Participants:
Julie Littlechild
Steve Wershing
Alan Moore
Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: What I quickly learned was that while Rick and I were on the same page, his team and I were not, and his team was really happy with where things were at. They weren’t very growth-oriented, and didn’t really appreciate a 23-year-old hothead coming in and telling them that they could do their jobs better, I come to find out. I was there for a whopping 10 months before moving onto my second job. I worked for a firm in Wisconsin, sort of the same scenario. Come in, you’ll be able to open your own firm one day and be able to take over. Again, just didn’t sit well. The fit just wasn’t there. So, just after my 25th birthday, I got called into the boss’s office six months into that job and told not to come back on Monday, and got fired. I was torn on what do I do? I had to look at it and go, well, at some point, you have to realize I’m the problem. The definition of insanity is doing the same thing over and over and expecting a different result. Julie Littlechild: Steve: Alan Moore: Steve: Alan Moore: Steve: Alan Moore: Steve: Alan Moore: Julie Littlechild: Alan Moore: Steve: Alan Moore: Julie Littlechild: Alan Moore: Steve: Alan Moore: We really do get at the core. If you’re a real financial planner, you’re getting at the core of what a client wants to do with their life, how they can live their great life, and then helping them achieve that dream. When a client comes to us, they really expose themselves. I always joke that they get financially naked in our office, and they show us how they spend their money. They show us their values. They tell us things that their partner or spouse or parents don’t know, and it’s not easy to leave that relationship, because you don’t want to go do that again. But it’s getting easier to do it, and to your point, and the whole purpose of your podcast, which I’m thrilled with, is that when a generic advisor down the street opens up and serves individuals, families, business owners, and women, they may not be attracted to that. But when a firm opens up down the street that specializes in dentists that are selling their practice in the next five years and your client is a dentist that’s selling their practice in the next five years, they’re going to talk to them, because they realize the power of expertise. I think that’s the big shift, that suddenly we’re going to wake up and realize has happened and we didn’t even see it happening. Julie Littlechild: Alan Moore: I quickly learned that I was working with the wrong types of clients, but I did have a couple of clients that if I could just replicate them 40 times, I would have retired a happy camper. So, I started looking at, what is similar about them? What is funny, especially given where I’ve ended up business wise is that they were all young professionals, typically in their 30s, that were starting their own small business, typically as a service provider. Doctors, lawyers, I had an orthodontist. They were all starting their own business, and I loved getting in there and talking about their personal financial planning, but also their business and talking about how to set up their books and picking a bookkeeping software and how to market their new business and all of that and really found a passion there. So, I pivoted into that space about a year into my business. Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: It sort of just took off. We underestimated the market size that was interested. So, as of this recording, we have about 350 advisors in our network, approaching three years old now. About halfway through that process, about a year in, I realized when we hit about 100 members, I got a call from a client and a call from a member in the same day, and I returned the call to the member and not to the client. That was the day I said, I’m no longer the best advisor for these clients. So, I ended up selling my practice and turning my focus to XY Planning Network full-time. Julie Littlechild: Alan Moore: We wanted to make it easier to start a firm, but we also wanted to establish the education and coaching to be able to bring financial planning to the next generation. The vast majority of fee-only advisors still base their firms on an assets under management model, which works really well if you’re serving people with assets, but what is 1% of zero, if they have no money or they have just debt? You can’t make any money on that business model, and people kept telling me when I launched a firm, no one will pay you for planning. You’ve got to wrap it into that AUM fee, kind of like how they told fee-only advisors, no one will ever pay you AUM. You have to do it in commissions 30 years ago. We just said, you know what? I don’t know. Young people pay for their lives monthly. Everything’s a monthly bill. Why wouldn’t they pay their advisor monthly? So, part of our platform is just providing that education to be able to serve younger clients. I’ll say that the most important piece, and the reason people stay in the network and they continue to pay our fee and leverage what we offer is that we give them a community of other advisors that don’t think they’re crazy. Our advisors are the ones that go to conferences in t-shirts, in jeans, and they talk about serving young people, and people look at them like they’re insane. They’re like, you can’t make any money. What is this monthly fee thing? We give them the group that doesn’t think they’re crazy when they want to roll out an e-course or they want to start a podcast. We have other people that have started podcasts. They can help, and it’s just such a collaborative community. There’s a few different components, but ultimately it really is, our mission is to bring financial planning to the next generation, and we’re leveraging the advisory practices to do that. Steve: Alan Moore: The service model really depends on who they’re serving, because if you tell me, Alan, I want to serve young professionals, I have to give you sort of this generic service model, but if you tell me, I want to serve families that have a child in high school and help them with their college planning, suddenly the service model gets a lot more