Advisors Criticize Peer For Saying Millennials, Gen Xers Don’t Need Advisors

As many of you know, I’m a proud member of the XY Planning Network, a group of around 150 financial advisors who predominantly serve clients born after 1960 or so.  I want to share with you a short article written by the founders of the Network, Alan Moore and Michael Kitces.

This was written in response to another advisor’s article, in which she concluded that millennials and Gen Xers don’t really need financial advice.  The narrow-mindedness of this original article is exactly what True Life Financial Planning was founded to counteract.  An industry of aging advisors with aging clients has started to pigeon-hole the rest of us into “investment management” and “retirement planner” roles that are only a fraction of what a true financial planner provides to clients.

I welcome your comments, as well as any questions you may have about either article.  You’ll find the beginning of Alan and Michael’s article below, as well as a link to the full text over at Financial Advisor magazine.

 

A recent article published on Financial Advisor’s website concluded that millennials, as well as Gen Xers, simply don’t need an advisor because they aren’t going to get any value out of working with one.

Melody Juge, the self-acknowledged  baby-boomer-centric advisor interviewed for the article, Millennials, Advisors Don’t Need Each Other, Planner Says, says: “Why do you want to have a 20- or 30-something man or woman who is full of life, creativity and forward thinking be focused on the end of their life? In most cases, savings should just be automated and out of mind.”

Yet what this statement really illustrates is not how young clients don’t need financial planning, but instead how the very label “financial planning” is being distorted. It’s being turned into a euphemism for investment management and retirement planning by a retirement-centric industry, as though accumulating a giant portfolio for retirement is the only financial problem anyone in our country ever faces.

Source: Advisors Criticize Peer For Saying Millennials, Gen Xers Don’t Need Advisors

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Advisors Criticize Peer For Saying Millennials, Gen Xers Don’t Need Advisors

The Tip of the Iceberg: Beginning to See what ‘Comprehensive’ should Really Mean

In September, I attended an amazing conference of financial planners and advisers from all over the U.S. who think just like we do about planning.  I took a lot of great lessons from that time, many of which I’ll be sharing with you over the coming weeks.  One conversation, however, was so impactful on me that I immediately came home and put together a quick video on the topic.

This “semi-short” (12 minutes) and “semi-technical” (graphs, but no deep calculations or theory) video is here to help you change how you think about your financial adviser.  As I’ve shared with many of you, one of the areas in which I’ve struggled with True Life Financial Planning (TLFP) is helping new clients understand exactly what it is that they’re getting in exchange for their monthly retainer.  I see this problem as having two parts.

  1. As I’ve stated elsewhere, we’ve been suckered into believing that conversations with our financial advisers are supposed to be about money.  Most of the new clients that I work with want to start by showing me an investment statement, insurance policy or the BBB* plan that someone put together for them years ago.  Financial planning is about life.  It’s about helping you achieve the life you’ve been called to life, your True Life.  Sure, we need to talk about money at some point in the process.  Money is the conduit by which our internal dreams and desires are manifested in the real world.  Doesn’t it make sense to sort out what those internal messages really are before we begin construction?
  2. Once we complete the initial life planning process, each client’s relationship with TLFP can take a different form.  For some clients I’m a sounding board and for new ideas about how to earn more income.  For others, I spend time researching the money aspects of their current “biggest financial decision ever.”  For many, I’m a coach or (shudder) accountability partner to help encourage them when the going gets tough.  I even spend time with clients’ other advisors (tax, legal, etc…) to work through how various aspects of their work fit into the overall plan.  Once can begin to see why it’s tough to give a short answer to the question of, “What do I get?”

The conversation in this video begins to address these two issues through a simple example.  An example client is presented who earns $40,000 per year, receives 3% raises annually, saves 5% of income, earns 8% on those savings and does all of this over a 40 year career.  The initial question I’d like to ask you is this:  “If this client walks into a typical financial adviser’s office for help with having a bit more in the retirement bucket at the end of 40 years, where will that adviser usually focus?”  I don’t know about you, but my experience has been that the adviser will start by attacking the 8% investment return.  If she doesn’t stop there, she may recommend that the client consider working a few more years.

Why anyone who stops there should ever be allowed to describe herself as providing “comprehensive” financial planning is a mystery to me.  In the video, you’ll learn see just how impactful (or not) that possible increase in the investment return might be, as well as some other levers that can be pulled for the client’s benefit.  If you’re not working with an adviser who at least asks about these things, you might consider looking for one.  I suggest you start with the XY Planning Network directory.

