I think it's time to discuss how NexGen could fit into the Young Financier's picture and vice versa. We will begin with an introduction of the concept, determine who is influential in this movement thus far, and complete the message with how we can play a role as the Young Financiers.
To give a background about NexGen, we would refer to the Financial Planning Association for inspiration. NexGen is the next generation of financial planners in the country (potentially the world someday). In the past, there had not been an avenue for the younger professionals to connect with one another in a formal fashion. The majority of the members of the Financial Planning Association were and are an earlier generation of professionals such as the Baby Boomers, Generation Jones, and the Baby Busters. There is nothing wrong with this, it just is the way it has been. The profession used to (and maybe still does) attract a career-changing individual, whereas now the trend seems to be toward those straight out of college wanting a career in financial planning. There are even colleges and universities who have degrees in financial planning, namely Texas Tech. Many students secure internships with financial planning firms that lead to full-time opportunities.
NexGen may have been underserved for some period of time, but a select set of individuals created an idea to do something about this. NexGen arose and now it is on to the growth stage of the organization. Michael Kitces, the Chairman of the group, was a key proponent in making this happen. Sabrina Lowell, the current President of NexGen, has been crucial in steering the ship for 2007. Mike Branham is the President-Elect and will chart the path for the following year. I read an article recently about Aaron Coates, another co-founder of NexGen. The professionals involved in this project are truly incredible and I look forward to getting to know them as NexGen progresses.
To get to how YF fits in the picture, I would like to give you a background of how we began. I had been attending the Financial Planning Association of Greater Phoenix meetings since June of 2006. I quickly learned that I was one of the youngest members in the chapter. It was great to speak with veteran planners in the industry, but I needed a deeper connection with others of my demographic with the similar passion for financial topics. Throughout the year and into 2007, I recognized individuals like myself who were recently out of school and working with independent financial planning firms as well as firms that support the financial planning process. I wanted to create an avenue where we could get together as a group to discuss various topics related to what we are doing in the field and develop long-term relationships to provide support throughout our careers. I identified about half a dozen individuals who stood out in this industry. Through conversations about what's possible, I generated interest within these people and created the Young Financiers. Since our first meeting in June of this year, I have discovered another half-dozen or so individuals who would be a great fit for our group.
NexGen has had annual conferences for the past couple of years, where young professionals from across the country traveled to attend an event to bring this group together. In fact, if I am not mistaken there were 120 members at the meeting this past July in Minnesota. On a national level, the group is picking up momentum. I believe the challenge now is to create a local and/or regional presence across the U.S. It seems as though the Young Financiers would be a good example of what the local presence of NexGen would look like. We would definitely like to pursue what this would look like. We are for the sharing of knowledge and providing assistance in the areas pertinent to our success.
I wanted to provide a few articles from national publications discussing NexGen:
NexGen: The Sequel from Financial Planning Magazine, September 2007
The Competition for Young Talent is Heating Up from FPA Solutions Magazine, October 2007
Young Rebel With a Cause from Investment Advisor Magazine, September 2007
Friday, September 21, 2007
Items from the Fall Meeting
I thought I would share with the group more about what was talked about during our meeting on Tuesday, September 18th and provide resources for further education.
The first area we spoke about was fundamental indexing. This seems to be a fairly new concept and Schwab is the first company to market to investors with mutual funds that use fundamental indexing. Rob Arnott and his company, Research Affiliates, created the methodology of the RAFI (Research Affiliates Fundamental Index).
On the Schwab website, they say the benefits of fundamental indexing are:
There were a couple of items passed out during the meeting on this very topic, namely Efficient Indexing for an Inefficient Market by Research Affiliates (provided by Jared) and New Frontiers in Index Investing by Jason C. Hsu and Carmen Campollo (provided by Joe). A contrarian article is available here from the WSJ with John Bogle and Burton Malkiel entitled Turn on a Paradigm.
The next topic concerned fee/ low-load/ no-load insurance. This is drastically different from how insurance was structured in the past. The field has been commission-based and many independent fee-only advisors shied away from offering insurance because of this. A structure has been established to allow fee-only advisors to place insurance for their clients, all the while aligning the fiduciary responsibility of the registered investment advisor toward the client's best interests. There are several advisors who have created businesses out of being the insurance expert as part of the wealth management model for a client and set up the compensation to be fee-based as opposed to commission-based. An article that sparked an interest in discussing this topic was by one of the major proponent's of fee-only financial planning, Bob Veres. He writes columns and articles in various financial publications, and the one that caught my eye was New Life for Life Insurance in the September issue of Financial Planning magazine (click here for the article).
