If your clients call to say they’re bringing their children to your meeting this afternoon, you’ll probably put on an extra pot of coffee for the additional visitors, review the succession plan that is transferring ownership of the family business to the next generation, and print out some materials regarding the grandchildren’s college funding.
Not Marnie Aznar. When her clients call to say they’re bringing their kids, she’s more likely to set out some apple juice in sippie cups for the extra guests, scare up a few stuffed animals, and arrange coloring books on an office coffee table that’s just the right height for pint-sized artists.
While many advisors duke it out over the wealthy silver-haired set, Aznar, of Aznar Financial Advisors in Morris Plains, New Jersey, has found success and satisfaction serving folks who are more likely to have a stroller in the trunk than a set of golf clubs, and whose night on the town is less likely to be an evening at the opera than a dance recital of a dozen kindergartners twirling about in pink tutus.
At 29, married, and with a two-year-old daughter, Aznar fits her own client profile to a T–but she found her target clientele almost by accident. When she founded her fee-only firm four years ago, she simply didn’t think that most well-heeled retirees would trust a 25-year-old with their seven-digit portfolios. “Maybe I didn’t have enough confidence at the time, but I just didn’t think that a 65-year-old man with $3 million was going to hire me,” she says. “Perhaps inevitably, I felt more comfortable with clients who were more similar to me, and they felt more comfortable with me.” When Aznar tells her clients, who range in age from the mid-20s to the mid-40s, that she understands their concerns about educating their children, affording a home, or handling the tug-of-war between career and family, they know she really does, because she’s facing them, too. “I have a lot of young professional women who are moms, and they’re dealing with the same struggles I am,” she says. “It just makes it easier for them, and for me, to be able to relate.”
Although Aznar started her professional life working with the aforementioned moneyed oldsters (she spent two years providing financial planning to corporate executives at the Ayco Company, LLP, and one year doing so at PriceWaterhouseCoopers), she especially enjoys helping young clients because their futures are wide open. A few smart moves early in the game can change the shape of a young client’s future on a scale that can’t be matched by even the cleverest financial strategies implemented for an older client, she notes. “I had a young couple, both 25 years old, with no idea where to even begin. To spend a couple of hours with them and get them on the right track, so that they’re saving in the right places, can make such a tremendous difference. They hadn’t even heard of a Roth IRA, and weren’t contributing to their 401(k)s because they didn’t think they could,” she says. “It makes you feel great to be able to help them start out on the right foot.”
Despite the industrywide drooling over the prosperous baby boom demographic, an equally appealing market can be found among the next generation, says Aznar. “But they’re much more skeptical than the baby boomers, and so they’re looking for conflict-free, objective advice,” she says. That skepticism works out well for the fee-only Aznar, who charges clients one of three ways: an annual retainer fee; a one-time project fee for a comprehensive financial plan; or an hourly rate. The different models enable her to help people who wouldn’t typically get the benefits of working with a fee-only planner, she says. Moreover, since so few fee-only planners accept her target clients, the referral pipeline is almost always brimming. “When someone in their 30s in northern New Jersey without a tremendous amount of assets types their zip code into NAPFA’s Web site, there aren’t that many options for them [other than my firm]. So I get a lot of business that way!” she says with a laugh.
Aznar’s clients generally have few assets in the bank, but their incomes are substantial, and one of their most pressing concerns is the way those substantial sums seem to slip through their fingers. Getting clients to cut spending might seem like one of the less appealing aspects of financial planning. While nobody wants to be the grim-faced party-pooper forever glowering at a client’s every splurge, clients who are overspending generally know they’re overspending, Aznar says. They just don’t know what to do about it.
Aznar starts by having the clients track their spending for at least two months to establish where the money is actually going. “The process, although sometimes a bit painful, has been a real eye opener for a lot of clients who are shocked at how much money is going to Dunkin’ Donuts or Starbucks every month, or to dining out or personal care,” she says. “This process can often be the beginning of a reduction in spending because it raises their awareness about their actual cash flow, which is very different than what they had thought.” To reduce insurance expenses, she may recommend raising the deductibles on the clients’ policies; to reduce entertainment expenses, she may suggest that they reduce or cancel subscription services (such as cable TV) that they’re not actually using. If the client pays a health club membership but never actually goes to the club, she’ll encourage them to cancel it, too. “I’m a big believer in exercise and physical health, but if they’re not going and they know they’re not going to go, why waste the $60 every month?” she says.
To diminish the impact of future spending, she’ll counsel clients to spread their major expenses over several years, rather than incurring them all at once. “If the client wants to redo their basement, their kitchen, and their landscaping, showing them the impact of doing it over four years instead of all right now is usually appealing to them,” she says. As for encouraging future savings, Aznar often recommends a “savings by default” approach, rather than a traditional budgeting regimen. Once the clients decide how much they can contribute each month to their 401(k) plans, 529 plans, IRAs, and other savings vehicles, she sets up the clients’ accounts so that all of the contributions are made automatically. “I have found that when money is automatically withdrawn, be it through a deferred comp plan, a 529 plan for their kids, or a taxable account for long-term savings, somehow they manage to live without it,” she says. The approach works. Aznar helped one client couple that was saving $20,000 per year to begin saving a whopping $125,000 instead, simply by enrolling both spouses in their deferred comp plans at work, enrolling one spouse in a supplemental savings plan, establishing an automatic monthly contribution to a 529 plan, and setting up an automatic monthly transfer to a savings account for shorter-term goals.
Striking Out on Her Own