Younger planners have a lot to offer the industry but can face numerous hurdles to success, according to Joseph D. Pitzl, director of financial planning at Intelligent Financial Strategies in Edina, Minn.
“The generations prior have all had the ability to come into the field and make their own path,” Pitzl said. These older advisors “developed their own philosophies” and were able to put them into practice by starting their own firms.
For a young planner, just coming into the profession, he said there is “a constant evaluation – do my philosophies actually match those of the firm that I’m working for?”
Financial Strategies has between 80 and 85 clients and manages about $130 million.
Pitzl, age 30, is the national chairman of NextGen, a collection of 300 planners age 36 and younger, that is part of the Financial Planning Association of Denver, Co.
These planners are all people who “were looking for a peer group to connect with,” and discuss the challenges of developing into the next generation of planners.
The group holds various events, including several in concert with FPA retreats and meetings. For example, at an event in July, the leadership of the FPA will meet with NextGen members to answer questions and discuss issues about the profession.
“There are some interesting challenges for a young advisor,” Pitzl said. For example, younger planners do not have the life experience that the older generation has, and some of the clients may find that to be a hurdle.
Also, he noted, “young advisors have a real tendency to cling to the technical side, demonstrating knowledge and ability rather than actually focusing on the client. ”While technological expertise can be a standout skill for a younger generation planner, client focus is still key, he said.
At the same time, youth can also be an advantage -- as long as the previous generation of planners is willing to give up the reins.
Many clients are “looking for someone who is going to be around for a long time,” Pitzl said, so a firm that has younger planners to carry the torch can use that as a selling point.
And older planners are facing their own challenges, too, Pitzl said – including succession issues. Many financial advisory firms are still essentially solo practices, run by the people who build them. Now, approaching their own retirement, these planners are “forced to have to start to think about converting the practice they’ve built into an actual business.”
Some will sell. But others who would like to see the firm continue to grow and prosper need to turn to the next generation of advisors, Pitzl said. These young people must be permitted to “grown and mature in the firm,” and become leaders in their own right.
Unfortunately, he said, “there just isn’t a set path for that,” at many firms. “A lot of it depends on who is running the firm today and their ability to, perhaps, give up certain controls.”
Pitzl said that the lack of a clear career path in financial planning is “a turnoff to a lot of people coming into the industry.”
“All of your peers that you’re graduating with that are going into different fields, they all have a track and a career path. If they put in their time doing X, Y and Z, then they’ll take the next step.”
There’s just not that level of clarity for young financial planners.
Some of these younger planners have moved on and started their own firms, including Pitzl and the president of his firm, Jason Good, who is also in his 30s.
At Intelligent Financial Strategies there is a focus on using technology to improve and refine the communication with clients.
Pitzl said he believes that technology allows people to receive information in whatever way is most comfortable.
In addition, firm outsources many functions, rather than having people on staff to handle them, Pitzl said. There are just two planners and one support person in the whole company.
He said he feels that makes the firm more efficient, unlike firms that can be “held hostage” by one individual who is the only person who knows how to do certain tasks. Outsourcing functions such as data management and billing means not having to deal with those staffing issues, he said. In addition, the firms that handle outsourced functions are experts at that one particular job and can do it more consistently and often cheaper than having someone in house.
Even outsourcing means giving up some control, but that can be an advantage to younger, more tech-savvy planners, Pitzl said. A big part of his philosophy is a belief that “you don’t have a monopoly on great ideas.”