In 1984, Janet Briaud sought help establishing a college fund for her children. Her stockbroker recommended a high-load technology mutual fund, just before the technology sector tanked. "I got mad," she remembers, "and thought, 'I can do this better, and I'm going to learn how.'"
That year Briaud, with no financial experience, began the CFP course. In fact, the full-time mother of two had a master's degree in physical education, had coached two championship volleyball teams in her native Canada, and had hoped to become executive director of a sporting association. Ironically, she was not hired because - you guessed it - her financial background was weak.
Undaunted, when Briaud completed the CFP course in 1986, she opened a fee-only practice of her own. Today, she manages about $180 million in client assets. Her firm, Briaud Financial Planning in Bryan, Texas, enjoyed gross revenues of $800,000 in 1999 and will probably reach $950,000 in 2000. Her success boils down to two factors seen in a growing number of today's successful financial planning practices: An initial focus on a tightly-defined niche and an approach that makes clients' lives, not just their finances, better.
At present, Briaud Financial Planning has just over 200 clients. Half are an eclectic mix of business owners, physicians, and women who either are widowed, divorced, or financially independent. The other 100 are Briaud's bread and butter: college professors, either working or retired. Many of them teach, or used to teach, at nearby Texas A&M University.
Briaud specializes in college professors for two reasons. First, she has an inside track: Her husband has taught civil engineering at A&M for 20 years, and Briaud herself briefly taught physical education there before leaving to raise her family.
More important, she has discovered that professors make ideal planning clients. "They are easy to work with," she says. "Their goals tend to be solid and grounded, and they are savers. They usually live in modest houses, drive modest cars, and most of them are putting away 15% or 20% a year for retirement. Also, they are fascinated with learning and with their projects and their research, so they tend to be very enthusiastic, interesting people," she reports.
All in all, professors pose such a prime market that Briaud is constantly surprised more planners have not tapped into it. It currently is so underserved that advisors should have little difficulty making inroads. "The first step," says Briaud, "is to understand the marketplace, which means brushing up on 403(b)s because there are some important differences from 401(k)s. Then you could start by offering to do presentations on a campus."
This is how Briaud launched her own practice in 1986. She obtained permission to speak to several faculty groups at Texas A&M. The sessions were well received and yielded several clients. They also led to speaking engagements on campuses across Texas, which brought in more new business. To gain credibility, she wrote a weekly financial column in the local newspaper for five years. However, Briaud abandoned her journalism career when she was elected president of the National Association for Personal Financial Advisors in 1992. These days, most of her new clients are referrals, either from existing clients or from attorneys and accountants with whom she has worked.
New clients today are required to have a minimum net worth of $500,000, but Briaud did not always set her sights so high. "In the beginning, I took any warm body just to get the experience," she admits. One client, in fact, had no assets but wanted to be sure he did things right when he got some. This forward-thinking man and most of her other early clients are still with her today. Briaud is intensely loyal to them, to the point of making exceptions about her minimum for them and their relatives. As a result, the net worth of her clients ranges from less than $500,000 to over $15 million.
For most clients, she charges 1.0% on the first $400,000, 0.75% on the next $1.6 million, and 0.5% over $2 million. She never calls these rates "fees." They are always referred to as annual retainers. About 20 clients pay flat retainers rather than retainers calculated on assets. To figure the flat retainer, she estimates the time involved and multiplies by a rate of $200 an hour.
The only person besides Briaud who meets clients is Bruce Sanders, who received his CFP last year. The other full-time staff includes two paraplanners, an office manager, a computer specialist, and an assistant to Briaud.
There are certain tasks that Briaud doesn't delegate. She retains veto power over portfolio allocations, and she participates actively in goal-setting with clients, an exercise that she has honed into a fine art.
New clients have at least two meetings with Briaud before any planning is done. The first is a let's-get-acquainted-and-learn-to-trust-each-other session that Briaud describes as "rather touchy-feely." If she and the client do not hit it off, or if she senses that the person is unwilling to make a long-term commitment, that individual will be referred elsewhere. Indeed, one prospect was rejected because he was surly and condescending to the office staff. (He later apologized, got a second chance, and turned into a model client.)
If all goes well at the introduction, Briaud schedules a goal-setting meeting, which she considers the most important work she does for clients. This session lasts at least two hours and often much longer.
Briaud begins with what might be called a George Kinder-esque approach, using methodology reminiscent of what Kinder proposes in his book The Seven Stages of Money Maturity. She asks people to assume that money is not an issue and to tell her where they would go, what they would do, and who they would be with. She moves on to medical hypotheticals. If given five years to live, what would the client do, and if death were imminent, what would the client regret?
"Then I have them do a verbal money autobiography," Briaud says. How much did their family have? How did their parents deal with money? What are their own earliest memories of money? "The more stories they can tell me, the better I can understand them." she explains. She then asks what they consider their main priorities and objectives, and prompts them to think about issues that may not have occurred to them.
"I try to help people from the human capital side, the psychological capital side, and the financial capital side. Until I can get my arms around all those issues, I won't do a plan," Briaud says. Once she is confident she knows her clients as well as they know themselves, she designs the plan, letting Sanders and the paraplanners flesh it out under her supervision. The process takes about six weeks. She then presents the plan to the clients at another face-to-face meeting.
By this point, she and the new clients have shared such intense soul-searching that they are emotionally bonded to one another. In some ways, they have moved beyond being client and planner to being intimate friends. And just as good friends rarely walk out of each other's lives, clients rarely drop Briaud after retaining her. Her clients are now located around the country as well as abroad, because several have left Texas but few have left her.