In this week’s #YAFPNW we’ll be working with FPA’s Journal in the Round podcast to discuss changes in the financial planning industry for planners and clients alike. We sit in with Yusuf Abugideiri, Russel Kroeger, Lisa Kirchenbauer, and Andrew Mehari to discuss how millennials are changing financial planning, different job roles in the industry, and what we might expect in the not-so-distant future.

Hannah's signature

“We want to give these young folks something to focus on and a way to be intentional about living their lives.”

What You’ll Learn in This Episode:

  • How millennial planners and clients are changing the financial planning industry as a whole.
  • The different career paths that are opening up within financial planning.
  • How larger firms are changing to serve millennial clients by integrating new, strategic planning service models.

Omega Wealth Management

Yeske Buie

Paradigm Wealth Architects

Jude Boudreaux, CFP®


Journal of Financial Planning

Financial Planning Association





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Ep64 Transcript


Hannah:                               We’re going to start off with Yusuf and Russell on their article of serving millennial clients with a three-step model. The first question for both of you all is, what caused you to want to write this article? Why was this important to you?

Russell:                                 Yusuf and I actually presented on the article FPA Far West Roundup in Santa Cruz in early August and made the comment that we wrote the article in an effort to bring real financial planning to people like us. That does mean millennials, but it also means those outside of the wealthiest 10%.

In a conversation with Dick Wagner, he challenged that the financial planning profession wouldn’t be able to become a profession until more than the top 10% were served, and he said, “Can you imagine if doctors only served the wealthiest of us?” That challenge is very personal to Yusuf and I because we both grew up without much money.

Honestly, the primary reason is that there are a lot of ways to serve young professionals and do so profitably. We hope that we’re encouraging people with some of our ideas so they can go out and work with communities that are important to them. I think one of the most poisonous comments I hear from our profession is that serving a particular demographic isn’t “profitable”, because what that really tells people is that they are unfit or are not deserving of our profession’s time or help that our skill sets provide. I can’t tell you the number of times that I’ve talked to a young professional and they would say, “Oh, well, we don’t have much money to invest. Once I get that, I’ll work with an advisor.” No, that’s actually the exact opposite, you should feel the right to work with someone before you have money to invest to make sure you get money and keep that money.

Hannah:                               Well, I think that’s really interesting, this idea that the words that our profession is using to talk about this issue is actually hurting the general public and really hurting our profession if we’re really going to mature into this greater profession that we all want.

Yusuf:                                   Yeah, absolutely. One of the things that Russell and I spoke about during our presentation was the fact that part of the problem here is millennials and other folks and other demographics just don’t view themselves as ideal clients and don’t know how to get help otherwise.

The way that we designed our framework, we made it effective in that it’s a three-step model that addresses all six steps of the financial planning process, but it’s also efficient and creates a space for the client to connect with the advisor when there are changing circumstances in their lives to determine what the next best step is without having to redo their entire financial plan. So being able to serve folks who need help without having to reconstruct their plan from scratch every time something changes.

Hannah:                               What I really liked about your article is that you guys are really challenging what is a financial plan, you’re still using that six-step framework, but what is the actual deliverables that are available? You guys have hit on this already, but are millennials looking for the service? Is this a need that already exists?

Yusuf:                                   Absolutely. With the millennials that we’ve brought on as clients this year, it’s been our experience that they’ve done their research, they’re looking for financial planners, they’re comparing the different service offerings that are out there and so they’re absolutely looking for it.

Yeske Buie started providing financial planning for millennial as an organic way to develop business and strengthen relationships with our existing clients just looking to build relationships with our existing client’s children in the service model developed from there for us.

Hannah:                               That’s interesting because your article is largely neutral on business models. Can you walk through examples of what this would look like practically and profitably? Get into the specifics of it. Like, hours of the lead advisor and they would actually spend with the clients, are clients doing a lot of the work on their own or the advisers are doing it?

Yusuf:                                   Certainly. As far as the lead advisor, in my experience in working with several of these clients, I’m supported by one of our financial planning residents with any millennial client that I work with, so I don’t do much work other than show up for the meetings and then maybe add a line or two to the follow-up emails afterwards. Aside from that, all the analysis, all the work is done by a junior advisor, someone who’s working in support of myself.

We’ve tracked how many hours of our time, we being the financial planners, that it requires to put together one of these financial plans, and it’s less than 15 combined man hours between the two of us. Reason being is, we insist that the clients send us all of the pertinent information that we need before we move on with the plan. So we’ll have the initial meeting, we’ll do the discovery and then we won’t prepare the financial plan until we have all of the information that we need to do so. That’s one of the ways that we try to keep the time commitment as far as creation of the plan down. I don’t know if that answers part or all of your question, Hannah.

