The financial planning industry has enjoyed a phenomenal run over the last few decades. Despite some painful slides along the way, financial markets always seem to recover. While this has led to record balances in American investments portfolios, one segment of the investing population hasn’t shared in the spoils-millennials.

Millennials had just begun their careers and began investing when the Financial Crisis hit. The severity of the subsequent recession soured many on purchasing both homes and stocks. As these two asset classes have rebounded, many Millennials have been left out of the celebration. As a result, many have reportedly been disinterested in purchasing homes or buying stocks en masse.1

Addressing the financial planning needs of Millennials amid these unique biases and perspectives remains a challenge for financial advisors. As such, ‘millennial advisors’ have emerged to serve these unique needs.2Here are three trends these new advisors, or any financial planner, should be keenly aware of when dealing with their younger clientele.

Subscription Models

As we mentioned, millennials don’t have large account balances. This is a challenge for a financial planning industry whose compensation is largely derived by charging a fixed percentage of client assets under management (typically 1-2%). Baby Boomer clients, who have had an entire working career to build up account balances, provide a healthy, steady stream of income for advisors.

However, millennials are a larger generation than even the boomers, the financial advisory industry had better come up with a different strategy to serve these unique clients.3But how? The ‘assets under management’ model won’t work, neither will returning to the commission model of the 1980s and ’90s because of numerous free trading platforms.

So, millennial advisors have come up with a unique fee structure-a subscription-based model. Clients pay a monthly subscription or ‘retainer fee’, somewhere in the neighborhood of $200 (or sometimes paid out quarterly at roughly $600).

You may be wondering what a client gets for a $2,400 annual subscription fee. From a Think Advisor article, here are a few prominent services provided by millennial advisors:4

  1. Budgeting
  2. Basic Financial Advice
  3. On Demand Contact


One of the main features of the subscription service is budgeting, which helps younger clients build a solid foundation for their financial future. The advice generally revolves around determining what percentage of income should go into key categories. These include ‘necessities’ (lodging, food, clothing, transportation, etc.) ‘discretionary’ items (entertainment, vacations, etc.) and ‘savings’ (emergency funds, retirement accounts, etc.). Advisors also teach millennials how to utilize online budgeting tools such as ‘mint’ and ‘every dollar’.

Basic Financial Advice

A basic introduction to investing, this financial advice centers on the type of accounts to open (i.e. taxable brokerage versus tax-advantaged retirement) and where to open them (a mutual fund company, robo-advisor, or online brokerage).

Once determined, simple asset allocation techniques may be provided. This maps out the percentage of an investment portfolio to have in stocks, bonds, cash and alternative investments. This is largely determined by factors including risk tolerance and age.

As you’ll notice, more complicated investment advice is not generally included. In fact, many advisors are outsourcingportfolio management duties. This allows advisors the opportunity to step back and construct overall wealth strategies such as insurance, philanthropic and estate planning issues.

On Demand Contact

For clients, a key benefit of the subscription model is that any time they have a question, they can submit it (via email, text, phone, Skype, etc.). Millennials face a number of financial decisions, despite having minimal asset levels. These include:

  • Buying or leasing a vehicle.
  • Buying or renting a home.
  • How to improve credit.
  • The most suitable mortgage loans.
  • Handling an inheritance.
  • How to manage student loan debt.

Solid advice can help clients avoid poor financial decisions that can take years to unwind. A subscription model can be a very smart investment in your financial future-especially for those with little background in the subject.

Why Would Advisors Take on these Clients?

Millennial advisors are willing to accept the lower revenue for subscription-based clients because they can make up the difference in volume. Most traditional financial advisors can handle no more than 85 clients, according to Angie Herbers of Beyond U Inc.5Anything beyond that sacrifices the quality of service provided.

But with the subscription model, these new breed of advisors can handle about 135 clients. At $215 per month, this new business model could generate roughly $350,000.6

Millennial advisors are also laying the groundwork for when millennials to accumulate assets en masse. They hope, at that time, they will stay with them for as assets-based fee structures.

ESG Investing

Often, Millennials are conscious of the impact their investments have on different stakeholders (employees, customers, the local community and environment, etc.). As such, an increasing number are putting money into socially responsible investing strategies, commonly referred to as ESG (environmental, social and governance).

Generally speaking, ESG strategies invest in companies with fair compensation policies for employees, broad diversity efforts, sustainability and/or transparency. Equally important to many ESG investors, is avoiding investments in companies with controversial practices or products.

Typical shunned investments, warranted or not, include energy companies (i.e. coal and oil), defense contractors and ATF names (alcohol, tobacco and firearms).

One popular way to invest in ESG is through the Goldman Sachs ‘JUST’ U.S. large cap exchange traded fund(ticker: JUST). The ETF was launched in June 2018 in a partnership between investment bank Goldman Sachs and hedge fund titan Paul Tudor Jones’ Just Foundation. To understand the potential of the ESG sector, consider the Just Foundation has some influential allies among its Board of Directors- Deepak Chopra and Arianna Huffington.7

Of course, the lens of what’s right and wrong can get blurry, depending on your perspective and how you weight the factors. Brown Advisory noted that cell tower operator American Tower received a ‘top’ ESG rating by one screen (employee treatment) and a rock bottom rating using another (lack of disclosures).8So, depending on the selection process, a particular stock can either be ESG friendly or detrimental.

Case in point, the aforementioned JUST ETF has Top Ten holdings include controversial names such as Exxon Mobil, Facebook, Google and Bank of America.9Each of these names has had their share of bad press.

Interestingly, only 19% of advisors surveyed by Cerulli Associates site ESG strategies ‘return’ as a major factor.10This shows that performance, typically the most important factor for investors, may not be tops for millennials. Millennial advisors must be aware of the socially responsible trend and be able to offer ESG options that mirror their client’s individual views.


Millennials remember the financial crisis all too well. While the Occupy Wall Street movement has subsided, many remain extremely distrustful of financial institutions. They blame banks for the deluge of student loan debt, a severe recession and shoddy financial advice that benefited the bank, not clients. Not surprisingly, a Facebook survey revealed that 92% of millennials don’t trust financial institutions with money matters.11

For years, there has been an inherent conflict of interest between retail clients and their advisors. This distrust makes a formidable barrier to the advisor-client relationship.

However, if your financial professional is considered a fiduciary, they put client interests before their own (or the firm’s) at all times. While an increasing number of advisors are fiduciaries, many aren’t. But a law was proposed by legislators to require financial professionals to be fiduciaries. Unfortunately, a watered-down version eventually passed.

Additionally, the distrust against the large bank brands creates an opportunity for registered independent advisors or RIAs. Financial planners are increasingly choosing this structure to further offer clients the most unbiased service possible. They are less ‘sales’ and more service.

As we wrote in an article on RIAs, many of these are made up of not only advisors but also estate planners, attorneys, accountants and analysts. Many have graduate degrees like MBAs or specific financial designations.

Further, an advisor with certain designations can provide fiduciary protection-because the certifications impose it. The CFP, CPA and CFAdesignations all have fiduciary and ethics components to them. These are also invaluable marketing tools when trying to compete in the wealth management space against the likes of Bank America or Morgan Stanley.

Becoming an independent advisor and obtaining financial credentials is a great way to earn trust. These demonstrate not only financial expertise, but a willingness to put client interests first.

Combining this trust with an understanding of millennial’s social values and different compensation options should jumpstart any millennial advisory business.


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