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Financial Planning > College Planning

Robo advisor, meet millennial advisor

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Thomas Forbes thinks the robo-advisor is an interesting evolution for the insurance and financial planning industry. Forbes, associate financial representative for Northwestern Mutual in Los Angeles, sees the rise of the robo-advisor as both a challenge and an opportunity. “It makes sense to where we are today in the world. I think it will slowly begin to penetrate the millennial market because it’s easy and it’s low cost.”

Forbes sees the benefit for young people who don’t necessarily make time to meet with financial advisors to create a financial plan, including insurance and retirement. “It’s not always easy to set aside time for something like financial planning if you don’t know you have a need for it. It’s not how millennials roll.”

He should know — Forbes is a millennial, as well. Plus, he’s new to the job, having been a financial rep for just two and a half years. It wasn’t a job he intended, but after college and two years in South Korea teaching English and learning a foreign language, he was home and considering his options.

He was also considering going back to graduate school for pre-med or physical therapy. Yet he felt he was on the wrong course. It was then he called his financial advisor, who worked at Northwestern Mutual, and talked with him about making a Roth IRA contribution. “After that conversation, he asked me what I was doing for work, and if I’d be interested in working for Northwestern Mutual. He referred me into the business.”

The network challenge

It wasn’t an easy transition. His first challenge was the toughest — networking. Having been away at college for four years, then out of the country for two more, Forbes struggled to get those first clients. “Your market is what you build on from relationships. I didn’t have as much focus off the existing relationships in Los Angeles. So coming back in, the challenge was rebuilding the network.”

He was able to do that successfully within the LGBT community, of which he is a member. While that sets him apart from other agents and gives him opportunity, he says it’s still challenging finding the right methods by which to capture that demographic. The majority of LGBT clients have come to him through referrals.

However, it’s also a market segment with its own unique needs. HIV, for example, while not prevalent within the community, remains a concern for a small segment of the population. Forbes says that it’s mostly an uninsurable event, but he’s seen some companies working toward getting a product on the market. However, that coverage remains expensive.

Within the LGBT segment, Forbes says retirement planning is actually quite a good opportunity for his clients. “A lot of gay couples or singles don’t have children. That’s a cost they don’t need to plan for in terms of education planning or general retirement planning. They don’t need to set aside so much capital to give to their kids. That gives them a big opportunity to save more than the average person who’s got two kids.” Yet even that is changing. He’s seen a growing number of the LGBT community in Los Angeles opting for children.

Related: How late is too late to start selling insurance?

Growing a brand

The focus on LGBT business is not Forbes’ only marketing. He says he gets quite a lot of professional and personal benefits not just by joining associations and nonprofit organizations, but also by volunteering to serve on the board. Most recently, Forbes served on the board of the Young Professionals Council in his city, a move that helped him network with other savvy young business people. His reasons for joining such associations are twofold — he wants to increase his networking group, but also “I want to give back to the community. It can help me get clients, but I’m also giving back to the community.”

He’s also learned to ask for what he calls “very pointed referrals” from clients and prospects. He uses the example of asking a physician’s assistant client for a referral. He asks for the names of other physician’s assistants that the person went to school with. In that one move, Forbes was able to secure five referrals. “It’s an easier question than ‘Who do you know?’”

The question was smart on a few levels, he says. First, these are referrals the prospect has a good relationship with. Second, “You know that they’re working and probably making decent money.” That question helped Forbes contribute to his three-person team’s $529,000 in insurance premium in one production year.

Competing with technology

That’s no small accomplishment given the growing interest in robo-advisors. In fact, the vast amount of information available online has made the advisor’s and agent’s job that much harder. “Once we make a recommendation, people say they want to do their research on it. It’s fair for them to do that, but this magic box of the internet has a lot of information. How do they know they’re getting good information? We’re making recommendations based on specific things, but one article could be geared toward a community, and the advice doesn’t apply to this particular person. It kind of drives me crazy.”

With the onset of robo-advisors, personalization has disappeared, says Forbes. A trust relationship, which is essential at the point of estate planning, doesn’t exist. While he does see the draw for the online tools, he thinks the advisor has a critical role to the health of their clients’ retirement planning. It’s too easy to go online and make a bad investment decision, he says. “When the market drops, people get freaked out and want to sell everything. If you have someone to go to who reminds you of the strategy we’re working toward, that’s a huge value that can change your overall return over a long period of time.”

That’s why Forbes believes agents need all the knowledge they can accumulate. “You need to be able to understand things in a complex and in-depth nature when you’re talking about estate planning or investments or insurance planning. So get your licenses quickly. It’s a lot easier to make a recommendation on the insurance side of things if you’re also making investment recommendations.”

That way, he says, when markets dip and clients panic, they have someone to turn to who will give them sound advice. “It’s service. That’s honestly our biggest value add as advisors.”

Related: Technology can help advisors deal with the impending DOL fiduciary rule


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