clear, as does the marketing plan for how we’re going to go find those clients. We are very, very niche focused, that we want all of our advisors to have a niche so that they can design a firm built specifically for that client. But I will say, it’s comprehensive financial planning. It’s the same thing we always talk about, where it is basically anything that touches their money or their personal financial life, but it looks very different than traditional because we’re actually building firms to serve a specific client base instead of whoever lives within 10 miles of my office, which is how we’ve historically built firms. Steve: Alan Moore: Look at that target market and ask yourself, what can you be the best at? Maybe you’re the best at serving target executives. There’s one firm out there that their specialty is, he only works with bass fisherman that compete in bass fishing tournaments. What a random thing, but he’s a bass fisherman. He has a boat, and his prospect meetings are taking people out bass fishing. It’s brilliant, because he’s the guy for people that win, apparently, there are million-dollar purses in bass fishing tournaments. Who knew? That’s his passion, and those are the people he loves to connect with. If you try to force it, and you say, this collection of people over here have a lot of money, I bet ranchers are a good target market, because no one talks to ranchers. But you don’t know anything about ranching and you don’t really enjoy ranching, you’re going to be miserable. You’re not going to be happy. Just try to come up with, who’s that ideal client? Who do you just really love working with? Then, start to build the service model around them. Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: You don’t want to compete with Bud Light. You don’t need tens of millions of people drinking your beer or using your service to be successful. You need 40 to a hundred. You need 40 to 100 people that love you and think you’re amazing, and that you solve their problem in a unique way that no one else could. That’s how you become referable, because you suddenly solve a set of problems that they can identify. Instead of saying, hey, my financial planner’s great, you should go talk to them, they can say, hey, my financial planner works with people that have a child under the age of five or expecting and they’re specialists in the way that California’s disability programs work for new parents. They know everything. You’ve got to go talk to them. Steve: Alan Moore: Steve: Alan Moore: Julie Littlechild: Alan Moore: I think we’re shifting away from that, and younger people are willing to ask this question, or they’re willing to share that they have a financial planner, but they don’t like master generalists. They don’t want people that serve everyone. They want people that have built something just for them, something that they can embrace, that cult following that they just love to talk about and can explain. I really think that’s where the niche market comes in, is that they’re looking for something unique. They’re looking for something different. Again, for lack of a better analogy, they’re looking for that craft beer. There’s a reason the craft beer industry is booming among millennials, and it’s because it’s something that they can grab ahold of and just love. They can be the first one that got it or whatever, and I see that that will overtake financial planning as the millennials continue to grow up and get older and take on more and more of the assets and basically will be the primary client of the financial planning industry in another couple of decades. Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: Guess what? None of them bought it. None of them wanted this financial planning lite. They want something that is built for them, and if you think that they’re just going to be waiting around until Mommy and Daddy die and leave them money and then suddenly show up on your doorstep, you’re sadly mistaken. It’s so interesting to see these shifting trends in the advisory community, and what we’re talking about and what we’re actually doing. For a long time, we always talked about succession planning and no one ever actually did it. Now we’re talking about serving the next generation, and no one’s actually doing it. But we do have a group that’s doing it, and it’ll be very interesting to see over the next 10 or 15 years. Again, as those younger clients grow up, if they’re suddenly attracted to the older, expensive firms that wouldn’t work with them before, which I highly doubt. Or if they’re going to stay with their cult following advisor that is built specifically for them. I think we all know how that’s going to turn out. Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: Julie Littlechild: Alan Moore: Steve: Alan Moore: Julie Littlechild: Alan Moore: Julie Littlechild:
Welcome to another episode of Becoming Referable, the podcast that helps you be the kind of advisor people can’t stop talking about. I’m Julie Littlechild, and on this week’s show, Steve and I speak with Alan Moore. Alan is the cofounder of the XY Planning Network, but his actual title is Director of speeding Things Up, which you’ve got to love. Just by way of background, Alan cofounded the XY Planning Network with Michael Kitces, and they set out with a goal to create a network that supports and encourages financial advisors who they describe as forging a new path in the industry. They offer a turnkey solution for startup firms, but also work with existing practices who specifically want to get better at serving next-gen clients, but how they recommended you do that is really important, because as he’ll tell you, age is not a niche. We’ll talk to Alan about the role of niche in building a great business and we’ll talk to him about the unique needs of younger clients. With that, let’s get on with the show. We are here with Alan Moore. So excited to have you. Alan, I have to say, I wasn’t just excited to have you on the show because of the business that you run, although that’s obviously a big part of it. I love your story and your path here and some of the twists and turns it took. I’m hoping I can ask you a bit about that, but welcome. Thanks so much for being here.
