April 2, 2018 • Gail Graham
I’ve spent the last several months talking to advisory firms about industry and secular trends and their business strategies. One would hope these two things would be linked—that strategies would be built with the future in mind. But to my dismay, many of the larger firms I’ve talked with have no answer to this important question: “How are you preparing to serve the next generation of investors?” It’s awkward when they try to explain why this isn’t on their radar, but here are some of the explanations I’ve been given: “We can’t serve small accounts profitably.” “High-net-worth clients are where the money is.” “We’ll get to this later.” What I’ve realized is that wealth management business leaders (largely of my generation, the baby boomers) see serving the next generation of investors as somehow optional. This complacency is incredibly dangerous for the long-term health of existing firms and creates an opportunity for even more disruption in wealth management. What’s Going On? I decided to interview a few advisors that focus on millennial investors to understand how they do it. Eric Roberge and Sophia Bera are both members of Michael Kitces’s XY Planning Network. They’re also friends who share ideas between their firms, Roberge’s Boston-based practice and Bera’s in Austin, Texas. Kelly Morgan, meanwhile, is an older advisor at a more traditional firm—the managing director and owner of Seaward Management, a $3 billion RIA, also based in Boston. Yet she, too, is trying to crack the code on reaching younger clients. Seaward is a client of mine that’s working with FinLife Partners, United Capital’s platform offering for advisory firms. Observation No. 1: “Not Your Father’s Financial Plan!” Kudos to Bera for the very cheeky website she runs at her firm, Gen Y Planning. The site puts that statement about your father’s financial plan front and center. She and Roberge both talk about how younger, upwardly mobile investors need help with the shorter-term issues first. That means traditional retirement-focused planning is a mismatch for them. Roberge’s firm is called Beyond Your Hammock, and he says, “Live a life you love today while still planning responsibly for the future.” While these two help clients spend well (budget), manage debt, maximize benefits and tackle other issues, Roberge and Bera are adamant that this is not “planning lite.” In fact, because they go very deep to solve complex problems millennials have, such as education loan refinancing, they can charge up-front planning fees of $2,000 to $3,000 or more. Their business model includes the initial planning “setup” fee and then a monthly retainer, akin to a gym membership for financial coaching. This pricing strategy feels familiar to the millennials they serve, and typically pays for itself with the concrete nature of problems solved. First « 1 2 3 » Next
I’ve spent the last several months talking to advisory firms about industry and secular trends and their business strategies. One would hope these two things would be linked—that strategies would be built with the future in mind. But to my dismay, many of the larger firms I’ve talked with have no answer to this important question: “How are you preparing to serve the next generation of investors?”
It’s awkward when they try to explain why this isn’t on their radar, but here are some of the explanations I’ve been given: “We can’t serve small accounts profitably.” “High-net-worth clients are where the money is.” “We’ll get to this later.”
What I’ve realized is that wealth management business leaders (largely of my generation, the baby boomers) see serving the next generation of investors as somehow optional.
This complacency is incredibly dangerous for the long-term health of existing firms and creates an opportunity for even more disruption in wealth management.
What’s Going On?
I decided to interview a few advisors that focus on millennial investors to understand how they do it. Eric Roberge and Sophia Bera are both members of Michael Kitces’s XY Planning Network. They’re also friends who share ideas between their firms, Roberge’s Boston-based practice and Bera’s in Austin, Texas. Kelly Morgan, meanwhile, is an older advisor at a more traditional firm—the managing director and owner of Seaward Management, a $3 billion RIA, also based in Boston. Yet she, too, is trying to crack the code on reaching younger clients. Seaward is a client of mine that’s working with FinLife Partners, United Capital’s platform offering for advisory firms.
Observation No. 1: “Not Your Father’s Financial Plan!”
Kudos to Bera for the very cheeky website she runs at her firm, Gen Y Planning. The site puts that statement about your father’s financial plan front and center. She and Roberge both talk about how younger, upwardly mobile investors need help with the shorter-term issues first. That means traditional retirement-focused planning is a mismatch for them. Roberge’s firm is called Beyond Your Hammock, and he says, “Live a life you love today while still planning responsibly for the future.”
While these two help clients spend well (budget), manage debt, maximize benefits and tackle other issues, Roberge and Bera are adamant that this is not “planning lite.” In fact, because they go very deep to solve complex problems millennials have, such as education loan refinancing, they can charge up-front planning fees of $2,000 to $3,000 or more. Their business model includes the initial planning “setup” fee and then a monthly retainer, akin to a gym membership for financial coaching. This pricing strategy feels familiar to the millennials they serve, and typically pays for itself with the concrete nature of problems solved.
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