Finally, I’d like to address something that I left out of this video.  I stopped short of delivering an important part of the message that was originally shared with me.  Why don’t most financial advisers talk about all of these things?  The line of thinking that was presented at the conference was that it comes from the very way my industry is constructed.  Most advisers don’t talk about helping clients increase their income or find work that they value so much they’d never dream of leaving it because there’s no product that can be sold in relation to that advice.  In fact, the only lever that you can pull in this example that’s tied to a product sale is the one that most advisers go after immediately: the investmet return.

I’m going to go one step further here and add my own opinion about why that approach is so popular.  American consumers have been so well marketed to for generations that we have come to believe a very simple misconception: Whatever problem I have, there’s something that I can buy to fix it.  It comes as no surprise then that something along the lines of, “Just buy THIS investment mix, and your problem will be solved,” is such an easy pill to swallow.  The other actions that you can take to enhance your life take work. 

Find the right financial adviser so you don’t have to face that work alone.

*BBB Plan: Big, Black Binder Plan.  Typically something that was prepared for a client a number of years ago, contains some form of “implementation checklist” that hasn’t been reviewed or acted upon since 6 months after it was prepared.

A very special thank you to Joshua Sheats of the Radical Personal Finance podcast.  Joshua shared this message with me and 150 of my closest friends at the 2015 XY Planning Network Conference in Charlotte.  If you haven’t already, get over to The Radical Personal Finance Homepage or find him on iTunes, Stitcher or your favorite podcast provider.  Joshua is working hard to help fix our industry, and I have no doubt you’ll benefit immensely from his knowledge.  I know I have.  Finally, if you DO value his work, I strongly urge you to support Joshua by contributing to his show.  You can do so in ANY monthly amount, and he deserves every penny.

The Tip of the Iceberg: Beginning to See what ‘Comprehensive’ should Really Mean

True Life Financial Planning as a Case Study

When I work with clients through TLFP, I walk them through a process known as “financial life planning.”  I’ll save the history lesson about the approach for another time, but it should suffice to point out that it’s an approach that is very much focused on helping clients discover what a meaningfully significant life would look like for them, then removing the obstacles that stand in the way.  TLFP is very much a product of my own financial life planning work, and I’d like to share with you how I arrived here, as a framework for helping you think about what your life plan might look like.

My work with clients starts with three deceptively simple questions, followed by exercises designed to hone in on what really drives them in life.  What’s been buried down in the core of their heart, constantly pulling at them (sometimes despite their best efforts to squelch it in favor of a life more “acceptable” or “normal”).  Going through these exercises myself galvanized a few things that I already knew about and uncovered a few I’d completely forgotten.

I’ve been called to be a financial planner for over 15 years.  It’s a call that I tried to ignore for the first 5 years of my career.  Spiritually, I have a need to feel that I am serving others in my work; that both my clients are not just better off because we met, but that they’ve received no less than the full benefit that I am empowered to bestow upon them.  I want to serve more than just a small subset of the fascinating people that I meet.  At the same time, I have a deep longing for the sea, and a strong desire to share that love with my children.  I love being their soccer coach, and one of the dads who can show up to help out at school.

As I was deciding the next chapter of my life, I intentionally built my practice around the life that I want to live, instead of the other way around.  TLFP is a virtual financial planning practice.  Not only can I serve clients all over the world, I can do so from wherever I have an internet connection.  In a more traditional setting, I’d realistically only be able to serve clients in Dallas.  I’d be tied to the brick-and-mortar office, both in the sense of geography and time.

I work with clients on a monthly retainer, instead of the traditional method of only focusing on a percentage of assets I’m managing.  Shifting that compensation paradigm has allowed me to work with clients that other advisors could never take on.  If your livelihood comes from a percentage of the assets you put into the stock market, how can you afford to help clients who invest their money into their own business or their real estate?  How can you afford to help younger clients who have excellent cash flow, but who haven’t had time to build a sizable nest egg?

Most importantly, how can I consider my work to be the best it could be if I’m only looking at the “math and money” portion of a client’s financial life.  Money exists to empower lifestyle.  The life HAS to come first.  Nowhere else have I found this to be more clearly expressed than in this excerpt from George Kinder’s Life Planning for You:

“We have been conditioned to think that a financial adviser’s office is all about money.  This is a tragic mistake.  Human lives are at stake… Financial planning is not about money.  The human life comes first. Let’s find out… what the life is that is meant to be lived.  Then, and only then, can we apply the financial architecture to make it happen.”

It’s entirely possible to live the life that you’re called to, and probably much sooner than you think.  I’m living proof.

