“Most of my revenue isn’t from asset management,” says Andrew Mohrmann, the 30-year-old founder of St. Louis-based Modern Dollar Planning. “You have to charge differently when you work with young clients.”
Modern Dollar serves young professionals balancing rising incomes with high debts, and over 80 percent of Mohrmann’s clients and managed assets are from millennials.
The XY Planning Network’s model calls for advisors to offer a flat fee to meet with clients and a monthly or quarterly retainer for ongoing advice. Advisors must have their CFP certification and be sworn fiduciaries.
Millennials respond positively to the model, says Daniel Wrenne, founder of Lexington, Ky.-based Wrenne Financial Planning.
“My average client is 35, most of them are millennials,” says Wrenne. “Around 25 percent of the assets we manage are in millennials’ accounts. It would normally be lower, but several clients received inheritances recently.”
Sophia Bera, founder of location-independent Gen Y Planning, says millennials make up most of her 43 clients.
“I would say 80 percent of my revenues are from millennials,” she says. “I have a few Generation Xers, but all my clients are under 42.”
At 39, Marcio Silveira, a planner at Arlington, Va.-based Pavlov Financial Planning, is not a millennial. After 15 years in the industry, he adopted the retainer-fee service model and pivoted toward serving younger clients.
“The major factor for being able to become a client is the income to pay fees,” Silveira says. “Many advisors won’t serve someone without assets or who only has assets in a 401(k) because they can’t bill on that. In my case, that’s not relevant.”
As traditional forms of advice become commoditized by technology, planning increases in value, says Noah Morgan, 31, co-founder of Fenton, Mich.-based Acorn Wealth Advisors.
“Behavioral advice is not a commodity,” Morgan says. “For things like investments or tax advice, inexpensive resources are widely available, so we must find other things to do for our clients.”