From the January 2004 issue of Investment Advisor • Subscribe!

Still Striving

They're partners in every way and personify success in financial planning, but Deena Katz and Harold Evensky retain their enthusiasm and desire for growth

It's a typical evening at the home of renowned financial planners Harold Evensky and Deena Katz: In the study, Gary Brinson is sidling up to the lady of the house and trying to sit on her lap; in the family room, Danny Kahneman is feverishly running in circles. Bill Sharpe is out in the kitchen, facefirst in a plateful of tuna ... and over in the living room, Harry Markowitz is contentedly chewing on the sofa.

No, it's not the latest episode of some loony new reality show ("Economists Gone Wild!") or a financial symposium gone terribly awry, it really is an average evening chez Evensky and Katz. The misbehaving guests are actually the homeowners' cats, and they're the feline namesakes of the financial minds their owners respect most: Nobel-prize-winning economists Bill Sharpe and Harry Markowitz; psychology professor Daniel Kahneman, winner of the 2002 Nobel Prize in economics; and Gary Brinson, co-author of the 1996 Brinson, Hood, and Beebower study on asset allocation. "Brinson was actually supposed to be named Merton Miller [winner of the 1990 Nobel in economics], but I don't really like the name Merton," explains Katz with a laugh. "Besides, we figured that Gary Brinson might win a Nobel someday."

She and Evensky admit that the unusual name choices can have a downside: If they accidentally let the cats out into the garden, they have to stand at the door shrieking, "Danny Kahneman! Get in here, right now!" for all the neighbors to hear. But it does make for some memorable conversations: When Katz was seated next to the real Bill Sharpe at a conference recently, she pulled out a picture of the feline Bill Sharpe and announced that the cat in the photograph was named after him. "He looked at me, utterly horrified, and said, 'I'm a dog person,'" recalls Katz, laughing. "But then, at the end of dinner, he said, 'Say, could I have that picture?'"

It takes a certain kind of person to name one's pets after a bunch of economists--but Katz and Evensky are both precisely that kind of person. The two planners, married since 1991, share the same sense of humor, and they're successful enough that they know they don't have to take themselves too seriously. Indeed, Evensky wears his trademark bow-tie expressly because it exudes nerdiness ("There is no such thing as a power bow-tie," he says cheerfully), and he's considering adding other unique accessories to his ensemble. "A clown's nose would be great!" he enthuses. "Nooo, dear, I think you've got enough," responds Katz mildly. "Although I did tell him he could get an earring when he turned 60," she adds with a smile, "but he's too chicken."

All Planning, All the Time

Yet the lives of Evensky, 61, and Katz, 53, are so permeated with financial planning that perhaps it's only natural that even their pets' names fit the mold. On any given day, if they're awake, chances are that Evensky and Katz are either talking, writing, reading, or thinking about financial planning--and weekends are no exception. "Harold and I were lucky to have found each other," says Katz, "because planning is our vocation and our avocation. We love what we do, and so we spend a lot of time doing it." And it shows: Each of them has penned at least four books (one of Evensky's was translated into Japanese; one of Katz's was translated into Chinese), lectured at more than 50 conferences, served in at least a dozen leadership roles in professional associations, and been quoted countless times in nearly every major financial publication in the country. And oh, yes, they also own and run a successful financial planning firm, Evensky, Brown & Katz, in Coral Gables, Florida, that serves 240 clients and has more than half a billion dollars under management.

How do they do it all? Their 12-hours-a-day/7-days-a-week work schedule certainly helps, and the two planners also credit technology (they both carry Blackberries and can almost always be reached on their cell phones), plus a strong staff of five professionals and eleven support staff who can handle many of their clients' concerns in their absence. "We've made sure that we have a really good team to back us up so that things can get done for the client when we're not readily available," says Katz.

But it's their enthusiasm for all things financial that seems to propel them onward--an enthusiasm that has helped make them two of the best-known names in financial planning. "We both find financial planning fascinating and fun, and we just want to tell everyone about it," says Evensky.

And tell they do--to prospects, to clients, to the media, and to the public, through books, interviews, articles, meetings, speaking engagements, and Evensky's almost daily entries in his Web diary, or blog, on the firm's Web site, www.evensky.com. While some might grouse that they're always in the public eye, the two planners truly do just seem to be doing what they enjoy. As a former teacher and the daughter of two ministers, Katz says that public speaking comes naturally to her. "I love to speak in front of people. To me, it's like theater," says Katz. "I like to see their reactions, get their feedback, and give them something that they can take back to their offices and implement right away."