Hannah:                               Yes. For those 15 hours, how much is a client paying out of pocket for these services?

Yusuf:                                   As it stands right now, we’re billing clients on an Assets Under Management engagement. For a client who is building up their assets up from zero, obviously, that’s going to be a very small fee, and we’re using that fee structure in this initial year of the formal launch of our millennial program and we framed with all of our clients upfront that we’re very likely going to be renegotiating the fee in year two once we have a larger sample of folks that we’re working with and can really look at the nuts and bolts of what the service offering requires from us, but right now we’re doing it as an assets under management structure and our wealthier clients are effectively subsidizing program.

Hannah:                               You’ve been very upfront with clients, telling them this?

Yusuf:                                   Yes. Yes, absolutely.

Hannah:                               The wealthy clients as well as the new clients?

Yusuf:                                   Well, that’s just an understanding with respect to within the business how financial planning firms work, it’s always the wealthier clients that are the subsidizing service offering that’s given to less wealthy clients if you’re using an Assets Under Management fee structure.

Hannah:                               We’ll get to that in just a little bit. Russell, do you have any thoughts on this?

Russell:                                 Yes, I actually do the traditional ex-wife planning network approach where I have an annual fee that’s-

Hannah:                               Wait, wait, can I just say we just said traditional method that the ex-wife planning network used, I think that’s a pretty incredible comment just right there of how far our profession has come.

Russell:                                 Yeah. No, exactly, in a short number of years. Definitely-

Hannah:                               Sorry to interrupt you, I just wanted to make that point because I think that’s amazing.

Russell:                                 Yeah. No, I definitely agree because it would’ve seemed strange, I think, maybe a number of years ago for me to say this, but I charge a fee, an annual fee, that’s broken out on a monthly or quarterly basis, whichever is most adjustable by the clients, and I have minimum fee that I charge, and it goes up from there based on complexity or the number of times that a client wants to or needs to meet. It basically is dependent upon what the client needs from me.

There are other models out there that I really like. Jude Boudreau has an interesting one, I think it’s 1% of income and then 25 basis points on net worth that I thought about using, and I might end up switching to that at some point, but right now I just have the basic fee and the price goes up from there.

Hannah:                               Well, I love this idea of testing these models out and seeing what works and being really … Yusuf, like you said, just very upfront with the clients like this is going to change, it’s likely to change. You don’t have to have it all figured out right away.

Yusuf:                                   We found that that’s very attractive with millennial clients, they’re hyper-aware of all of the different options that are out there and they very much value transparency and communication above all else.

Hannah:                               One of the lines from your article, you say that for a millennial at the beginning of their financial journey, rebuilding their entire financial plan with each change is not an effective use of time for the planner or for the client. This leads into the need to build financial planning policies with clients, so when ad adviser adopts your framework, what are the actual deliverables given to the client? Or, perhaps a better way of asking that is, what does a financial plan tangibly look like?

Russell:                                 The deliverable for me has generally been more illustrations than it has numbers. The idea is that if discovery is done well enough people are anchored to what’s important to them, so as long as the policies are explicit and what goals or values they support, the illustrations do a good enough job of helping people evaluate trade-offs and then measure their progress once they’ve decided on a path forward.

Yusuf:                                   Yeah. Just to add onto Russell’s response, for Yeske Buie, when we’re working with a millennial client, we always prepare a tax projection and a cash flow projection, and what that gives us an idea of is what the client’s free cash flow or available surplus is at the end of each month. Once we’ve identified that number, then we start “bucketing”, and so identifying different vehicles they can use for saving, for different goals and working from there, but it’s all about identifying their free cash flow and then we’re able to build from that.

Hannah:                               Are you guys tracking their cash flow on your end or how do you know that the numbers that you’re getting are accurate?

Yusuf:                                   Everything that we present to the client in that first initial financial planning meeting is a draft plan, and we always confirm that they can sign off on any of the analysis or numbers that we’re showing them in the way, and then the way that we encourage the continuation and actual behavioral aspects of the financial plan is we set up an automatic savings into the account that we manage. So whether or not the spending numbers are 100% accurate is irrelevant as long as they’re not racking up debt and the monthly or weekly or quarterly deposit to their account is occurring, then the cash flow analysis is reflecting an accurate depiction of their financial situation.

Russell:                                 Just to add on to that, I know Carl Richards advocates for a one-page financial plan, and some people may think that’s a little ridiculous but that’s actually the simplicity that policies provide. You don’t need a lot of numbers. Obviously, they’re working in the background, but once people know where their money is and why it’s there, simple statements and rules about what they’ve put in place, serving as guardrails, seems to be effective.

