Dichotomy of the Young Financiers

I have identified two types of individuals in the Young Financiers group (maybe this exists in NexGen as well).

• One type are those who are working with an established firm with partners who are seasoned in the industry. This type (I would include myself in it) is learning the ropes of the business and will eventually be a planner and relationship manager.
• The other type (which I have to give my "hats off" to because of the potential extreme difficulty) are those who are their own boss and are responsible for generating revenue to pay their bills and put food on the table.

In the financial planning business, the second type mentioned is extremely difficult to do (especially when you are younger than your clients). Not to mention that doing what's right for the client may hinder the financial success for the short term because what's in the best interest for the client may not be what's best for an advisor's pocketbook. I wholeheartedly agree that doing what's best for the client should be the #1 priority for a financial planner, much less all industries. I was trying to make a point that it's tougher to make it in this business from scratch.

Both types of individuals in the group complement each other well. One is curious what the other does for tasks and activities. What does the "other side" look like? That's why we have these meetings: to find out more about each other's practice and be the best we can be.

Review of Technology Forum Meeting

We had a great turnout for the Technology Forum in June. Thank you to all of those who made it out to the meeting and a big thanks to Daniela Urs for allowing us to use Barnes Investment Advisory's conference room. It is great to learn from one another about the different systems and processes each of us use in the business. It's amazing how there is not one right way. People have different pieces to create their own puzzle. This was an opportunity to open up each other's world by sharing ideas and applications that others had never heard of before. The exposure is greater when more people contribute based upon their experiences. By discussing a particular program being used, it gives the listener an idea of that application without having to use it. There is some trust and validation within the Young Financiers that I think people take one another seriously and have a great deal of respect for others' comments.

One thing the group agreed upon is that there is not a silver bullet in the industry of technology for financial planning. It is almost a best-of-breed combination, but even the applications in that breed are not unanimous. The idea is to stay open to learning new technology and seeing if it is a fit in your practice. Things are constantly evolving in this world. If you stay the same, you will become less competitive because everyone else is adapting to those changes.

Next Young Financiers meeting: Technology Forum

The time has come in our organization to generate another Young Financiers meeting. A topic that is timely and relevant that the group has not focused on in the past is technology within financial planning. We are calling our next event "Technology Forum", which will be a culmination of the various systems and processes that are used within the industry to make our jobs easier.

A great article published recently that provides an overview of some current systems in our industry is David Drucker's piece in May's issue of Research Magazine entitled, "The State of Advisor Technology". David touches on:

• Customer Relationship Management Software
• Financial Planning Systems
• Portfolio Management and Reporting Systems
• Document Management Systems
• Software Integration
• Remote Computing

I think these are great talking points for the meeting because every one has it's place in a financial planning practice. I think there is a great deal to be learned from the group because everyone does things differently and there is not "one right way".

Some firms that are large such as brokerages and banks already have many of these systems in place. Other small sole practitioner or partner shops may have a few in action because they haven't focused their efforts on the technology area. Technology has been known in some aspects as a cost center and in a financial planning practice, the firm is not paid on the actual technology segment of the business. The relationship is the main driver for revenues within the firm.

This is about opening professionals' eyes as to how critical technology is to a financial planning practice. If the systems and processes are mastered, more time is allowed to develop relationships for greater revenue generation and a better chance of a successful venture.

More details will come as far as the logistics for the meeting. Thank you for allowing me the opportunity to serve our community.

Review of our First Meeting in '08

Hat's off to Michael Kitces! What an amazing performance he gave at the FPA of Greater Phoenix Chapter meeting on February 27th. That man knows everything there is to know about all the nooks and crannies in the financial industry, especially taxes. His presentation on "Cutting Edge Tax Planning Developments and Opportunities" was certainly worth listening to. Who would have thought it could be done by a man around 30 years of age? The man has more designations than anyone I had ever seen (I know he gets that a lot). I like to call him the "etcetera man". When they made his name tag for Wednesday's chapter meeting, Jo Lynne put three or four designations and then included an "etc." because there was no more room.

The Young Financiers had the pleasure of hosting Michael for dinner after the afternoon chapter meeting. Some pictures are posted below of our experience at the Red Rim Bistro in the Phoenix Airport Marriott.

Michael got started with the meeting sharing about his background. He had mentioned getting started in the insurance field. That is where his CLU and ChFC designations were derived. He then moved to an independent broker/dealer for a few years, ending up in his current position as Director of Financial Planning at Pinnacle Advisory Group in Maryland. The firm is a fee-only RIA with $600+ million under management. Michael was able to describe his experience under the three different environments. They each seem to have their place in the industry, but Michael seems to like where he is at currently. Michael has transitioned over the years to more of an author and commentator in the financial planning industry with the various books he has published as well as "The Kitces Report", similar to Bob Veres' newsletter style but focused more on the technical aspect of the business. For more information about Michael and his activities, feel free to visit www.kitces.com.

Michael was interested in hearing about each of the Young Financiers' backgrounds. Many in the group were ASU graduates.

The Young Financiers' attendees were locked into listening to Michael's commentary.

A diner at the restaurant was nice enough to take a picture of the entire group present for Michael's get together.

The dynamics of the attendees were great because we actually had representation from a wirehouse or brokerage perspective for the first time. FPA of Greater Phoenix President Neal Van Zutphen had made a comment in the past about "cross-pollinating" the members with various models for doing business in the financial arena. The numerous parties involved could gain perspective and learn how things are done outside of their own philosophies.

As a result of Michael's graciousness to speak with the Young Financiers, our group thought it would be appropriate to provide a small token of our appreciation. We thought a gift with southwestern flair (a glass cactus and desert coasters) would be most relevant and memorable since Michael was a visitor from the East Coast.

Michael shared the history of how NexGen began. He said the movement had started at a FPA National Conference. A group of younger financial professionals got together at this event aside from the other activities occurring. They had modeled it after a financial group called the "Rat Pack". In 2006, they had the first gathering of NexGen at a conference in the summer. I believe there were 95 attendees. The FPA agreed to provide support to get this program up and running. In 2007, about 110 members attended the NexGen conference. They are expecting an additional 20-40 more for 2008's event, which is July 25th-27th in St. Cloud, Minnesota. More information can be found at http://www.fpanet.org/nexgen/. There were no representatives from Arizona last year, but we are planning to have multiple attendees from the Young Financiers this summer.


Thanks again to Michael Kitces for providing insight, perspective, and inspiration to the Young Financiers group. We are very appreciative and will continue to be the change as the next generation of financial planners in Phoenix, Arizona.

Our next Young Financiers meeting will be in April. We are looking to have a Technology in Financial Planning session where we will delve into the impact of technology on our business and create a best practices forum in relation to systems and processes. This will pertain to the efficiency of a financial organization.

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.