Thanks so much for having me. I’m excited.
Maybe since I said there are twists and turns, maybe you can just start with a bit of an introduction to, where are you today? What does the business look like? And just a quick history on how you got here.
Yeah. I’ll start with the history real quick, because it definitely led me to the current state. I was lucky enough to get my degree in financial planning. Not a lot of folks can say that, just because they’re fairly new degree programs, but I got my undergraduate degree in family financial planning. Then, ended up staying for my Master’s degree because I was torn on if I wanted to be an academic or I wanted to be a practitioner. During grad school, I quickly learned that I did not want to be an academic, because there were too many politics, and I don’t manage politics well. I tend to be a very honest, just off-the-cuff type person and found out that doesn’t fit in well. I left to go for the dream job. I found Rick Kahler with Kahler Financial Group out in South Dakota. Phenomenal planner. One of the fathers of financial therapy and this blending of money and psychology, and went to work for him, and it was one of those scenarios of he’s in his mid-50s, I’m a young gun coming in, excited and over time I’ll take over the firm and be able to buy it out.
Very self-aware.
What is it that they say? If you happen to meet a jerk at some point during the day, then he’s probably a jerk. But if everybody you meet is a jerk, then you’re probably the jerk.
It’s probably me. I realized that I wanted something that wasn’t available, and what I wanted was control. I wanted ownership. I wanted to be able to do things my way. The financial planning career path is a 10- to 20-year path, from a paraplanner to associate advisor to lead advisor to relationship manager. Whatever that path is, if you’re even fortunate enough to have one laid out for you, it’s never two to three years long, and I have about a six-month tolerance for anything in my life. So, to be told 10 or 20 years from now, you’ll get equity in the firm, I promise. I’m not going to put that on paper and sign it, but I promise, one day. Just didn’t sit well with me, so I decided, you know what? I have two options. I’m 25 years old. I have no money. I have no clients. I’m living in Wisconsin, where I’ve never lived before. I’m originally from Georgia. I said, I can either go take another job as an associate advisor in an RIA making decent money, or I can start my own firm and see what happens. If the firm succeeds, great. If it fails, I’ll got get a job as associate advisor inside of an RIA making decent money. I’m like, well, why not? Let’s give it a shot.
Alan, can I diverge just for a second and ask you a question that has nothing to do whatever with referability?
Sure.
Mark Tibergien used to make the joke that most of the lone wolf kinds of practices are started by people who just really wanted to do it their way themselves and that everybody that they knew would agree that that’s the best way for them to do it. He said it way better and funnier than I did. Those two experiences, because I’ve had very similar experiences and probably like you, I’m tremendously headstrong and have no difficultly telling everybody what I think, what insights did you pick up from those two experiences about how to create change within a firm? Because it’s not just you as the upstart kid who wants to make a better model, but people who own firms have that same issue when they go off and they get inspired at a conference or by a unique idea, and they want to go make big changes. What insights do you walk away with from those experiences that may help those other people?
You have to be patient. It’s the one thing that I have learned over time. If we jump ahead, and now that I have a business partner, Michael Kitces, who he and I are not polar opposites, but we’re very different in terms of strengths. So, I’m a quick start. I’m somebody who can get something going. When I have an idea, I’m ready to go, and he’s more of a data gathering, sit back, analyze, be patient kind of guy. We balance each other out, and when I have learned is the power of waiting. I have learned the power of getting buy-in from everyone, because I’m just a bull in a china shop, which works if you’re by yourself. It doesn’t work if you need to get other people to buy in. If you want to go and you want to implement a new service model inside your firm or try a new marketing method, you can’t just say, I’m just going to do this. Even if you’re the owner. That’s the one other piece that I have learned is, just because you’re the owner doesn’t mean you get to do anything you want if you have employees, team members, staff, because you’ve got to get buy-in from them for them to help you. Otherwise, they’ll be a hindrance, and you won’t be able to succeed. I will say, the one thing I am learning in my old age, as I approach 30, going on thirty—
Don’t even start with me.
