Andrew Siversten is passionate about working with younger clients – and he’s built his role within The Planning Center to reflect that. Siversten originally started working part time at The Planning Center in 2007, and over the next several years his role began to evolve from analyst to a more involved, senior member of the planning team. Today, Siversten is a partner and senior planner at The Planning Center.

In the ten years Siversten has been with them, The Planning Center has effectively doubled. They now have six offices around the United States, and have grown largely through merger and acquisition.

Siversten has played a large role in evolving The Planning Center’s approach to residency programs and building a career path within their firm. In this episode, Siversten explores The Planning Center’s career path process for developing young planners, how he’s advocating to work more with young professionals within the firm, and how being part of a constantly growing financial planning practice brings positive change and opportunities into your life as a financial planner.

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Know that it’s [financial planning] a lifelong pursuit of mastery, and it’s always skating toward where the profession’s going, and trying to figure out, ‘How can I better improve myself?


The Planning Center

FPA NexGen

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Ep83 Transcript

Hannah: Thanks for joining us today Andrew.

Andrew: Hey, it’s great to be on. Thanks for thinking of me.

Hannah: Yeah, so we are going to dive into your firm’s evolution and the service model for younger planners, because you guys have been doing that for 10 years. But before we get to that I’d love to hear how you got into financial planning, and what your career path has looked like.

Andrew: Yeah, absolutely. I think you mean how we serve young clientele …

Hannah: Yes, thank you

Andrew: Yeah, I guess to just back up time here a little bit, I graduated 2004 from the University of Illinois with a degree in finance, so I’d always say that was kind of my skillset, was just working with numbers and problem-solving, and always enjoyed that through high school, college. I really had a passion for serving others, serving people, and back in 2004 there weren’t financial planning programs, CFP programs, things like that. I didn’t even know this career existed. I kind of thought of finance as working back office for a bit corporation or bank, and that just wasn’t all that attractive at 21 years old. I had this passion to work with people, so I worked with two nonprofits for six years, one education based, one more ministry based, even taught overseas for a couple years.

All through that time, my older brother Matt Sivertsen, who’s also one of my partners here at the Planning Center, he had started right about the time I was almost graduating college. So I said, we would have conversations about what he was doing, and this career in financial planning, and it really kind of piqued my interest. I didn’t realize that personal finance, and these things that really hit home to me and my gifts, also okay met my passions, that you work one-on-one with these individuals and families, and that’s where you’re going to spend the bulk of your time.

By 2007, while I was still kind of working with some of the nonprofits, I started part time with the Planning Center, and I was working maybe 10, 12, 15 hours a week, really doing a lot of project work, systems work, just getting exposure to things like cost basis and modeling, some of the data entry into some of the systems. But they also gave me a little bit of exposure, would let me sit in on a few client meetings here and there, just to see, is this something I might be interested in? It was just a real great time to just get some exposure to the career.

By 2010 I jumped in with two feet, came on full time. That’s where, really kind of progressed from what we would call a planning analyst, or now we would even kind of call it a residency, to really more of a senior planning analyst. One of the things I was required to do, and we still require, is to get a Series 65, so most of our residency program is not … We’re not finding CFPs right out of the door. They’re usually people who don’t have that designation yet. Might just be the fact that we live in Moline, Illinois, which is a blue collar town that’s about a quarter million people. It’s nice though, because we can essentially groom them from the start. I passed my Series 65, which then allowed me to start getting some exposure, helping out with some of the trading operations.

I really probably split my time maybe half with just company projects, things that our COO, Eric Keyes, kind of needed me to do, versus probably half my time where I was getting more exposure into client meetings, and really being in charge of a lot of the prep and the followup. There’s koa natural progression there, where early on you’re just constantly … They might run emails past the advisor before you would send them out, to all of a sudden you’re just generating correspondence and CC-ing in the advisor, and then as the career progresses you might … And all of a sudden the clients start realizing, I can just go directly to Andrew and Andrew could just respond, and not need to go through some of the formalities. I think that’s a great time to learn systems, learn projects, learn some of the paperwork and things that eventually you’ll be delegating out as a planner. Of course I got to working pretty hard on my CFP, blew through that pretty quickly in a year and a half or so, and just had to wait on my experience, which I got by 2012, and became a financial planner.

Hannah: Let’s talk about how long it took you to get from each phase. How long were you working at the Planning Center as a part-time employee?

