What I Learned at XYPN Live 2019

What I Learned at XYPN Live 2019

Today’s post is a follow up to last week’s post.  There are a few conferences I try to fit into my travel schedule every year.  XYPN Live is one of them.  XYPN is an acronym for the “XY Planning Network” – it’s a professional organization for financial planners who work with generations X and Y.  (Unlike much of the industry).

This year the conference was held in St. Louis for the second year in a row.  Attendees are mostly all financial planners, with a few reporters, CPAs, and tech providers sprinkled in.  I make it a point to attend this conference for a few different reasons:

  • This is the only time throughout the year that my study group meets in person (I have a weekly study group)
  • Many of the XYPN members who attend have firms similar to mine
  • Many of the attendees are exploring new, innovative service models and ways to provide value to their clients.

For me, XYPN Live is an opportunity to connect with my study group, reconnect with friends I don’t otherwise see or talk to, and pick up bits of wisdom from other professionals in the industry.

Attending these conferences takes some time away from my family, my clients, and the firm.  But because the learnings ultimately benefit all three, I find a lot of value in going.

Here’s what I learned at XYPN Live this year.


Planners are Settling Into More Specific Niches

One of the great quandaries for many financial planners starting out is who to serve & how specific to be when defining an ideal client.  On one end of the spectrum you have generalists.  The generalist financial planner works with anyone who can meet their minimums asset level or fee requirements.  This sounds convenient, since the number of potential clients who live near their office is probably large.  That planner could walk into any semi-expensive bar/restaurant/coffee shop in town and have a good chance at being around a few people who technically fit their definition of an ideal client.

Here’s the problem.  The generalist doesn’t have specific expertise in…..anything.  People don’t seek out the help of the generalist – they look for specialists with expertise in areas they need help with.  And because the generalist doesn’t have potential clients looking for him, he’s forced to go out, pound the pavement, and find every single client he brings into his practice.

On top of that, when the generalist’s client base is diverse, the problems they’ll need to research, investigate, and help solve are also diverse.  They may need to learn about restricted stock units, 401k liquidations in a divorce, tax implications of a business owner’s asset sale, and federal student loan repayment options all in the same week.  Which probably takes a great deal of time.  And could cause a lot of headache!

On the other end of the spectrum you have a specialist.  The specialist works with a very specific type of person.  Instead of being a mile wide and an inch deep, they’re an inch wide but a mile deep.  They don’t work with everyone, but they intimately know the needs and challenges facing the people they do work with.  There may not be many potential clients in their surrounding area, but people reach out from around the country to work with them because of their specialized expertise.

The XY Planning Network is a big proponent of specialization in financial planning.  “Niche” may be a familiar term to you.  The idea is that it’s easier to grow a practice, operate more efficiently, provide more value to our clients when working in a particular niche.  You become more familiar with and better understand your clients’ challenges, making your day to day quite a bit easier.

This year, many of the firm owners I spoke with have been working in a specific niche for some time now.  Whereas they may have launched as more of a generalist, their firms have evolved organically toward a certain type of client.  (Mine sure has).  They have processes, marketing, and service offerings focused on the needs of their specific target client.

The result?  These niche-focused firms tend to be well set up for scalability.  It’s easier to create an “operational handbook” when all your clients have the same issues.  It’s easier to hire talented employees who can help push the ball forward, since the playbook is easier to learn.  The whole enchilada is just easier to manage.  Which provides more opportunity to bring value to the relationship with clients – bringing me to my next observation.


This Group is Laser Focused on Providing Value

Part of it may be that the demographic of the XYPN membership veers younger.  Part of it may be that many of the firm owners’ in the group launched their own company out of frustration working somewhere else.  Whatever the reason, the membership of XYPN genuinely wants to help people.

This isn’t to say that other financial professionals don’t.  After spending a dozen years in the industry, I think nearly all financial planners truly want to help their clients.  The difference here is that XYPN firms are a little more…..nimble….in how they do so.  Newer fee and service models enable many of the XYPN firms to really hone in on their target clientele.  I have a friend who specializes in working with ex-patriots working overseas as diplomats.  100% of her interactions with clients are via videoconference, since they’re spread all over the world.  She has a specialized service model that she’s built based on feedback from her clients, and she has intimate knowledge of the benefits offered to diplomats working at U.S. embassies throughout the world.

Could she offer this type of service at Merrill Lynch or Wells Fargo?  Most likely not.

My point isn’t that XYPN members are focused on providing value to their clients while others in the industry are not.  My point is that the membership in this network mostly has smaller, nimble firms.  And when you have the flexibility to build a firm around a specific type of person, it’s far easier to focus on client relationships and adding value.


XYPN Firms Will Have Tough Decisions to Make in the Coming Years

Financial planning firms today have a lot of flexibility in operating structure.  20 years ago it would have been terribly difficult to launch and operate a planning firm without substantial help and overhead.  The technology you’d need would require expensive enterprise level subscriptions, and you’d probably need a staff of three or four for operational assistance – even for a firm with just one financial professional.

That’s changed a great deal over the years.  Today there are numerous low cost tech options for financial planners getting started growing new firms.  Operational tasks can be handled with technology (think online calendar software to schedule meetings instead of having an assistant arrange times over the phone).  It’s still incredibly difficult getting a new firm off the ground.  But the resources available are much better and less expensive.

One byproduct of this operational leverage is that planners today can build very strong, profitable, service oriented firms with only 50-80 clients.  For most, that’s enough to pay the bills, feed the family, and send the kids to college.  This type of firm is the objective for many of the members in the XY Planning Network.  They want to balance their lifestyle and family time with their business initiatives, and this set up is a perfect fit.  Others members aspire to build different types of firms.  Regional, multi-advisor firms are a popular concept, and a few nuts out there (myself included) tentatively plan to build larger scale enterprise level firms.

When firms are launched, the ultimate type of firm (lifestyle firm, regional multi-advisor firm, or enterprise) doesn’t matter a great deal.  The only objective is to build the client base up to the point where the firm is financially sustainable.  As firms grow beyond this size & begin to make a comfortable living, they typically start thinking about what’s next.  But without revenue in the door in the first few years, none of that matters.

One of my observations from this year’s conference is that many firms in the network have bypassed their initial “ramp up phases”.   Many are now financially viable, and need to consider what happens next.  Some of my friends & colleagues know what this path looks like for them, some don’t have a clue.

If you do know exactly what type of firm you want to build, the day to day operational and business decisions become easier.  But it’s OK if you don’t.  And it’s not like firm owners can’t change course later.  Some planners I know want to spend as much time with their kids while they’re young.  But when the kids are teenagers or older, the plan is to change course and focus more on growing the business.

This year, many of the people I spoke with are trying to figure out what their firms’ growth path should look like.  How much time do they want out of the office?  Do they want to bring on other advisors?  Do they want to expand to multiple locations?

The fact that so many of my friends and colleagues are asking these questions was striking to me.  The fact that they’re in a position to be thinking about these questions tells me that the future is bright for much of the membership.  It’s proof of concept for many of the firms’ models.  And proof that it’s possible to build a financial planning firm from scratch in today’s environment.


Will I Attend Next Year?

Yes, probably.  As I mentioned above, I like to get together with my study group in person.  While the sessions themselves aren’t terribly interesting, the opportunity to network and touch base with peers throughout the industry is hard to pass up.

I’d strongly encourage young financial planners to attend, if there are any out there reading this.  The community is full of newer planners trying to get their ventures off the ground & get their feet wet in the industry.  I’ve had dozens of great friendships & relationships result from my attendance in the past.  I’d certainly attend if I were starting over today.

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