From the February 2005 issue of Investment Advisor • Subscribe!

February 1, 2005

The New Faces of Planning

There is a new batch of advisors out there who want to do the right thing. Personal attention to clients and running a fee-only practice come first, and paychecks come second

Owen Malcolm remembers when he was first introduced to financial planning. He was sitting in the corner of an office quietly waiting for his parents to finish meeting with their financial advisor. At 12 years old, he wandered off in his own thoughts and occasionally caught bits and pieces of the ongoing conversation. His father, a CPA, was always crunching numbers around the house, but this time he was the one getting advice. Any other 12-year-old in such a predicament would rebel with loud sighs and rolling eyes, but not him. As he heard words like diversification, risk tolerance, overall returns, and retirement, his ears opened, and he began paying attention. At the end of their meeting, the advisor called Malcolm to his desk and told him something that would change his life. "When you are 18 years old, if you take $5,000 and invest it," the planner explained, "and you earn a 12% return, you would be a millionaire by the time you retire."

Says Malcolm, now 29: "That just blew my mind." Wanting to hear more, the advisor explained compound interest and the Rule of 72. "If you take 72 and divide it by your expected return," the advisor continued, "it will tell you how long it will take for your money to double."

"I didn't believe him," Malcolm recalls. "I went home and spent half the night on a legal pad crunching numbers trying to prove him wrong. It turned out he was right."

For Malcolm, VP and COO of Sanders Financial Management, Inc. in Norcross, Georgia, that was a defining moment that led him to the financial planning field. Not everyone in the industry can say they've had such a memorable "Aha!" moment, but each of the following advisors knew financial planning was indeed the place for them. These are the new faces of financial planning. Their practices may be different, but their objectives are the same: to help people reach their financial goals and do it in a way that puts ethics before earnings.

The Enthusiast: Jamie Oder

Saunders & Associates Financial Management

At 22, Jamie Oder is the kind of person you just want to talk to. A December 2004 graduate of Kansas State University, Oder represents the newest face of the financial planning industry.

"I always knew I wanted to help people," she says. "When I initially went to college, I started out in family studies and human services with a minor in business." But Oder says that personal financial planning brought all those areas together, so she changed her major.

Now an assistant advisor with Saunders & Associates Financial Management, a fee-based independent advisory firm in Flower Mound, Texas, she's been in the business for less than three months and is already a member of the FPA and the International Association of Registered Financial Consultants (IARFC). "I love the financial planning field and am getting as involved as I can by going to conferences and networking with as many practicing financial planners as possible," she says.

But make no mistake. Veteran advisors could learn a thing or two from her as well. "I think older advisors can benefit by bringing on [new financial planning] graduates to their practice because we have fresh ideas and different perspectives of the world than they do," she says. "Coming out of school it's hard for us to jump right into it and start our own business. We can't say, 'Hey I'm a financial advisor, let me give you advice on your mortgage. I have never done it myself, but let me tell you how to do it.' We don't have any real-world experience, just a whole lot of book knowledge."

Oder is also up to date on all the latest technology. In fact, she often advises her new boss on the subject-- that is, when she's not studying for her CFP certification or busy learning the ropes of her new career. "We do the day-to-day tasks," she says, which gives her boss, Barbara Saunders, time to focus on seminars, clients, "and other parts of the business."

Alongside another assistant advisor, Oder is currently working on portfolio reviews and annual reviews, and meeting her new firm's clientele. "It's busy but I love it," she says. "I enjoy working with people and think that being someone's financial planner really makes a difference in their lives. As a planner, I believe I can take clients from where they are to where they want to be, essentially making their dreams a reality."

Saunders & Associates currently has $40 million in assets under management and serves about 150 clients with net worths between $3 million and $4 million.

Like most advisors, Oder hopes one day to open her own practice. "This is a growing field and the best field out there," she says. "Banks and attorneys are slowly starting to offer financial planning services," she notes, "and there's no telling how big this is industry is going to become."

The Stock Picker: Owen Malcolm

Sanders Financial Management, Inc.

Having an interest in personal finance at a very early age is something Owen Malcolm is proud to share.

He loves what he does and makes it a point to get out into the community. He regularly speaks to church groups, does pro bono work for the needy, raises money for children's health care, and sits on a leadership board that focuses on teen education and lowering the number of high school dropouts in his area. Not to mention the fact that he helps run a successful practice and keeps up with his three young children. Needless to say, he's a busy guy.

Malcolm, a financial advisor for nearly six years, joined fee-only Sanders Financial Management in 2000 as an analyst, and has quickly made a name for himself in the business. "My first job out of college was with IBM," he says. "I was in their global financing subsidiary." But it didn't take long for him to realize that corporate finance wasn't the right fit for him. "I really wanted to work with people as opposed to entities," he says. "I went back to school at night to get my MBA knowing I wanted to go into financial planning."