Hannah:                               Cash flow seems to be this driver for much of the policies that you guys have outlined in what we’re talking about, Yusuf, you’ve talked about this a little bit, but what is your approach towards cash flow when you work with clients, specifically with those clients who don’t have the skill set to manage their cash flow on an ongoing basis? Are you having to actually teach cash flow budgeting skills to clients or are you just getting clients who already have that skill set?

Yusuf:                                   It’s mostly clients who already have that skill set. A lot of the folks who come to us know they need financial planning and are sophisticated enough to be able to make that assessment themselves. Often times what we’ve experienced is they’re professionals who are familiar with either budgeting or some type of cash-based analysis for work, and so they already have those skills and we haven’t had to teach them much. We focus more on exploring ways that they find to be most effective to organize their cash flow or be more organized about their money general, and then from there we build the structure up after we’re all on the same page.

Hannah:                               Russell, how about you? How do you approach cash flow?

Russell:                                 Yes, so I’m generally pretty upfront with clients in saying that I think budgets are a terrible idea, they drain a lot of time and mental energy, as is the case with basically all policies. There are calculations running in the background that support the reasoning for the policy, for example you need to know how to do the time value of money calculations to figure out how much needs to be saved for a specific goal, but cash flow is more about building habits than it is about goals. Since budgets are backward looking, we can pull out themes of spending and then have a conversation with the client around what that looks like relative to what they said was important in the discovery meeting. When there are discrepancies, we can talk about how to establish policies to help allocate resources towards things that are actually fulfilling to the client.

Hannah:                               On the final step, you guys outlined the importance of building confidence through collaboration, and you say at each check-in meeting, the planner must vigilantly look for signs that progress is sputtering, so in your experience what are examples of this, especially considering just how fast life changes for millennials and job changes and life changes? How do you assess that? Do you have examples of that?

Yusuf:                                   I don’t know that there’s going to be a empirically substantiated response, Hannah, but I’ll just speak from experience both in my own life and from the standpoint of observing and other millennial’s lives. The more transitions, the more likely you’re going to have progress sputter. For example, I’ll speak for myself, my wife and I are expecting our first child here in about three months, we just moved recently, my role at work is changing, et cetera, et cetera, and she’s got a lot going in with her as well. You’re so exhausted at the end of the day, just processing all the learning, all the new information, trying to assess what behaviors are going to continue until your new normal, which behaviors are going to stay left behind in your old life, when you get to the end of the day, you have no energy to think about money or saving or the future, or what have you, you’re just trying to get to bed so you can turn around and then be productive the next day. We observed the same kind of thing with our clients, and what’s why it’s so critical to have these regular check-ins and say what’s changes since the last time we walked? How is that supporting or inhibiting your progress and then going from there.

Russell:                                 Yeah. I’d just like to go off of what Yusuf was just saying, the reason check-ins are so important is because goals become outdated very quickly when the landscape is shifting as it is for young professionals. If the strength of an anchor to a particular policy decreases as the goal becomes outdated, people can get distracted by other things and not tend to that policy, and check-ins give the planner the opportunity to ask whether or not goals need to be changed, policy should be tweaked or if someone was just losing track because of everything going on in their lives. Check-ins also reveal changes in the client’s life that may lead to proactive planning opportunities, which can then add value to the client relationship.

Hannah:                               How often are you guys doing these check-ins?

Yusuf:                                   I’ll speak from my standpoint, it’s really a function of the client’s needs. I mean, we’re available whenever there’s something to be discussed. We insist on at least one meeting per year, but the millennial clients that we’ve brought on this year, for example, we’ve had about two or three meetings, when I think about the various clients in the fold there, and it’s just because they got a raise and so cash flow changed, or so-and-so is actually considering a job change, how would that affect their savings plan? That type of thing. So it’s a function of need.

Russell:                                 Yeah, and I would just echo that. I have roughly six months of running my own firm and having my own clients under my belt, so I can’t speak to that as much, but it’s more or less what the client needs. I generally tell them that we’re going to meet more than you want to but less than I want to.

Hannah:                               That’s great. Excellent. Well, thank you guys. Great work on getting this article written and published. I think it’s great for our profession and, hopefully more advisers will consider working with millennial in this way.

Okay, so next we have Lisa and Andrew. Lisa, you wrote that choosing a career path is not always client-facing, and what I think is so interesting is that you guys paired it with Andrew, your article on choosing the analytical role of young professionals experience. Lisa, starting with you, what caused you to write this article? Why was this important to you?

