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Financial Planning For the 99 Percent

Alexa von Tobel thinks her company, LearnVest, can be the CFP for the masses. And now she has the federal stamp of approval to accomplish just that.
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Two years ago, when Alexa von Tobel, the CEO of LearnVest, made Inc.'s 30 Under 30 list, she said she aspired to create Gen Y's version of The Suze Orman Show. Today, she's a giant step closer to bringing gold-plated financial services to the masses. Yes, Learnvest appears to be angling toward becoming the broker to the 99%.

Today, LearnVest, which is based in New York City, announced that it has completed registration with the SEC as an investment adviser. As a registered investment adviser, or RIA, the company can now offer portfolio recommendations and other investment advice--and charge for them.

As a result, LearnVest has revamped its financial planning services, with costs that range from $89 to $599 a year. The top-tier package will now include investment advice, as well as a five-year financial plan, quarterly phone consultations with a financial planner, and unlimited e-mail support.

That access comes at a fraction of the cost of traditional financial services, says von Tobel, who is now 28 years old. Indeed, certified financial planners often charge hundreds of dollars per hour, and many accept only clients who have assets of at least $1 million.

"I believe with my heart and soul that this industry needs to be disrupted," von Tobel says. 

Bringing Financial Literacy to the Masses

LearnVest's Tuesday announcement builds upon the company's transition from a primarily editorial site to a full-fledged purveyor of financial products. Earlier, the company launched My Money Center, a free tool similar to Intuit's Mint.com, on which users can track and categorize their transactions. It also introduced paid subscriptions for ongoing consultations with a certified financial planner.

LearnVest has revamped both those services to work together. Although My Money Center will remain free of charge, paid subscribers can now share their profiles with their financial planners during consultations.

"It's like Google Docs for your money," says von Tobel. 

Financial planners will be able to set financial goals for customers on their profiles, though they will not have direct access to transactions. My Money Center will also include recommendations in accordance with users' financial goals and habits. LearnVest also plans to launch an iPhone app next month.

Von Tobel views these changes as a significant step toward the company's goal of spreading financial literacy. She compares LearnVest to LegalZoom, which enables users to easily prepare legal documents. "We're making financial planning a consumer product," she says.

The company's recent changes have expanded its audience. Although LearnVest's core users are women in their 30s with an average household income of $80,000 to $100,000, more than 20% of its paying customers are men. As the company has grown, it has developed more content for families, including a daily newsletter called LV Moms. 

A Young Company Grows Up

As LearnVest's services have matured, so has its infrastructure. The company initiated the SEC registration process in January and made preparations over the next six months to launch its new subscription services. It created a subsidiary, LearnVest Planning Services, to house its financial planning services. It also appointed a chief compliance officer, who is charged with ensuring that the company meets SEC regulations. Many of those regulations involve restrictions on marketing: for instance, it forbids customer testimonials on financial services.

LearnVest has beefed up staff in other areas as well, particularly its technology department. In order to meet regulatory requirements, the company had to upgrade its technology, including its customer relations and e-mail systems, to ensure the protection of customers' data. All the company's software is developed in-house.

The company has also expanded its staff of certified financial planners--it now has 50 throughout the contiguous U.S.--and has brought on a recruiting specialist to oversee the increase in hiring. Its financial planners undergo a rigorous vetting process. Before they are even brought in for an interview, they must prepare a sample financial plan, complete a writing exam, and undergo a background check and review of their certification status. 

Financial planners are also tested for their ability to empathize with clients, whose finances may reflect difficult personal circumstances. "Ninety percent of the job is finance, but 10% is the ability to say, 'That's tough,'" von Tobel says. 

Alhough the registration process has brought an added measure of responsibility, von Tobel says her young company is well prepared. Ultimately, its decision to move forward, she says, was driven by strong customer demand after the company introduced its initial subscription plans. LearnVest's recent infrastructure upgrades, she adds, position it well to offer enhanced services in the future.

"This isn't just about where we are today, but where we plan to go in the next year," she says.




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