Andrew: Probably about two and a half years. I would say that kind of that planning analyst role, if you were full-time, we’d probably be looking one, at least two years, as a planning analyst, building some of that core, then there’s a couple milestones that we kind of want to see. Of course the Series 65 is one of the big ones, and some of the systems. Then from there … I kind of did it more part-time, which I think is okay, whereas those coming on now kind of spend that first year or two full-time doing that planning analyst role. Then they kind of move into the senior planning analyst role, which for me, again, would’ve been probably about two years, so two and two there. Where it’s just kind of then wait until I passed my CFP, got my work experience, and I was able to be certified to work with clients.

I recognize that might look a little bit different for firms that are hiring CFPs right out of CFP programs. If we hired a CFP that might kind of shorten that a little bit, but a lot of them still need their work experience, and so they would still kind of … Maybe they could jump past the planning analyst role and right into the senior planning analyst, which I guess, that’s really what we called it when I was in the role. Now I think we really just more call it the resident, senior resident, type of title. Just has kind of a little bit more relevancy to, I think, our profession, as we kind of mirror what the medical profession has done with career development.

Hannah: One thing that I think is really interesting is, the Planning Center has grown significantly since you’ve started working there, from my understanding. When you started, how big was the Planning Center?

Andrew: That’s a great question. We were founded in 1998 by Marty Kurtz, so we’re celebrating our 20 year anniversary, which is pretty cool. By the time I came on, 2007, there were probably about 10 or 11 of us: Marty, Matt, and Eric as kind of senior advisors, me working through the ranks, and probably three or four on the service team. In 2013 we began doing several mergers, and we now have six offices around the country. We’ve got one in Fresno, California, Twin Cities up in Maple Grove, Minnesota, we’ve got one in Chicago right downtown, and now we’ve bought a practice in Anchorage, Alaska that we run, and most recently have brought in Jude Boudreaux and his group down in New Orleans. We’ve got quite the team, I think we’re up to 13 certified financial planners, two CPAs, and then another probably 12 support staff. Somewhere in the neighborhood of 26, 27 toll employees.

Hannah: You guys have almost doubled in 10 years since you’ve started.

Andrew: Yep, that’s probably about right. A lot of it through merger acquisition. Our staff has more than doubled, and the size of revenue, assets, those types of things, have more than doubled as well. Yeah, we’ve gone through a lot of growth and growing pains in the last 10 years, in my experience.

Hannah: Even just when you were talking, you kept kind of going back and forth between what you experienced and what the new planners would experience. The career path within the planning center has really evolved, is what I was hearing. Would you say that’s right, or is it just more fine-tuned?

Andrew: I think it’s more fine-tuned. I think I was really the guinea pig in hindsight, that it’s like, Eric and Matt had to kind of fight their way into this profession as young planners and saying, what would it look like if we could give some direction? Eric Keyes had kind of penciled out some stuff into Excel spreadsheets and said, “What do you guys think about this? That not look great?” When I was interested in a job, it was very, very rare 10 years ago to come into an RIA and have a career path put in front of me. I could see, okay, within a few years I’ll be a financial planner, and beyond that a senior financial planner, and possibly partnership opportunities and things like that. It was even tied to compensation schedules and growth and all of that.

I could really see a career path forward. I was surprised, probably a couple years after that, when I went to my very first NexGen gathering, and the topic of career paths came up, and the question was asked, has anybody been shown a career path? My hand was the only plan that went up in the room, of probably 30 NexGen planners at this gathering. It was kind of a shock to realize.

Now I think things have changed. We’ve seen a lot of the good quality firms are developing residency programs, so we’ve been able to have other firms to bounce ideas off of, and so we’ve been able to fine-tune things and learn, what work well, what do we want to improve, and be able to develop that. Then we have several who have recently kind of just gone through the ranks of the residency program, and recently certified, so it’s kind of cool to see that next generation, wave of planners coming through.

Hannah: Let’s talk to the people who are like everybody else at that NexGen gathering who don’t have a career path. You’ve seen, I’m assuming, so many of your friends go through that. What would be your advice to them as they’re working or looking at job offers that don’t have a clear career path?

