Video: Boomer financial planning

Talent Names - Melissa Lee
By Melissa Lee Reporter
CNBC
updated 4/20/2006 9:34:19 AM ET 2006-04-20T13:34:19

Boomers have a lot to plan for: their retirement, their kids' college education, care for an elderly parent. As the financial services industry sees this need for advice, independent planners are going head-to-head against the big-named brokerage firms, hoping to capture the business of the boomers.

They came of age in an era of distrust. Anti-war protests rocked campuses, and anti-Nixon sentiment gripped the country. So when it came time for Bennett Gross, a corporate lawyer turned consultant, to decide whether to stick with his broker in planning for his golden years, he asked some hard questions.

“Was it just happenstance that they just happened to have the greatest financial vehicle that I could possibly imagine?” he said. “It's not to say anybody did anything. But I always lacked a level of comfort and feeling that their interest may not be coextensive with mine.”

Like many in his generation, Gross didn't trust brokers paid by commission. He opted for an independent advisor, registered with the Securities and Exchange Commission and charged with a fiduciary duty to clients.

That desire for unbiased advice is causing investors to opt for registered, independent advisors. By next year, independents will be managing an estimated 14 percent of all investable assets in the U.S., taking share from traditional brokers.

Brokers still manage the lion's share of funds out there. But there is one competitive edge they've lost: the perception that they've got market moving information on stocks ahead of the street. In the last boom, that was a selling point for clients.

“In this decade, post-(Regulation FD), that info advantage is much less relevant,” said David Trone, a brokerage analyst with Fox-Pitt Kelton.

One firm hoping to capitalize on the trend: Focus Financial Partners, an upstart with $3.5 billion in client assets. CEO Rudy Adolf says size means scale, and access to products like hedge funds and private equity helps level the playing field with the big brokers.

And with new rules now requiring brokers to disclose exactly how they are paid, the difference between independent advisors and brokers are now more transparent to consumers than ever. That’s another reason more boomers like Gross are opting to go anti-establishment when it comes to their nest eggs.

Boomers also say they plan to work longer. According to a recent AARP survey, 80 percent of boomers plan to work during their retirement. The primary reason — the need for money.

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