College Planning Workshops Help Fill the Pipeline With the Next Generation of Clients

Editor’s note: In this edition of What’s Working Now, an AdvisorRADIO feature in which Horsesmouth members tell us about recent success they have had running and growing their businesses, we hear from advisor Justin Peek, who partners with local COIs to offer college planning workshops.

The following article includes edited excerpts of Justin’s comments and advice. Or you can listen to his full interview by clicking the audio file below.

I had a small business of my own but realized I didn’t want to continue with that, and a friend suggested that I become a financial advisor. That was 15 years ago, and it’s the best decision I’ve made.

My parents are small business—really, micro business—owners and have been my whole life. That’s how I was introduced to a lot of the planning needs for small business owners, who comprise most of my client base.

Put on your own oxygen mask first

My interest in college planning was piqued about a year or so ago when I found the Savvy College Planning program&v=02joow00lbqetgijbr0ww0j0. Most advisors just talk about savings tools, the Coverdells, IRAs, 529s. But the Savvy program is more than that. What really caught my interest, though, is that I have two daughters ages nine and seven. It’s like when you fly on an airplane and they tell you in case of an emergency to put on your oxygen mask first before helping anyone else. I needed this information to plan for my own family!

First it was a necessity, then I realized there was a lot of potential to help my community, because it was astounding to me the lack of education on this topic. Even intelligent, successful people whom I look up to didn’t know much about college planning. I realized, “I’ve got to dig into this, not just for my kids, but for the community.”

And Lynn O’Shaughnessy [the subject matter expert for Savvy College Planning] lives close to me, so it all sort of came together. I’d heard her name over the years I’ve been an advisor. Plus, what I love about the financial advisor community is we all help each other. Jack Shinn on the East Coast has been a tremendous help when I first looked into this, and was always receptive to my phone calls.

Another reason for my involvement in college planning is that I’m 39 years old, 15 years into my career as a financial advisor, and I have a lot of clients that are in the distribution phase. I want to attract a client base that is not just the traditional baby boomer crowd or just my small business owners. So how do you bring in that next generation who maybe don’t have an ideal asset size? I see this as a wonderful tool and a way to be valuable to those families. And that’s definitely proven itself. It’s almost like a placeholder. When we help with college planning, we’ve established our expertise and scope of competency for later down the road. If someone helps you with your children, you don’t forget that.

Teaming up with for-profit high school counselors

I’m probably not the only one who buys the materials and then lets them sit on the shelf for a while. Then, quite by accident, I saw a post on my local Nextdoor website from a for-profit high school counselor. I thought I’d reach out and just see what happens. I asked if he discusses the financial side of college planning and I found out that he didn’t. He told me he’s desperate to, but not licensed and has no expertise in that field.

So we sat down and went through the Horsesmouth materials, plus some of what my firm provides, and his jaw just dropped. He invited me to a seminar they were doing for their clients the next month. So I was launched right into giving seminars without presenting to my clients or family first.

So these counselors are all trying to find someone they trust who can help them with the financial side. So that launched me into a circuit of seminars with several for-profit counselors. They have different types of study centers, and I talk to their clients. It’s really starting to mushroom.

How it works is we do a one-time presentation with about 25 of the for-profit counselors’ families. We currently have six scheduled over the course of the next year. I’m also going to be speaking at some retail study centers to their client base, still partnering with this counselor.

I’ll specify that these are independent high school counselors, not the ones employed by the local high schools. They’re small business owners too, and they need to market and grow, and they’re looking for networks and chances to speak in front of groups. What it boils down to is I’m the back office, the CFO for them. It’s never been easier to bring a group of prospective clients together.

I’ve only done events for clients before and that’s intentional. I want the highest educated client base, and I trust that they do too. They share that with their friends and then the friends come to me. But this is a network of other professionals growing their businesses who are desperate for the information that I have.

You don’t know what you don’t know

The first step for me was studying the materials cover to cover and watching every webinar that Lynn has ever recorded. Thankfully they’re all online! It was a lot of note-taking and studying. I had a mentor in Jack Shinn, as I said, and still talk to him. The materials are obviously top notch, but it was very eye-opening how much I didn’t know.

I have done a lot of speaking engagements, about one a month, so I’m not afraid to be in front of a crowd unless it’s the first time with that material. At my first workshop I just followed the script. I took a little trick from Jack Shinn. Start by asking attendees a couple of questions about the EFC or net price calculators and watch their hands go down. Nobody knows about any of that. At that moment I knew that I was on the right path. This is a wonderful topic where we can do a lot of good.

It feels good as well. You’re making a difference. What astounds me is that people are in need, and particularly people who have high incomes and high liquid net worth. They are, no offense, just as ignorant on this topic as everybody else.

Nobody pays the MSRP

I want to emphasize that this topic is a great door-opener. Yes, there’s a large knowledge gap out there, but more important is the fact that there are a lot of families who have jeopardized retirement because of putting kids through college. They just don’t understand that the listed college price is like an MSRP from an auto dealership. No one expects to pay the MSRP. You do your homework and figure out what the real price is and then you go and informally negotiate and find the appropriate school.

I can relate to their stories personally. I grew up in England and came to the U.S. when I was 13. College here is a strange animal to people outside of this country. I was accepted to Boston College, Boston University, and University of San Diego. My family didn’t know anything and my decision was based on the fact that having visited BC and BU I felt I liked BC’s campus more. We visited on a beautiful sunny weekend, and when I came home my dad said, “Justin, you know they only have that kind of weather like three weekends out of the year.” So I went to USD. It really shouldn’t have been completely up to me in the first place.