There is value in patience, but I will also add to that that being able to start is a strength. I would say it’s my primary strength. It’s the thing I bring to the table, and I have to surround myself with people that bring other strengths to the table. Sometimes, that is bringing in folks that have more empathy and the ability to connect with folks in a way that maybe I can’t. Or again, having Kitces that offsets my personality to slow things down, is huge, in order to actually get things done.
Right. So, there you are. You’ve learned some lessons, and I think you’re now thinking about the third iteration of your career. What happened?
Again, I just sort of said, well, if I take a job, I’m living my plan B. Again, at some point, I have to realize that maybe I’m the problem. Maybe no one’s going to actually give me what I want. I said, well, why don’t I just start my own firm? We’ll see how it goes. Give myself a year or two, and if it goes well, great. If not, again, I’ll go take a job. So, I set out and started my own RIA. I did it very solo. Researched all the CRMs, all the compliance officers. I actually wrote my own ADV. For anyone who’s thinking about starting a firm, do not do that.
Been there, learned.
It took me, let’s see, I got fired in April. I made the decision that I wanted to start my own firm in May, and by August, I had an RIA up and running there in Wisconsin and just hit the ground running to try to see if I could build up my own firm.
I think what’s interesting, though, and this is part of what I loved, I read this somewhere that you got to the point, which I think you’re describing, and maybe this is later on as well. You’re helping to realize their dreams, but if you’re not being true to your own, if you’re not being true to that personal passion now, in my respects, you probably tried a bunch of different things, but you were lucky because you did it when you were starting out. Whereas, I know I look around the industry and I just see so many people who probably should be trying something different because they’ve got that passion for it, but they’re more afraid of taking that step. Do you see that as well?
I do. We get hung up on, but this is the way it’s always been done. My clients aren’t complaining, so why should I change? And change is hard. It is tough to change sometimes, but you’ve got to. If you’re not growing, you’re dying, and this is an easy business to get very comfortable in. We’re very fortunate to have a business where we have just ridiculously high client retention rates, in the 98% range, which is just crazy. No industry gets to claim that. So, we can get comfortable, and my fear is that we’re too comfortable and that things are sort of stagnated to the point that I think we’re going to experience 10, 15 years of change in a matter of a year or two, because technology is changing. The way that we market is changing. The was that businesses are built is changing. It’s amazing to see everything that’s bubbling up, and I think when it hits, it’s going to hit really hard and really fast, and I am very concerned that the advisors that feel very comfortable now because things have been fine for the last decade are going to wake up one day and just go, oh, crap. I really wish I had listened to all those podcast episodes and the people that sounded crazy at the time, but now it’s happened.
Can we talk about that for just a minute? I think it brings up a really interesting thing to explore. I heard someone speaking recently that was talking about passive loyalty versus active loyalty and that one possible reason for the retention rates that all the advisors have is two things. One is the lack of differentiation between different firms, and second, just the hassle and the friction of transferring accounts. Once a significantly different alternative pops up that’s really attractive to a bunch of people, those obstacles won’t look that big, and it could trigger the kind of cascade that you’re talking about. Is there any way that we can try to get a sense of, and Julie, you might have some good input here since you’re the researcher. Is there any way that we can sort of feel that out and get an idea of whether or not that’s a real risk? Or are we just talking amongst ourselves until something happens?
I think we have a couple of different firms that you’re talking about. If you’re a 60-year-old advisor with a client base that’s in their 60s and 70s and you’ve been working with them for two decades, you’re probably fine. Your business can turn into the world’s greatest annuity. You can just sort of work 10 hours, 15 hours a week part-time and sort of coast into the sunset. But that’s not really who we’re talking to. Those business owners, they’re going to do what they’re doing. If you are trying to build a real business here and you are banking on barriers of leaving such as, account opening forms are just a real pain in the butt to fill out, and doing all the transfers and all that. That stuff’s getting real easy. Technology is making the ability to switch advisors much more streamlined and much easier. It’s becoming easier to find advisors on the Internet. You’re no longer tied to just the guy that lives down the road and so you went to him because your friend said he was good and he sold you some stuff. It’s becoming easier to switch advisors. Now, we still have this amazing component of our business, and this is what makes financial planning so great, and it’s the reason I’m in this field is that, we truly help clients live great lives. We don’t just do some retirement planning and some investment planning and some taxes.
