Young advisers want a future, not handouts

Three changes would make the financial advice industry more nurturing and appealing for young professionals

Jul 26, 2015 @ 12:01 am

By Liz Skinner

Eric Roberge dedicated three years to helping an adviser develop a business he expected to take over one day. He quit, though, when the adviser offered him a handshake promise instead of a written succession plan that spelled out his future with the firm.

Amy Hubble wanted to help her peers, other millennials who earn strong salaries but don't have enough assets accumulated to meet traditional advisory firm minimums. She left her employer after eight years to create a firm that can help this group with their finances.

Elizabeth Clough repeatedly spoke to her boss at a small advisory firm about how she might reach the next level in her planning career. She quit after six years, feeling like she was being asked to meet more and different goals without ever actually advancing.

“She would say, "You need to do A, B and C and then we'll talk again.' Then once I did those, it became, "Now you need to do D, E and F,'” Ms. Clough said of her former employer. “I just felt like there was this moving target toward moving up.”

These young professionals, who participated with others in a round table of next-generation advisers hosted by InvestmentNews, all eventually found opportunities in the industry. Two created their own firms.

However, the challenges they describe here are common and go a long way to explaining why many young advisers abandon the business altogether.

With one-third of all financial advisers planning to retire in the next decade, according to Cerulli Associates Inc., the industry will need all of its young planners to stick around.


Three changes would make the financial advice industry more nurturing and appealing for young professionals, according to this group of advisers who gathered in Dallas last month to attend the Financial Planning Association's national NexGen conference. Ten advisers, all certified financial planners, spoke with InvestmentNews for 90 minutes before the start of their meeting.

First, the industry needs to be more progressive in offering opportunities for new planners to earn equity stakes. Second, business models need to support serving younger individuals and couples, a natural clientele for young planners. Finally, firms should offer a detailed career path so advisers can advance to the next level at their firm, or attain the skills necessary to take the next step at another firm.

“If there's open communication and a career path, then it will be a little bit easier to stay and understand that there is a method and there is a reason why you are going through the various levels,” said Rianka Dorsainvil, 28, a financial adviser with Financial Services Advisory.

Firms typically bring on a younger adviser to help energize the business and take on some of the older advisers' work so they can attract new, often bigger, clients, said Allen Kozel, 30, an associate financial planner at Stewardship Wealth.

Those older advisers, though, don't know what to do down the road when the younger adviser is “essentially running the place.” There's no framework for small- business owners to be able to create a succession plan, he said.

“They are so focused on the business and so focused on their clients that they don't really know how to make a transition” to bring in other owners, Mr. Kozel said. “They don't know where to start or how to approach younger advisers.”

Mr. Kozel, who is director of the FPA NexGen group in Houston, said he's now hosting regular happy hours that bring together chapter members and older FPA members, so the two groups can begin talking to one another.

“The goal is to at least facilitate discussion so they can understand what we're looking for, and we can see what they are looking for, and realize that we're really all on the same page,” he said. “But without having that conversation, there's a really big disconnect.”

Mr. Roberge, 35, solved the equity issue by starting his own advisory firm, Beyond Your Hammock.

Ms. Hubble, 30, also created her own firm, Radix Financial. She made sure its structure would allow her to offer financial advice to millennials as well as older investors.

Traditional business models that charge a fee based on a percentage of assets don't work for populations who haven't accumulated much of a portfolio yet, so most firms don't take on these clients. Yet people naturally like working with those who they can relate to, Ms. Hubble said.

“Unless you go out and start a firm that works directly with 20- and 30-year-olds, it's very hard in this profession to work with clients just like you,” Ms. Dorsainvil added.

But some firms see the future now and are working to incorporate younger clients, and next-generation planners are helping.

Ms. Clough, 36, who landed happily at Rembert Pendleton Jackson nearly four years ago, said she is able to serve younger clients by charging a flat fee for certain planning arrangements.

Matt Davis, 26, an associate adviser at FJY Financial, said for younger clients who don't fit the typical mold, his firm has established a salary requirement and “strict goals” on how to get them to a point where they fit with the firm's traditional fee schedule.

“We have found ways to make it work because we certainly recognize that they are the future client base,” Mr. Davis said.

Young advisers also want a defined career path that outlines the skills they'll need to move into more advanced roles, and how long the different steps along the way are likely to take.


“Our generation needs motivation, we need to be assured that there's something out there that we can reach, that there's a goal,” said Jennifer Calvi, 30, an associate financial planner at Quest Capital Management.

Andrew Sivertsen, 32, a partner at The Planning Center, said when he started with his firm he was shown a career track, which he knows is unusual in the industry. He attributes having that framework as a leading reason he has progressed so quickly in his career. Mr. Sivertsen became a partner 18 months ago.

He said, however, that new advisers can't expect to have their careers handed to them.

“Young planners need to take some ownership, too, and really say, "Hey, this is where I want my career to go,'” he said.

Interestingly, one of the greatest irritations young advisers have is shared by most advisers, regardless of age. That is, clients not understanding the differences between a financial adviser who offers comprehensive planning and a broker or insurance agent.

“I get fired up when I say to a prospect, "I'm a financial planner,' and they're like, "Yeah, so is my brother-in-law,' and they work at MetLife,” Ms. Hubble said.


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