Andrew: I don’t necessarily think that that means it’s a bad firm to work with, and I think I was very fortunate to have that career path, but I think the conversation that some of the principal advisors and owners of the firm, or lead planners, where’s your direct mentor, really should be open to the dialogue. It’s okay as the young planner to be leading the conversation, so I’d encourage people to just not say, “Well they don’t have a plan for me,” but to be a part of developing that plan. I think that’s where podcasts like this, resources from FPA NexGen, are going to be phenomenal, because over the last 10 years more and more firms are developing resources that people can take a look at and say, “This is how one firm did it, let’s look at what they did, and what’s going to make sense here.” I really think that if young planners can’t see a way forward, if they can’t see a career path, then it’s going to be tough to want to stay. I think just the willingness to sit down and have that conversation, and help gather the resources, and help the senior leadership walk through that path.

Hannah: So much of it comes down to having the right conversations, and being willing to have those conversations.

Andrew: Yep, absolutely.

Hannah: You said earlier that you are a partner at the planning center. At what point did you get offered a partnership, and what did that look like?

Andrew: For me, sometimes it’s being in the right place at the right time. Also I think being kind of an early career transition, that I did have six years of experience doing other work, and just a little bit of age, that I think helped maybe speed up the process in my particular situation. I believe I became a CFP in 2012, but had already been doing quite a bit of planning work, and I think I became a partner in 2013, and so was very early on in that financial planner role. I’d say most likely that probably would be a couple more years under normal circumstances, where someone should be probably a financial planner for a few years before being offered a partnership. But I think just due to a few circumstances that really helped accelerate my career, but I think that really came available. With Eric and Matt already kind of working through some of their internal succession plan, it was kind of nice to be ushered along at a little earlier phase than most.

Hannah: You got the benefit of them having to go through the painful parts.

Andrew: Absolutely.

Hannah: Did you have to put money up for that, or were you offered shares, or how did that transaction work?

Andrew: By then Eric and Matt had already bought some shares where they did do cash purchase type things. Part of our mission is, wouldn’t it be cool if 50 years from now we have different advisors talking to different clients about the same pool of money. Just this idea of just a forward-looking … We do things with future generations in mind. When we started looking at our succession planning, we really felt like we should have a system that would be able to pay for itself, that we should have a evaluation that honors the selling stakeholders, but also honors the longevity and the buying approach.

We have a structure where it’s kind of an internal buyout, where we take on a promissory note, and in that note it has language that structures being able to pay, basically, with our quarterly dividend check. It allows a little bit of some flexibility to pay some tax estimates out of the dividend before paying off the note, and also some flexibility, since as minority stakeholders, we wouldn’t be controlling the vast majority of what’s happening with the firm, and therefore if profits were gone we would not be forced to make a payment. Of course we know, if you don’t make payment you’re also building interest, so there’s still a lot of incentive to keep the firm profitable and grow the firm to continue to pay down our notes.

Hannah: And it’s, when you become a business owner you assume risks, and that’s just a risk of being a partner in a business.

Andrew: Yeah, absolutely. Additional ownership of … We’re not quite to the point where we’re big enough to be institutionalized, so essentially all of the partners need to wear multiple hats. We have committees and things that need to be addressed. Someone needs to run the investment committee, and our technology committee, and our human capital HR committee, the budgeting committee. Just various things that each of us kind of has to take our gifts and talents and do above and beyond just as serving clients.

Hannah: How did your perspective change from being just a salaried employee to becoming a partner in the firm? Or did it change?

Andrew: It definitely changed. I think you just become very sensitive to resources. Things that, you just realize that it’s not all about top-line. I think that part of the career path is really, as a financial planner, which really should take two, three, sometimes even upwards of five years to kind of get your base training before you’d relay be a senior financial planner and in charge of revenue generation. I think you’re more aware of, for this thing to be sustainable, for me to grow my salary, we need to be bringing on new revenue and new clients, but also I think sensitivity to the systems and the things that … It’s like, here’s a cool new thing, well it costs his much money, how does that affect the bottom line.

I even remember, it’s like as a resident, or analyst as we called it back then, it’d be like, as soon as you hit a technology upgrade schedule, heck yeah I’m going to … If they’re going to buy me a new laptop computer it’d be like, yeah, I’m all aboard. Now it’s kind of like, okay, can I stretch this thing out another year, another two years, just knowing that, what are ways that we can look for efficiencies and say, we’ve been writing this off over in Iowa City, and I found a way that’s going to save us $6,000 a year. I just think you problem solve and you look at expense items differently as an owner.

Hannah: Talking to people who are in jobs where they want to be the owner, they should start thinking about that now. Would you agree? How can people prepare themselves for that well?