Lisa:                                       All along in my career development, I’ve really believed that you need to have somebody who is good at the client service/operation’s role not somebody who’s just passing through, and what I’m seeing and hearing in some of the financial planning programs is that people are only … I love that we got financial planning programs now, that they’re only being groomed to be advisors, and because I’m a student of people, I’m very much into assessments, I’m an assessment junkie, I’m very interested in how people are different and what their different skills and strengths are. It’s not a one size fits all that everybody was meant to be an adviser. This is something I’ve been passionate about, I’ve been talking about and … With Andrew in place at our firm for the last couple of years, it just felt like it was time to really put this down in paper and get that message out there and start open a new dialogue about what career paths are in the financial planning profession.

Hannah:                               Lisa, can you give the listeners a better idea of your firm, the size, employees, your structure?

Lisa:                                       Yeah. We have five people, I’m the senior advisor, I have two associate financial advisors, one is a millennial, the other one is a baby boomer who’s a career changer, we have an office manager, and then Andrew Mahari is our operations analyst. We have about 85 clients, we are managing almost 100 million, under management, we take a financial life approach and we have a retainer/smaller AUM business model.

Hannah:                               Okay. Great. Just in your experience, especially this important that is operation’s role, so looking at the lifecycle of these financial planning businesses that many of them are starting out as the solo advisor, entrepreneur, and then they’re hiring an assistant, in your opinion, what hires should the operation’s role be?

Lisa:                                       Well, I actually think that they’re probably the next person that you should hire because if you’re trying to be client-facing, as the sole advisor planner, the sooner that you can get out of the operation’s role, the more effective you can be in going and finding more business, meeting with clients. If you’re spending a lot of your time trading, dealing performance, dealing with getting money out to clients, all that kind of stuff that tends to fall in the operation’s area, you don’t have time to keep growing the business. I think when you realize that you need to expand, is 25 million, is that 50 million, whatever that number is, if it’s a assets or revenue, the operation’s role really should be the next role in line-

Hannah:                               That seems so much aligned with this idea that we need to be a business of financial planning not just … There’s a business side and then there’s the craft side.

Lisa:                                       Amen. Right. You have to start to run a business. I mean, that’s the e-myth idea is that you come into financial planning, you want to do financial planning, but you’re a business owner and at some point you have to start to work on the business not just in the business, and having somebody who can handle the operation side of your business-

Hannah:                               One of the things that was in, it was either your article or Andrew’s article, where you talked about the career steps for operations, with these smaller firms, how do you build out that career path where somebody would want to stay with you for a long time?

Lisa:                                       Well, to be fair, really, Andre did the work on this. I had created a career path for a financial planning associate, so that’s the entry advisor level role, which then leads to associate and lead adviser and then advisor senior, which is me. I had said to Andrew, “Look, I don’t have a career path, but here’s what we’ve done for the financial planning associate role, can you re-create?” Bless a soul, he took that and shifted it to operations. He can talk more about that, but just to give credit where credit’s due, I got the inspiration for creating what we have created as the steps, what are the qualifications and what do you need to do to move to the next level from a talk that Rebecca Pomering gave at our local financial planning association-

Hannah:                               Andrew, I’d love to hear your thoughts on that. Working within a smaller firm and building out their career path, is it just additional responsibilities and compensation that’s tied to that or how do you view that?

Andrew:                              Yeah. It’s a mixture of all those things. I came in here and I was doing the general ops responsibilities and, obviously, I wanted to progress within the firm once I was offered a full-time position and I wanted to know, “Okay, what does this progression really look like?” Yeah, Lisa had told me that, “Look, we don’t have an ops career path, but here’s the advisor career path for you to look at so you can get an idea,” and that sort of thing. I used the advisor career path as a steppingstone and outside of that, I talked to some other firms, I looked back at my internship at another firm, I talked to some colleagues, looked at some Schwab firm surveys, just gathering that sort of data, what does compensation look like after a few years? What does compensation look like after five or seven years? What kind of certifications do ops people typically try to obtain? What kind of roles or what kind of responsibilities come with the role as you move on from one position to the next? So taking that all into account while using the advisor career path as a reference point or a steppingstone. That’s how I came up with the ops career path. After presenting it to Lisa, she really liked it, and after I guess a few edits, it became the ops career path our firm at least for the foreseeable future.

Hannah:                               Andrew, you feel like you have a career path now within this five-employee firm now?

Andrew:                              Right, right. Before, I didn’t really have a career path and I didn’t really know what I needed to do to get to the next level, I didn’t really know exactly what my compensation would look like after being promoted, that kind of thing, so the career path helped solidify that and made me more confident and made me feel more secure about moving forward.