When you started your RIA, initially, did you have that concept of a clear target in mind? Or did that evolve over time?
I did not. I will freely admit, I failed in every way to develop a benchmark, and my About Us on my website said I serve individuals and families. So, when I joke about that, I am joking about myself. Part of it was just, I was not financially ready to start a firm. I had almost no money in the bank. I think I had $8,000, and all of that went into the business, which please, for anybody out there, do not take that path. Have a couple of years of savings before you get started, because what it forced me to do or what I felt forced to do was accept any client that came in the door. But I learned very quickly that I was getting clients that I did not enjoy working with. Folks that would come in say, I just want you to manage my investments, which as a comprehensive financial planner was not a fun thing for me to do. I hated talking about bond yield curves. I learned it in CFP school, but I don’t want to talk bond matters ever again.
Okay. Then, obviously, the story continued, because you got to the point where you moved away from your business in order to help others focus on younger clients and work with younger advisors. Can you talk a bit about that pivot?
Sure, yeah. I’m a sucker for shiny objects. I am very ADD, very entrepreneurial, and the shiny object that I saw—it took about a year to see this, but after I started my firm I was very involved in NAPFA Genesis and FPA next-gen. I had started getting on the speaking circuit just a little bit, mainly because I didn’t have any money to go to conferences and I found out if you spoke, they would pay for you to go to the conference, which was cool. I started getting calls from young planners, and they were saying, Alan, how did you do compliance? How do you get your clients? How did you select your CRM? I had a few people that I called when I started my firm, and they always picked up the phone, and I was so grateful for that. So, I just said, if somebody’s going to call me, I’m going to pick up the phone. After a year, I looked back and I had had 100 phone calls. One hundred hour-long phone calls in the course of a year with 100 different people that were asking this question around, how do you start a firm? I had been working with Michael Kitces on some various projects. We met on Twitter. We’ve been Internet dating for about seven years now.
That’s nice for you two.
If you need a business partner, Twitter’s where to go. I sent him an email in December of 2013. I’d had my business about a year and a half at that point, and said, hey, man. I’m getting a lot of questions. What if we package something together and make this a business? We’ll help a few people. I’m betting 15 or 20 people would pay for this, and I call it a side hustle, to be sort of a side gig. It’ll be fun. Something new, scratch my entrepreneurial itch. He said, hey, you know what? I’m getting a lot of emails and phone calls too from people asking the same question. So, let’s do it. So, that was in December, and in April of 2014, we launched the XY Planning Network, which was built to be a platform to help advisors serve Gen X and Gen Y clients using a monthly subscription fee model instead of an asset-based model, which was the way that I ran my firm.
That’s very cool. Tell us what you’re helping advisors do. You talked about setting up a firm, but maybe just give us the overview of the network.
Yeah. It’s a couple of different pieces. One is just demystifying the how to start a business process. Compliance is this big, scary unknown, and really, compliance in the RIA space is not that hard, but it has been, especially if you’ve ever been broker dealer world or had to deal with FINRA. It’s just terrifying. We just wanted to make it easier. We handle their compliance and their initial ADV registration and that sort of thing, which is a huge value add for advisors, because they just don’t know how to do it. You generally file one ADV in your lifetime to actually start an RIA. How to select technology. There are dozens of CRMs and planning softwares and scheduling softwares, and all of that. You can spend months, and I did this, and many of our founding members spent months analyzing all these different softwares. Instead of everyone doing that over and over and over, we just provide that platform of technology that we all centered on and selected, and just make it available to them as part of the membership.
Alan, let’s dig into that. Let’s dig into what those firms are providing those XY gen clients. Tell me a little bit about the niche, the experience, that you’re helping firms create for that generation.
I like to joke that Gen X and Gen Y is not a niche. It’s a 150 million Americans. We’re talking about half the population, but because the advisory world has focused so heavily on the retirement community and retiring baby boomers, that we were actually able to carve out a niche of half the population, which is awesome. We tell our advisors, you can’t have Gen X and Gen Y. We have that. You go pick a more specific niche. We have an advisor that specializes in working with emergency room physicians that are graduating residency. He knows all of the hospitals in the area around that medical school, and you know what? He has actually helped the last dozen ER doctors that those hospitals have hired, negotiate their contracts. He knows all the contracts for the last 12 hires they’ve made. So, he can help the 13th person do it, so they become his client. We have others that specialize in working with women that are in pre-IPO technology companies that are executives. They get really specific.
