Warning to Veteran Advisors: Your Old Model Won’t Cut It With Millennials

December 14, 2017 at 04:46 AM

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Blunt message to veteran financial advisors: No way do millennials want FAs whose goal is to sell them products. They want advisors who focus on meeting their needs, as Eric Roberge, 38, a successful four-year "virtual advisor" targeting professionals in their 20s, 30s and 40s, told ThinkAdvisor in an interview.

Roberge is unquestionably representative of the new financial planner paradigm. As a virtual advisor, 85% of his client meetings are held via video — digitally, that is — using Skype or a similar service. Marketing himself as "a personal trainer for your finances," the fee-only CFP takes the friendly exercise/sports theme further by charging most clients a monthly subscription, just like paying for a gym membership.

Of course social media plays a big part in Roberge's M.O. More about that shortly.

He manages assets of $6.5 million, but right now, gathering assets isn't what this planner is about. He is focused on helping young, motivated men and women who make at least $100,000 a year build wealth by developing constructive money habits.

Indeed, he zeros in on the principles of behavioral finance to first gain insight into what makes his millennial clients tick money-wise — vital information for both advisor and client.

A J.P. Morgan assistant treasurer before switching to financial planning, Roberge founded his practice, Beyond Your Hammock, in 2013. He prefers helping people who want to be actively involved in managing and investing their money and has coached more than 100 determined millennials get to that next level.

How to connect with this cohort? Roberge confirms what you likely already know: Go where they go. The CFP is an expert at working the fertile terrain of social media, with his networks numbering 1,000-plus on Facebook, 2,000-plus on Twitter and about 1,000 on LinkedIn.

The trick to harnessing social media, he says, is to generate and post engaging content that indicates specific ways you can help the next-gen folks you're pursuing.

Roberge charges most clients a monthly subscription fee for which he provides ongoing financial planning; when assets reach $500,000, some clients switch to an AUM model. He maintains a flat fee to create a financial plan only.

For the first six years of his career, the Methuen, Massachusetts-born FA worked at two big banks. He trained at State Street and there became a portfolio accountant pricing mutual funds. At J.P. Morgan, he was a supervisor in the mutual fund tax department.

By 2007, seeking personal fulfillment working with investors one-on-one, he left the bank and became a financial planner.

Stints at small firms followed, where he helped folks invest and also sold insurance. In the summer of 2013 he launched Beyond Your Hammock, a name that piques curiosity, which is precisely why he chose it.

The solo advisor incurred only about $12,000 in startup costs that first year and still keeps expenses low by paying monthly for a CIC co-working space in Boston's financial district.

To set up shop daily, all he does is yank his laptop out of his backpack. Face-to-face meetings are held in one of several on-site conference rooms.

In a recent interview with ThinkAdvisor, Roberge revealed secrets to his success and why nowadays young advisors have clear advantages working with millennials over FAs who entered the business a few decades ago. Here are highlights from our interview:

THINKADVISOR: What's your advice for veteran financial advisors who want to pursue millennial clients?

ERIC ROBERGE: If you've been in the business for 30 years, you deserve respect for having created the world of financial planning. But what got you there isn't going to build a successful practice with millennials.

What will?

You have to figure out a different way of doing business in order to connect. It's all about communication and listening to people, and providing something that will fulfill their needs — not having them fit into your process. Millennials aren't interested until they understand how you can help them with their needs.

Many older advisors consider millennials almost a different breed. They say that cohort doesn't like to meet with FAs face-to-face and want to be communicated with only by email and phone.

Millennials aren't all that different. But they're definitely technologically forward. So, yes, they use their phones more. They access social media apps often and communicate with people through Facebook Messenger, Twitter and Instagram. That's how they're connecting.

So social media is obviously critical for reaching millennials.

If you're looking at the younger generation, you have to be in those places in order to get in front of the people you want to attract. But it's about what you say on social media and how you say it that has people pay attention to you and engage with your content or not. If people aren't engaging with your content, it might as well not even be there.

Why do you define yourself as a "personal trainer for your finances"?

People get that connection. Just like a personal trainer will help build a regimen for the gym and guide you to make sure you're using the right technique for exercises and hold you accountable for going there, I'm doing the same thing for clients' money.

What do you bring that differentiates you from other advisors?

I try to take the industry [emphasis] on demographics to another level and focus on psychographics — trying to understand people from a behavioral finance perspective, a mindset of growing wealth and what they're looking to do. That way, I can focus on the people I really want to work with: those who are more inclined to build solid money habits.

How do you learn what your clients are really about?

One way, early in the relationship, is by using software that helps them understand their money mindset and propensity to grow wealth. DataPoints [software] offers insights into the behavioral finance side of planning. People answer survey questions that help me identify how well they rank in areas like "frugality" and "responsibility." The scores provide talking points. I'm hoping that this helps clients better align their values with their wealth-building goals.

How do you encourage folks to save money and not spend too much?

Instead of consumption being the goal, it's building wealth — directing the energy from "How do we spend as much money as possible right now?" to "How do we save and invest in a way that allows us to choose how we live down the road — and not having to make decisions because our money says so?"

But tightening the belt requires a great deal of self-discipline, especially when you're young.

It does. And that's where psychographics comes in. [My target client] is a certain type of person that's very motivated and knows how to [capitalize] on having a coach, perhaps from doing sports. I want clients to be involved with their [finances]. I don't want them to say, "I just want to go to work 9 to 5 and have you manage my money."

