My son said he’d expect a larger planning fee in the first year, and he’d agree to a retainer for guidance in years to follow. “Mom, I value people’s time and am willing to pay a fair rate for a talented professional. I want my advisor to be as smart as me or smarter, so why wouldn’t I pay what they are worth?” Low-cost investment vehicles appeal to them, but they want high-priced advice when it matters.

New Models for Next Gen

With all this information in mind, I began a search for advisors in the New York City area to refer, and quickly realized my old contact list wasn’t a fit. I turned to the web and made calls to industry contacts, and found several extremely bright advisors with stellar academic backgrounds and credentials. Three that I researched had something in common—they had tried working in established firms as junior advisors and found it an uphill battle. Since they wanted to focus on next-generation investors, they started their own RIAs with a fresh client experience in mind.

A decade ago, I was convinced that a small firm (an RIA with less than $250 million in AUM) would have trouble surviving. Now I see things differently. Technology has enabled a new generation of start-ups with younger advisors who need minimal overhead. They aren’t saddled with fixed operating costs or old systems, and they are nimble about accessing what is available from custodians and fintech firms. Their smart devices are how they do business, and they have figured out how to deliver a good digital experience to their clients too. This unfettered approach allows them to be creative in who they serve, what they offer and how they price for their services.

A Wake-Up Call

My son is finalizing the advisor selection process, and I will enjoy learning more from his experience. In many ways, these young practitioners are leading the innovation in our industry. If you have a more traditional practice, I urge you to find some Gen X and millennial investors. Don’t pitch them. Ask them to imagine and describe what they think an ideal advisory relationship would be like. Also, identify some young advisors with entrepreneurial practices. Buy them a cup of coffee and hear their story.

I’m aware that many RIAs will do just fine for the next decade servicing boomer assets, but there’s something sad about “milk the cash cow” as a strategy. It didn’t work for Blockbuster, Sears, Toys “R” Us and others. All of us need to be thinking about what we do from the eyes of both today’s clients and the people you want to serve tomorrow. When change hits home, it’s a wake-up call.  

Gail Graham is CEO of Graham Strategy, dedicated to helping wealth managers build brands people love. As the former CMO of United Capital, she created an industry-leading marketing platform. Previously, she spent a decade at Fidelity Investments.

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