DAY ONE: FRIDAY, JULY 25^th:

At the 2008 annual NexGen conference 120 financial planners (including 80 new and 40 returning attendees) packed into the dorms at St. John's University in St. Cloud, Minn. Admittedly, I was a bit dubious to jump back into campus living, but it turned out to be the perfect setting to bring this young crowd together. The conference's task force, including 2008 NexGen president Michael Branham and chair and past president Sabrina Lowell, brought in industry leaders to discuss the history of the financial planning profession and the responsibility that NexGeners hold for its future.

Something to Think About:

In the conference's opening address, "The Ten Big Things for Advisors to Think About," managing director and CEO of Pershing Advisor Solutions LLC, Mark Tibergien, described the rapidly evolving industry and how young planners can and should take advantage of this growth. Here's the top 10:

1. Managing growth
2. Deploying technology effectively
3. Managing professionally
4. Building value
5. Differentiation
6. Attracting and keeping people
7. Sales and marketing
8. Margin management
9. Clients demanding more and different
10. Pricing strategies evolving

Do's: Mark's advice to NexGeners included "find a niche specialty"—noting that niche-oriented practices are growing 3x faster than the average practice—and "develop technical superiority as advisors." He discussed some of the challenges advisors face in obtaining client referrals, and instructed the group to spend more time focusing on their client relationships and centers of influence. He told NexGeners to build these centers early on to avoid having to "sell" in the traditional sense or rely on passive referrals.

Don'ts: Mark's list of practices to avoid: poor pricing, poor productivity, poor service mix and poor client mix.

Rising Fees: More than half the audience raised their hands when asked if their firms had increased their fees in the past year.

Talent shortage: "If we're clear about the nature of work, the nature of the worker becomes clear. When employers look for talent, they need to understand ability, motivation and interest. The biggest reason for turnover in a practice is poor selection of talent at the start. Your aim should be to match the right, motivated people to your practice."

Another great tip Mark gave NexGeners was to be aware of how they position themselves. Many boomer clients, for example, have confidence in their advisors during the accumulation phase, but look elsewhere when it comes to the distribution of their wealth.

Summing things up Mark reminded the group to continually ask themselves the following questions:

• Is my strategy is still relevant?
• Who is my optimal client that I'd like to replicate?
• Do I have the right, motivated people working with me?
• Is my compensation structure aligned properly?
• Am I building my practice to last or to sell?
  

NexGeners & Ownership:

In the afternoon panel discussion, "Straight Talk on Ownership," moderated by Mark Tibergien, young financial planners Sarah Bailey, CFP® and Jason McGarraugh, CFP®, reviewed the various paths to ownership and weighed the involved risks.

Sarah, of San Francisco's ASPIRIANT, described her career progression from a financial analyst to an investment operations specialist, and later to an associate wealth manager. She attributed becoming an owner to her demonstrated client experience, her passion for the profession, and to being in the right place at the right time (when Kochis Fitz merged with Quintile Wealth Management LLC, adding seven new shareholders, including Sarah, in the process). Sarah first got the ball rolling by conveying her interest in ownership to her boss prior to the merger.

A very different set of circumstances led Jason McGarraugh, CFP®, to an ownership position at Neal Financial Group. He began working in the financial services industry in 2003 at Waddell & Reed as a financial advisor and struggled for a few years to earn a living while working with his "natural market." Accordingly, when he met Deena Katz, CFP®, who was running a career development course at Texas Tech, he asked her for assistance. Deena gave him the encouragement to approach Wynette Stuntz, CFP®, who, at 68, was on the lookout for a young CFP practitioner to ultimately inherit her practice. Wynette was able to offer Jason some much-needed security, and he in turn began working with her client base and dove into ownership much earlier than he expected.

When asked what motivated the panelists to pursue ownership, Jason recalled "I wanted to be an owner because I'm a horrible employee. I'm the product of being raised on a farm as a self-sufficient, overly-independent boy with a strong personality, and I didn't fit in with some of the larger firms out there. It also helps that as an owner I'm now getting a paycheck!" And Sarah said she got behind the idea of ownership because she saw it as an excellent investment opportunity with great income potential. The panelists noted that NexGeners have the unique opportunity to receive ownership while they are still young, unlike their predecessors who generally started out in the industry in their 40s.