Hannah:                               In your career path that you’ve lined out, there are compensation benchmarks tied to that, is that what I’m hearing?

Andrew:                              Yeah, relatively. I can’t remember if they’re actually written down number for number, but I think Lisa has a system where there’s relative points tied to the advisor career path in the same way.

Hannah:                               Lisa, how does a compensation differ or does it from an operation’s role to an advisor role?

Lisa:                                       At our firm right now, everybody’s on salary. I have certainly used Angie Herber’s approach to having bonuses. Again, one of the thins … Because I’m very much into how people are built and what motivates them, we found after a while that having a bonus was not really motivating anybody, it was really just turning into salary, and so we went to full salary for everybody who’s currently with us.

One of the things that I’m going to have to revisit is as we get to the lead advisor role and there’s perhaps business, new clients being brought in, that’s, I think, when we’re going to have to reassess things, In the meantime, I’m not treating the operations versus advisor role or career path any different from a compensation stand point. The operation’s role is critical to the firm, as I talk about it in the article, this is increasingly an area of liability. The whole first party, third-party wires and having to verify them, and if we accidentally allow money to go out to somebody it shouldn’t have gone to … We’re completely liable for that. This is a really important role and it shouldn’t be compensated any less than the people who are sitting face-to-face with a client as far as I’m concerned.

Hannah:                               Yeah. Again, I think it goes back to this if we view it like a business, what are the roles and how do they all fit together as the greater whole?

Lisa:                                       Yeah, exactly. Everybody has an important contribution to make.

Hannah:                               Lisa, has this helped with higher employee retention rate? I know the operations career path is the new thing but you’ve had an advisor career path for a while, has it helped with retention?

Lisa:                                       I really think it has because it’s created … I mean, this important for most younger planners and even for the operations side, you want to have a sense of where you’re going and that’s why a lot of young associates leave is there is either no clear career path or it’s not followed or it’s arbitrary and capricious. People seem to be clear what they’re supposed to do, they’re focus on it as we meet quarterly and annually, they’re looking at what are the steps I need to take? They’re checking them off with me, so it feels like it’s working better for everybody, not just for me or for them. It’s a win-win for the entire firm.

Hannah:                               In the article, you highlight the need and the value of the Kolbe assessment, and I know you love the assessments, so you do this for all positions, right?

Lisa:                                       We do this with every client and anybody who’s going to be hired into our firm does a number of different assessments, so Kolbe, strengths-finder, Myers-Briggs, which was really valuable to understand about Andrew as well, and sometimes we use Emergenetics as well. It’s very, very important for us to understand how you’re built, what your strengths are, and then to try to put you in the right role that fits with your strengths.

Hannah:                               Lisa, can you talk more about how the Kolbe has helped enhance your firm and how the employees relate to each other?

Lisa:                                       We find that having this understanding of each of our own strengths, then understanding each other’s strengths, and then being strategic about the roles, the projects that people take on, we work as a much more effective team, a more efficient team. We avoid some of the emotional affective stuff that happens when people are different than you are. I’m very different than pretty much everybody else in the firm, and if we didn’t understand that about each other, we would have a lot more conflict.

Certainly, before I started using these kind of assessment, that easily could happens. You make affective judgments like people are being lazy or they’re not doing this or they’re not doing it well and they don’t care, all affective judgments rather than understanding that somebody is built differently and you need to respect that difference and you need to figure out how to work with those differences and strengths. It’s certainly true across the different roles of advisor versus operations.

Hannah:                               From your perspective, Andrew, as an employee in a firm that uses a lot of the Kolbe assessments and using that to hire people as well as shape the firm, what has been your perspective on the value of these assessments?

Andrew:                              I think they’re great because, really, they helped me specifically the Kolbe, I would say, helped me, I guess, know more about my strengths and how I work methodically and what benefits me the most in how I work. When I got to the firm, what I had in mind was doing some of that, the analytical operations and non-client facing work that I had enjoyed in my previous internship, and when I took the Kolbe and got my results back that I was very process oriented, very detail oriented, I followed through on the work that I would submit and deliverables, and that kind of thing, that just spoke to me and confirmed what I already thought about, I guess, my work habits and helped, I guess, provide some proof that I really do think this role is for me and if I’m successful with it. I think the Kolbe helps solidify that.

Hannah:                               Andrew, in your article, what I thought what so great was you hit on this concept about identifying and being aware of what you’re naturally drawn to. We make the assumption that everybody wants to be an advisor, and that’s just not true, were you exposed to the idea that there were other career paths when you were in your degree program?

