If financial planning and new, younger clients are key to the future of the financial advisory industry, then the industry needs to attract young advisors who are interested in planning and not just investment management.
Ian Bloom, a 26-year-old who opened his own financial planning company in Raleigh, North Carolina, less than a year ago, is one example of that advisor of the future.
He’s most interested in financial planning; does not want to push product, but provide clients what they need to reach their financial goals (which aligns with the desires of many millennials); and has his own YouTube channel through which he delivers primers on personal finance topics.
He believes deeply in financial education, transparency of fees and the development of long-term ongoing relationships with clients.
“My generation wants to make a living, but we also want to make a difference,” says Bloom.
He came by the profession through the father of his college girlfriend (now wife), who was in the business, working for a large insurance firm.
Bloom had been a psychology major, hoping to specialize in adolescents, but changed his mind once he realized he would have to get a master’s degree to earn “any meaningful salary” and a doctorate “to make really good money.”
His girlfriend’s father, who worked at Metropolitan Life, helped get him started there, working initially for a salary, then a salary plus commissions earned through the sale of products. Bloom ultimately found himself at MassMutual, which had acquired the MetLife business, disliking the pressure to push product.
During his year at MetLife and MassMutual, Bloom passed his Series 7 and 66 exams and licensing exams to sell life, health and long-term care insurance. Last June he set up his own firm, Open World Financial Life Planning, named for a type of video game that allows players to interact however they want and is “legendarily difficult,” says Bloom.
He’s a gamer who shares an affinity with the gamers and software engineers in his target market. “There is a way that gamers think about the world,” says Bloom. “They’re used to overcoming challenges and setbacks. If you can show a gamer a progress bar comprised of six separate steps [like quests] to overcome, you can help them get their financial life in order.”
He has a YouTube channel called Nerd Finance where he explains in three- to 10-minute videos the importance of investing, the differences between traditional and Roth IRAs and why people need financial advisors, in addition to many other topics.
“Chances are if you have a single financial question I have either addressed it on the channel or have plans to in the near future,” says Bloom in his advisor profile on the XY Planning Network, to which he belongs. He’s also in the process of writing a gamer’s guide to finance, which he hopes to self-publish.
Bloom calls himself a “financial planner first” who got into the business to help people become wealthy rather to work primarily with people who already have millions to invest. He earned his certified financial planner designation in December.
“This is the career I wanted but I didn’t know anything about it,“ says Bloom, recalling his college days. He attended Appalachian State University in Boone, North Carolina, where there was no financial planning program, but a business finance program that focused on the finances and balance sheets of corporations, not of ordinary people.
Still, Bloom’s psych courses at the university have helped him connect with clients in ways that help them reach their financial goals. He likens the connection to a “coaching relationship.”
Bloom will manage clients’ investments but doesn’t view that as his primary purpose. “When I designed the firm I didn’t have asset management at all but added it when two clients asked for it.” He outsources asset management to XY Investment Solutions, which uses East Bay Financial Services for that purpose.
Bloom has two methods of charging clients. A comprehensive financial plan costs a minimum $2,400 — half up front, then $100 a month for the first year and $200 a month for the second — “Gamers are used to paying for subscriptions,” says Bloom. A project-based financial plan is more limited in scope and costs about $1,500 on average. For asset management he charges an additional 1% of AUM, which includes the fees he pays to his outsourced manager.
When this reporter noted that his total annual fees were on the rich side — especially when compared to Schwab’s new subscription service, which charges just $300 up front and $30 a month — Bloom said he was “excited” about Schwab’s subscription plan, “charging for advice. The industry needs to move closer to that. It has not been transparent, has not been clear what the client gets for what they pay for.”
Bloom says he doesn’t understand why advisors who call themselves planners only collect revenue on an AUM basis. “They are not getting paid for the planning work they do,” only for the assets they manage, according to Bloom. He, on the other hand, gets paid for the work he does, and charges separately for those services.
Asked if the new Schwab model means more competition for his business, Bloom said he’s “not competing for the same people. My clients aren’t shopping for costs. They’re shopping for answers.”
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