A recent article published on Financial Advisor's website concluded that millennials, as well as Gen Xers, simply don’t need an advisor because they aren’t going to get any value out of working with one.
Melody Juge, the self-acknowledged baby-boomer-centric advisor interviewed for the article, Millennials, Advisors Don't Need Each Other, Planner Says, says: “Why do you want to have a 20- or 30-something man or woman who is full of life, creativity and forward thinking be focused on the end of their life? In most cases, savings should just be automated and out of mind.”
Yet what this statement really illustrates is not how young clients don’t need financial planning, but instead how the very label “financial planning” is being distorted. It's being turned into a euphemism for investment management and retirement planning by a retirement-centric industry, as though accumulating a giant portfolio for retirement is the only financial problem anyone in our country ever faces. And while we wish that Ms. Juge’s opinion on Gen X and Gen Y clients working with an advisor was just her opinion, it unfortunately seems to be systemic of the entire financial planning profession.
Yet the reality is that true comprehensive financial planning is about far more than just managing an accumulated portfolio for retirement spending. Financial planning is about helping clients live great lives. And arguably, we can do more for younger clients in their 20s, 30s and 40s to accomplish this mission, when they still have most of their personal and financial future lying ahead of them, still waiting to be shaped.
As Gen X and Gen Y advisors ourselves, we can’t help but turn back to our own lives when thinking about this.
Alan’s story is this: I’m 28 years old, and just five years ago I was graduating college and grad school. I had a boatload of student loans, got married and moved across the country for my first job. When I got there, I bought an investment property (a duplex), and I worked at that job for a year before leaving -- and then moved across the country again for a new job. I sold the duplex, took that second job, and six months later I got fired. At that point, I landed in a new city again and launched Serenity Financial Consulting, a financial planning firm that I started from scratch. After that, I moved yet again to Montana, started another business and sold it, started XY Planning Network, bought a condo, sold Serenity Financial Consulting, had a baby, and got divorced.
Michael’s story is this: I’m 37 years old. On graduation day, I packed up everything I owned into the back of my car to take a life insurance sales job that required me to live with my parents for nine months because I wasn’t making enough money to live on my own. After a year I changed jobs and moved out, but the only way I could afford to live on my own was to rent a three-bedroom apartment with roommates so the rent could be divided three ways. I began building my credit score, and started putting myself through graduate school part time while working full time. Less than two years later, I left my job to take a lower paying one with better upside potential and launched a side hustle to earn extra income so I could save for a house down payment. Three years after that, I left my full-time job to make my side hustle a full-time business and moved in with a girlfriend. Within two years we got married, blended our finances, had a baby, moved to another state, bought a house, and made the family decision to adjust from a dual-income to a single-income household so one of us could stay home full time to raise our family.
Are we really going to make the case that people with these kinds of rapid life changes, so typical for those in their 20s and 30s (and even 40s), don't need and would not benefit from getting quality financial advice from a financial planner? Of course not! The reality is that people facing these kinds of transitions -- from marriage to divorce, from starting a family to starting a business, from working down student loans to getting a job, from losing a job to getting another -- can benefit from the outside guidance of a personal financial planner. Not everyone has the time, knowledge or inclination to just “learn it from the Internet and do it themselves.” Yet our industry says there are no opportunities to provide financial planning value when serving Gen X and Gen Y?
Of course, not every financial planner needs to work with young clients. Near retirees and retirees need financial advice too, and there’s nothing wrong with helping those clients. But being a retirement advisor who focuses on portfolios and distributions and doesn’t work with Gen X and Gen Y isn’t a basis for saying that no young people need a financial advisor. Young people need help with everything else in their lives that is financial but has nothing to do with saving for and spending in retirement! To say otherwise is like telling Gen X and Gen Y that they don’t need a doctor because they’re young and healthy right now, and that they shouldn’t bother with health insurance or check-ups until they’re older and more likely to have serious health issues to worry about. This is clearly not prudent advice.
Saying that the advice of financial planners who work with Gen X and Gen Y clients -- including the nearly 150 who have joined XY Planning Network in the past 18 months -- has no value for their clients is both offensive and insulting. It's offensive to those advisors because they are delivering value to their clients and insulting to their clients because they are happily paying for the value they see in having access to a planner who provides real financial planning advice.
Despite Ms. Juge’s personal opinions about how her retirement-centric services aren’t valuable to young people, the rapid growth of the XY Planning Network makes it clear that other financial planners are willing and ready to step up to the challenge and opportunity of delivering valuable advice on everything from student loans and credit card debt, to building good spending and budgeting habits, to how to grow income by asking for raises and engaging in side hustles and starting businesses, to making good decisions about college savings and life insurance and mortgages, and a wide range of other financial planning advice that has nothing to do with managing a portfolio for a percentage of AUM.
Rather than one-sided interviews with financial planners who acknowledge they don’t serve young clients, perhaps it’s time to interview financial planners who are serving young clients profitably while delivering value to them for lessons and guidance and advice on how to do it? It’s certainly better than insulting young advisors serving their peers because their services and expertise happen to be different and not revolve around just portfolios and retirement.
And in the meantime, as long as the traditional financial advisor industry does continue to mock and insult young planners who provide value to young clients, we’re happy to continue to provide a home and community in XY Planning Network for those who recognize the opportunity in delivering comprehensive financial planning services to those in Gen X and Gen Y who really want it, need it, and are more than willing to pay for real value.
Alan Moore and Michael Kitces are co-founders of the XY Planning Network and advocates for bringing real financial planning to Gen X and Gen Y consumers.