The other part is that I received merit aid because I went to the high school across the street. Most people just don’t realize how much merit aid is available. I thought I was so special because I had about 40% of my college covered with a merit scholarship, but really it was because they like the caliber of students who came from my high school. Sometimes that’s how simple it can be to get a discount at these schools.

Once you’ve gone through the Horsesmouth materials, it’s amazing to learn how much public information is out there. I mean, you can actually look up what characteristics are appealing to the school and what you should care about. Is your SAT important? Is it important that you follow the school on social media? Believe it or not, they actually track that. So it’s cool to see the things they prioritize. You are given a roadmap if you know where to look for it.

How I get clients from presentations

The attendees were already clients of the counselors, and some other professionals, so we allowed them to come to us with questions. Our phone was ringing off the hook for three days and people wanted to dive into these topics. One suggestion I have for other advisors is to partner with a local reputable 529 partner, and we have one that is very accessible, with a lot of net asset value purchases available and a lot of option with low costs. We shared the content Horsesmouth provided, then went into a lot more detail on the ins and outs of 529s.

It’s mushroomed into a lot of people wanting us to handle their 529s and teach them how to use the College Board website, how to determine their EFC, how to fill out the CSS Profile and FAFSA. I will say that we don’t put ourselves out there as the expert on all these topics. We are more like a guide, like managing a 401(k), which we do a lot of in my office. We’re there to provide guidance, which is still much appreciated. I still have a lot to learn, trying to get more dangerous, if you will, on this topic. But I’ve never seen such a reaction to a topic in all my career. It’s a lot of fun.

I also want to say that I’m compensated in the traditional AUM model and college planning is not a moneymaker in. That’s not the design behind it. I would caution anyone who might be newer in the business to focus on the lower hanging fruit like retirement, IRAs, other Savvy programs.

What I enjoy about this topic is that it’s extremely transparent. Clients ask, “Why are you doing this?” I start the conversation by preemptively saying, “I do this because I have children of my own and I need this information and you need this information.” It’s amazing to me how competitive this makes me. I’ve got people pulling their 529s away from their current advisor relationship because they want access to us for ongoing information. Who would have thought you could separate a 529 from another advisor? And really, the rest of the assets start to follow after that.

It really is a door opener, and I really enjoy it. And the clients get it. When you tell a client, “Hey, here’s why I’m doing this, and at some point you might need me for the deeper planning,” they sit there and say, “That’s a smart way to do it.”

Like a doorbuster

I liken this topic to a doorbuster, like they have on Black Friday. It is something that captures people’s attention, and people want it. I don’t want to spend a lot of money trying to get these groups of people together. So to be able to piggy-back on what these other professionals are doing is a real win-win. It’s a low barrier to entry—people just have to know your competency and trust you to stand in front of people.

We’re still early on in this endeavor, about eight months in, but I’ve still gotten new clients from it. I’m also a savingforcollege.com member, which gives me tools to evaluate what the client is doing with their 529s and other savings vehicles. We start with that, and answering the questions that came up during the presentation. Any veterans reading this know that if they’re in a relationship with someone, the client should be receiving this type of information. If they’re not, that causes a bit of disruption. Again, it’s a competitive environment. That disruption is how we earn new relationships.

What I have found to be true, is that if you know a lot about this topic, people tend to wonder how much you know about something else. The college thing is about 10% of what I do, and people end up finding out about all the other stuff I do: Do you look after IRAs and trusts too? Even if they don’t end up bringing you all their assets, that isn’t the point. This topic allows me to become a highly qualified number two for that family. They may have a number one and a current relationship, but if something happens to number one, then I’m right there.

Basically, reviewing 529s is similar to how you might review somebody’s IRA—the contract, the costs, the quality diversification. In California there is no state tax deduction for contributing to a 529, so it really boils down to highest quality with lowest costs when selecting a plan. For example, I might be speaking to a family of physicians who have a greater chance of a lawsuit. I help them understand how protected 529 plans might be if there was a lawsuit. Some 529s have a pullout date where the beneficiary can’t be older than a certain age. Some plans don’t have that requirement. It’s about finding the right one for the right family.

It’s nothing magical, but just an overall review of their plan. Again, we’re not fee-for-planning advisors, and there’s a 25 basis point trail in a 529, so no one’s making a lot of money on these, nor should they, I think. It’s such a slow window of time to save that obtaining the 529 is not necessarily the purpose either, but if you’re the one talking about it, later on the client will remember that and usually ask about other things that we do.

My 1-2-3 advice on college planning

For those looking to get into the college planning topic, my first suggestion is to review the materials and see if it’s even something you can personally get behind. I believe that you’ve got to have a belief and genuine interest in the topic. I’m fascinated by it now.

Second is that it’s like retirement in that no one understands it. Anyone who has dealt with retirement planning knows that the average person out there doesn’t have a clue how much they need to retire and stay comfortably retired, to quote Nick Murray. Know that if you choose to move into this space people do not have the knowledge and they desperately need it. As Nick Murray would say, “Everybody’s sick and you’ve got the antidote.”

Third, know that there are a lot of aligned professions, and PTA groups, and other ways to disseminate the information. Find people who can bring you that ready-made, right-fit audience.