As for Evensky: "Well, as everyone in my office will tell you, I love to hold forth; I'll take any kind of audience," he laughs. Besides, he says, writing a speech or preparing for a media interview helps keep him on his toes. "Talking to reporters is good for you," he says, "because there are always a lot of challenging questions, and it forces you to stay up to date, or at least be comfortable defending your position." Both planners also foster their public visibility by following the media-friendliness advice that Katz sets forth in her practice management book, Deena Katz on Practice Management (Bloomberg Press, 1999): returning phone calls promptly, respecting writers' deadlines, always speaking on the record, and doing so in actual English.

Is There An "I" in "Team"?

So how did two of the nation's most prominent financial planners end up not only in the same firm, but married to each other? And how do they handle the challenge of working together every day?

Deena Katz, who graduated from a small liberal arts college in Michigan with degrees in English and education, started her career as a first-grade teacher, an experience that she says helps her in communicating with clients: She learned how to express herself simply and clearly, and learned to use stories to make a point. (When asked if her clients are miffed at being lumped in with six-year-olds, she laughs and says that in fact, they're just less likely to be intimidated.) Soon, she switched gears and began a career in real estate syndication. "I thought if I couldn't teach the kids to read, I'd probably ruin them for life, but if I lost all their money, I'd only ruin them for a while," she quips. She also joined an investment club. When one day, a member of the club asked her what she should do with her money other than investing it through the club, Katz was stumped--but also intrigued. She started doing some research, then began studying for her CFP through the College of Financial Planning. In 1984, she opened her own financial planning firm in Chicago.

Harold Evensky, who earned undergraduate and graduate degrees in engineering from Cornell, began his career as an engineer at Procter & Gamble in Cincinnati. He served as a captain in the Army from 1968 to 1971, then spent a decade as a partner in several home-building companies in south Florida. From there, he moved to a post as a VP of investments at Bache (later Prudential/Bache) for two years, then filled the same position at Drexel Burnham Lambert for another two years. In 1985, he and a partner, Peter Brown (who has since retired and been bought out of the firm), founded an independent financial planning firm in Coral Gables, Florida.

Over the next several years, the two planners became acquainted professionally at financial planning conferences and retreats (we told you their lives have a financial planning theme). In 1989, when Katz mentioned that she was thinking of moving to Florida to care for her ailing mother, Evensky asked her to consider joining his firm. Knowing that you only get what you want if you ask, Katz answered carefully. "I said, 'Well, okay, I could do that, but I've always owned my own firm, so I'd have to be an owner-partner. And as a matter of fact, I've always run my own firm, so I guess I'd have to be president,'" recalls Katz. "And--after a dead silence on the other end of the phone--he says, 'Let me ask my other partner.'" Evensky called back two days later with the message: Come on down! "I never had managed, nor wanted to manage, a business--I preferred the actual planning--and Peter could manage it, but didn't really want to," says Evensky. "So it was a pretty easy decision."

As Katz's mother's condition worsened, Evensky did everything he could to be supportive, and also, in a very low-key way, told Katz of his feelings for her. After a few months, however, he chucked the low-key approach, and popped the question--yes, that question--instead. "I got tired of waiting around," he says with a smile. And what did she say? "Well, I was pretty much in shock after losing my mother, so ... I married him," says Katz with a wry laugh. "And when I woke up, I found I'd made a really great decision."

Rules of the Game

Once they were married, the most obvious challenges were how to balance their personal and professional relationships, and how to establish boundaries. First, they tried making a rule that they couldn't talk about work once they got home. " I think that lasted about three days," says Katz. "I don't even think it was that long," chuckles Evensky. The compromise they finally agreed upon still stands today: Every Wednesday night is date night, and they take turns planning an outing or dinner during which they aren't allowed to discuss work. "It's important, because you do need your personal time," says Katz.

The reverse of this rule--don't talk about home at work--is even more important, says Katz. "We never 'fight in front of the children,' meaning the office staff," she says. "We argue the way we would argue with any partner, but we don't bring personal issues to work."

The two also made a rule about overtime hours. "Harold is more of a workaholic than I am, which is somewhat amazing because I thought I was the champion member," says Katz. "But we made a rule that if he wants to work longer, I don't feel guilty, and he doesn't feel abandoned. I can say, 'Okay, if you want to do that, fine--I'm going home!'" says Katz.

