Youth is wasted on the young, according to Oscar Wilde. Many think it is wasted, too, on 20- or 30-something CFP® professionals trying to get started in the business. After all, who wants to talk about money and retirement with someone who whose balance on student loans is higher than his or her home equity?
As younger Americans increasingly realize the value of financial advice and the importance of starting their planning in early adulthood, the demand for contemporary planners may well increase. But if there's a lingering tendency to assume older is wiser when it comes to financial advice, consider the following:
- Cost efficiency: So much of good planning is about organization, documentation, and data management. A younger planner, whose hourly rate is likely lower than an older advisor, may be just the right person for these essential tasks.
- Longevity: Older planners may be good at advising about retirement, because it is something they probably think about a lot … for themselves. But, if you are interested in forming a long-term trusted relationship with an advisor, there are advantages in seeking a professional who still has a long-term career plan.
- Accessibility: The person whose name is on the door may often be out-the-door, speaking at professional conferences or taking care of all the activities required to keep a business going. Younger associates are often the ones running the shop; and they will be there for you, even without an appointment.
- Ways of doing business: Because today’s 20- and 30-year-olds have little to no experience of such archaic practices as typing, taping, or telephony, their attitudes about communication and information sharing are often quite different from their seniors. Access, security, and speed are to them what knowledge, privacy, and face-to-face relationships are to an older generation. In choosing your planner, you are also choosing a style of communication; and preferences about this may well be generationally determined.
So, why might it be that consumers feel better with older financial planners? Perhaps whatever we know about money was learned (or not learned) from our parents. The failure of schools to teach personal finance is well known and much to-be-deplored; and talking about money is often a very private matter, discussed only within the family. For these reasons, when we seek out a financial advisor, we may well be seeking a parental figure: one who gives us permission and guidance on making and spending money.
A quite different reason may have to do with the financial planning industry itself. The profession is not very old, having evolved out of the professions of accounting, insurance, and brokerage about 40 years ago. The first financial planners were well-established professionals in other fields, who moved laterally into the field of personal finance. Back then, there were few if any colleges or universities offering courses in financial planning; the early financial planners did not study for the profession, but came to it entirely through practice. As a consequence, the profession grew through the 1980s and 1990s under the auspices of seasoned, middle-aged professionals, often in solo or small practices where there was very little room for younger professionals who did not have an established book of business.
Fortunately for us all – both professionals and consumers – this is changing. There are hundreds of college and university degree programs in financial planning and a flourishing market for interns at financial planning firms. Many of the sole-proprietorships of three decades ago have grown into well-run businesses with multiple employees and divisions, affording tremendous opportunity and growth for the younger planners who will someday be running these companies.
Don’t get me wrong – CFP® professionals with a few wrinkles have their uses too. Some of my very best friends in the business are old, or rather, mature … just like me. But there is something to be said for the importance of the young CFP® practitioner in a profession that is all about planning for the future.
More Resources:
Eleanor K.H. Blayney is Consumer Advocate for the Certified Financial Planner Board of Standards (CFP® Board). She is President of Directions LLC, a firm that assists women with women issues.
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I feel that (all other things being equal) a younger professional would have less of a sense of the seriousness of the task at hand, because they themselves have much more time in which to make mistakes and recover from them. Someone who is 25 is going to have a harder time conjuring up 60, on their own behalf or on mine, than someone who is 45, and their advice is going to be affected by it. On the other hand, the ability to communicate using up to date modes of communication, as well as to acquire information by them, is not to be derided.
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I do not know the age of the author but its curious that she has zero activity and points on FiLife. I would say that one should not judge a professional by age but rather their experience, credentials, knowledge and communication skills. It's true that if you work with a 65 year-old planner you might need a new one soon. But that fact alone doesn't justify you working with a 27 year-old planner just because you might be able to work with them for 40 years. People move on, get promoted, die, burn-out, change careers, etc. The choice of a financial planner should be based on a multitude of factors with equal weighting...not the singling out of one factor.
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I totally agree that the choice of a financial planner should take into account many factors -- such as experience, expertise, and commitment to professional and ethical standards. In promoting the younger planner, I am simply acknowledging the many dedicated, aspiring professionals now entering the field of financial planning who have a lot to offer in helping consumers make smart financial decisions. I assure those reading this article that there is no self-promotion intended: I belong to an "older" generation that finds these social networking sites a bit hard to figure out. Maybe that's why I have zero points on FiLife!! I'm working on it....
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My god. Are you crazy? If you think a young financial planner going to give better advice than a an old financial planner is ridiculus! Let me further clarify a very intersting point. Regardless, young or old. All financial planners will direct the client to the highest commissionable product, regardless of the best interests of the client. So it's a mute point. All commissionable agents may seem sincere, may look pretty...but the bottom line they will hustle the client into the largest commision product. It's that simple.
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Peter: a point of clarification. I am not arguing that younger financial planners give better advice than more experienced advisers. (And no, I am not crazy.) My message was that in a profession that is growing, largely through younger people training and entering our ranks, there is an important role to be played by a young advisor. Given that so many -- too many -- people think that financial planning is expensive and only for rich people, they might be interested to know that there are younger professionals who are interested in working with individuals who, like them, are starting out their professional and financial lives, and often can be retained on an hourly basis.
But what concerns me more in your comments is the belief that "all financial planners" are interested only in selling their clients products that generate high commissions. You are not alone in that belief, unfortunately, but the fact is that there are tens of thousands of financial planners who do not sell products and work only for a fee paid by the client and not by a product provider. Furthermore, there are 60,000 CFP® professionals who are bound by a code of ethics and practice standards, and subject to an enforcement process, that requires them to practice by a fiduciary standard, which means putting their clients' interest ahead of their own. You will be pleased to learn that there is now a legislative initiative afoot to make this fiduciary standard applicable to all advisers who offer investment advice.
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Youth is a raw investment in the future to be molded as you see fit; experience often comes appended with the baggage of prior environments and biases and needs de-programming.
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A senior adviser once told me that I needed 500 "client experiences" to be considered ready to meet one-on-one with clients. At the time I was still learning the ropes of the planning profession, but eventually acknowledged the wisdom of his statement. It can take years to become a sought-after adviser.
I agree with Eleanor's points about technology and process. Younger planners tend to communicate and work differently from older planners. At 44, I'm in the middle of the generational timeline and have observed both work styles.
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