[This article originally appeared in our December issue of ETF Report.]
Sophia Bera: Financial Advice for the Next Gen
Gen Y Planning isn’t your typical advisory firm. But maybe it’s about to be.
For starters, founder Sophia Bera works almost exclusively with millennial investors between the ages of 25-35. Only a handful of her 43 clients are over 40.
Furthermore, though Gen Y Planning is based in Minneapolis, Bera takes on clients from around the country. Even as many advisors struggle to adapt to online platforms and smart devices, Bera has embraced next-gen technology, keeping in contact with her clients predominately over Skype and email.
“I wanted to help people like me and my friends—younger professionals who didn’t have time to come into a financial planner’s office,” said Bera, who worked at several traditional RIAs before founding Gen Y Planning in 2013.
Even her fee structure is unusual. Most advisors make their money by charging 1% of a client’s total assets, incentivizing them to chase higher and higher net worth clients. Bera, however, charges clients an upfront flat fee to create an initial financial plan, followed by a monthly subscription fee for her advice on how to meet their financial goals. This fee structure allows Bera to work with clients of any asset level, including younger clients with six-figure salaries who simply may not have saved up much money yet.
It’s a bit unorthodox. But Bera isn’t interested in doing things the way they’ve always been done.
Like an increasing number of advisors, Bera only uses all-ETF portfolios for her clients. “I like ETFs because the cost to own them is so low,” she said. “I can’t control the stock market, but I can control the cost of funds.”
Unlike many advisors, however, she’s embraced the robo-advisor trend, turning to Betterment Institutional to handle the details of portfolio construction and management.
Outsourcing portfolio management to a robo advisor, she says, frees her up to focus on guiding millennials through their unique financial challenges, including paying off student loans and credit card debt, buying first homes or navigating marriage and divorce. “I believe investing can be commoditized, but good financial planning can’t be.”
As time goes on, says Bera, we’ll see more and more firms like hers begin to emerge, particularly those that rely on robo advisors. “Robo advisors are here to stay,” she noted. “And I think traditional advisors should be scared if they place all their value on giving investment advice only. People want comprehensive financial planning; they don’t want to just pay a manager $10,000 on a $1 million portfolio anymore without that added value.”