We as a group also discussed mentorship experiences within our firms and in our lives. The Cone of Learning by Edgar Dale (below) shows that we retain most of what we are exposed to by actually doing as opposed to reading or listening to a lecture.
Mentorships are tremendously valuable because it is rare to find opportunities that allow you to learn more quickly, especially when you are in connection with someone who has "been there, done it". We agreed that we have had these experiences within each of our firms, but it was more of an informal structure and a learn-as-you-go model.
Toward the end of the meeting, we agreed it would be beneficial to have bi-monthly meetings as opposed to quarterly meetings. The participants thought it would be a better chance to develop relationships with other members.
Our next meeting will be scheduled for Mid-November. Details will follow within a month of the actual meeting (mid to late October).
The first area we spoke about was fundamental indexing. This seems to be a fairly new concept and Schwab is the first company to market to investors with mutual funds that use fundamental indexing. Rob Arnott and his company, Research Affiliates, created the methodology of the RAFI (Research Affiliates Fundamental Index).
On the Schwab website, they say the benefits of fundamental indexing are:
- Access to an indexing approach that can potentially help investors avoid overexposure to overvalued companies
- Reduced market risk through diversification
- Long-term growth potential by tracking the market
There were a couple of items passed out during the meeting on this very topic, namely Efficient Indexing for an Inefficient Market by Research Affiliates (provided by Jared) and New Frontiers in Index Investing by Jason C. Hsu and Carmen Campollo (provided by Joe). A contrarian article is available here from the WSJ with John Bogle and Burton Malkiel entitled Turn on a Paradigm.
The next topic concerned fee/ low-load/ no-load insurance. This is drastically different from how insurance was structured in the past. The field has been commission-based and many independent fee-only advisors shied away from offering insurance because of this. A structure has been established to allow fee-only advisors to place insurance for their clients, all the while aligning the fiduciary responsibility of the registered investment advisor toward the client's best interests. There are several advisors who have created businesses out of being the insurance expert as part of the wealth management model for a client and set up the compensation to be fee-based as opposed to commission-based. An article that sparked an interest in discussing this topic was by one of the major proponent's of fee-only financial planning, Bob Veres. He writes columns and articles in various financial publications, and the one that caught my eye was New Life for Life Insurance in the September issue of Financial Planning magazine (click here for the article).
We as a group also discussed mentorship experiences within our firms and in our lives. The Cone of Learning by Edgar Dale (below) shows that we retain most of what we are exposed to by actually doing as opposed to reading or listening to a lecture.
(Click on Dale's Cone for larger view)
Mentorships are tremendously valuable because it is rare to find opportunities that allow you to learn more quickly, especially when you are in connection with someone who has "been there, done it". We agreed that we have had these experiences within each of our firms, but it was more of an informal structure and a learn-as-you-go model.
Toward the end of the meeting, we agreed it would be beneficial to have bi-monthly meetings as opposed to quarterly meetings. The participants thought it would be a better chance to develop relationships with other members.
Our next meeting will be scheduled for Mid-November. Details will follow within a month of the actual meeting (mid to late October).
Sunday, September 16, 2007
Introducing the Young Financiers Fall Meeting
Good day Group,
This is Darin Shebesta. I am the current spokesperson for the Young Financiers. You had expressed interest in being a part of this group and I wanted to let you know the details of our next meeting.
Event: Young Financiers Fall Meeting 2007
Date: Tuesday, September 18, 2007
Time: 7:00PM-8:00PM
Place: Jackson Financial Advisors Conference Room, 9590 E. Ironwood Square Drive #110 Scottsdale, AZ 85258 (map), Courtesy of Jared Roskelley
Potential Topics for Discussion:
-Fundamental Indexing
-Fee/low-load insurance
-Mentor experiences
-Anything else that would like to be brought up
Please let me know if you are able to attend by responding to this email. Please let me know if you have any questions or concerns. I trust everyone is well. Take care and make it a stellar day.
Darin Shebesta
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