Andrew: I don’t know if you can prepare. I think the realization that there are several ways that you can improve the profitability of a company. I think all are going to benefit even if you’re not an owner, with a more profitable company. There’s three ways to do that. You can increase revenue, bring on new business. You can decrease turnover, so ways to, how can we better serve clients so that they want to stay with us. Just making sure we’re doing high-quality work, which is probably the most important thing in that early career, financial planner, resident-level, is to focus on just high quality of service, because that’s really going to decrease turnover and really help things.

But I think looking at technology and systems and expense items, and just saying, “Do we really need this? Is this really worth it?” Because when you look at a business projection, it’s actually more valuable to find one dollar to cut out of the budget than it is to bring on one dollar of new revenue. It takes a lot more dollars to grow the top line, compared to if you can find dollars to cut off the bottom line, which is a better way of improving profitability. If it’s a system that’s needed that’s not the case, of course that’s a valuable system, but finding things that are wasteful or things like that can really help out.

Hannah: Great advice. What is your role right now within the planning center?

Andrew: My role now is, I’m a senior financial planner. I’ve been certified now for what, six or seven years. I think the progression from financial planner to senior planner was fairly natural. Those first two or three years, was just shadowing a lot of clients. We really wanted Eric Keyes to take on more of a business management role. I sat in on almost every single one of his meetings, a handful with my brother Matt Sivertsen and a handful with Marty Kurtz, and it was a kind of a natural progression where each year was kind of like, here’s some low-hanging fruit that’s, let’s just have you take these over.

After two years it’s like, here’s another wave that, Eric might just start bowing out of meetings, kind of pop in and say hey, but really try and build me up as the planner. Rather than, if a client asks something, he might say, “Andrew, what do you think about it,” or, “Why don’t you explain it”. Then if they said, “Eric, what do you think about it,” he would really kind of build me up and say, “Andrew’s totally right here,” and maybe expand upon things a little bit ,but really reinforcing the fact that this is who we should be listening to. Then after probably about that three year transition, the bulk of the clients, probably took over about two thirds of Eric’s client relationships, was managing those. At that point, had really started taking on more of a new business role, so that’s one of the things, switching to financial planner is just kind of being expected to be a part of bringing on new clients.

During those first couple years, this kind of ties in too to working with young clients, I was like, when we’d have some young clients that would come in it’d be like, “Hey Andrew, why don’t you work with these cases”. It’s a great way to develop experience as a solo advisor in those early years, and then into the senior planner role it’s like no, you’re fully ready and equipped to be bringing on all clientele and our ideal client as well.

I’d say my role right now is primarily, number one, to service clients, so to be a financial planner. As a partner I’m in charge of revenue generation, so I kind of have a certain number of clients that we’ll hopefully be able to bring on throughout the year. Then like I said, also partner responsibilities, I head up two of our ongoing committees, or investment committee, so doing a lot of the due diligence with our vendors that we work with, mutual fund companies, custodians, meeting in an ongoing with those. Then also preparing resources and conversations for our monthly committee meetings. As well as our marketing committee, so managing that group as well.

Hannah: Looking forward, do you just see yourself more in that same role, or how do you think that your job is going to evolve over the next five or 10 years?

Andrew: That’s a great question. I really love working with clients, so I think my role as a senior financial planner will really kind of follow me into this mid-career stage for another five, 10-plus years. I think we’ll see … Of course part of my job too is helping to mentor some of the newer staff. Now we’ve get my brother Matt Sivertsen who kind of heads up our human capital committee, and so he does a lot of one-on-one meetings and things like that with the younger planners coming through the ranks. But that doesn’t mean I can’t still be mentoring them, and as they get pulled into my client meetings, that we can be talking about things. I do think that that’ll be kind of a key role.

I’ve got to think 10 years from now that hopefully we’ll kind of hit that institutionalized mark where some of the systems like running our investment committee and trading and all that, that we might have a full-time CFA that runs that operation. I may actually see some of my side responsibilities kind of phase out, and focus more on working directly with clients and mentoring some of the younger staff. At the same time, I love the work with the investment committee and the marketing committee, and would be okay if those haven’t transitioned away either. We’ll see.

Hannah: Let’s talk about the clients of the planning center. What does your normal client look like?

