Outside voices and views for advisers

The rise of the young firm owner

The trend of young planners turning into firm owners is just beginning. Here is one planner's story.

Jun 30, 2014 @ 11:42 am

By Sophia Bera

xyplanning, generation x, financial planning, planner, fpa, next generation
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Members of the XY Planning Network (l-r): Derek Lawson, Alan Moore, Sophia Bera, Kate Holmes, Eric Roberge, Ben Wacek and Katie Brewer. (Michael Kitces)

As I walk into the room of the NexGen Gathering at Augustana College, I'm greeted with familiar faces. This is my fourth year attending this unique conference geared toward financial planners under age 36. I recognize about half of the 60 participants in the room. It feels familiar, yet fresh and vibrant.

Over the past few years, the conversations have been shifting.

When I first attended the Financial Planning Association's NexGen Gathering, I didn't know what to expect. I was 27 years old and working at a traditional fee-only registered investment adviser in Minnesota. I liked my job and enjoyed the people I worked with, but going to NexGen made me long for something more. The conversations in the room were centered on creating a career path. We were all trying to carve out our place within the structure of a bigger firm and we weren't sure how to do that. I knew I wanted to work with my own clients someday and I wasn't yet doing that. It was there that I realized my mission in life was to bring financial planning to Gen Y to empower my generation.

(Related: What is the FPA NexGen Gathering?)

The next year, I had taken a job at a startup in New York City so that I could start working with my own clients. I came to the NexGen gathering to reconnect with friends and was curious as to what people were most interested in discussing. I was finally working with younger clients across a range of income levels, many of whom were middle class. There was much more discussion around how technology was shaking up the traditional financial planning model, but the conversation had shifted from, “How do I find my place at a firm?” to “How do I buy an already established firm?” People were really curious about succession planning and how to structure business deals with their bosses so that they could have ownership in a firm.

My third year at NexGen, I had just quit my job at a start up to launch Gen Y Planning. My website was going live the next week and I wasn't sure if this idea of being a “financial planner for Millennials” was going to gain any traction. People couldn't believe that I left a full-time job to launch my own firm without any clients or any assets to manage. The topic that kept emerging was, “How do we help younger clients who don't have assets yet?” The overwhelming consensus was that these clients are “loss leaders” meaning that some firms were helping younger clients for free or in a way that wasn't profitable, in the hopes that someday it would be. But I didn't want to wait a decade to run a profitable business, so I took a virtual approach. Office spaces and staff are expensive, so without those things my business expenses were cut to bare bones. I also believed in charging clients a monthly subscription so they could pay for financial planning like they would pay for their cell phone or cable bill, but I didn't know if it would work.

Year Four at NexGen was a whole new ballgame. Suddenly, there were a dozen people in the room who were young firm owners. The conversation became about tools and technologies used to run our firms; others inquired about how we started our own firms because they wanted to do the same thing. (I even wrote a post on Kitces.com to show others how I launched my own RIA.) There were a handful of us that were founding members of the XY Planning Network, which is made up of fee-only financial planners serving Generation X and Gen Y clients by using a monthly retainer model. We were proof that our generation wanted financial advice and was willing to pay for it — we just had to change how we were charging for it. In addition, it was turning out to be a profitable business model and not a “loss leader” like many had predicted.

It seems like this trend of young planners turning into firm owners is just the beginning. After trying to find my place in an established firm, working at a start up, and having no interest in “buying” other advisers' clients, I took the plunge and launched Gen Y Planning. It is the best decision I've ever made.

Sophia Bera is a financial planner and for Millennials and founder of Gen Y Planning. She works virtually with clients in their 20s and 30s across the country.


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