Andrew:                              Not really. Honestly, not really. Maybe that’s part of the reason of that is because the profession is still new, or I guess newer than most other professions that have been around and right now maybe it’s just that because of that newness, the advisor role is the default role or role that’s talked about the most because it’s directly associated with the CFP nowadays, at least with all the commercials you see on TV now, but … Yeah. No, in my program, I didn’t really know or think about too much what I would be doing outside of school besides working in a financial planning firm and probably being an advisor.

That’s not 100% what I wanted to do, but that’s where my head was at because this is what they kept telling us in school. It wasn’t until I actually went out into the profession and actually got some experience with some firms that I realized okay, there’s more than just the client-facing role. There’s all these other roles that I can … Depending on what firm you end up working for and how many positions they have open for that role … I don’t have to be doing this or I could be doing this in a different way or there’s an art to it, maybe you can combine different responsibilities from each role and create something different for yourself if your employer allows it. It was more so me understanding that there is more to the planning profession than just a client-facing advising once I had graduated and done some internships, honestly.

Hannah:                               What has helped you in your transition from college student to being a successful professional? Really specifically, what has your firm been able to help make the transition smooth?

Andrew:                              Well, just first, from transitioning from being a college student to working full-time, I think, at least for me, that the things that helped me the most were, number one, keeping my finances in order. We’re lucky to come from the financial planning program so a lot of these strategies, whether it comes to budgeting, or cash flow, or learning to pay off debt, learning to manage your credit, that kind of thing we learned in our early planning courses is really applicable to professional life, especially right after graduation where you probably don’t have the best credit score if you were taking out student debt. In that aspect, I used a lot from what I learned in school to help build a budget, learn how to pay off my bills, learn to manage my credit more thoroughly and that sort of thing.

But aside from that, working with Omega has just been great in terms of the environment here is really supportive. I work with another millennial, Jared, who is an associate advisor here and … Yeah, it’s just been really great because I actually came in when we were in the middle of a transition from one custodian to another for the majority of our client accounts and I was … That was my immediate role when I had come in and … Yeah, since then, there’s been a lot of growth for me. Lisa is extremely easy to work with and she’s open to new ideas, and she was really open with the career path strategy that we came up with and whether or not I want to get my hands in different roles or different projects, has been really easy to do as well. So the openness, the firm environment, I would say the firm culture and learning to manage your money once you start working really helped me.

Hannah:                               You all have been listening to each other, talking about these articles, so I am curious, Lisa and Andrew, so it’s fair to say that a lot of larger firms are now looking at how to profitably serve millennials as they’re becoming a greater percentage of the population, from an established firm’s perspective, how plausible do you see that three-step framework that Russell and Yusuf outlined in creating and integrating a service model targeting millennials?

Lisa:                                       Yeah. Hannah, this is something that we have been talking for probably two or three years as part of our strategic planning and, actually have a fairly clear sense of what we’re doing and we’re also starting to beta it a little bit, so similar three steps but a little different focus, because we’re very much into assessments and we found that to be really valuable in sharing with people just starting their careers, understanding their strengths, figuring out what’s the best for them to take, that’s part of the beginning of our first step. Our discovery process is similar but different.

We also, because we’re very much into the life planning side of things, our goal is to use the kinder three questions, so to really start to give people, these young folks, something to focus on and be intentional about how they live their lives. For us, we see it as being part of an offering to the adult children of our clients, and so that’s a little bit different, perhaps, in going out and trying to reach other people, just have a separate offering or something. We call it Omega Financial Planning. I think I’ve got a new name for it, which I’m not going to share right now, but I have a new idea for.

The second step for us is more around, like Russell was talking about, habits not goals. It’s a little early to have big goals, especially before you’re married or buy a house, or anything like that, our focus is around building good habits. So introducing them to apps and strategies that help them build good financial habits, so things like cash flow … We’re interested in cash flow but we’re looking at it in a way of introduce them to or to YNAB or to one of the budgeting apps that’s out there and get them tracking their expenses from the beginning, setting up auto investment, whether it’s into some sort of investment offering, or whether it’s just savings, or whether it’s into their 401(k) at work, and then credit score monitoring.

As it turns out, that’s a really hot issue now, but really building that basic skill because credit score is so important to employment, insurance, getting an apartment, getting any money for a car, or a place to live in, so we think that getting all of those pieces together early and easily, and starting to develop that relationship like they talk about in, really, the third step, we see ourselves as a thinking partner and as an accountability partner. A thinking partner is they go through various questions and rather than asking their parents, they’re asking us as an accountability partner. “Hey, we’re wondering if you thought about doing this? Hey, did you get that set up?” We see it a little differently but, I think, fairly similarly.

