Built on young clients and lifetimes of value

Kristin Jacobsen has seen both sides of retirement life.

When he was a paraplanner in his father’s business in Queensland, he met retirees who thought about their finances only on the cusp of their 65th birthday, as well as those who had done a bit of planning beforehand.

The difference was startling.

“It was quite sad really, because I saw guys – sugar cane farmers – who had worked their whole life. They were far from lazy, but they hadn’t thought about retirement, and when they came to us, we had to try to make it work for them as best we could,” Jacobsen, 27, recalls. “Those who had started to think about retirement beforehand, it may have been only five or 10 years before, were a lot better off.

“I remember thinking that if starting five or 10 years earlier made a difference, imagine if people started thinking about their retirement in their 20s and 30s.”

It was then that Jacobsen decided to start his own financial advice business pitched directly at Millennials and Gen Ys.

“I remember my father and I were in the car and we were coming back from a planning conference and I told him I was going to start an advice business for Millennials and he told me there was no money it.”

Jacobsen wasn’t deterred, however, and three years later, his business, Connected Wealth, has more than $30 million in funds under management, and he was recently designated as a gold standard adviser with ratings company adviserratings.com.au

“What my Dad was referring to when he said there was no money was a commission model, but I am approaching it from a flat-fee basis,” he explains. “There are not many advisers focusing on this segment and if you think about it, they are clients who you’re going to see through a number of life stages, so there is this lifetime value to the client.

“Furthermore, there is going to be one of the biggest transfers of wealth from the Baby Boomer generation to Millennials in coming years and they are going to need quality financial education.”

Most of Jacobsen’s clients are well-paid professionals who know they want to make sound financial decisions but are not entirely sure how to go about it.

“What we try to do is establish first what outcome they are seeking,” Jacobsen says.

“Sometimes people will say they want to buy a house, but when you ask them their reason, you realise it’s more what someone else thinks they should do and what they really want to do is start a business.

“Other times, people really want to own their own home. Either way, once you know what people want, you can work with them to establish what they need to do to make it happen.”

The second part of the equation is bringing the ideas to fruition, and Jacobsen says that is at the heart of what planners do.

“Technology will change things in the future and even these days people can research online where to invest their money and how to put an investment portfolio together,” he says. “The focus will shift from the nuts and bolts of investment to the emphasis on relationships. Our job is understanding what the clients want to achieve, and helping them decide what the right path is.”

For Millennials hoping to kick-start their retirement planning, Jacobsen offers the following advice:

“First of all, you need to know what your intended outcome is,” he says. “The next thing to learn is that cash flow is king. You need to know where your money goes, and there are lots of apps that can help you track this.

“If you find your income isn’t high enough, then find a way to make extra money, as there are lots of ways to do that these days. And have a back-up plan. Make sure you’re properly insured in case things go wrong.”