OCTOBER 2, 2017 • FA STAFF
“Chase after the dream, not the money,” says Kimberly Foss, founder and president at Empyrion Wealth Management.
A career in financial planning, according to many practitioners, must be a labor of love, otherwise an advisor’s work—and clients—could suffer.
Thus, when Financial Advisor asked experienced financial advisors about the most important lessons they had learned throughout their careers, many suggested that potential advisors follow their hearts. They should want more than just to work with money; they should also have a desire to serve people and families.
“In everything that you do, the client always comes first,” says Andrew Crowell, vice chairman for D.A. Davidson’s individual investing group.
Though financial planning is still a young industry, the first wave of experienced planning practitioners are diverse in age and background. Many, like Russell T. Hill of Halbert Hargrove Advisors and Lynn Ballou at EP Wealth Advisors, come from the first generation to move away from selling financial products and toward offering holistic financial advice, while others such as Divam Mehta of the Mehta Financial Group and Michael Kitces of Pinnacle Advisory Group are leaders among the second generation of financial planners.
The leadership also comes from diverse backgrounds. Ballou became an advisor after garnering years of experience as an accountant. Ric Edelman, founder and executive chairman of Edelman Financial, originally set out on a journalism career. Deena Katz, of Evensky & Katz/Foldes Financial Wealth Management, migrated to financial planning after a stint teaching English.
Many of these successful practitioners emphasized the technical aspects of financial planning. Some recommended that advisors expand their technical knowledge to become more versatile for their clients and more useful to their firms.
Others suggest that would-be advisors collect various professional certifications to demonstrate their practical skills. “Build as big a foundation as you can so you have multiple options as opportunities present themselves,” says Rick Buoncore at MAI Capital Management. “Get your CFP. Get your CFA. If you can go get your MBA, go get it.”
A number of participants suggested that such general expertise can also be developed through mentorship and professional organizations.
Advisors should also seek out specific expertise and develop a niche or specialty, as broad general knowledge will not distinguish them from the rest of the financial industry, notes James Brewer, president of Envision Wealth Planning.
What follows are the three or four nuggets of wisdom seasoned advisors would give to people entering the profession.
Ross Levin, CEO and Founder
Accredited Investors Wealth Management
1. Little decisions have big implications. Try to understand what you want your business to be in five years and make decisions regarding clients, business model and staffing that will help move you in that direction rather than taking everything that comes and being swept along.
2. There are few absolutes and little that we can actually say we know. The most important aspect of a long-term practice is getting you and your clients comfortable with impermanence. Things are always changing, so getting comfortable with change is better than pretending that you know what the future holds.
3. If something doesn’t feel right, don’t do it. When you are looking at the cost of fixing problems, ask yourself, “If this cost a dollar, what would I do?” This will help you look at what the right thing is rather than rationalizing doing the wrong thing to save some money.
Dave Polstra, Partner and Co-Founder
1. QTIP trusts can create problems in second marriages when the patriarch dies. Many times they result in ruined relationships between the patriarch’s children and the second spouse. And what is interesting is that everything may seem rosy and wonderful and full of harmony—until the patriarch dies, and then watch out!!! Life insurance might be a better answer.
2. When the patriarch in a family begins to develop dementia, old age or ill health, I have seen elder abuse from children and from second spouses … urging the patriarch to transfer assets instead of sticking to their well-thought-out estate plan that was put in place when the patriarch had better capacity to make wise decisions.
3. Over the years, I have taken clients to visit charities. I never ask them to make a contribution or to create a planned gift in their will, but by exposing them to the charity, many times they become involved with the charity financially, both with their current giving and/or through a planned gift. I have identified over $6 million of charitable contributions from my clients to these charities, just by exposing them to the charities’ mission.
Deena Katz, Co-Chairman
Evensky & Katz/Foldes Financial Wealth Management
Coral Gables, Florida
1. Keep your ears open and your mouth shut; I never learned anything from my clients while I was talking.
2. An engaged client is a happy one; leading them through decision making may take longer, but it will better ensure that they “own” the solutions.
3. Don’t “should” on yourself or anyone else. “Shoulding” is judgmental and causes barriers and resentments.
James Brewer, President
Envision Wealth Planning
1. Knowledge is not the key to acquiring and retaining clients. Advisors deal with humans who often make choices based on feelings, not facts. Knowledge can detect new sources of value to offer new and current clients. Always be learning and re-evaluating.