As far as the actual business model, we see it as a loss leader too. The idea is that these are the inheritors, eventually, that we like we understanding the whole family system, and so if we can understand the dynamics between parents and kids and grandparents in some cases that we can be more helpful advisors. The model itself we envision is an on-boarding fee, a one-time on-boarding fee to do the assessments and life planning and everything, may be paid by the parents and then have some sort of monthly subscription fee, no assets under management fee because that’s not really appropriate. Eventually, they might graduate into our regular three-tiered offerings, if that made sense, as they grow.

I think we have serve similar ideas and we’re pretty close to … Like I said, we’re practicing with different pieces of it, we just haven’t pulled the trigger on having an agreement for it and actually kicking off the monthly subscription piece.

Hannah:                               One of the things that Yusuf had said that they were a total of about 15 hours of work from the lead advisor or support staff that were involved with each client in the course of a year, does that seem reasonable to you?

Lisa:                                       I think it depends on what you’re doing. That’s part what we’re trying to walk through right now is we can vision, and we’re stealing this from other people, is that over a 12 month period, there may be months where they’re just listening to a webinar so it’s more educational and maybe a couple three times a year, probably two, that we would be checking in again for that accountability goal setting, that kind of thing. Annual goal type of stuff, not long-term goals.

Then, as Yusuf mentioned, and I think Russell mentioned as well, that it’s more on an as-needed basis, so trying to have some things, offerings, but as technology leveraged as possible. That’s the only way I can see this working to start, is that it’s got to be pretty highly leveraged.

Hannah:                               Russell and Yusuf, as you’re listening to this, what are your thoughts on what Lisa’s outlining?

Yusuf:                                   I’ll speak first. I’m just excited to hear that there are other firms that have been thinking about this for some time and see some validity to the ideas that we’re proposing. Our whole thrust was just to continue a conversation that we thought was happening but that needed to be happening on a broader level, and so it’s exciting to see that other firms are going to be diving in.

Hannah:                               One of the comments Lisa made was that this was really going to be like a loss leader for their firm, and I think a lot of firms are going to take that mentality, but you guys are proposing, maybe that it doesn’t have to be that loss leader. Is that just going to come down to business models or what are your thoughts on that issue?

Yusuf:                                   Yeah, I think it really is going to depend on the business model just because it starts as a loss leader doesn’t necessarily mean that it will continue to be one. Part of the deal with millennials is that they’re at the early part of their career and if you snag them now, the idea is that they’ll continue to accumulate assets and the relationship, aside from being fulfilling with respect to the client planner engagement, will also end up being profitable in the long run.

Lisa:                                       Hannah, to be clear, when I say loss leader, I don’t … We’re making an investment in the future. We know that it gives our main clients peace of mind to know that their children, their adult children, are getting good financial advice and are getting set up well, we’re really okay with that. We’re not trying to make money. I think we might break even if we do it right. It’s taking a long view, a multi-generation view to our business. Honestly, just from a very smart standpoint, we don’t want these assets to leave. If we don’t start building these relationships, the assets will leave. So, part of it is for us, a life planning piece that we really want to engage the next generation and we’re excited about that, and part of it is, honestly, just smart business management.

Hannah:                               Well, what I like about what you’re saying, Lisa, is that your ideal client is still going to stay the same, and this is just add-on service, if you would, almost.

Lisa:                                       Yeah, exactly. It just makes sense when we think ahead on the demographics. To go back to as Yusuf and Russell were talking about, you go back to Dick Wagner’s book, and he’s like, everybody starts this way. Now, the reality is that we can’t let go of the clients who brought us to the dance, but it’s time to pick up next generation along the way so that our younger advisors can be excited about the business and aren’t always just dealing with people who are literally 30, 40 and 50 years older than them.

Hannah:                               Andrew, do you have any thoughts on this, especially from an operational standpoint?

Andrew:                              No. I mean, I really liked Yusuf’s and Russell’s article, I think they brought up really good points with the millennials wanting to be seen and heard and want to feel valued, and the fact that we live in a space now where everything is digital and there’s no limit to how expressive you want to be online and there’s no limit to finding your niche and what you’re into, and I think that planners in the profession can definitely attest to those values or those niches, especially with all the stuff that’s happening around socially responsible investments and low-cost ETF index funds and that kind of thing to supplement those millennial wants and needs.

I also really liked the part about the financial policies. I think they called them compact decision rules. I think for millennials, especially these periodic policies make a lot more sense for them than overarching, long-range financial planning recommendations that are more suited for wealthier, more traditional older clients.

Hannah:                               Russell and Yusuf, you’ve been listening to and Lisa and Andrew’s portion, and as young planners yourself, what thoughts do have around the need for young planners to be aware and identify whether or not naturally drawn to, especially as it relates to their career?