They also addressed the responsibility that comes with the territory of ownership. Sarah noted that this new sense of responsibility is a good feeling and one she feels privileged to accept. She also mentioned that ownership has given her more credibility and confidence when dealing her client base. Jason said he has taken on leadership positions in the past so his sense of obligation to his clients after ownership has remained the same.

Mark concluded the session by discussing the factors NexGeners should consider when positioning themselves for ownership and whether it's worth the risk. "Like a prenup, never go into it assuming its going to crash, but be prepared nonetheless." He emphasized the importance of doing your homework to understand your rights and obligations as a potential owner, and to have a frank discussion about the legal context beforehand. "You should try to identify your deal-killers from the start."

Karaoke & NexGeners

As the last session of Day One wrapped up, the NexGen crowd set out for an evening of networking beneath the trees over barbecue and beers. Then the majority of attendees headed over to a campus bar for a night of karaoke—in which the more daring advisors belted out tunes from such artists as Guns & Roses. Marty Plachko, from Pershing Advisor Solutions in Jersey City, N.J., later told me, "During karaoke, I finally got up there and sang "Bust a Move" by Young MC. I had some practice for that moment as I'm currently in a band called "Open Tab" in which I play base." The performances seemed to do the trick of breaking the ice and served as a nice segue into Day Two of the conference.

DAY 2: SATURDAY, JULY 26^th:

LTC Insurance Planning

Day Two started with Michael Kitces' technical track, "Advanced Concepts and Issues in Long-Term Care Insurance Planning." Kitces is the director of financial planning for Pinnacle Advisory Group and a recognized industry expert—as well as a moderator for the Financial-Planning.com discussion board!

As long-term care (LTC) gains in popularity among advisors, Michael explained the differences in policies and how planners can use them to best serve their clients. "Financial planners need to know how to get the right plan for their clients and how best to work with insurance companies."

Here are the key things he advised NexGeners should know before their next client meeting on LTC:

• The factors that determines if a client is in need of "substantial assistance" and is therefore eligible to receive benefits.
• The differences between home care and nursing-care benefits during the claims process.
• Whether a client satisfies "elimination periods" required to receive benefits.
• When a care coordinator should come into play. (Michael noted that care coordinators come in handy if, for example, dad is being released from the hospital in six hours and you have to make a snap decision on where he should go.)
• How your client's choice of policy will affect them in the long run (for example, when choosing between short/fat and long/thin policies).
• How much your clients should actually purchase based on issues such as cost variance by region.

As a of word of caution Michael reminded the class to be careful when advising clients on buying policies if they are still relatively young—because by the time that client is actually in need of care, the nature of the health care industry may have changed.

To Think Like a CFP

In the first of the conference's series on what it means to be a CFP today, industry veteran and editor of InsideMoney.org, Richard "Dick" Wagner, JD, CFP®, led the motivational session "To Think...Like a CFP® Professional, Circa 2008."

Dick kicked things off by looking at the evolution of the industry—through the economic panic of 1907 to the 1980s "decade of greed." He declared that "financial planners are the people who can look intelligently at these issues. Twenty years ago we were considered sales people and we grew tired of that—so we began to search for an identity."

Dick explained that in 1990 he felt compelled to write his ground-breaking article, "To Think...Like a CFP" (Journal of Financial Planning) because he saw the challenge of communicating financial planning as an authentic profession—built around function, service and meaning—to others.

Dick spoke passionately about the profession—describing it as his "calling" in life. "It's going to be the most important profession on the planet in the 21^st century because the kind of work we're doing isn't being replicated elsewhere and we're doing it better than anyone else." And he told the young planners in the room to "absorb in your gut the seriousness of what you do."

He advised the NexGen audience to make the most of their current opportunities and to keep looking ahead to the future of the profession. Dick noted, "To push ahead with progress of the profession, it's up to this generation to define its mission more fully." To that end, he recommended taking information on the profession to college campuses to raise its academic presence, and to question if financial planning can survive as a certificate program or if it needs to graduate into a degree program.

Perhaps most significantly, Dick talked about the need for young planners to stay together and form lasting relationships—suggesting to the NexGen crowd that they make someone else in the room their own personal financial planner.

Clients and 1040s

In the afternoon session "All You Ever Wanted to Know about Your Client Is in Their Form 1040," Trudy Turner, CPA, CFP® of Robertson, Griege & Thoele, discussed how today's advisors want to speak the same language as their CPA networking partners.