2. Be special on purpose. Business models do not necessarily differentiate you from other advisors. There are other advisors who come from similar channels such as independent broker-dealer and RIA. Continue to refine what makes you special compared to other advisors.
3. Deciding who you want to serve and how best to serve them is key. However, you are likely going to have to go through several iterations to find the right combination. Be diligent and be patient.
David Millican, Founding partner
1. I got my start in 1996… in an industry facing massive changes and challenges almost overnight. My first business card said I was an “Investment Broker.” In ten years, there wouldn’t be any investment brokers. I succeeded because I embraced those changes, learned about them and adapted.
2. Treat clients as if they were family. At the end of the day, you are going to be a lot more successful it you put your clients first in everything you do.
3. My first boss, Parks Brown with A.G. Edwards, told me the key to success was hard work, and to be the first one in in the morning and the last one out at the end of the day. I’ve always taken that heart.
4. Embrace the next generation… we have so many unique opportunities with technology that it would be foolish not to learn from the generations that follow.
Ric Edelman, Founder and Executive Chairman
1. Narrowcast. Don’t try to be a generalist. That worked in the past but won’t work in the future. Become the advisor known as the go-to advisor for plumbers, divorceés, race car drivers—it doesn’t matter, just pick one.
2. Focus on the future. Much of the advice planners give is outdated. Do you assume clients will live to 110? Consider what happens if they do—and alter your advice accordingly. Likewise, what investments are you recommending? Don’t assume the advice you’ve been giving is the advice you need to keep giving.
3. Scale up. The notion of a sole practitioner is fading. Merge with other advisors to create scale, or join a larger firm that already has it. Otherwise, you’ll lack the resources to deliver the services clients will demand.
Jim Baird, Partner
Plante Moran Financial Advisors
1. There are no small or unimportant projects. No matter how insignificant a task may be, you have the ability to do your best work and put your best foot forward, because the small things matter to clients.
2. Plant seeds now to harvest in the future. Early on, it can be difficult to see where opportunities will come from as you network, develop relationships and become active in the community, but a book of business begins with early investment.
3. Be honest with clients, always do the right thing and always put their interests first. Listen to them and understand what they’re feeling; that allows you to develop strategies specific to their needs and goals.
4. It’s critical to have strong communication skills. Technical expertise and effective communication are a powerful combination that put you in a separate class in terms of how you serve your clients.
Lynn Ballou, Regional Director
EP Wealth Advisors, LLC
1. From the heart of any firm’s mission statement should spring the creation of a service model of excellence that is completely client-centric, allowing for a consistent environment in which clients feel they are heard, supported and beloved. Train everyone from interns to principals to walk that walk every day, all day long.
2. The turning point toward success for me involved finding my “blue ocean”—specializing in what I love and not trying to be all things to all people.
3. This leads to the importance of creating a process and dialogue that both encourages and supports collaboration between all the client’s professionals—both internal and external to our firm. This is how best solutions emerge and an ongoing best practices environment is sustained.
Kimberly Foss, Founder and President
Empyrion Wealth Management
1. Chase after the dream, not the money. Make sure you are passionate about your profession and what you do with your practice. If you come to work every day to do what you love, you will give your clients the best “you” possible.
2. Approach your youth as an asset, not a liability. When I was young, I thought my age was a stumbling block. Now with technology, being young is a value-add that can help build your business.
3. Know your niche. When you first start, you think beggars can’t be choosers for clients, but you will have to spend more energy down the road culling your client list. My parents struggled with retirement. That is why I chose retirement planning as a niche.
Michael Kitces, Partner, Dir. of Wealth Mgmt
Pinnacle Advisory Group
To be successful as a financial advisor in the future, CFP certification has quickly become the “must have” mark to demonstrate basic competency. In fact, advisors in the future will need to pursue “post-CFP” designations and certifications.
At the same time, it’s crucial for new financial advisors to recognize that there are many paths to success. The most important first step is simply to get started. Most financial planners don’t spend their careers at the first firm they ever joined, so don’t put too much pressure on yourself to do so either.
Your career is less like a sprint and more like a marathon. Just as with saving and investing, the long-term compounding benefits of continuing to invest in yourself and your career are powerful. Pace yourself, and focus on steady and continual progress for the long run!
Jane Newton, Managing Partner
Morristown, New Jersey
1. Take risks. That goes for both men and women, but particularly for women. You cannot wait for opportunities to come to you and you cannot wait for everything to be perfect.
2. Follow your passion. Find something you really want to do and that you are good at and do it. Do not worry about what others say.
