Deconstructing XY Planning Network: The Niche, the Bad Fits, And the XYPN Movement

It’s no secret that Michael Kitces is a big believer in the niche. A simple Google search with “Kitces” + “niche” will bring up thousands of search results. Page after page of articles, podcasts, and interviews that all lead to a single conclusion: you need a niche.

Since joining XY Planning Network’s team in November 2019 as a Member Experience Specialist, I have spoken to more than 150 members in the Building and Scaling phases. These conversations have taught me many things, including one very simple fact: Kitces is right (shocking no one).

XY Planning Network exemplifies just how important niches are when running a business. From day one, XYPN co-founders Alan Moore and Michael Kitces knew exactly who they wanted to serve, and this hasn’t changed since XYPN's launch in 2014.

Our commitment to serving a niche not only allows us to fulfill our mission of helping people live their great lives, but it allows us to effect real change in the financial services industry. That alone is a true testament to the power of the niche. 

XYPN's Niche

XY Planning Network was created to serve the fee-only financial advisors who want to bring real financial planning to the next generation (namely Gen X and Gen Y) of clients at a price they can actually afford.  

Through that statement alone, we can identify the three key elements of our niche:

1. fee-only financial advisors
2. work with Gen X/Y clients
3. accessibility through affordability

#1. Fee-Only Financial Advisors

Since the beginning, we have adopted the CFP Board’s definition of “fee-only,” which, as of October 1, 2019, is defined as:

1. The CFP® professional and the CFP® Professional’s Firm receive no Sales-Related Compensation; and
2. Related Parties receive no Sales-Related Compensation in connection with any Professional Services the CFP® professional or the CFP® Professional’s Firm provides to Clients.

In short, this means that to be in accordance with our membership standards, you are unable to maintain affiliations with commission-based entities, have any trails on your book of business, or transact any products.

Moreover, our Network is designed for financial advisors who provide comprehensive financial planning. To understand what that means, look no further than the Who We Are page on our website:

We believe that consumers are looking for more than investment advice, and are seeking full financial planning. All of our advisors provide comprehensive financial planning, which can include services such as: Cash flow, debt management, estate planning, insurance planning, tax planning, real estate analysis, career planning, retirement planning, and investment advice and/or management. 

#2. Work with Generation X and Generation Y clients

For reference, here are the birth years for each generation as well as the ages:

• Baby boomers: born between 1944 and 1964 (roughly 56-74 years old)
• Generation X: born between 1965 and 1979 (roughly 41-55 years old)
• Generation Y (aka Millennials): born between 1980 and 1994 (roughly 26-40 years old)
• Generation Z: born between 1995 and 2015 (roughly 5-25 years old)

I came across an article written by Carly Schulaka in 2015 where she asked Alan 10 questions. This one in particular caught my eye:

Do you think the financial planning profession as a whole is doing a good job serving the needs of Gen X and Gen Y clients?

Alan's answer was simple:

No, [the financial planning profession] is not doing a good job of serving Gen X and Gen Y clients—which is why this is part of our niche.

Alan has always been passionate about bringing real financial advice to younger clients and largely attributes this financial planning profession’s fundamental failure of serving the needs of Gen X and Gen Y clients to a lack of young advisors.

His vision for XYPN came about as a way to combat this deficiency in the financial planning industry and shift the tide to empower young advisors to ultimately serve younger clients.

#3. Offer affordable prices

Let's address the elephant in the room: affordability and profitability are not mutually exclusive. In fact, they go hand in hand. 

According to an article published by SmartAsset, “The average salary for a millennial is $47,034 a year, or $905 a week.” With this datapoint in mind, one can easily assume that millennials don’t have a lot of assets, if any, to pay a financial planner on an AUM basis. You don't have to be good at math to know that 1% of $0 is $0. 

This doesn’t mean that in order to be an XYPN member, you have to charge exclusively on a monthly retainer model. Rather, we believe if you are serving Gen X and/or Gen Y, you need to offer your services at a price that makes sense both for you and your clients.

XYPN’s Bad Fit 

When marketing your business, it is just as important to attract the wrong people as it is to attract the right ones. With XYPN’s niche broken down into three distinct components, it may be clear to see which advisors are categorized as “bad fits."

The advisors who aren't and have no intention of ever being fee-only are a bad fit and will be rejected from membership. (We do openly welcome advisors who are in the process of transitioning to fee-only.)

Perhaps less obviously, students are also a bad fit for XYPN. This is simply a matter of timing. Financial planning students, however enamored with the idea of fee-only planning, aren’t the right fit right now because they are simply not ready to be financial planners (let alone firm owners). We’d be doing both the student and their potential clients a disservice, and acting rather irresponsibly, by falsely reinforcing that they’re ready to run their own firm.

Our Movement Within the Financial Planning Profession

By staying true to our niche and recognizing our bad fits, we are able to uphold our mission of helping people live their great lives; moreover, we're able to push the movement forward.

By holding fee-only in high regard, we are exposing consumers to those advisors whose only agenda is to provide comprehensive financial planning without the pressure to make commissions. By eliminating the chances of the advisor making commissions, and requiring that all XYPN advisors take a fiduciary oath, we can assure these advisors are working in their clients' best interest.

By focusing on Gen X and Gen Y, we are making good financial planning available to more people in hopes that they will lead fruitful and fulfilling lives. 

By having a turnkey platform—complete with compliance support, resources, and tech stack—we are empowering more young advisors to take the leap and start their own RIAs. We take some of the stress off of the advisor who doesn't know how to run a firm by vetting the tech stack, providing access to industry professionals and coaches, offering a support community that provides accountability, invaluable knowledge, and so much more, and ensuring that their firm needs are taken care of throughout their firm journey.

In parting, I'll share Alan’s words from 2014, which still ring true today:

We’re here first and foremost for our advisors, the financial planners who are eager to work with their peers, make positive changes within the profession, and build a successful career and business for themselves. 

We’re here to encourage more innovative, talented Gen X and Gen Y people interested in the profession to make the leap and start training to become financial planners with operating practices that specialize in helping their peers. We want to see our advisors lead the paradigm shift as we move away from outdated industry standards and towards a better way of doing things. 

We’re looking for more financial planners to help further our efforts, and to become a part of the movement that’s working to create a better financial planning industry.

About the Author

Sara is a Member Experience Specialist (MES) on XYPN's Member Services team. As a Member Experience Specialist (MES) on XYPN's Member Services team, Sara works primarily with members in the Building phase. However, she enjoys speaking to all members and helping them leverage the most valuable benefits that make sense for them and their business. Sara's main objective is to listen, provide guidance/support, and ultimately be an advocate on behalf of members in the Network.