Yusuf:                                   Yes. I think a lot of people, they’re attracted to financial planning because they like working with people, they like helping people and maybe they’re good at numbers and … I went to Virginia Tech, which is one of the top programs in the country, preparing people to sit for the CFP exam, but one of the things that I think even great education programs don’t do a very good job of is helping people identify what their roles are going to look like, and so when you graduate everybody’s looking for job but they’re not necessarily looking for a job that’s going to be a long-term thing. Trying to make partner track, obviously, for a lot of people that’s the idea, but if you don’t have much experience … Even internships really don’t do as much as we would like, but we don’t have a sense of what’s out there and who you want to be in the profession and you get that through experience. I think that having some flexibility and autonomy to figure that out is really important.

That’s one of the reasons why I joined … Or, actually, probably the main reason why I joined Yeske Buie’s residency program back in 2015 was because I wanted the opportunity to experience different aspects of the financial planning profession. I worked for 18 months before that and was getting pigeonholed into a certain thing that the firm wanted me to do and that wasn’t necessarily authentic to me and that was frustrating, so doing this residency program gave me the opportunity to explore different areas. Then, once I figured out what I wanted and I graduated from the program, I was able to start my own company because I knew what I wanted.

Russell:                                 I’ll add on just from a different angle. I think one of the critical things that a young advisor needs to do as they’re considering what kind of a firm or which firm they want to join, you’d better have your own personal investment philosophy ironed out. It’s not one of those things that you can just, “Okay, well, maybe we disagree on a couple of things here and there, but overall this is going to be fine,” you really need to know what your deal breakers are and then be able to match up with a firm that has the same approach because, obviously investments are not the only part of the financial planning engagement. In fact, it’s just one of five or six realms that we delve into pretty heavily, but it is the fuel that thrusts the financial plan forward, if you will. If you’re not clear on that and don’t see eye-to-eye on that with the firm that you’re joining or that you’re at, it’s going to lead to some problems.

Hannah:                               From an employee perspective or from a new planner’s perspective, how important is having that career path laid out at a firm, speaking to the people who are actually going to be hiring these new planners?

Yusuf:                                   Yeah. That’s my opinion that having a clear, structured, nuanced career path is one of, if not the most important thing that you can have as a firm when you’re looking to recruit new talent because if you can’t tell a young person where they can expect to be or where they should be if they’re performing well in a year, in three years, in five years, in 10 years, then, at some point, it’s going to become … There’s going to be time wasted and there’s going to be frustration because expectations won’t be aligned and that’ll lead to issues.

Hannah:                               Looking at the idea of employee retention, losing an employee is just incredibly costly, Yusuf, from your perspective, do you have a career path laid out in front of you?

Yusuf:                                   Yes, yes, all the way from entry-level planner to what someone would have to do to become a partner or a managing adviser at the firm.

Hannah:                               Your loyalty to your firm is going to increase dramatically because you have that laid out?

Yusuf:                                   Absolutely, because I know that if I do A, B and C, that’s going to lead to the role, and the career, and the function that I’m aiming for, that I’m dreaming about as a young planner. Speaking from experience, having that career ladder is what got me through, maybe a frustrating period or a difficult period where I wasn’t quite doing exactly what I wanted to be doing but knowing that if I just continued to chip away at it, eventually I will end up where I wanted to be.

Hannah:                               You were able to see proof of this from your firm as well? I mean, it’s measurable, you know if they’re lying to you or if it’s real.

Yusuf:                                   Right, and that’s the thing about having that agreement, the career ladder effectively serves as a contract of sorts between the firm and the employee. As the employee moves up the ladder, if they see that the response from the firm is in line with that, then it’s another signal of trust that continues to build as the relationship grows.

Hannah:                               Well, as we wrap up, are there any other thoughts that any of the four of you guys have about these articles or this conversation?

Lisa:                                       Well, Hannah, I just really appreciate the opportunity for us to be in this dialogue. Over the years, I’ve been a little frustrated that across generations we’re not having open dialogue about where planning is going for the profession in the future and what the career paths look like, and I’m very excited about what Yusuf and his firm are doing and excited for Russell. There’s lots of different opportunities and, hopefully that’s what’s going to have come out of this whole podcast is that there’s different paths, there’s a lot of exciting opportunities if you’re coming into the profession right now.

Hannah:                               Great. Well, thank you all for being here. We appreciate it and hope everybody enjoyed the conversation.

Yusuf:                                   Yeah, absolutely.

Andrew:                              Thank you.

Lisa:                                       Thanks, Hannah.

Russell:                                 Thanks for hosting.