As a finance major who later earned her master's in accounting so that she could speak like a CPA, she reminded the group, "You don't have to be able to cite tax codes to your clients. But it's important that you excel in the areas you can, and that you bring in outside experts for the other areas." Trudy talked about how to analyze tax returns to uncover the stories behind them, which can then shed insight onto what's coming up in a client's future.

She taught the group to go through their clients' earnings history, and to lookout for things like whether they are self-preparers, practice gifting, have a history of debt forgiveness, and if they have previously gone through attorneys due to bad experiences with advisors.

She also provided loads of information on different tax returns that may not be on NexGeners' radar screens, and offered several useful tips, including:

• Do a tax checkup for existing clients
• Use a CPA to uncover new tax opportunities
• Check in with clients during times of change
• Use your referral specialist network
• Communicate how much money you have saved your client
• Educate your clients on legitimate deductions they can and should be taking
• When working with tax specialists, know what their philosophy is: How do they treat confidentiality?

Trudy livened up the ordinarily dull subject of taxes by telling the group that if they learn to spot ways to save their clients more money, they'll all be heroes. "If you are the one offering your clients real solutions to their tax problems, they will begin to see you in an entirely different light."

Lastly, Trudy offered the group some helpful outside resources:

• IRS.gov
• RIA Federal tax handbooks
• Books by Kaye Thomas and Natalie Choate
• Quickfinder handbooks

(For additional information on using 1040s to learn more about your clients, see "In My Experience: Benjamin A. Tobias.")

Under the Trees

Next we all grabbed bag lunches and divided up into groups to discuss issues such as succession planning and effective cash flow management strategies. I ate with a group chatting about how to operate more efficiently, led by Bill Winterberg from CMC Advisers in Portland, OR.

My group talked about the different CRM systems they were each using—including Juncture, Salesforce and Xcelerate—and knowing when to outsource. They all seemed to be looking for more affordable practice management software and agreed on wanting programs tailored to fit their firms.

Wisconsin planner Janet Tyler noted that advisors should ask themselves if their operations fit with their firms' long-term visions. She recommended a company called Beneficial Concepts that takes care of the back office work for you.

Everyone also agreed that it was highly efficient to send web updates to their clients. But some said they still send printed reports to their older, less tech-savvy clients.

Bill also asked what companies the NexGeners were using to build their websites. One planner said he uses Advisor Square (which elicited mixed reactions from the group). Another recommended a Seattle-based company called Make It a Great Day. And several planners said they relied on Google Analytics to find out who's visiting their site and to determine how to tailor it accordingly.

To Feel Like a CFP:

Later in the afternoon, Mark Johannessen, CFP®, volunteer president of the FPA, moderated a panel on what it feels like to work as a CFP in firms of various sizes. Mark said he wanted the panel discussion to feel like "Inside the Actor's Studio" for financial planners.

The panel members—each representing a small, mid, and large-sized firm respectively—discussed the nuts and bolts of working in each type of firm, from their office culture to organizational charts and their expected career progression within them.

Jamie McCusker, CFP®, a financial advisor at F&D Advisors, LLC, described working for a large firm where she's involved in all aspects of servicing high-net-worth clients, and noted that there are many different areas she can move into as her career progresses over the years.

Mark Van Drunen, CFP®, MS, with Ownership Advisors, Inc., in Cleveland, OH, discussed his experiences working in a mid-sized firm. (He worked as a trust officer until the opportunity arose where he could buy in.) On the issue of ownership Mark advised, "You need to make sure your values are aligned with your prospective partners if you're considering being an owner." From an ownership standpoint, Mark noted that "One of our challenges is to get a more clearly delineated career path for our workers. Our profession lacks a uniform training process, but as it matures, it's my fervent hope that that changes."

And Michael Branham, CFP®, a financial planner at Cornerstone Wealth Advisors, Inc. described the advantages of working in a small firm where he can focus on client relations. "Two out of our top three people are always in client meetings." When he brought up his firm's extremely basic organizational chart on the screen, he joked, "As you can see there are a number of places I can go from my current position in the next 10 years."

The highlight of the session was when Mark asked the panelists to describe their hardest days working as a CFP.