True Life Financial Planning as a Case Study

Reading List for the DIY-Oriented

From time to time, one of the conversations that I enjoy having starts off something like this:

Highly Intelligent Person:  You know, I can find everything I need to know about <insert financial planning topic here, usually investments> online.  Why would anyone ever hire a financial adviser?

This is about where a typical adviser begins defending her worth or running down the list of services that he provides.  The truth is simple.  Absolutely everything you need to know about every topic related to financial planning is available on the internet.  You really can do all of it yourself.  While we’re on the subject, every “secret” to nutrition and physical fitness is on the Web, too.  So why do we still have an obesity problem in the U.S.?

For great financial advisers, only a portion of their job involves education.  For those of you who have the grit and drive to turn that education into success, I provide the following reading list:

On Financial Planning

Life Planning For You by George Kinder
George Kinder is the father of the financial life planning movement, and has been introducing clients and advisers to a better way to think about planning since the 1980s.  This work, subtitled “How to Design & Deliver the Life of Your Dreams,” provides just that.  It’s a do-it-yourselfer’s guide to the financial life planning process that I walk each of my own clients through.  It also includes a guide to finding a great financial adviser you can trust, should you change your mind about going it alone.

Values-Based Financial Planning by Bill Bachrach
Bill Bachrach has provided another excellent step-by-step guide for DIY planners.  He walks you through identifying your values, setting your goals, bench-marking your current situation, then creating what he calls a Financial Road Map®.  It also includes a section on educating yourself, or finding a trusted adviser to help, with regards to implementing your plan.

Financial Peace by Dave Ramsey
Dave catches a lot of flack from financial advisers, but the truth is, no one has had more impact on eradicating debt and instilling basic personal financial principles in the United States.  If you find yourself just starting out, or behind the eight ball with regard to debt, Financial Peace is an excellent place to start!

On Investing

Simple Wealth, Inevitable Wealth by Nick Murray
Nick Murray is well known inside the financial planning community as an author, speaker and consultant.  It’s a shame that his only (to my knowledge) book that isn’t aimed at advisers doesn’t get more attention.  In Simple Wealth, he lays out just what’s wrong with the way that many investors (and their advisers) think about investing, and provides a simple, elegant framework for long-term success.

On Taxes

How to Pay Zero Taxes by Jeff A. Schnepper
If you had told me that I’d be stifling laughter while reading a book on income taxes, I never would have believed you.  While Jeff’s book looks like a text book, his initial introduction and brief history of the tax system in the United States had me chuckling.  He then goes on to provide just about every loophole imaginable.

For Business Owners

The E-Myth Revisited by Michael E. Gerber
As a business owner myself, this stands very near the top of my list of favorites.  In his 1995 business classic, Gerber lays out the obstacles that stand in the way of every small business owner at each stage of their business’ life.  The picture he paints of the three forces that are constantly vying for every solo entrepreneur’s attention changed the way I think about work.  When I have friends and clients who start businesses, I try to get them a copy of this one.

For Financial Advisers

While the above books are titles that every adviser should read (multiple times, with a highlighter), they were each written specifically with the end client in mind.  The following books are written FOR advisers.

The Excellent Investment Adviser by Nick Murray

What Simple Wealth, Inevitable Wealth is to clients, this book is to advisers.  Me. Murray expands on his investing message to provide talking points that advisers can use with clients to help u do some of the brainwashing they have been programmed with.

Lighting the Torch by George Kinder

Lighting the Torch is George’s term for helping clients find that dream that’s burning inside of them and nursing it into a full-blown bonfire.  This book lays out the financial life planning process from a practitioner’s point of view.

Reading List for the DIY-Oriented

Welcome!

Welcome to the True Life Army!  If you’ve made it this far, you probably know that I’m Tony Pampel, the founder of True Life Financial Planning.  True Life is a firm that helps clients with all aspects of their financial lives regardless of where they live, what they do, or how they choose to invest.

The concept of the True Life Army comes from the driving vision behind why I started my firm.  When I finish my career, I want to have built an army of people who can look at something in their life – be it some prized possession, a relationship or an unforgettable experience – and say that they never would have had it without my help.

This online version of the True Life Army, though, is designed as a repository for free information and opinions available to all.  It is my hope that you’ll find a blog post, video or other content that speaks to you.  If you find just one piece that makes you better than you were before you saw it, then I’m happy.

Be forewarned!  I am not a blogger, podcaster, actor or poet.  The videos that you see on the True Life Army are unscripted, and many don’t even go through any form of post-production.  I hope that my earnest desire to bring benefit to you and positive change to the financial planning industry will earn me a bit of forgiveness for the technical quality of my content.

Welcome!