Book your place at the CISI Financial Planning Conference 2017
Sophia Bera, founder of Gen Y Planning, confesses to feeling “a little nervous” ahead of her talk at the upcoming CISI Financial Planning Conference.
She’ll be sharing an inside look at how she has run her firm since its inception in May 2013. “While I’ve spoken on this topic quite a bit,” she explains, “I want to revamp quite a few things to make it even more relevant to the audience.”
One to watch Featured in
InvestmentNews’ ‘Top 40 under 40’ project, which aims to reveal the tremendous – and often unrecognised – young talent in the financial planning sector, and named as one to watch on
Financial Adviser Magazine’s top ten list, Sophia has built a six-figure online business in the space of four years using only her laptop.
She hopes that by giving conference delegates a behind-the-scenes glimpse of Gen Y Planning’s methods, they will be inspired to attract or retain a younger client base.
“Traditional financial planning wasn’t attracting young clients,” says Sophia. “By having high asset minimums, planners weren’t able to work with millennials in a way that was also profitable.”
Figures from the ‘
Financial adviser fees’ report by news outlet
AdvisoryHQ find that the average US financial adviser fees for 2017 for assets up to $500,000 are: $5,250, or 1.05% as a percentage of the assets being managed; or a fixed fee of $7,500 for assets up to $499,000. The average hourly rate is $200 an hour and the average retainer, depending on location, is $6,000–$11,000 a year.
“I decided it was our problem as financial planners, as opposed to blaming young clients for not having enough money,” she says, “and I was determined to solve it.”
So she changed her pricing structure, charging an upfront planning fee followed by a monthly retainer. Her fees start at $1,500, followed by a monthly retainer that starts at $149 a month. “I thought: ‘We pay for our lives monthly, why wouldn’t we pay for a financial planner monthly?’”
Taking on technologyGen Y Planning is a location-independent business operated entirely from Sophia’s laptop. In the US, this trend for tech-savvy financial advisers, or ‘eAdvisers’, is growing – these advisers now make up 40% of the adviser population, according to the
Fidelity 2016 eAdviser study, published every two years, which is an increase of 10% in two years.
While these eAdvisers only make up two-fifths of the adviser population, they outperform their peers. Their assets under management (AUM) are 42% higher and they have 35% more AUM per client than their traditional counterparts. eAdvisers also have more $1m-plus clients and receive 24% higher compensation.
Sophia attributes the virtual nature of her practice as a reason Gen Y Planning quickly became profitable, so embracing technology is something that Sophia, unsurprisingly, advocates, but it isn’t the be-all and end-all. “If you want to work with younger clients you might need a brand new website, new service model or have an entirely different focus,” she explains.
“I talk to my clients about growing their careers, credit card rewards, maximising their company benefits, setting up a travel savings account or paying off their student debt. These are outside the scope of what traditional financial planners talk about with their clients.
“In addition, I think that the AUM-only model doesn’t work as well for younger clients. It’s also important to think more creatively about working with our client’s children if we want to retain them as clients when they inherit wealth.”
Take a chance on meAs well as focusing on younger clients, Sophia believes that financial planning organisations need to focus on giving younger financial planners a chance.
“In both the UK and US, I think we have to start taking a chance on younger financial planners, hiring them at our firms and then empowering them to build out an entirely separate income stream for our practice,” she says.
An EY report released in 2016,
The next generation of financial planners, says that baby boomers are now transferring their wealth to their children, who prefer younger financial advisers.
“When I founded Gen Y Planning, I didn’t know anyone else at the time that had a niche geared towards Generation Y,” she recalls. Since then, Sophia says she has observed an “explosion” of growth in financial planning aimed at Generation Y in the past half-decade.
For example, the XY Planning Network, an organisation of fee-only financial advisers who serve Generation X and Generation Y clients, now has 500 members since it was founded in 2014.
However, the average age of financial planners, according to EY’s report, is currently 50-years-old and has been rising for years: 22% of financial planners are under 40, while 5% are under 30. The appetite for younger financial planners is there, but the planners themselves aren’t. This is compounded by the anticipated growth of jobs – there will be 66,400 more jobs by 2020 – and a 4.3% decrease in financial planners over the past decade.
The next generation
Sophia set up Gen Y Planning to “empower my generation”. She hopes to do the same at the conference.
Her future plans are to connect and inspire, which she feels she was "put on this earth to do".
“I’ve had a few really interesting opportunities come my way, such as international speaking engagements and consultation work with start-ups. I like dreaming big (book deals or TV shows) but I don’t like planning more than a year in advance. In fact, in the future, I actually don’t know if what I do will be called ‘financial planning’ or if it will be its own field entirely.”
Sophia is flying in from America to speak about next-generation financial planning at the CISI’s Financial Planning Conference, day 2, 4.50pm. Book your place to hear her and over 40 other speakers.