“The Great Divide” (February 2005) made strong assertions about the current state of financial planning. I am a 22-year-old newly-minted fee-only financial planner and while I agree that the obstacles mentioned in the article do exist for young planners, I can say with confidence that they don’t need to. I practice financial planning under the Sestina Network, created by John Sestina, and it has made my transition from student to financial planner seamless. My experiences over the past 16 months have been so vastly different from what was depicted in the article that I urge other young planners not to settle for a position that underutilizes them and not to give up on their profession, because solutions most assuredly do exist. If you find yourself struggling to get started, look into joining your local chapter of the Financial Planning Association. The FPA has provided me with a wealth of resources that have proven to be invaluable, and could help you find a mentor to guide you through this process.
Matthew M. Brandeburg
Kickin’ It Old School
I just read your article, “The Great Divide.” I must say it left me feeling that the new, educated financial planners want to jump right into a practice without growing pains or, as some have expressed, “paying their dues.” I have been a sole practitioner for some 17 years now (my first three were with IDS [American Express]). I started with no formal degree in financial planning. I sure wish it had been available. I believe the new graduates have an advantage.
You exposed the frustration of those new planners who want to work in a place where they can share in the ownership, especially in those cases where the new planner “generates half of the earnings.” I don’t think it is entirely fair to present only this angle. Generation of fees or earnings is a combination of getting the client in the door and then having the systems in place to present a viable planning process and finally getting paid for it. I do not wish to diminish the efforts and professionalism of the young planner, but he/she is but one piece of the process developed by the owner of the business.
The planners who have been in practice for a number of years have done much more than study for entry into the profession. I entered the industry as a financial planner; I had no experience as a broker or an insurance agent. At the time I lived far away from family and friends so I was carving out a client base from the very beginning. Once I completed the CFP requirements, I left IDS and opened a practice in New Jersey. Six months later I relocated to San Juan, where fee-only planning was virtually nonexistent. Almost 15 years later I am still here, but with a much more solid client base. When you hear the “older” planners’ expressions of “paying dues,” I believe it refers to the professional and business growth one endures while developing a practice. The study of the planning process is but one of the many, many components of any practice. I believe the new planner must research the practice he or she joins to better understand the type of clients serviced and the types of services offered.
I agree with you that independent financial planning firms need to do a better job at utilizing the new, educated resources better. There are large firms (banks, brokers, and other institutions) that have programs in place to use the new talent more effectively.
Kurt A. Schindler, CFP
Financial Planning Group Corporation
Hato Rey, Puerto Rico
What’s For Sale Matters
The section of the February 2005 Gluck Report (“Marketing Wisdom) under the subheadline “Remember: You’re Selling” misses the point.
Yes, we are all selling something. A fee-only advisor is selling his knowledge and advice. A commissioned or fee-based broker is selling a product. Don’t confuse the two because there are significant differences.
The problem arises when commissioned advisors sell for the sake of selling because they have to sell the client something in order to get paid. Worse yet, they may choose to sell the products that pay the higher commissions, whether or not they are appropriate.
When fee-only advisors get a bit fervent, it is because there are several conflicts of interest when taking advice from someone who is selling you a product. These conflicts are eliminated when someone is selling you pure advice. The solution and better way is, without a doubt, fee only.