3. Have confidence. Believe in yourself. If you do not believe in yourself, why should others? This is especially true in wealth management. Others can see if you are confident.
4. Always remember the importance of networking. This industry is about relationships; nurture them. Work is a team sport so think about who you want on your team. You need a sponsor; someone who will pound the table for you and promote you when you are not in the room.
Karen Altfest, Ph.D.
Principal Advisor, Executive VP Client Relations
Altfest Personal Capital Management
New York City
1. Be a great communicator. I have learned to be patient, listen more than I speak, and to explain financial concepts to my clients, even when it’s a question I have been asked before. I have learned to abandon financial jargon, ditch acronyms and pause to ask if clients want further explanations.
2. Be precise. I feel I have a great responsibility to find the best solution to each problem and to get it right! I take this responsibility very seriously, watch what I say, and who I introduce to my clients. Clients tend to think anything I say may be an endorsement.
3. Wait for it. Everybody has a unique personal story to share. I have learned to search for that story. It always sheds light on who is sitting across from me.
Elizabeth Jetton, Founder
Elizabeth Jetton Coaching and Consulting Services
1. Value your unjaded perspective: You will only have it for a short time and it is full of value.
2. When you start out, consider that you are looking for your first job, not your forever job! You will learn from a firm that is a great fit and from one that is not a great fit. It’s ok to move on, but make sure you learn something and don’t burn bridges; it’s a small world.
3. Get involved with professional associations. It will expand your network, build your confidence and raise your skills.
4. Find mentors and ask for help. This is a caring and giving community that wants you to succeed. This is a learning profession, so focus on learning, not being the expert. Mastery will come.
Russell T. Hill, CEO
Halbert Hargrove Advisors
Long Beach, California
1. Work only with those of good character. The larger the organization, the greater the tendency for organizational self-interest to crowd out the good intentions of individuals. Very tough to overcome, and your clients are placing a great deal of trust in your judgment.
2. Everyone—even academics—has an axe to grind, a point of view. It’s up to you to determine what it is. Keep learning. Attend as many industry and educational events as possible.
3. George E.P. Box said it best: “All models are wrong. Some are useful.” None can successfully predict the future. Be skeptical of certainty in an uncertain world.
4. Uncertainty and risk are not the same thing. Increasing longevity, aging demographics, perhaps climate change are all big picture items that will swamp the daily noise.
Divam N. Mehta, Founder
Mehta Financial Group
1. Proper asset allocation and diversification still hold as much value today as the day Harry Markowitz theorized the efficient frontier and MPT. Advisors, as much as clients, often get caught up in chasing returns during a bull market, rather than remaining disciplined to the core investment strategy that was designed for the client.
2. New clients are not going to magically walk through the door. Advisors who wish to organically grow their practice need to be proactive in building relationships, articulating their value proposition, and executing client meetings flawlessly.
3. Relationships are more important than returns. An algorithm can potentially generate solid returns. An algorithm, however, can never replace the value of an advisor’s ability to ascertain a client’s vision for their family’s financial security.
Paul H. Auslander
Director of Financial Planning
ProVise Management Group
1. There is more job security now than ever before—as long as you are a financial planner. Consumers need financial therapists, not salespeople. Get a financial planning degree and then sit for the CFP exam. Then you’ll still need two years of direct experience working with a certified financial planner.
2. Find an older financial planner to hire and then mentor you. The right person will recognize that they need your very different skill-sets—by modernizing them through the use of social media and your ability to connect with children and grandchildren of the client.
3. If you want to make yourself indispensable to the mentor/boss, study for the CFA designation. The combination of CFP/CFA is credible, useful and marketable. It also tends to command the highest salary in most firms today.
Rick Buoncore, Managing Partner
MAI Capital Management
1. Build as big a foundation as you can so you have multiple options as opportunities present themselves. Get your CFP. Get your CFA. If you can go get your MBA, go get it.
2. You have to hire people, so find people who are smarter than yourself and whose skill sets complement yours.
3. Be ready to make sacrifices today in order to be better off down the road. As you start a business, it seems like every dollar you spend is another dollar out of compensation, but to have a viable, long-term business, you have to sacrifice and invest.
4. Be personal, because it can set you apart and help build a firm’s culture. Understand why you are in business.
5. Never trade your integrity for anything; it takes a lifetime to build, but only a moment to lose.
Sheryl Garrett, Founder
Eureka Springs, Arkansas
1. To feel confident advising clients, I had to learn that I didn’t have to know all the answers. I simply needed to know enough to know the right questions and where to find those answers.