Perhaps most important to their relationship, however, was the decision to divide their responsibilities and define their turf. "We each have our own realm of responsibility. I trust Harold to handle the things we've agreed he will handle; and he does the same thing for me," says Katz. "That way we aren't constantly stepping on each others' toes." "In general, if Deena says something about hiring that I don't agree with, she wins, and if I say something in the planning area that she disagrees with, I win," says Evensky. "And in most cases, there's not a lot of disagreement, because we're too busy doing our own things." Division of labor also helps the staff know whom to go to for different issues, and keeps them from pitting the two principals against each other ("Well, Deena said I could, so..." "Well, Harold said it was okay...").

As president, Katz is in charge managing the firm: hiring and firing, structuring the staff roles and supervising employees, and setting the strategic vision for the firm. She also oversees all client relationships on a broad level, in what she calls the "kiss and bless" phase. "I talk to them about their personal issues, and come in and kiss and bless what's going on," says Katz. "Harold is much more involved in the activity and solution phase."

As chairman of the firm, Evensky is head of the investment committee, and has overall responsibility for the advisor teams in the planning department. "I work with them in handling planning issues, deciding on the processes we're using, what technology we're using, and how to handle the daily relationship with the client," says Evensky. His extensive research on investment strategies is put to work in client portfolio design, as evidenced by the firm's recent embrace of a core-and-satellite investment strategy. (For a detailed discussion of this strategy, see "Master Harold's New Portfolios" in the July 2003 issue of Investment Advisor.) Evensky is also the firm's technology junkie, if not its technology expert. "Harold gets all this software because it sounds good, and then he hands it to me and says, 'Here, make it work!'" laughs Katz. "But we have a full-time technology person now," adds Evensky, "so I've got someone to turn to." The firm uses Morningstar Principia online (www.morningstar.com) for fund research, Overlap (www.overlap.com) for fund analysis, Junxure-i (www.junxurei.com) for client relationship management, and Centerpiece (www.centerpiece.com) for portfolio management.

Interestingly, as a special service to clients, Evensky sometimes dispatches the technology guru to help out business-owning clients iron out thorny computer problems. "We had one client whose computer guy left, and after he left, the client realized the guy had been running a whole other business within his business," says Katz. So she and Evensky sent over their technology manager, who sorted through the mess and helped the client find and hire a new computer staff person. The client "thinks we walk on water now," says Katz. "So, in addition to the fact that he and Harold have fun talking and tinkering with things, there are really good benefits to having a technology specialist on staff."

What's Next

Things are humming merrily along at the firm of Evensky, Brown & Katz, but the two principals hardly seem ready to kick back and relax. With half a billion under management at present, the firm aims to have $1 billion under management within the next year and a half--a growth spurt Katz believes is possible with newly added staff members and refinements to the firm's client services and systems. "We're well poised for growth: We've brought on some new planners, and we've filled out our original structure of what our firm should look like, with a planning division, operations divisions, and client advisor division," says Katz. Their recent growth thus far has been propelled in large part by the hiring of a new business development staff person, whose sole raison d'?tre is to bring in new clients. This new rainmaker, incidentally, is Evensky's son, David Evensky, and Katz was not initially in favor of hiring him. "Having more family members in a company is not usually an answer to business problems," she says. "But he has been extraordinary, and has brought in incredible business." Indeed, the two principals are even considering hiring another person to fill the same kind of role.

And what about their former plans to create a large, nationwide financial planning company by buying up firms across the country? The Evensky Group, as their planned company was called, was supposed to cut costs and improve efficiency among acquired firms by providing a universal back office, leverage in negotiating fees with third parties, and additional knowledge-sharing opportunities. They even worked out a special agreement with Fidelity to support their venture. Unfortunately, says Katz, "we selected the wrong person to be CEO and partner for this venture. We had the money to move ahead, but when we had an opportunity to get out, Harold and I looked at each other and said, 'We do not want to be a partner with this person.'" Once they'd extricated themselves, Katz and Evensky turned their attention to beefing up their own firm rather than buying up others.

That's not the end of the story, of course. The two planners are already working on another growth venture, but at the moment they won't say anything more about it than that. "The last time, we had so much press, and then when it didn't work out, we felt like we were in a goldfish bowl," says Katz. "This time, we're keeping it pretty close to the chest. But we should be coming out with some things in the next three or four months."

Any thoughts of an exit strategy will undoubtedly be affected by the new venture, but as they look ahead to the future, neither planner seems terribly interested in exiting from the field. "Our exit strategy doesn't really involve exiting, just maybe slowing down," says Katz. "I could see us maybe spending a little time in a quiet place by a lake doing more writing, but I don't think we'll ever just walk away." "There are just so many issues to think about and investigate and translate, from other professions and academia, into useful practical concepts for our profession and the public," says Evensky. "Given the time to do just that, we could be busy for the rest of our lives."

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