I was finally able to catch up with Deborah Fox, CEO of the Fox Essential Planning Services (and the Fox Financial Planning Network), who was the subject of my last two blogs (Luring Millennials Is a Waste of Advisors’ Time and last week’s Luring Millennials Is a Waste, Take 2: Serving the Children of Clients Makes Sense), via telephone from her San Diego office.
She’s an obviously bright and passionate advisor, who gave me more than I bargained for: providing the details of her novel strategies for both attracting and working with millennial generation clients.
Here’s what she told me about her process for working with millennials. As I wrote in my last blog, her goal isn’t to recruit these 20-somethings off the street (although she wouldn’t rule that out). Instead, her plan is to offer financial services to the children of existing clients, creating an “ongoing” firm that, if successful, could take the independent advisory business to another level.
Fox’s work with millennials is an offshoot of another uncommon service that her firm offers: providing college financing advice for affluent families. With college costs continuing to skyrocket, and sources of financial aid funding drying up, Deborah found her firm researching the alternatives for clients with college-aged children. “It was completely accidental in the beginning,” she told me. “But before long, we developed an expertise in the alternatives for people who don’t quality for financial aid. And that side of our business just grew. We eventually created Fox College Funding, LLC, and now other advisors send their clients to us for college consulting, too.”
Not only did college funding become a source of new advisory clients (not those of other advisors), it also led to services for high school students: choosing the right college, learning financial responsibility and even some financial planning. Which, in turn, led to advisory relationships with college-aged children as well as their parents.
But what started as an additional client service has turned into a business model that Fox hopes will enable her firm to work with her clients’ children from college to, well, when they pass on their portfolios to their own children. “It’s just a question of creating good relationships with young people,” she said, “and of helping them with the challenges they are currently facing. And working with younger clients who have more basic financial needs is a great training ground for young advisors—who don’t get much hands-on client experience at most advisory firms.”
Because Fox sees the payoff for working with millennials to be continuing to manage their parents’ assets and to train younger advisors, that part of her firm isn’t under pressure to be profitable on its own. Still, she does want to deliver the service as efficiently as possible, which is why she’s in the process of adding a “robo advisor” component to her firm.
“Ultimately, we anticipate offering younger clients three levels of service,” she explained. “An automated ‘set it and forget it’ portfolio management, with 24/7 access at a low price; a ‘light advisor touch’ service, with group access to advice, and online meetings; and investment management plus financial planning. The goal is to connect to millennials via the way they want to receive advice.”
Of course, the real test of Fox’s program will be whether her millennial clients actually stay with the firm after they inherit their parents’ portfolios. While it’s too early for any actual results, Fox has had some good early indications.
“To date, we’ve had three of our clients pass,” she says. “And in each case, the children who inherited kept their portfolios with our firm. Although those children weren’t clients of the firm, we had worked to build good relationships with each of them, and we think the results are very encouraging.”
As Fox says, the question for the industry is “How does the independent advisory model evolve to retain client assets from one generation to the next?” She thinks her program stands a good chance of offering the solution.
And she even has an answer for those of us skeptics who wonder whether millennials are still too young to “take financial advice.” “Today, many of them may not be ready,” she said. “But sooner or later, we’re going to have another major market correction, and then they will be ready. We want to be in a good position to attract them as clients when they are.”