From the January 2005 issue of Investment Advisor • Subscribe!

Less Is More

Not every planner struggles with growth. From her San Francisco home, planner Mary Mettler is quite content serving just seven clients

Imagine running a practice with no formal marketing strategy or public relations effort. You haven't formulated a plan to increase revenues or profits or assets under management or the number of clients, and you tend to work evenings and weekends. You have no employees, and you do all of your clients' investment research yourself. There isn't a fancy sign on your office door, you don't have a Web site, and you're not even listed in the phone book.

While that description might sound like a young advisor just breaking into the business, in this case you'd be wrong. At age 66, Mary Mettler is no babe in the financial services woods, though she did start her planning practice fairly late in her career.

"I wanted to get out of the corporate world and I used turning 50 as my goal" to do so, she laughs. "Well, I made it out at 51."

Now, Mettler happily works out of her home office, or "home in her office" as she puts it, and caters to only a handful of clients. "My copier and postage meter are in my dining room," she says, "and all of my files are in my basement."

Mettler began her fee-only practice in 1992 and still manages some of the same clients today. "My clients were basically friends or business associates, and then I picked up some of their mothers and brothers and so forth. I got up to about 23 clients, and that was too many," she explains. "Today I plan for seven families and have $27 million [in assets under management]." She downsized based on client size and geographic location, wanting all of her clients to be in California.

Not at all interested in increasing her income, Mettler operates her practice at very little cost. Her only expenses are entertaining clients, basic office functions like the telephone and that postage meter, and the investment advisor's basics: her Morningstar subscription and Centerpiece, the portfolio management system she uses.

Her average account size runs between $5 and $6 million, and because she insists she have control of all of her clients' liquid assets, Mettler manages everything from their retirement accounts to their UGMAs. Knowing all of their finances, she says, helps her plan more efficiently.

Mettler practices what she preaches, too. She's already sold part of her practice to three other local advisors, anticipating a time when she will want to retire (not yet, she says forcefully), and allowing for the possibility that her clients will be well taken care of should she become disabled (see "First Downsizing, Then Exiting" sidebar on following page).

Jane of All Trades

As a woman, pursuing a career in the early 1960s meant putting your personal life on hold, Mettler recalls. "Back then, if you got married you were expected to stay at home." That certainly was not going to work for her. "There are many ways to be happy," she says. After graduating from Stanford University in 1959, attending the Harvard-Radcliffe Program in Business Administration in 1960 (during the first year of the Harvard Business School, that was the only program available to women), and earning her MBA from American University in Washington D.C. in 1962, Mettler has had a prosperous career in many facets of the finance industry.

"The very first career I had was in investment banking," she remembers, as director of research at Ferris & Company, a regional brokerage firm in Washington, D.C. Later in the 1960s, she joined IBM and helped install the Pacific Stock Exchange. She then worked for a software firm that developed financial application packages and did mutual fund shareholder accounting. Tiring of travel and fearing she'd "die of boredom" in data processing, Mettler switched professions, took the CPA exam, and became CFO of a couple of companies. She finished her corporate career as CFO of the San Francisco Newspaper Agency, the business division of the two daily newspapers in San Francisco.

"I always wanted to have my own business, but until we had [companies like] Charles Schwab and [programs like] Centerpiece, I really couldn't work on my own," she argues. "I couldn't completely retire at age 50, so I knew I had to keep working."

Before Mettler began her planning practice, and after she spent a year traveling to places like India and Nepal, she set some ground rules.

"I had a bunch of things I definitely didn't want to do," she says. As a CFO and VP of finance, she had dealt with 17 different unions and had 125 people reporting to her. "I didn't want anything to do again with tax withholding, OSHA, employee reviews, and employees calling in sick," she says. "I don't much like marketing, so I needed a business that didn't require a marketing strategy." Then she decided she was not going to do any kind of budget planning for her clients. "I wanted high-net-worth, successful people," she says. "I did not want to get involved with clients who had to worry about how much money they spent and how they were going to afford retirement."

Finally, she needed maximum flexibility in her schedule to do thorough stock analysis, "the fun part of the job," and to be able to periodically take time off. "My clients know that if it's a pretty day outside, I may put an 'out of the office' message on my machine, which is a euphemism for 'gone hiking.'"

Interestingly, her unusual work hours seem to be exactly what her clients need. "I work out of my home and thought I'd eventually get a small office," she says. "But clients want to call at night and on the weekend because they are not going to haul all of their information to the workplace and discuss their estate plan in the middle of the day." Incidentally, Saturday is a regular business day for her. "It works fine," she says. "And it's comfortable."