As a co-owner of the practice, Malcolm, along with three other advisors, focuses on the emerging affluent. "We have found a great niche of clients with investable assets between $300,000 and $2 million," he says. "We don't really go after what most advisors would consider high-net-worth" clients. These clients are small potatoes for larger firms with $1 million to $3 million minimums and are often ignored, he says. "Given that they have $300,000 to invest, they have outgrown do-it-yourself investing and outgrown a part-time stockbroker. They need a professional."

Currently, his firm serves more than 100 clients and has just over $90 million in assets under management. "We have deliberately kept our practice small so we can provide personal attention," he says. "Our client-to-staff ratio is 18 to one."

Doing most of his own investment research, Malcolm primarily invests in individual equities to meet his clients' needs. "We build a core of the portfolio around individual stocks," he explains. "We are big believers in diversification so we use everything--large, small, value, and growth." Shying away from mutual funds because of "double-dipping on the fees," he also uses preferred stocks, bonds, and REITs in his clients' portfolios. "It's a very active and labor-intensive process," he explains. "We are not shoving [clients] off into managed accounts or mutual funds, or delegating anything out to other advisors or other managers."

Although he is always on the lookout for new clients, Malcolm says he's not making cold calls. "Seventy-five percent of new clients come from referrals," he says. But, more important, "a lot of clients come to us because they want to be fee only." And fees are something Malcolm feels very strongly about. "I'm a big fee-only zealot," he says. "I see the future [of this business moving] to fee-only with an emphasis on service rather than products." That's why he believes small firms like his are going to continue to be successful. "[Most of the larger firms] are product-driven and are institutionally incapable of delivering personal advice and customized attention," he adds. "Our financial plan is not a product pitch. Clients want to know what they need to do to achieve their goals," not shuffle through endless charts and paperwork.

Being able to sit down face to face with his clients and help them plan their own course is what makes all his hard work worth it, he says. "To help them achieve all of their financial dreams is the most gratifying thing."

The Problem Solver: Tony Stureman

Krouse Kern Wealth Management, Inc.

Tony Stureman, now 35, spent the first five and a half years after college in the electronics industry. "That went nowhere fast," he recalls. "I went back to school and started studying business." After earning his BS in finance from Indiana University, Stureman worked as an analyst for nearly a year until he ran across an opportunity to buy an advisory business in Northwest Ohio. "My nature is to try to be a problem solver and to help people," he says. "Financial planning is a natural fit and serves a need that I have."

Young and eager to push his career into high gear, Stureman and his wife bought the business and left their home in Indiana. "That was a fun time," he says. "We had just gotten married, just bought a house, my wife was expecting, and then this opportunity came along. It was a little mom-and- pop outfit already up and running with a lot of clients, and not a lot of assets."

At its peak, Stureman was managing about 500 accounts, each between $40,000 and $50,000. "Trying to serve that number of people took a lot of time," he says. "I suffered from squeaky-wheel syndrome. The people who called all the time got all my attention. It was frustrating and very difficult." To boot, it was a commissioned-based business model. "To make the business profitable I had to open new accounts and sell products," he says. "The business was getting bigger and bigger, I wasn't able to serve my clients very well, and I was at home less and less." As his client base grew, Stureman knew something had to change. "I knew I was just going to have to start over."

After six and half years of working on commissions and running himself into the ground, he began picking his practice apart and figuring out what he wanted from his next business and how it would be successful.

"CPA's were a key contact for me as I was trying to lay out investments," he says. "To do it the right way we had to have input from a tax standpoint, from an estate planning standpoint, and almost every time that person was a CPA." Seeing the value of CPAs led Stureman to start a wealth management firm by partnering with a CPA firm.

By March 2003, Stureman had sold his practice in Ohio and partnered with Krouse Kern & Company, a CPA firm in Ft. Wayne, Indiana. "They were looking for someone to develop their wealth management program for the CPA firm," he says. "I met with a friend who worked there, ended up going to lunch, and literally came up with this whole plan on a napkin." Together, they formed fee-only Krouse Kern Wealth Management, Inc. (www.kkwealth.com).

The only advisor in the office, Stureman currently has 12 clients with average net worths of $1 million to $1.5 million, all of whom are small business owners. Although his practice is very small, he says he's in no rush to increase his client load. "Coming from a business that was so big and unmanageable, I have been very cautious about growing too fast," he says. The minimum account requirement is $300,000, and for the time being, Stureman says he's very selective about the clients he takes on. "At some point we will want to take this to the next level and develop a formal marketing plan, but right now, I am comfortable and I think my partners are comfortable growing slowly."

His investment strategy is a little different than most other financial advisory firms out there. He's part of the St. Louis-based BAM Advisor Network that preaches, and practices, passive asset class investing. "BAM was developed by a CPA and has already done their homework and asked all of the same questions that I would have asked," he says. "They found a management style that fits their firm, and we use the same thing."

Passive asset class investing is similar to indexing, he notes. "In other words, if we owned t

Reprints Discuss this story
This is where the comments go.