Can you step us through the process of helping- I think your comment or your description of how you approach that is really insightful, and just to give you a preview of what I’m working on, you’re talking not so much about niches, but about progressively more narrow target markets, where the target market is the people you’re trying to attract, and the niche is the experience that you’re creating to attract a portion of that market, which is why you can have a target market that’s tremendously huge like the X and Y generation, but you’re creating a niche that will only attract a small portion of that. Walk us through the process of refining that and narrowing it down and designing. If there’s is a financial advisor who’s listening who says, yeah, I’m too diffuse, and I’m not focused enough on a particular group of clients, is there a process they can go through that you can just overview with the steps that they would go through to design it specifically for the kind of client they want to work with?
Yeah, absolutely. It’s a great question. For advisors that either have a business or have been working with a very diverse range of clients, my recommendation is just sit there and close your eyes and just imagine the perfect client walks in the door. This is the client that when they call you, you’re excited to answer the phone. You’re excited to prep for their meeting. You’re excited whenever they come into your office or meet with you. Think about what it is about that person that you like. What is it about their problems that you enjoy helping them solve? Is it certain professional pieces, like you just love doing salary negotiations with a hospital? Maybe so. Maybe it’s a certain personality, more psychometric traits or a life stage or whatnot. If we were just to sit down and come up with niche markets, we’d come up with millions of them. You can be so specific and so different, but who do you just love working with?
I’m so happy that somebody is finally saying age and gender are not niche markets. They are not. I love it. When you think, then, you’ve built this extraordinary experience. We’re talking about becoming referable, obviously. We believe this is a big part of it, but how do you see this, then, playing into that notion of referability and growth?
Have you never had anyone come up to you and go, listen, guys. I just had the most amazing beer. It was a Bud Light. You should totally go to the store and get a Bud Light. No one says that. I live in Montana, where we have tons of craft breweries, and people come up and go, hey. I just tried this amazing Bayern Hefeweizen. You have got to go try it, and I will go get that beer.
We’ve got to get that in the show notes, right there, first of all.
I could spell Hefeweizen for you. I think it’s German. What I like in this shift into niche marketing and referability, very much to the beer marketplace. It’s just because I enjoy craft beer. We’ll always has these generic Bud Lights, Coors Lights, that serve the masses, but it’s boring. No one really enjoys it. They just get it because it’s got a big brand name and they spend tens of millions of dollars on marketing. What gets people really excited are these unique flavors, the unique beers that these local breweries are putting out that almost have a cult following. Those are the ones where you actually want to get a group together and go and try the new beer that they’re putting out. When I look at financial planning firms, you want to be a craft beer.
I love the idea of developing a cult following, and I’ll probably steal that and build something around it. That’s brilliant.
Please do.
Since Julie started bringing up the idea of referability, once you’ve done that, once you’ve created the microbrew that you’re going to deliver to your unique audience, do you find that younger clients refer differently? Or that their approach to it is different than other generations?
I do actually think younger clients are more willing to talk about their financial planner. I have no research to back this, so Julie may be able to correct me on this.
I do, and you’re right.
Just anecdotally, I was sitting at a restaurant the other day, at the bar with my fiancée, and these two guys are sitting next to us. They’re total ski bum meatheads, and they’re talking about their 401Ks, about how to select a 401K. Maybe two days later, we’re at the barber shop and one girl is talking about that she’s the executor of her parents’ estate and isn’t quite sure what to do there and where can she go to learn more? I start to hear more conversations among younger generations that Depression era baby boomers and their parents just didn’t really embrace. I do think they’re more willing to say, I have a financial planner. I think historically, it was sort of taboo, like, oh, you must be rich. It’s like whenever you had a maid. No one knows you have a maid or a cleaning lady come in, because heaven forbid people think you’re pretentious. That’s sort of how financial planning has been.
