Evard Financial Advisors, PLLC

The Arizona Republic (Phoenix, AZ)

July 3, 2006

FINANCIAL PLANNING FLEDGLINGS: YOUNG ADVISERS FACE DIFFICULT START

Author: Andrew Johnson, The Arizona Republic

Edition: Final Chaser, Section: Business, Page: D1

Financial planners are supposed to guide their clients on a stable path to financial security.

But those new to the field often must forge a difficult path to financial independence, making large sacrifices early in their careers to establish a practice from which they can earn a sustainable income.

It's a harsh reality Michelle Evard learned when she decided at about age 25 to begin a career in financial planning, a field whose practitioners are overwhelmingly in their late 40s and 50s.

"It was one of the scariest experiences of my life, the lack of money that I had," said Evard, who is now 29 and has her own independent practice in Phoenix.

Yet financial-planning careers can be rewarding both monetarily and emotionally for individuals who survive their first few years in the business.

In 2005, the median gross earnings amount for a certified financial planner was $277,800, according to the College for Financial Planning's 2005 Survey of Trends in the Financial Planning Industry. The amount represented a 26.8 percent increase over 2004, when the median gross earnings amount was $219,000.

When Evard first started out, she said she made about $1,200 a month. The Columbus, Ohio-native quit her job doing business plans for Abercrombie & Fitch and moved to Phoenix to start a career as a personal financial planner after being inspired by a personal-finance speaker.

Evard chose to build an independent practice after being turned down for jobs at branches of national financial-services companies, where she was told she was too new to the Phoenix market and lacked experience.

She soon found herself waiting tables on nights and weekends to pay the bills while trying to establish a solid client base during the day. In addition, she went without buying groceries and ate "whatever was in the cabinet," stayed in her apartment on weekends and skipped out on doctor and dentist visits to save money.

"I was really, really broke there for a while," said Evard, who is nearing $2 million of assets under management, an industry term that refers to the amount of money she is handling.

High dropout rate

Evard's story is not unique, which is why it is so common for new planners to throw in the towel.

The early years are often rife with ups and downs as planners try to build a client base and carve out a defined tract in a career many veterans say lacks a clear trajectory.

"It's not a profession where you can get started easily or quickly," said Michael Kitces, director of financial planning for private wealth management firm Pinnacle Advisory Group in Columbia, Md.

Kitces, 28, is a task-force member of NexGen, an offshoot of the Denver-based Financial Planning Association that started to form in 2004 to address the lack of young people in the planning industry.

Only 3.9 percent of financial planners were between the ages of 21 and 29 in 2005, compared with 32.7 percent who were between the ages of 50 and 59, according to the College for Financial Planning's survey.

NexGen, which is holding its first conference in August, targets financial planners 36 and younger, Kitces said.

There are no concrete data on the turnover rate for new planners, but industry experts agree the number is staggering.

Multiple factors determine whether a planner will last in this career.

The lack of a consistent income can be the biggest source of hardship for first-time planners.

Most major financial-services companies pay their new recruits a salary for a period of time while they are in training.

"Once you become a full-fledged financial adviser, you're on commission," said Robert Burghart, vice president-investments and a resident branch manager with Wachovia Securities in Scottsdale. "Your entire income is based on the revenue that you're bringing in."

Burghart, 31, started his career as a financial adviser in 1999 with Prudential Securities at age 25 after quitting his job as a detention intelligence officer with the Maricopa County Sheriff's Office. He said he grew tired of his old job because he wanted to help people, but many of the people he was trying to help didn't want it.

Growing a client base

Veterans agree that a desire to serve people is necessary trait for a successful financial-planning career. But it takes more than a desire to serve others to be successful.

Advisers' ability to bring in revenue is tied to their ability to attain and maintain clients, which is challenging because many of the people who work with financial planners are older.

"As a young person, you don't have that gray around the ears," Burghart said.

Some new planners dodge that roadblock by teaming up with an experienced adviser.

That approach has worked for Trevor Wilde, vice president and managing director of Wilde Wealth Management Group in Scottsdale.

Wilde, who started his career when he was 23, formed the business with his father, planning veteran Bill Wilde, in 2003 after working for RBC Dain Rauscher for a couple of years.

In his first year in the business, Trevor attended client meetings with his father to obtain a deeper understanding of the profession. Today, the two have a joint practice in which they share their clients.

"It's hard if you don't have someone," said Trevor, 29. He urges new planners to seek out firms that will allow them to form teams with their established advisers.

Entrepreneurial Bent

At its core, financial planning is an entrepreneurial business, something many new practitioners fail to realize before they start their career.

"You're going out there, and you're becoming an entrepreneur who's in charge of your own destiny, but also your own income," said Janenne Lackey, an investment planner with First Financial Equity Corp. in Scottsdale.

Lackey began working as an assistant for an investment planner when she was 24 and decided she wanted to start her own career in the field.

Burghart said one of the biggest misconceptions new planners at large firms have is that the firm gives them clients.

"A lot of people who we talk to think they they're employees," he said. "I personally don't look at them as employees. I look at them as entrepreneurs. They own their own business."

Fast facts about planners

Age:

21-29 years: 3.9 percent.

30-39 years: 22.3 percent.

40-49 years: 27.3 percent.*

50-59 years: 32.7 percent.

60-69 years: 13.2 percent.

70+ years: 0.5 percent.

Financial planning education:

College for Financial Planning: 56 percent.

American College: 16 percent

University of California (various locations): 2 percent.

Adelphi University: 1 percent.

Boston University: 1 percent

Fairleigh Dickinson University: 1 percent.

Kaplan University: 1 percent.

University of Phoenix: 1 percent

Other: 21 percent.

Years working in the financial services industry

1-4 years: 9.9 percent.

5-9 years: 20.6 percent

10-14 years: 15.6 percent

15-19 years: 20.6 percent.*

20-24 years: 19 percent.

25-29 years: 9.6 percent.*

30+ years: 4.4 percent

Primary source of earnings

Fee and commission: 56 percent.*

Fee only: 34 percent.

Commission only: 4 percent.*

Salary only: 3 percent.

Salary and fee: 2 percent.

Salary and commission: 1 percent.

The College for Financial Planning's 2005 Survey of Trends in the Financial Planning Industry. All survey participants were CFP designation holders who were members of the Financial Planning Association.

Reach the reporter at andrew.johnson@arizonarepublic.com or (602) 444-8280.

CAPTION: Trevor Wilde, 29, is vice president and managing director of Wilde Wealth Management Group in Scottsdale. Wilde started his career in financial planning when he was 23.