Demographics, uncertainty spur growth

EYEING GROWTH: Nikki Parness, right, left Fidelity Investments to join the firm started by her father, Larry B. Parness, left. State and federal forecasts anticipate growth coming for the financial-services sector. / PBN PHOTO/RUPERT WHITELEY
EYEING GROWTH: Nikki Parness, right, left Fidelity Investments to join the firm started by her father, Larry B. Parness, left. State and federal forecasts anticipate growth coming for the financial-services sector. / PBN PHOTO/RUPERT WHITELEY

When Nikki Parness, a certified financial planner with a decade of experience crossing the public and private sectors, wanted to go independent after five years at Fidelity Investments, she knew there would be more to change than her office location.
Joining Larry B. Parness, her father’s 35-year-old Providence firm that serves individuals and businesses, in July 2001, she added tax preparation and business consulting to her repertoire.
“I feel like people are looking for more one-stop shops,” Parness said. “I think [there’s] a good mix [here] when the client comes in. Having [more] available in one office keeps me confident with clients.”
Parness may represent a change in the way the financial planner will appear when the industry moves toward welcoming a new wave of professionals as the baby boomer generation nears retirement and her generation, the Gen Xers, rises within their careers.
According to the U.S. Bureau of Labor and Statistics, there is an expected 32 percent job growth for financial advisers between 2010 and 2020, much higher than the average 14 percent across all occupations.
The R.I. Department of Labor and Training previously estimated a 6.9 percent growth for financial advisers here between 2008 and 2018.
“The average age of financial planners [here] … it’s a small percentage in their 30s and 40s and that’s become a concern,” said Dave Matarese, a certified public accountant and certified financial planner with Corrigan Financial Inc. in Middletown and president of the Financial Planning Association of Rhode Island.
The association has declined from 155 members in 2008 to 135 this year.
The BLS reports that in 2010 there were 580 personal financial advisers in Rhode Island earning an average salary of $78,370.
For that same year there were 206,800 personal financial advisers nationwide earning an average of $64,750. “It’s tough in our profession. A lot of people are retiring and not a lot of people are coming in,” Matarese said. “But you know, from our perspective, things continue to grow.”
He’s talking about business at Corrigan Financial which, he said, suffered no effects from the economic downturn that began in 2008 and which has remained strong into widely acknowledged economic recovery.
In fact, he said, there’s been new business.
“We continue to have more clients,” he said. “I think it’s a combination of things.”
Rather than keeping people at home to balance their checkbooks, design a family budget and plan for future needs, the economic slump, financial planners say, has made more people willing to pay for financial advice and management.
It’s not enough, it seems, to rely on your employer’s 401(k) account and an automatic paycheck deduction into a future college fund.
“The need for sound financial planning continues to attract people,” said Dan Forbes, a certified financial planner who runs Forbes Financial Planning in Providence. “People are looking for more qualified advice. It’s appreciated by people with a level of uncertainty about what’s going on in the financial market.”
A survey released last month by the Consumer Federation of America and the Certified Financial Board Planner Board of Standards reported that people with financial plans are more likely to feel confident in managing their money by a margin of 52 percent to 30 percent than those without a plan across all income brackets.
The survey also reported that those with plans feel more secure that they are on track to meet financial goals than those who are without a plan by 50 percent to 32 percent.
Forbes began his business as an insurance agency and branched into financial planning in 2008. “It’s really not just budgeting your money,” he said. “The making of a good financial planner is someone who is going to make or save you money in the long run. It’s important to have someone sit down and take a look to see areas for improvement.” Forbes offers an initial client meeting free of charge as an opportunity to get to know each other.
Parness does the same and begins working with a client by goal-setting.
She said she sees mostly those either at the beginning or end of their careers seeking her advice.
“I’m younger in the community, and I feel one of the things I see are young professionals. I think that people are now a little bit more aware because of what’s happened in the market,” Parness said. “They’re also just starting to make their money and are more aware of the importance of a correct asset allocation for the long-term investor.”
Those young professionals also are coming to her seeking advice on how best to pay off their student loans, manage education funds for their children, and long-term insurance and care for their aging parents.
“At least the clients I’m working with are aware that these are all things they need to think about but they don’t really know where to start,” Parness said. “With new clients [its] really coming out with a personalized plan because we want to make sure they can realize these goals.”
Matarese, Parness and Forbes all offer fee-based services.
With larger investment firms, financial planners often make commissions on their clients’ portfolios.
The yearly fee model, Forbes said, allows clients to know the planner is working in the client’s best interest.
“We need to move so we are offering advice to anyone who has questions,” he said. “There certainly are people who are savvy enough to oversee their own finances. But it doesn’t hurt to at least sit down with someone and make sure you are on the right track.” •

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