Michael Branham has to take a two-pronged approach to thinking about succession planning. As this year's president of the Financial Planning Association, the issue is foremost for thousands of veteran advisors, especially for those who haven't yet given it the attention it's due. And as a 38-year-old CFP at Cornerstone Wealth Advisors, he finds that he and some colleagues may be the succession plan at the Edina, Minn., RIA firm where he works.
When he's not busy working to develop plans to assist advisors and promote the FPA, he's helping clients with cash flow, retirement planning, and tax and estate planning, as well as helping his firm determine its investment portfolio strategies.
Branham, who was president in 2008 of FPA NexGen, an organization of young advisors, recently sat down with the editors of Financial Planning to discuss the evolving role for younger planners in the profession and how the FPA can be as relevant as possible to planners. Below is a condensed version of the conversation.
You've said that finding the right strategy for growth is the No. 1 concern for planners. What's the best way for an advisor to go about it?
I think what we're hearing from our members is that practice management as a whole is really their top concern. How do they not only grow their practice, but structure their staff internally? What's the endgame in terms of succession planning?
When you think about growth, it's a little bit different for everybody. We have a plethora of coaches and professionals out there who can help each firm grow. Our job as an association is to match the practitioners with the professionals who can help them develop that marketing and growth strategy, and provide resources along the way so they have them at their fingertips while they manage their practice and move it forward.
A lot of planners in their 50s and 60s understand that they must get moving on succession planning. As a younger planner, have you thought about succession planning and the future of your practice?
I work in a practice where there are a couple of young planners in the firm and we could be the succession plan. So I think about it from the other side of things: How do I connect with the more seasoned veteran planners, and what do I need to bring to the table in order for them to know and trust that I can manage a business that they spent so much time - their blood, sweat and tears - building over the years?
And so it's really that connection point and learning the skills, the competencies, that I'll need - not only to serve the clients within that business but to run a viable business as well. We have a number of different demographics within FPA, different generations. Part of our job is to help to develop the skills necessary in each generation.
In your work at the FPA, how do you make the case that there's a value proposition for planners in joining, and in going to the events?
The reality is we need to help our practitioners be better practitioners, run better businesses. From a professional education standpoint, we need to help our practitioners keep up with the latest trends and keep their skills and competencies at a level that really serves the client well.
We need to advocate for our practitioner members at both the state and the federal level. And we need to be a connection point for our practitioners, both through our conferences and some of our virtual online offerings, so that they can connect with other planners and learn what's going on out there in the profession. That's really our focus at FPA.
There are a lot of opportunities to connect, a lot of conferences, a lot of organizations. Do you think the industry has too many groups?
I don't know that we have too many. If you think about the groups that are out there, you've got NAPFA, which is really focusing on that fee-only financial planner. You've got FPA, which is focusing on a larger demographic. You've got the CFP Board, which is really the standard-setting body, and they maintain the marks from a standard-of-care, standard-of-competence standpoint in order to protect the public. And you've got groups like FSI, which was really born out of FPA to serve the actual firms themselves.
Each has its unique role. What we really need to do is find areas where the groups can work together on various issues and collaborate in order to better the profession and help the end game, which is to provide valuable services to the consumer.
There's been considerable attention this year on the run up in domestic stocks and in certain international markets. When they're working with clients to set up a portfolio, don't advisors really need to focus on the overlap with domestic securities when it comes to correlation?
I think you're right. There used to be a day where international equities were a good way to add a negative correlation in your portfolio. But we live in a time now where information moves so quickly, and the global marketplace is really becoming global.
The days of being able to say that as U.S. stocks go up, international stocks may go down, are really over. They move much more in the same direction now. So we really need to look for other ways to add negative correlation within a portfolio. But I don't think you would eliminate international stocks just because you've lost the negative correlation.
Scott Wenger is editorial director of SourceMedia's Investment Advisor Group and editor-in-chief of Financial Planning.