1st Meeting of 2008

Hello Young Financiers,

Happy 2008! I am excited for the prospects of this year and we are kicking it off with a bang. I wanted to post details regarding our first meeting of the year. See the release below:

Attention Young Financiers

Our group will be having the first meeting of 2008 with special guest Michael Kitces, the speaker at February's FPA of Greater Phoenix regular Chapter meeting.

Michael is a co-founder of NexGen, an organization created to support the next generation of financial planners. Michael is Director of Financial Planning for Pinnacle Advisory Group.

The meeting will be on Wednesday, February 27th from 6-8 p.m. Please email youngfinanciers@gmail.com for the location.

Come learn how Michael helped create a $600+ million firm as well as start the NexGen revolution! You are responsible for your own dinner cost.

One really exciting piece to all this is the Young Financiers were featured on the first page of the Financial Planning Association of Greater Phoenix's February Newsletter. Click here to view the press.

It is an honor to have Michael as part of our group for February. Please acknowledge him for his willingness and ability to join us and share his knowledge on the industry.

Special Thanks to J.P. Dahdah

We had our third Young Financiers meeting this past Tuesday and I want to thank J.P. Dahdah for acting as our guest speaker and sharing his insight with the group. I thought he would be an excellent candidate because he was in the financial services field for much of his career and still is so to say. I would like to share some takeaways I got from the meeting:

• J.P. began the conversation by having everyone introduce themselves by stating their name, the company they work with, and their role within that company. He wanted to get a feel of their background and develop relatedness with each member.

• Mr. Dahdah next spoke about his career history. He interned with Merrill Lynch while at U of A and then progressed on to American Express Financial Advisors. He commented on the great training program they had. While he was there, J.P. was involved in a mentorship type program where he was matched up with a more seasoned professional at the firm. I think this is valuable because learning from someone with experience is better than reading it from a book. There is something to be said about absorbing information (osmosis) from first hand knowledge.

• J.P. then talked about ending ties with AEFA and going on his own with his mentor. He talked about having his own clients, his partner having his own clients, and the two of them having mutual clients. I found this to be an interesting concept. He had formed Dahdah Global Wealth Management with the idea that he could give his clients more opportunity than a selected list of preferred funds and limited breadth and depth. Learning to run a business on your own is a powerful skill to have. There are elements of each business that are universal and can be carried across industries.

• Mr. Dahdah was continuing to search for various investment opportunities for his clients. A client had talked with him about putting real estate into their IRA. J.P. did not have the capabilities at AmEx or thereafter locally to act on this matter. He went to various sources seeking the truth. He found a company that could do this on the East Coast and was able to bring a solution to the client instead of saying, "this is not possible". I like the idea that he may not have known the answer, but he was sure going to find out.

• J.P. talked about discovering The Entrust Group and then creating the opportunity to own the license for Arizona. He acted on this opportunity and has been building this business ever since. The business of self-directed IRA's is growing more popular everyday. Many people have no idea you can place real estate or other alternative assets into IRA's. They are led to believe by the Schwab's and Fidelity's of the world that stocks, bonds, and mutual funds are only what's available to invest in. There is nothing wrong with not offering this, it is their model of doing things. Entrust is out there to educate the general public and investing community that investor's have options when choosing investments for IRA's.

• With his position of President at Entrust Arizona, J.P. has figured that it is more important he work on his business rather than in his business. He mentioned the word scalability. This clicked with me as he used an analogy of a doctor/lawyer/financial planner. If you are not there, the company does not make money. How could he structure something so that if he wasn't there, the company would make money? I believe he found his answer.

The next Young Financiers meeting will be in Mid-January. Happy holidays and finish out the year strong.

Recent PR for the Young Financiers

I wanted to make everyone aware of some PR the group has recently received across the valley. There have been two instances I am aware of within the past month where the group is noted.

The first is in the Financial Planning Association of Greater Phoenix's newsletter Newsline in their October issue. The issue can be found here on page 11. This is excellent because it goes out to the target market for potential members of our group. The article discusses the purpose of the group as well as contact information to get involved.

The second piece is pertaining to one of our actual members of the Young Financiers. Joe Clancy, Operations Manager and Portfolio Administrator at Perspective Financial Services, is featured in his firm's monthly newsletter A Broader Perspective for October as recently joining the Young Financiers. See the newsletter here. This is a way for Perspective to let their clients know the employees are taking on additional learning opportunities. What an excellent way to gain exposure to let clients know there is a group out there that caters to younger individuals in this business.

I look forward to sharing many more media pieces focused on this group, potentially in the Journal of Financial Planning and the Wall Street Journal.

Next Young Financiers Meeting

I wanted to make you all aware of our next YF meeting as we are having bi-monthly meetings now as opposed to quarterly. We are excited to have our guest speaker J.P. Dahdah:

• share his insights and experience running a wealth management company
• explore self directed IRA’s
• provide any other information pertaining to the group’s topics of interest

If you would like to read his biography, please look below the details. Here are the specifics for the meeting:

Who: Young Financiers

What: 3^rd Meeting for 2007

When: Tuesday, November 13^th, 2007 from 7PM-8PM

Where: Entrust Office (20860 North Tatum Blvd. Suite #240 Phoenix, AZ 85050), NW Corner of Tatum and the 101 @ The Desert Ridge Corporate Center

About J.P.

J.P. Dahdah began his professional career in 1997 as a financial advisor with American Express Financial Advisors, Inc., a Fortune 100 company. He graduated from The University of Arizona, where he earned dual degrees in Finance and Marketing. In 1999 he founded Dahdah Global Wealth Management, LLC, a comprehensive wealth management company which specialized in working with business owners. Throughout his career, Mr. Dahdah has been a featured speaker at various financial workshops throughout the United States, focusing on wealth accumulation, retirement planning, and estate conservation.

In June 2004, Mr. Dahdah founded Entrust Arizona Retirement Plan Administration, LLC, an affiliate of The Entrust Group. Entrust Arizona provides retirement plan administration and record keeping services to individuals and small business owners who wish to include non-traditional assets, such as real estate, as part of their tax-deferred and tax-free portfolios.

Internationally, Mr. Dahdah co-founded Capital Field Business Corporation (“CFB”) in 2005, a Latin American real estate investment company. CFB’s mission is to stimulate capital growth throughout Central America, primarily Guatemala, by creating investment opportunities in the real estate sector.

Mr. Dahdah is actively involved in the Arizona community, as well as, various philanthropic organizations. He is a member of Arizona State University’s School of Global Management & Leadership Dean’s Advisory Council, Treasurer for the Urban Land Institute’s (ULI) Young Leaders Group, and volunteers his time to Big Brothers Big Sisters of Arizona. In 2007, he was selected as a “40 Hispanic Leaders Under 40” Award recipient, presented by The Arizona Hispanic Chamber of Commerce and Univision Radio.

Revision From Previous Post

I received some feedback from the last post about the revision of a particular comment.

Michael Kitces was Chair of the 2007 NexGen Conference, but not the Chairman of NexGen Leadership. The role of Chairperson of NexGen Leadership for 2007 belongs to Tara Scottino. Tara was last year's NexGen president.

I appreciate the revisions so we have accurate information on the blog. Thanks for those who have provided insight thus far.

Introducing NexGen - the Next Generation of Financial Planners

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

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:

• 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

The group thought the concept was interesting, and some were looking into using it as a opportunity for their clients depending on the needs of the investor's situation.

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).