Andrew: That’s a great question. Obviously with six offices around the country that have all merged together, right now one of our big initiatives is, we’re kind of working on what we call the way, or the TPC way, and just unifying our client service. Obviously with as much transition as we’ve been through in the last 10 years, we don’t have a very specific niche or anything lie that. I’d say that I have a fair number of clients, maybe a third or so, who are retired and have ongoing needs that we kind of touch in. The other two thirds are probably kind of split between baby-boomers, late baby-boomers, kind of in their 50s, early 60s, who are kind of going through a lot of transition planning, preparing for retirement, et cetera. Probably my other third working with a lot of young professionals kind of my age, in their 30s and early 40s. In each of those, the needs and the servicing looks a little differently, which ties into how we’ve really built our planning process or service model as well.

One cool thing that we have seen is, when Marty was running the shop by himself, and even some of the firms that have all merged in, it was pretty interesting, the average age of our client was Marty’s age. Every year that just ticked up as he kind of aged through, and then what we saw when Eric and Matt came on, and then myself, is that average age plateaued, and then in fact started going down, as we’ve really brought on a whole new wave of clientele with our service model, and being open and willing to work with mid-career and young professionals.

Hannah: When did you guys start wanting to work with the young professionals?

Andrew: Those conversations really were going on right about the time that I came on, so about 2007, when I came on part time, my brother Matt had probably just about passed his CFP, and Eric had been onboard for a couple years. They kind of looked at each other and said, at that time we were charging AUM, and minimums kept kind of ticking up a little bit, and said, geez, we can’t even work with ourselves, and we’re telling all of our friends and network and peer group what we do, and it’s like, but wait, we can’t work with you. It was kind of just this oxymoron. It’s like, here are these young professionals that think that this is a valuable service, that they would love to have this service, but they wouldn’t even be able to sit across the table for themselves. It’s kind of a racking of the brain, how can we do this? Fortunately Marty Kurtz was extremely open to the conversation and willing to let them, and really me, who kind of then pioneered the program that they built, run with this.

What it is, is there really weren’t anyone serving young clients 10 or 11 years ago, but we said, what do we think a young professional would be willing to pay for a financial planning service? We looked at cellphone bills and gym memberships and things like that and said, seems like maybe about 100 bucks would be a decent starting spot. We said okay, what do they need, and what can we really afford to do to at least power the advisor costs and the advisor time, looking at the advisor salary to let them do that?

That’s where we kind of came up with this program called the cornerstone, where we were really starting with the foundational blocks. We establish a track record, really explain, this is one of the most important things we can be watching and building and understanding. We’re huge cash flow believers, so we’ve got a proprietary firm called First Up Cash Management System that we use to teach cash flow. It’s a very forward looking conversation. Then with some simple recommendations on how to set up their bank accounts they could really automate the program and make healthy decisions to make sure their past commitments are taken care of. They know how much they can live off of week to week with their present day choices. Really kind of helping them plan for future needs and wants.

We came up with that cash flow system, we would help them make sure they’re establishing and building an emergency fund as part of that cash flow and network checking. A lot of them would have debt management concerns, so coming up with debt snowball plans, refinancing or things, whatever would need to be done to address paying down debts, and then really helping them just get used to the idea of establishing and tracking goals that we could do. That was the cornerstone program. We weren’t doing investment managements or insurance analysis or tax planning or estate planning, things like that it was really focusing those first few years.

The idea was that someone might do this for say 18 to 36 months, then we would transition them onto our full-service model. Which by then we had moved away from an AUM to an annual service fee, and we had a fairly low minimum for that, so it was a pretty easy transition from $100 a month to our, I guess it was $3,000 at that time, to just bring them onto our full-service platform. I think that’s kind of how that started, but that’s evolved over time.

Hannah: Let’s talk a minute about the cash flow. I’ll raise my hand and say, I’ve been guilty of this in the past, I’m getting a lot better. I’m getting much more hands-on with cash flow with my clients. I know a lot of my advisors just avoid the cash flow conversation, because it’s messy, it’s just not … It’s a lot easier to talk about investments or other planning concepts. Did you find that working with cash flow with your clients was very time intensive, or can you go into, what did it actually look like working with a client on their cash flow?

Andrew: Yeah, and I think you’re right. Cash flow can be a very hairy and sticky topic. It’s kind of where the rubber meets the road. It’s where we experience our money, and we know that the second leading cause of divorce next to infidelity is financial matters. Typically that comes down to income and spending. If we can’t have a platform for a healthy conversation, I think that can really be a huge problem, especially for couples. However we think the system is extremely valuable for single individuals as well, and to be honest it really doesn’t take as much time as people think.

