XY Planning Network co-founder Alan Moore talks about his generation, his monthly fee model, and why many advisors are too focused on retirement.

The millennial generation’s attitudes toward work and money differ from those of their boomer parents, so why shouldn’t they have different advisors who “get” them?

That is one of the questions that drove one industrious Gen Y entrepreneur, Alan Moore, to create a financial planning solution for Gen X (whose oldest members are now pushing 50) and Gen Y savers — the aptly named XY Planning Network.

The energetic 27-year-old, whose accomplishments exceed his years, co-founded the rapidly growing, 10-month old network with advisory industry thought leader Michael Kitces as a sort of virtual home for “pissed-off junior planners,” as he put it in a phone interview with our sister site, ThinkAdvisor.

“They want to work with younger clients; they want to do financial planning,” he says of the 60 constituent firms that XY Planning Network has amassed since its April launch.

What keeps most advisors who value financial planning from practicing their profession is what Moore describes as a broken and conflict-ridden business model built around products and sales.

“Our business model is a total restructuring of the way that financial planning is delivered,” says Moore, whose planners charge a monthly subscription fee so consumers can pay for financial advice the way they pay for their cell phone and utilities.

Moore, who has run his own successful planning firm catering to millennials, and that after working in a traditional RIA catering to wealthy clients, decries the commission-based compensation, with its product emphasis.

But he is also critical of the fee-only RIA model, where the advisor’s fee is based on assets under management. That model, he argues, incents advisors to seek out wealthy clients, or to make them wealthy, encouraging them to work, save and invest even when they might be better off working and saving less but consuming more.

“Our focus is on our clients’ income, on helping them live great lives — not making sure I get as much of their money into an IRA as possible because my retirement plan is getting rich [through AUM fees],” Moore says.

Interestingly, the Georgia native, now resident in Bozeman, Montana, says peers who ask what he does professionally typically have a hard time understanding what financial planning is, so he makes it simple for them:

“If I was to define financial planning for you, I would say it’s helping clients live great lives. Ultimately that’s what we do,” he says.

But Moore says older and younger generations have different views of what that means.

In a recent blog he posted on Time magazine’s site, the young advisor, all of whose clients are under 40 as well, says one can’t talk to millennials about “retirement.”

“That’s something that’s not going to happen for 30 more years. It’s just hard to connect with,” he says, adding that he has seen eyes glaze over when (formerly working at a traditional wealth management firm) he handed young clients a Monte Carlo simulation showing they’ll one day have $30 million with a 70 percent chance of success.

“It really requires a restructuring of the conversation. It’s part cultural, part generational, part their age. They don’t want to talk about working their tail off so one day they do not need to be working anymore,” he says.

Rather than retirement, which does not resonate with millennials, Moore talks about financial independence, which does.

“My parents [who are 57 and 53] are still trying to figure out what I do for a living,” he quips. “I don’t’ have a single job; I don’t go to same office every day,” the expected routine of boomers whose model was to work a full-time job and then retire.

For members his generation, in contrast, a “side hustle” with Uber or TaskRabbit to bring in extra money may be preferable to a full-time job they may not want for the rest of their working lives.

What’s more, millennials “don’t trust the job market like our parents did; they know they’re going to get laid off or try [new opportunities]; they saw their parents rely on a dual income and then kind of get screwed [when one spouse lost a job but still had to pay a mortgage],” for which reason Moore says it’s common for millennials to live on one spouse’s income while saving the other’s.

But while society is changing, the advisor and entrepreneur says the financial services industry is slow to change, and nowhere more so than in its obsession with retirement, which he says derives from the compensation advisors receive from retirement products.

While most advisors would cringe at a couple who keep substantial wealth in cash rather than investments, “that excites me to no end,” Moore says.

He recalls the experience of 30-something clients who were encouraged to put their half-million-dollar net worth into retirement funds, and thus lacked the financial wherewithal to manage a financial crisis because they had no liquidity.

Far from seeing cash as a lost opportunity, Moore says: “The greatest asset that a young person has is their ability to earn money; and investing money in yourself — or investing in a career you love, whose return is hard to quantify — can bring a better return on your investment than investing in the stock market.”

But lacking a financial incentive to fatten his clients’ assets and enlarge his own fees, Moore says that XY Planning Network advisors can have these conversations, and consumers he says, are clamoring for them.

His network does not regulate how much advisors in his network charge, saying that monthly fees generally range from “$100 on the low end to maybe $250 on the high end.”

That variability, he says, makes sense, since the advisors’ services vary: some manage assets, others outsource money management through TAMPs, still others provide tax-return preparation and so on.

Advisors pay a $400 monthly membership fee to join the network and can terminate membership at any time. That fee includes ongoing compliance support, a turnkey financial planning technology platform, and the provision of leads from prospects seeking advisors.

While Moore says probably every member has gotten one or more clients from the network, “folks just looking for lead-gen are probably not the right fit” because the main value of the network is the community of like-minded advisors who can help each other out.

“The community is why people stay; we use an intranet where people ask each other questions: ‘What do you think of this new logo, or a very technical student loan question or … how do you structure the monthly retainer?’

“I call it ‘choosing your own co-workers,’ which is a nice thing to have for solo practitioners,’ Moore adds.

His cadre of planning wonks are all CFPs, and all work virtually. And many get referrals from advisory firms with large investment minimums, he says.

XY’s closest competitor, he says, is the Garrett Planning Network (GPN), a 15-year-old network of hundreds of hourly-based fee-only advisors. Moore says the major difference, apart from cost structure, is “the tribe.”

The GPN tribe tends “to have older advisors, career changers, and people who work part-time; we have a tribe of younger, very energetic advisors looking to reshape the financial planning profession,” he says.

Moore and Kitces, whom he met on Twitter in 2011, he says, decided to start the firm when they realized they were each having the same conversations with young planners wanting to do things differently.

Moore says he had 50 hour long conversations with people who, noticing (through social media, public presentations and the like) he started a successful planning firm at the age of 25, wanted to know what CRM he was using, how did he do compliance, etc.

Many of those 50 planners are founding members of his network, he says.

See also:

Advisors must better server women, social media-savvy millennials

What about millennials who are starting families