A few weeks ago, my son reached out to me about finding a financial advisor. He and his wife are very successful, hardworking millennials who have earned, saved, paid down all debt and built a solid portfolio. Their financial trajectory looks terrific, but they are in that life stage where they will be starting a family, buying a home—and making the many decisions that go along with these important steps.
In our extended family, I’ve referred a dozen or more of my relatives to the many fiduciary advisors I’ve gotten to know through the years. I’m happy to say that many great relationships between advisor and client have been forged with these introductions.
That is, until my son asked for help. He’s a financially savvy MBA and his wife is a CPA, and they had some very specific requirements that made me realize my personal network of highly respected advisors would not work for them. Their point of view provides insight to the next generation of wealthy investors and reinforces the need for change in our conventional wealth management industry.
Here are the three screening criteria for advisors the young couple used:
It should be “someone we can relate to.” It turns out they had gone to see one advisory firm already, at the suggestion of my son’s boss. The firm marched out its “token young advisor” for the meeting, while the older partner did all the talking. Both Gen X and millennials are skeptics who can spot fakery in a heartbeat. The young advisor obviously had a back-seat role, and turned out to be just a freshly minted CFP with zero experience. What my son and his wife were looking for was someone young, but smart and confident with earned expertise—just like themselves.
The firm environment was also a turnoff. My daughter-in-law looked around the office and noted the lack of diversity in gender, race and age. This assessment was practical rather than political: Can a firm with this composition be progressive and forward-looking? Even the office layout and furnishings shouted low-tech luxury at a slow pace. This couple ran in the opposite direction.
They wanted a “breadth of services beyond investing.” My son has been exposed to “financial life management” from my days at United Capital, and it makes sense to him. His view is that investing is important, but it’s commoditized, and he’s not looking for outperformance. What he does want is human help aligning his and his wife’s goals and establishing their priorities. Couples have to make trade-offs. It’s scary, for example, to buy a first home when the starter houses in the desired neighborhoods are a million dollars or more. Will they pay up for location, or take an interim step with a smaller home in a less popular town? Life and money are complicated.
Beyond traditional planning, they seek cash-flow planning, tax advice and tax preparation services. And they expect the whole experience to be both online (digital) and face-to-face (human) with seamless integration. They want the relationship with the planning firm to be paperless, easy, flexible and efficient for the basic stuff and they want it to be consultative and deeply personal when there’s more complexity.
They want “transparent, needs-based pricing.” For my son and his wife, AUM-based pricing for wealth management makes no sense. They have the assets to meet the minimum thresholds of most RIAs, but it seems strange to tie pricing to investments when it’s the planning they value most. Moreover, they had a cautionary tale from friends of similar age and means. Another couple they know were saving and building a portfolio to ensure they would be financially secure after they bought their first home. When it was time to buy, the advisor was pushing them to leverage up rather than use their own money to make an oversized down payment and keep the monthly payment low. Their assessment (right or wrong) was that the advisor got paid on AUM and was operating out of self-interest. They fired her.