We might spend five or 10 minutes just kind of explaining the concept and the idea, and then what we’ll do is, we’ll probably gather their fixed expenses on all of their bills, their debts, their insurances, service utilities, property taxes, any other commitments, monthly tithing and things like that. Those are pretty easy for them to find, and we can structure those, and we put those into what we call this static bucket. We know how much each month they need to be flowing through their bank account to make sure they can take care of their commitments.

Then what we do is, we kind of explain, what we’d like to do is siphon off and set up a separate checking account for each member of the household, that we determine how much is a weekly amount that is just going to be enough for you to be able to take care of all of your needs throughout the week? To be able to buy lunches and entertainment and dinners and groceries and gas and all those variable expenses. It should be enough that things aren’t too crazy, they just set up kind of a weekly transfer and they get used to having a stopgap on how much they can spend. For those who are savers it gives them freedom to say, “I’ve actually got a few hundred dollars each week that I can spend on this.”

Then with savings accounts we can set up what we call a dynamic bucket for their future needs and wants so we can talk through, what are dynamic things, to saving for travel, or college education, or home and auto maintenance, or things like that. Saying don’t worry, what you’re spending week to week with your control bucket is not going to affect the fact that you’re putting away enough money into savings accounts that you’re going to be able to enjoy these bigger ticket things that you’re excited about, that they’re part of your annual and lifetime goals.

Then we punch the numbers in, we figure out what’s going to make the system work, and everybody gets on the same page, and then we can give them a checklist to go set up your bank accounts. We might come back six weeks later and say, “How’s it going? Is it working out? Do you need to bump this up a little bit or this down a little bit?” Then the odds are the system kind of runs itself, and people can, we might check in on it once a year and have a short five or 10 conversations about it.

I don’t think it takes as much time as people think. In fact it takes a little bit of working, but even our high-income clients, we think that this system is more valuable for them than a newlywed. That’s what people think of when they think of budgeting. It’s like, that’s for college grades and newlyweds. No, this is a powerful conversation tool that, now you have an idea where your money’s going. It’s going to reduce stress, it’s going to give you more peace of mind. Because when people start making 10, 20, 30, $40,000 a month, they have no idea where it goes. They just feel invincible. With a system like this, it’s really not hard to operate, and now they have a clear picture of where everything’s going. In fact the system doesn’t even work that well if you’re living paycheck to paycheck, because it relies on needing a little bit of slush in there to be able to operate the system.

Hannah: I really like that idea, even with high net worth clients, that this is a way that we can really add value to clients, is through cash flow.

Andrew: Yeah. We can look at those dynamic goals, and I think it was 2008 and 9 we were using the first step system with our clients, and we’d have clients who would say, “Let’s look at these dynamic goals. Geez, I’ve been spending $12,000 a year on gardening” or something like that. It’s like, “I could maintain it this year for $2,000”. Conversations like that, and then all of a sudden it’s like, wow. Rather than just looking at the plan and saying, it’d be a great idea if you could cut $10,000, $20,000 out of your annual budget. It’s like no, they actually have the cash flow system to say, let’s look at your goals and priorities, and is there anything in here that could take a back seat for a year or two, and allow markets to recover, and not hit portfolios as hard as needed.

Hannah: You were working with these young professionals, and you were charging you said about $100 a month, so $1,200 a year, and then you bumped them up to that $3,000 service model.

Andrew: Yeah.

Hannah: Is that still how you do that, or how has that evolved over the last 10 years?

Andrew: Over the last few years we’ve kind of phased out our cornerstone program. As our advisor team got a little bigger … It was always kind of tough to say, “These are the only things we’re going to do.” It’s tough to come to the table as a comprehensive planner and turn off part of your brain, and so there was just a little bit of a rub there. I don’t think there’s anything wrong with the way that it was being done, and I think it can be a great business model for people who want to try, and especially a nice way to differentiate and introduce. I think it’s a nice stepping stone for firms looking to incorporate a service for young clients to have the differentiated packages, and then that way they can really track revenue and profitability and things like that. However we just kind of felt that …

We were big believers in our angel service fee, and we use a formula that’s calculated off of net worth and income to be a proxy for the size and complexity of the case. We just recognize that not all cases are created equal. We some cases are going to take more time, more expertise, they have more risk more value, and that there are cases that are going to and should be paying you more than other cases. We’ve really found that net worth and income really is that best approximation of the case and the complexity, and the time and the value that we’ll be providing.

