Young Rebel With a Cause

Elkhart has been called the RV (recreational vehicle) Capital of the World, and is also the place where car trailers were invented, but it isn’t the land of milk and honey for wealth and flashy living. It does, however, have a fair amount of salt-of-the-earth working-class Midwest types who have made money over a lifetime and need advice. The local population is also sprinkled with the descendants of the Amish who are focused on the practical things–making sure the money doesn’t run out, Coates says. Many of Coates’s clients are retired, with 94% or so of them being what he calls income-type clients.

Elkhart residents first seek stable investments, then income and growth, he says. Some money is put aside in income-producing assets and the rest is used for growth. The client decides, using an interactive spreadsheet designed by Compass Wealth, whether she wants five years of income set aside that will protect her if the market turns downward. The target is to hit the rate of return every quarter to build up that cushion of income, Coates says.

What Coates does offer clients is to have cash sitting off to the side so that in bad times, they won’t be forced to sell their equity holdings. “If we have a bad two years, then they may be forced to sell or…we put three years of income off to the side,” he explains. The point is that Compass Wealth has devised a way to respond to the client’s wishes while fully informing them of their options.

Michael Kitces, director of financial planning for Pinnacle Advisory Group in Columbia, Maryland, and a co-founder with Coates of NexGen, says Coates “is a pretty active go-getter type,” who has “big ideas” and looks for new approaches. “His style is to help create things and get the ball rolling.” Twenty-nine-year-old Kitces was another young industry wunderkind who with Coates attended the 2004 Financial Planning Association retreat in Colorado. “We were shocked at the sparseness of young planners at the meeting,” Kitces recalls. Perhaps there were four or five under age 35. “Aaron came over to me to start the idea of a community of young planners,” says Kitces, who chaired this year’s NexGen meeting in July. Now, NexGen has taken on a life of its own.

Elizabeth D. Festa is a freelance business writer based in Washington, D.C. She can be reached by e-mail at [email protected].