Skip navigation
letter jacket money michaelquirk/iStock/Getty Images Plus

Advisors Advising on Student Loans: It's Not Necessarily Altruism

Taking on student loan conversations with teens means different things to different advisors. Does it help the bottom line?

New technology is making it easier for advisors to help their clients with one of the biggest costs many will face: higher education. While the vendors building the technology are confident it’s needed, concrete data holding up a group of advisors who were able to retain clients—or bring on new ones—because of their advice around student loans, is scarce.

But with many offering student loan payment incentives, from small towns in Iowa trying to attract new residents to financial service giants like Fidelity with its Student Debt Employer Contribution Program, advisors are paying attention to tools they can use to help their clients with the cost of college. A wealth of advisor anecdotes supports the tech-driven push toward helping clients with student loan debt, before it becomes a problem.

Some advisors who talk directly with the teenage children of their clients feel the information is better delivered by them, instead of parents. How to manage student loans, before the loans are obtained, is something parents may tell their children, but advisors can get the message across from a different angle, said Aaron Agte, a financial planner at Graystone Advisor in Foster City, Calif. “I have had informal, but lengthy, financial planning conversations with teenage children of clients,” he noted. “Sometimes, a teenager absorbs the message more effectively coming from a third-party adult rather than their parent.”

Kyle Goulard, founder of Goulard Financial in Portland, Ore., agrees. “As a millennial financial planner, it comes naturally to me to have those 'money chats' with fellow millennials and Gen Z-ers,” he observed. The parents of children about to enter their college years are “plenty capable of imparting advice to their kids, but sometimes it takes a third-party to create those 'aha' moments.”

“The most valuable money conversations come during that transition between graduating high school and leaving for college,” he added.

While it might not be a way to explicitly generate revenue, for advisors like Ben Lies, president and CIO of Delphi Advisers, in Vancouver, Wash., nipping student loan debt in the bud is part of advisors’ larger mission to help families. Ideally, parents are advised to have set up and funded college savings vehicles, like 529 accounts, and teenagers can benefit from weighing potential salaries against the costs of student debt.

The argument that those children could eventually become clients isn’t always the driving force behind the decision to offer college loan guidance. The “tremendous value” that advisors provide is on display for parents, not necessarily children, when an advisor starts weighing the costs and benefits of college and the debt a student might take on, said Goulard.

“I don't work with client children to create future clients,” added Tara Unverzagt, an advisor at South Bay Financial Partners in Torrance, Calif. “If that happens great, but the point for me is to get them off on the right foot to building a financial foundation.”

A similar don't-try-too-hard approach helped Sidney Divine, founder of Divine Wealth Strategies in Atlanta, bring on the child of a client as a new client. "It was less about converting and just letting [the children of my client] know I’m there for them as a result of their parents working with me," he said. "My value prop is being there to see the client to and through retirement, and to be there to ensure their initial legacy goals are met when I start to work with their kids. I’m young enough that I can relate to clients and they feel secure that their money doesn’t get handed to some junior guy when the initial advisor retires."

Perhaps more importantly, a conversation between an advisor and a teenager about student loan debt sets the tone for what working with an advisor should feel like, Goulard noted. “Today's teenagers will be setting a new standard for their future financial relationships,” he said.

That’s not to say advisors haven’t eventually converted children of clients into clients. “Connecting with clients' children is essential because the sooner we establish a connection and relationship, the more likely they are to become clients and sustain the next generation of wealth,” said Jirayr Kembikian, co-founder of San Francisco-based Citrine Capital. He estimates that 10 of his clients’ children have become clients themselves after he discussed topics like college tuition planning and student loan strategies with “most” of them.

For advisors skeptical of discussing student loan debt with teenagers, Kembikian offers another perspective. The decisions of children don’t exist in a vacuum, he points out. His conversations are worth it, simply because he sees it as a way to help his clients achieve their goals. “Having a financially responsible child will lower the likelihood of the child becoming a financial burden on their parents (my client) in the future,” he noted. “As a result, the parents will have a higher probability to achieve their financial goals and live prosperously.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.