We said that it’s kind of like we’re going from this monthly service package to now this whole different formula, and we just said, can’t we just sign them up on the full net worth and income formula? We’ve really said, what are, in regards to services provided, what do we provide? We’re looking at their balance sheet, their assets, their debts, how do we improve and maximize those. We’re looking at their cash flow, we’re looking at investing, investment management, we’re looking at accumulation and retirement planning, we’re helping with tax management, philanthropy, we’re viewing insurance and asset protection, and we’re helping with estate planning. We kind of have these eight different fields of expertise that we’re helping every single client with, but we realized that at each different stage the needs and complexity grows.

Sometimes it’s a little different, but we really change from calling cornerstone to saying, “You’re on our full-service package,” but we’re kind of building the fundamentals. How do we spend a few years just building the fundamentals in all eight of those categories? For instance, investment recommendations might look a little bit different in that category because in the fundamental stage your savings rates are more important than your rates of return, and so cash flow and balance sheet and all those planning are much more important, and building a real complex asset allocation and asset location plan.

Then as people grow past fundamentals, they kind of move into more of an accumulation phase where we are providing fairly robust services in all eight of those categories, to beyond that, we start thinking about high net worth families that, the management of all of those, it looks even different. On our website we explain what each of the things that we provide in each of the categories, but even beyond that you can look and say okay, how does cash flow differ for someone who’s in the fundamental stage versus the accumulation stage versus the management stage? It’s like, fundamentals, we might be helping them create a simple framework for cash flow, whereas with management, we might be helping them manage income from multiple sources: businesses, real estate, farms, the portfolio. How do we have a plan that kind of works in concert with tax and investment strategies? I just think that things look a little bit different as they grow and progress through the system.

It depends a little bit advisor to advisor, but I’d say across the board you would probably kind of have what we would say is a $5,000 soft minimum, meaning that this is, for us to have an ideal client, where we’re profitably servicing them, taking them through all this stuff. Then obviously if they’re under 40, and the net worth and income schedule doesn’t quite hit that number, if we really think that they’re going to be an ideal client, or someone who is a professional that’s going to be in need of the way we do financial planning, the advisor has the discretion to wave that minimum and then just bring them on at a lower rate, knowing that in two to four years they’re probably going to grow up closer towards that minimum. That’s kind of how we look and think about the career planning path of a younger client.

Hannah: Yeah, that’s really interesting. Your minimum, like you said, it’s not a hard minimum, but it has increased over time as you guys have been able to really articulate the services that you are able to provide for them.

Andrew: Yeah. I think the net worth and income model has really opened up a blue ocean for us. Even at 6,000 annual service fee, that’s $500 a month. We might have some high-income doctors that are straight out of residency, and they’re starting to make these real high salary careers, but they’ve got a negative net worth. It’s like, because we build off of net worth and income we can say, you’ve got high income, you’re going to have more needs than your typical peer that’s not making as much money. We can then essentially … They’re like, “I don’t have any investments for you to manage, but I’ve got needs, and I’m willing to pay you $500 a month to take me through this process.” We think that that’s been pretty cool, that we’re able to bring on clients like that.

Hannah: You guys don’t charge … You said you guys just charge a retainer fee, you guys don’t charge assets under management or anything like that. Is that right?

Andrew: We still have clients on assets under management, but I’d say, we launched the NWI back in 2008, so we’ve been doing it for 10 years now, and all clients prior to that, we pretty much just fathered into AUM. Over time we’ve tried to review cases to say, if it’s a better deal let’s have you switch over. The Moline office, we’ve done a decent job of paring back a lot of that, but we still have a significant number of AUM clients. When other offices merged in, Fresno, Mable Grove, Chicago, Anchorage, they were all using AUM models. We didn’t want that to be a hindrance of the merger so we said, let’s just leave it as is, we’ll match up AUM schedules, but over time let’s start telling this story. But every client that comes on today comes on under NWI, so there is a lot of legacy business that’s still AUM, but all new clients are NWI. With the exception of Jude Boudreaux. His office, he’s been in the study group with Eric Keys, so he was already using our service model, he was using our fee schedule with permission, using net worth and income, so his entire business was already built around the model we were using. That was kind of a cool transition, to just have that all lined up already.

Hannah: I also think it’s really interesting, maybe I’m guilty of this as well, but a lot of young planners come into firms and they want to change a lot right away, and so it’s really interesting to hear how maybe that change doesn’t happen right away, and bringing on new clients under a new model … I don’t know, what are your thoughts on that?