2. I learned that my “highest and greatest good” as a financial planner was providing holistic and objective financial advice. With that advice, many clients were capable and willing to do all or most of the implementation themselves. They didn’t need to pay me to fill out their name and address on a form.
3. After 11 years as a financial advisor, I finally fell in love with financial planning when I launched my practice as I would want to receive financial advice—on an hourly, as-needed basis.
Andrew Crowell, Vice Chairman
Individual Investing Group, D.A. Davidson
Los Angeles, California
1. Everything you do, the client always comes first. It’s true that the DOL rule brought this discussion to the fore, but the reality is that without an investor or client, the planner is out of business.
2. Stay humble and teachable. I don’t think that this is a business that you can ever master. There’s always something to learn, and you have to be intentional about seeking knowledge.
3. Control what you can. By that, I mean focus on client outcomes more than just investment performance. Advisors and planners do not control financial markets, but they can formulate and focus on a long-term plan.
4. Set goals and create plans for your practice, challenge yourself to get better. Think about your brand, what you stand for, and what defines you. You can’t be all things to all people.
Dan Moisand, Principal
Moisand Fitzgerald Tamayo
1. The most important thing you can do to build trust is be trustworthy. If you aren’t worthy of trust, it comes out at some point—it is critical that you do what you say, and if you can’t do something, don’t agree to try.
2. Don’t worry that you don’t know everything. Being technically exceptional is valuable, but being able to say “I don’t know” and being content with that fact is a great skill and can be very liberating.
3. Say what clients need to hear even if it’s not what they want to hear. To many, integrity just means honesty, but it also means having the strength to do what needs to be done, even if it’s uncomfortable.
4. Treat your co-workers as well as you treat your clients. The golden rule is a great example of elegance through simplicity—if only we all did this all of the time.
Judy Shine, Founder and President
Shine Investment Advisory Services
Lone Tree, Colorado
1. Don’t be a one- or two-person shop for too long. I would have had partners sooner and I wish I had hired people who could market. A bigger firm with more partners is more bulletproof.
2. Today’s younger advisors are all over technology but they are not building relationships. I’ve heard of several situations in the last year where established firms have gotten younger clients from younger advisors who are cheaper but don’t offer the same level of advice.
3. Clients want to know who they are talking to. We’ve gotten clients from Vanguard who say they get a person but it is never the same person. Vanguard has a premium service where you get the same person, but it’s questionable whether they can deliver the holistic advice. People aren’t going to take advice on important issues from someone they don’t know.
Melissa Joy, Partner
Center For Financial Planning
1. The most important thing I’ve learned about life as a financial advisor is that working with people’s money is much more about understanding human nature and much less math. If you learn how to affect human behavior, your power to change people’s lives multiplies.
2. As our profession evolves, you get the opportunity to reinvent your services and work life often. Be discerning, because you can easily be tempted to chase the newest big thing, and that may be a distraction. I find the career satisfaction of the advisors I know to be quite high, and I agree.
3. Some of my favorite people are other financial advisors. I love my friends who do this job and have learned so much from my peers. I find that those who embrace the advisory community are warm, interested and exceptionally talented people.
Harold Evensky, Chairman
Evensky & Katz/Foldes Financial Wealth Management
Coral Gables, Florida
1. Something I just heard from a planner I met on a cruise: If another advisor would recommend that your wife use your firm or partner for help if you happened to be killed in an accident, that means you were a good advisor. If they wouldn’t, find a new profession.
2. It’s fun, intellectually challenging and you can make a real positive influence on your clients’ lives.
3. Don’t take clients you don’t like; no matter how much they may offer to pay. Clients become family. Why would you want family you don’t like?
Sharon C. Allen, President and Co-Founder
Sterling Wealth Management
1. Everyone’s story is worthy of my time. It’s easy to be overly fixated on the definition of an ideal client or personal biases. I’m at my best when I throw those mentalities out the window. This practice has created a firm culture that values every interaction, builds trust and multiplies opportunities.
2. It’s always about the client. To truly address a client’s needs, you can’t start with their balance sheet—you have to start with them. Good advice isn’t always the right advice for a given client. They need advice that is good for them. The best advisor crafts advice and service to reflect that.
3. Money hits more than the pocketbook. Emotions can run high when people talk about money, because they’re really talking about hopes and dreams. Money conversations often begin with dollars but end with feelings. Navigating these waters can be more art than science, but it’s vital to being the trusted advisor.