What would you like them to do?

Ask questions to try to get better every day because that's the way I know they're committed to the process. Then we can actually improve their situation day by day. So if people who are now 35 do that every year, they'll definitely be in a better situation in 30 years.

What motivates millennials to seek you out?

A 30-something that makes six figures is at a point in their career where they have enough money coming in and should have something to show for it. But often, outside of their 401(k) plan, they don't — and that frustrates them. So they say, "Tell me what I'm doing wrong so that I can prioritize my money and make sure it's going to the right places." They're looking for financial freedom down the road.

You're focusing on people who make at least $100,000 a year. What's your fee structure?

When I first starting doing this, other advisors said, "You're really dumb because you're not going to make any money — 1% of zero is zero." So that's why a monthly subscription makes sense, just like paying for a monthly gym membership. Clients pay me to provide ongoing service and coaching. I also have a Quick-Start financial planning service: a 90-minute conversation with [individuals] who aren't yet making $100,000 and who don't understand how to prioritize their money and need to be pointed in the right direction.

What about young people who are living paycheck to paycheck? If they don't get good financial advice, in 30 years they'll wind up like most baby boomers with nothing saved for retirement.

That's a habit thing. If they're not saving, there's something in them that has them overspending. They're using money as a release, just like people use food and drugs that way. They have to do more than financial planning to improve that part of their life. From there, a financial advisor can really help them build money.

Many people – particularly millennials — are wary of advisors or brokers because they think they just want to sell them products to make commissions.

I hate all that [selling]. When I left JP Morgan and became a financial advisor, I worked for several different firms where I both sold insurance and did investments. I hated the product sales; it wasn't transparent. You can't really help people because you're so interested in trying to sell something and make a commission off it. So when I started my business, I chose to be an independent fee-only RIA and provide objective advice. The products are simply tools.

What investment vehicles do you use?

We figure out the strategy to [reach goals] and then plug in the tools that will help clients get there. There are very few products other than exchange-traded funds [ETFs] for my clients' investments. All my portfolios are built with ETFs.

So much is being said about marketing to women. Do you approach millennial women differently versus male millennials?

Women aren't a niche — just like baby boomers aren't a niche. My client base is split evenly 50%/50% men and women. I know an advisor who focuses on women in technology. That's a niche, but women in general aren't a niche. That's nonsense.

But is there any way an advisor needs to deal differently with a female millennial?

Not really. Sometimes their attitude is a little different [from men's]. They're actually more open to the advice than, maybe, a man would be, just like men don't like to ask for directions when they should. It's a little easier for women to relax and take the advice.

Please talk a bit more about the role that social media plays in your prospecting.

I want to make sure I get into the media, whether by being quoted or writing something. But that alone doesn't do much for getting new business. However, I can leverage that exposure by, say, posting an article — maybe with a learning tip in it — on social media so that my entire network sees it. If people see it over and over again in different variations, they'll realize they should reach out to me if they have a question about finances [figuring] that "Eric is the one who helps people in their 30s who are going through transitions."

Do you ever pay for ads on, for example, Facebook?

If people interact well with a blog post, then we'll highlight it by putting money behind it to boost it and get it out to thousands more people. For instance, we did that with a recent blog I wrote about the budget we worked out for Kali [Hawlk, founder of Creative Advisor Marketing] and my upcoming wedding. People are eating it up! So I actually walk the walk of what I tell my clients.

When you attended Babson College, what were your career aspirations?

I read The Wall Street Journal because it was laid out in my dorm for free; and then I started becoming interested in investments and the market. I thought it would be lucrative and prestigious to be a stockbroker or a trader. But I realized that tech was taking over and that trading was stressful and maybe wouldn't even be there at all that much longer.

Yet you stuck to pursuing a career in finance. How come?

I liked investments and started investing after college. I owned two stocks; one was Borders Group [books and music]. I probably made $100 on that investment — and thought it was great. [Borders ceased operations in 2011 after filing for bankruptcy]. So I was smart: I got out when I needed to!

What was important to you career-wise when you graduated from Babson with a B.S. in finance, accounting and economics?

I was still focused on making money and prestige. It wasn't until I founded my own business that I realized [a career] was much more than that. It was finding something that I really felt passionate about that didn't feel like [onerous] work and where I was providing education and helping people in their lives. That's what drives me.

Many people don't trust the judgement of inexperienced young brokers and advisors. Did you encounter that?

I used to get that all the time when I started as an advisor. I was 27 and looked about 24. But after I started by own business at 33, I have yet to hear anybody say anything about my age or experience.

Your youth is a plus in attracting millennials. What about drawing middle-aged clients?

I don't necessarily work with older people. But if a 55-year old comes along, they know that 20 or 30 years down the road, they'll still be around. So if they're working with a 60-year-old advisor now, that guy will be 90 in 30 years and probably won't be in business anymore. However, that's the time when you need your advisor most. You therefore need someone who'll be around for the long haul. That's where younger advisors have an advantage.

What's your ultimate goal?

I'd like to grow the business to where I become the literal CEO, speaking and innovating and trying to push the industry forward. I'm really motivated by being on the front line, coming up with new ideas, taking chances and figuring out how to make the biggest impact possible with what I know how to do best.

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