Jamie talked about having difficult discussions with a widow about her husband's estate. "The widow was lost and didn't have anyone to turn to, and it was a very emotional time for her. After two years, however, she's still a loyal client because we helped her through that tough time."

Mark recalled how an emotional 47-year old widow with kids in college walked into his office one day. He talked about the challenges involved in getting her think about financial matters for the first time in her life and how months of difficult conversations followed.

And Michael told the crowd about a widowed client battling aggressive breast cancer with two children (the youngest with special needs). He noted how difficult it was to visit her at home during the last days of her life to work through her financial matters. "Going through that was some of the most memorable work I've ever done and highlighted the importance of what we do."

NexGeners & Dance Parties

Following an evening of social activities—some of which involved water balloons—the NexGen group got decked out in elaborate costumes for the night's dance party. (Incidentally, I was unaware that this was a costume party and was by far one of the plainer-looking attendees.) As the evening progressed more and more NexGeners hit the dance floor to do the two-step and the twist. I tried my hand at beer-pong and failed, miserably, to my worthy NexGen opponents, while being serenaded with fist-pumping renditions of songs like Bon Jovi's "Living on a Prayer."

DAY THREE: SUNDAY, JULY 17^th:

I retired to my student housing around 12:30am, but I'm told that the after-party continued well into Sunday morning. Inexplicably, the same advisors who had dominated the dance floor appeared bright eyed and focused at the 8:45am session "Going Independent: A Process, Not an Event!"

Tim Maurer, CFP®, practitioner and director of financial planning at Financial Consulate, Inc., addressed the various options available to young financial advisors when job hunting in the industry.

He reminisced, "As a finance major 11 years ago I had no idea what a financial planner actually was." Since then he's come a long way—primarily by learning from his mistakes while working in positions at "the big three"—brokerage firms, insurance companies and banks. Tim cautioned that you can only fool yourself for so long if you're at a firm that isn't a right fit. And as he navigated the industry he discovered that many operations are proprietary in nature and profit-centric rather than client-centric. He warned, "It's very difficult in this business that's so driven by money not to let the money get to us."

Next Tim asked us to raise our hands if we believed money was powerful. Nearly everyone, myself included, raised their hands, but surprisingly Tim disagreed, saying that relationships—not money—are powerful and enable advisors to do their jobs well. "Have you had clients in the past that simply didn't trust you? To develop meaningful relationships you have to genuinely want to be interested in your clients' lives."

Interestingly, Tim explained that "wealth" derives from the word "contentment," and that as wealth managers, the group should take pride in bringing contentment to the lives of their clients. He posited that advisors should come to regard money in a different light, saying, "Money is not powerful, but it is a very useful tool in the cultivation of relationships."

Ending on a high note he told the group, "Your biggest mistakes in life can result in your greatest achievements—so make the most of your mistakes."

To Be a CFP Professional:

Kyra H. Morris, CFP®, EA, wrapped up the conference with its final super-session, "To Be a CFP Professional." Kyra helped to create Morris Financial Concepts, a financial planning and wealth awareness practice in Mt. Pleasant, SC, and has been named one of the top financial advisors in the country four times by Worth Magazine since 1994.

The crowd immediately warmed to her entertaining and inspirational speaking style. (It is also worth mentioning that her dance moves were a huge hit on Saturday night.) Kyra focused on what it means to be a "complete" financial planner: incorporating awareness, foresight, timing, confidence, humility and inspiration into your practice. Of these, Kyra highlighted self-awareness as the most important, but most often omitted, trait of a great financial planner.

She also spoke metaphorically about how being a CFP is, in a sense, a lot like being a naval aviator, as members of both professions must ask themselves the same questions:

• How close am I to my target? (prospective clients)
• What is my fuel level? (my resources)
• What are the weather conditions (the state of the market)
  

Kyra summarized that being a CFP involves putting it all together and accepting the responsibility of acting as change agents in the world. And she urged the NexGen group to strive to make an impact during their challenging journeys and to always live life to the fullest.

Convos with NexGeners

I had the opportunity to chat with NexGeners about many issues, including what they were hoping to get out of the conference, how they got their start in the industry, how this summer's market volatility has affected their clients, and whether it was worth staying in the dorms.