Andrew: I think there needs to be kind of a healthy balance between learning and respecting the model, but I think we should be asking questions. “What’s the reasoning behind that?” We’ve had a very collaborative environment, a very open environment. Our entire office meets together once a month in what we call circle, where everybody’s on the same level playing field. There’s not presidents and CEOs and rank and file, we all have a voice to just talk through, is there a better way. Once a year we get together for an annual company meeting where for two days we spend some visioning, and going through things.

A lot has changed, and it’s funny thinking back over my career. Some of those projects I did when I was part time, pretty much all of them, I remember dismantling. That was a project that we did, and we used it, and it’s like, technology has replaced this, and we’re going to do something else. That’s okay, it’s kind of funny to see that happen, but you know you’ve arrived and you’ve been somewhere long enough where you see some of your projects or creations be dismantled and undone, so I don’t think we should ever be tied to doing things one way or another.

We’re big believers that you never master something. The idea of mastery, that it’s this lifelong pursuit of improving. I think that was probably one of the most humble lessons I had to learn as a planner. I think when we study to take our CFPs there’s so much technical knowledge, and I think you realize that from a technical standpoint you know more numbers than the senior advisors. You’re just so excited to share that with clients, just have all this confidence and things, but the reality is that doesn’t necessarily make you a great planner. In fact we’re really in the business of relationships, and we’re helping people through transitions.

I have gone through the Sudden Money Institute Program, it’s now the Certified Financial Transitionist Program with Susan Bradley. One of the greatest things is, I’ve had the privilege of having one-on-one coaching calls, and just realized that most of what I do needs to be asking good questions and listening.

I can think about my first couple years as a certified financial planner, I’d find that all of a sudden I’d get done with a client meeting and my throat would be dry and scratchy and I’d be like, “What’s going on,” and, “How come I’m not bringing on new clients. I know the story, I can do this.” Then I realized that, wait a minute, as soon as I realized it’s not about me and what I can do and what we can do and all these things, it’s about them, it was like a light bulb went off in my head, and my skills and my career took of. Because all of a sudden it’d be like, if you’re having an initial consultation meeting, 80% of the talking should be the clients.

When I discovered that we’d be spending the bulk of that time just asking questions, asking questions, and “Tell me more about that,” and really figuring out what they value, figuring out their goals, their intended outcome, understanding their concerns, their transitions, their family and their career and how they want to be communicated to, and all of these things that are just extremely important, then it’s like, we’ll I’ve got expertise, we’re fiduciaries, we’re fee-only, we’re going to put your interest first, and we charge a fee based on the size of the complexity of the case.” They go, “I love the idea.” “Here’s the next steps, here’s what we’re going to do,” and people are onboard, and they’re excited.

Most have never worked with a financial planner before, and so I think they just really love our model, and I don’t need to tell them how great we are. Practice it, and get to know them, and make sure you really understand where they’re coming from. That’s probably the most valuable thing I can teach new CFPs, is just take a step back from the technical training and really learn the art of listening, and make sure that we’re listening more than talking.

Hannah: I’m not sure we could end on a better note. What advice would you have for new planners as they’re coming into this profession?

Andrew: I would say get involved in our associations. The FPA has a program called NexGen, NAPFA has Genesis, there’s other national and local networking opportunities to get involved with other professionals, because I think realizing that you’re not doing this alone … Because they’re going to have people who’ve now walked the walked. We are an emerging profession, so it’s no longer these career changers at 50 who are working with other 50 and 60 year olds. We’re creating a profession, we’re creating career tracks, and so that there’s going to be places to go to find, what are the different types of models, what are RAs, what are brokerage firms, what’s it like doing financial planning for a bank? What are the servicing miles, how are people paid? What is the compensation structure? Really understanding, how can I really put clients’ interests first, and really serve them well?

Ultimately then that’s going to lead to creating you as a better planner. Finding ways to improve skills that are going to help the clients, whether they be your technical skills, which, frankly as technology continues to grow, those technical skills are going to become less important, and it’s those personal skills that are going to become extremely valuable. I don’t think computers and robo technology will be able to replace the human element. That our work is going to be much more oriented around behavior and transitions. Know that it’s a lifelong pursuit of mastery, and it’s always skating towards where the profession’s going, and trying to figure out, how can I better improve myself? It’s not just, I’ve mastered financial planning, I’m going to do that for five or 10 years, and then I’ll move on to the next thing. It’s, how can we grow and enrich our lives and our education in that?

I probably had three or four things in there, but I think, get involved, because that’s going to help you find some of those other things that I was talking about.