It’s interesting. It’s hard to get a lot of data, depending on where you cut the age off, and the ages change. For years, it seems we talked about younger clients, and they were always under 30 or under 40, but now you’re under 50, and you’re demonstrating those same characteristics that we’ve been talking about. Who knew people would age and they wouldn’t suddenly become their parents just because they passed over 40 or something. The next generation, I think the oldest one’s 22 now. They’re starting to think about these things.
Yeah. It depends on which generation we look at. X is in their, I guess, early 50s down to their mid-30s. Y is mid-30s down into their 20s. Kids that are in college right now may not actually be Gen Y. They may be whatever we’re going to call the next one. No one seems to have picked yet. I’ve heard post-millennial, which as a self-serving and self-absorbed millennial, I love because they named it after me.
There you go. Well, Gen Z. We hear about Gen Z.
It could be Gen Z, yep. The edge generation. There’s a few different ones I’ve heard, but the one caution that I will give, just looping back to whether or not we’re going to serve the next generation is that firms have approached this all wrong, I think. The way that we’ve approached it has, I guess, made us think that there’s no marketplace among young people, they’ll never pay for financial planning. It was because we rolled out this sort of Happy Meal model of financial planning. We said, you’re so cute and little. You don’t really need a big burger and a big fry. Let’s give you a little burger, little fry. We’ll throw in a toy and make it kid-friendly. That’s what we’ve done with financial planning. We’ve said, oh, you’re not big enough for my big, expensive financial planning service. We’ll trim it down. You don’t need the high-level tax plan or your social security, and we’ll throw in a robo advisor and make it millennial-friendly. They’ll all buy it.
Yeah. We’re just hitting time, but just quickly, if you’re an advisor listening to this, you’ve suggested there’s obviously some error in the way that a lot of folks have been approaching this. What’s that one next step or thought that you think advisors should be having if they genuinely want to serve this niche well?
Yeah, and I would say again, the younger generation is not a niche. Let’s find something more specific. Find your calling. Find what gets you out of bed in the morning, that group of people you’re so passionate about that you would serve them for free if you could, but you don’t have to. Who are you just so excited to serve? Start to build the service model for them. Don’t worry about the fact that you have existing clients. They don’t go to your website anyway to find out you changed your niche. If you have to keep serving the folks that you’ve been serving, that’s fine, but be willing to put a stake in the ground and say, these are the people that I’m the best advisor for, and serve them well. The truth is, I bet what you’ll find, and obviously, you guys are more knowledgeable about this than I am, but you don’t even have to ask for the referral. At what point you’re the person for them, they’re going to tell everyone they know that’s an ideal fit for you because you have become so referable because it’s so specific. It’s hard to refer people to a generalist. It’s very easy to refer people to a specialist. You’ve got to figure out, what are you going to be the specialist at? And be willing to go with it.
Yeah, thank you for that. Just quickly, what’s your next bright, shiny thing? And where can people find you?
Kitces and I have dove off the deep end into tech developments. We got very frustrated with the fact that—
Obviously.
Yeah, let me tell you. For any listeners that are out there, this is a shiny object you should ignore at all costs. Do not do tech development.
Let’s talk about time sucks.
Everybody warned me, and I didn’t listen to them. Time and money. It’s a black hole of feature updates. We’re in the process, and by the time this goes live, we may have already launched. We’re just a couple weeks away from launching Advice Pay, which is a payment processer for financial advisors that does one-time and monthly subscription billing using ACH and credit cards in a compliant manner, which no one has ever built before. We have stepped off into it. We have a network of advisors that need it, but we’re also seeing, the trends in the industry are moving towards retainers and flat fees and away from just asset-based pricing, but there’s no easy way to actually get paid, which I think is holding a lot of advisory firms back from offering some of these services. So, we wanted to streamline that. That’s the next shiny object, along with, completely honestly, learning how to scale a business. Never had a business with 12 team members until today. So, learning how to run a real business instead of one that’s just myself is an ongoing challenge. Those are the two pieces that are facing me over the next 12 months.
Well, that is just awesome. Thank you so much for your time. Really appreciate you being here. Loved chatting with you, and we’ll make sure that we’ve got all those links in the show notes. So, thanks again.
Sounds great. Thanks again for having me on.
Hi. It’s Julie again. It was great to have you with us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes. It really does help. You can get all the links, show notes, and other tidbits from these episodes at BecomingReferable.com. You can also there get our free report, Three Referral Myths That Limit Your Growth, and connect with our blogs and some other resources. Thanks so much for joining us.