Here are some highlights:

• "Due to this summer's market volatility, I've been working to educate my clients. Only about 10 out of our 200 clients have called up with concerns, and we attempt to quell their concerns by having frank conversations with them. They've come to understand that they're in this for the long term and that this is just a blip." —Charlie Capasso, 27, Morris Financial Concepts, Mount Pleasant, SC
  
  
• "I came to this conference in hopes of continuing my education about the profession and to network with my peers in the industry. As for this summer, some of my clients have been worried, but I've been working on readdressing and reexplaining our money management philosophy with them." —Luidgi Faubert, CFP®, ChFC®, MBA, Ameriprise Financial, Parsippany, NJ
  
  
• "I attended the conference because it's inspiring to listen to such great speakers and I wanted to rekindle relationships from last year and network with my peers." —Jerad Waggy, 25, The Enrichment Group, Miami, FL
  
  Jerad attended Texas Tech University where he majored in financial planning. The university also prepared him for the profession by requiring him to do an internship. Landing his first job, however, proved more challenging than he expected, but his perseverance finally paid off. "I researched firms online and called around—but I was told by the firm I was most interested in that there were no vacancies and was hung up on. I decided to send them my cover letter and resume anyway and eventually got the job."
  
  
• Next year I'd love to listen to speakers like George Kinder, Ross Levin and Harold Evensky...My advice to other young planners trying to break into the industry is to work directly with a veteran in the business and act as a sponge—absorbing and learning as much as they can." —Darin Shebesta, 24, Jackson Financial Advisors, Scottsdale, AZ
  
  Darin also runs a blog, www.youngfinanciers.blogspot.com, to build camaraderie between his fellow young planners and provide them with general information on the industry.
  
  
• Bill Winterberg from CMC Advisers in Portland, OR, also runs a blog called www.Fppad.com for financial planners in need of practice management software. "I was inspired to create the blog as I hear the frustrations of young advisors—who have to pay their dues by handling operations and learning about processes before they earn the trust to do client work—so I try to make that kind of information more readily accessible to them."
  
  
• Tom Gartner from Independent Service Company in Minneapolis, got into the industry because he wanted to work directly with clients—saying that if he's spending time away from his family it ought to be for something that matters. He started out as an intern for Morgan Stanley but didn't enjoy the cold-calling culture. He noted that this summer his clients have been getting approached more to buy products that help protect against market volatility. In response to this he's been doing an awareness campaign so that his clients don't fall for these used-car salesmen type tactics.
  
  
• When I asked Vincent Barbera, CFP®, from TGS Financial Advisors, about young planners and ownership, he mentioned that many young advisors may lack confidence in the elders' promise of eventual ownership, and will likely decide to go solo. "I think that five to 10 years from now the majority of NexGeners will be on the path to independence. NexGen has instilled in me confidence to consider going independent one day because it's such a supportive group and I've made great alliances here."
  
  Vincent also talked about his efforts to foster relationships with his peers. "I've started a study group with eight other financial professionals so that we can regularly discuss issues we face in the industry. Our goal is to meet about once per quarter. We also discuss ways in which we can give back to the community through pro bono work for example."
  
  
• "I'm here to network and mentor young people in this profession and to share my wisdom. It's also a great opportunity to hear speakers like Mark Tibergien and Dick Wagner—and that's definitely worth staying in the dorms!" —Janet Tyler, CFP®, JATAJ Wealth Advisors Network, LLC, Blanchardville, WI
  
  
• "I came to the NexGen conference two years ago and it's very exciting to see all the new faces this year—things are definitely moving in the right direction. I'm primarily interested in taking the career development tracks which get great feedback." —Caleb Brown, CFP®, Strategic Financial Planning, Inc., Plano, TX
  
  Caleb's wish list for next year's speakers includes Susan Bradley and Ed Jacobson. He also filled me in on what I missed during the session on life planning—saying it was a good refresher for him. The goal of the session was to teach NexGeners that life planning isn't therapy—it's more about asking the right questions. "Nowadays I would consider it malpractice if you don't ask your clients life planning questions. It's our responsibility."
  
  And although Caleb spoke about how smoothly the conference was pulled off, he did admit that when it was his turn to introduce a speaker, he talked for nearly five minutes to the crowd before realizing his microphone wasn't on.

On a final note, although the majority of NexGeners said they planned to attend the annual FPA conference in Boston this October, they didn't seem to have ulterior motives for making the trip, as I couldn't find a single Red Sox fan in the group!