Get ‘em in the door when they are young
Why do some veteran advisers offer planning sessions to anyone under 30 who is willing to walk through the door?
Younger people who distinguish themselves from the madding crowd as willing to plan at that early stage in their lives most likely will become asset-laden clients by their 40s.
And they will remember the earlier kindness, says Paul Sutherland, a CFP and the president and chief investment officer of Financial & Investment Management Group in Traverse City, Michigan.
“You are going to want them as clients when they get older,” says Sutherland, adding that that has been part of the DNA of his team since its beginning.
The problem is that before they reach their 40s as full-time clients, some young people may use more of an adviser’s time than they can afford based on their assets, says Marcio Silveira, a CFP and the founder of and a financial planner at Pavlov Financial Planning in Arlington, Virginia.
He markets his advisory services primarily to millennials.
“The demand is huge, [but] the problem is one of access. Many young people will not be getting in front of a financial adviser because they don’t have assets and they can’t accumulate very quickly,” Silveira says.
Any veteran adviser with the bandwidth to offer pro-bono planning advice to young people should jump in, he says.
But advisers who systematically cultivate such clients with an eye toward the future and want revenue in the meantime should set a fixed fee schedule, perhaps $100 or $200 a month for each client, Silveira says.
Of course, he expects some of his young and asset-scarce clients to become wealthier and eventually pay him much higher fees as a percentage of their portfolios, but Silveira can’t wait a decade or two for the accumulation to occur.
Marlo Stil, agrees that advisers must be careful not to overstretch themselves when young people come knocking at the door.
She is a wealth adviser with The Wealth Consulting Group in Rancho Mirage, California, which doesn’t have a huge younger population.
But when younger potential clients walk through the door, it becomes obvious quickly that their needs are great, Stil says.
“I don’t care what the robo-advisers do. There is nothing like having your own personal balance sheet and your own personal goals,” Stil says.
Advisers should help younger people out but when doing so charge a fixed fee, she says.
Miriam Rozen writes about the financial advisory industry and is a staff reporter for Law.com.
This story is part of a 30-30 series on strategies to boost your practice.