The Mettler Process

Having only seven clients may seem like a disadvantage to the average planner, but Mettler enjoys the fact that she can devote a lot of time to each client and plan everything for them. "I manage their emergency funds and [all of their other accounts]," she explains. "When we do retirement planning, I have the all the information right at my fingertips rather than having to search for it all."

She begins each quarter meticulously working on her clients' "individual reviews." In those reviews, Mettler goes over each of their accounts, discusses any trading activity, makes recommendations on the portfolios, and covers issues like IRA distributions. "I'll let them know if it's time to make an estate tax review appointment, or if we need to go over the charitable trust they set up," she says. Additionally, it covers how each client's portfolio compares with the S&P 500 index and the average equity fund. "I compare the equity portion to the S&P 500 Index and the average domestic and international equity mutual funds," she explains. "I also compare the fixed-income portion to bond and money market fund indexes."

Each client also receives an individualized retirement plan review once a year. "I just finished reviewing everybody's IRA beneficiary form," she says.

"The main purpose of my practice is to teach my clients," she explains. "That is why I do those individual reviews. I try to teach them at least one thing each quarter so they not only will understand what I am doing, but if someday I am not around, they will be much better informed on how to choose another advisor. No one will ever pull the wool over their eyes and they won't be victims."

When her clients do need to meet with their estate planning attorney for some reason, Mettler is sure to accompany them. "Sometimes clients forget things," she says. "I have discovered that if I don't go with them something will get missed."

Almost all of her clients use the same attorney, which she says, makes life easier. "The attorney knows exactly how I work, and I know how the attorney works," she says. "And 10 or 12 years later, we know these accounts very well."

Once clients receive their reviews, Mettler requires them to respond, and to give her permission to make any and all of the recommended trades.

She then spends the rest of the quarter fielding questions, making trades, working on retirement reviews, taking care of any regulatory and compliance requirements, and conducting her stock research.

Mettler is particular about her clients' investment options and her investment strategy is straightforward. She only uses stocks in the S&P 500, and rather than investing in an S&P index fund, she sticks to large-cap individual common stocks. She invests in small caps, mid caps, and international stocks only through mutual funds. "There is no way I can follow small caps or mid caps [themselves]," she says. But larger companies, especially those that have been around for a number of years, are easier to follow, she explains. "I have been doing this since 1961. If a good company stumbles and the market punishes it, I might still think it's a great company and I would do some buying," she says. "When it gets to be too expensive, I'll trim back."

Each of her clients' portfolios is different and is specialized to meet specific objectives. "If an account has a large pension, I worry a lot about inflation," she explains. "In which case, they will probably have more oil or natural resource companies to give them additional inflation protection."

Portfolios are rebalanced at least once a year, and currently Mettler is carrying 20% in cash because of poor performance in the bond market. "We have moved into shorter maturities," she says. "When some bonds mature, I'll stick them in cash or short- term bond funds for the moment."

Mettler is a state-registered advisor, and is a member of the National Association of Personal Financial Advisors (NAPFA), since the fee-only group's ethics "are what I believe in."

The most important benefit of her NAPFA membership was all the support she received at the beginning of her practice. "The willingness of the members to share information and their experience, even today, has stayed with me," she says. "Our northern California group is like my family."

Different, But It Works

As a sole practitioner, Mettler has the luxury of never having to deal with motivating employees or offering company-wide incentive programs. "I only have the attorney, the insurance agent, and the tax accountant to deal with," she says. Doing all the work herself keeps things interesting. "A lot of people probably couldn't handle that, but because of my data processing background, I am very comfortable with technology."

If she were younger, in fact, Mettler says she would definitely go the paperless route. "I would outsource the portfolio processing," she says. "But at this stage I am comfortable with it and I found that [doing it myself] will trigger something that I'll need to follow up on with a client."

Although highly disciplined about her work, Mettler purposely schedules lunches with friends or clients to keep from feeling isolated.

As for retirement, she's not planning on it anytime soon. "I like doing this and I like being part of the investment community," she says. "I would always do the research for myself anyway, so my plan is to keep these seven families until I am tired of it, or losing it, or they think I am losing it."

Megan L. Fowler is a freelance business journalist living in Fairbanks, Alaska. She can be reached at mlfr@magwriter.com

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