More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Chugging along Florida's Atlantic coast in a rented RV, the recently engaged financial planning power-couple Norm Boone and Linda Lubitz weren't on a relaxed vacation planning their upcoming wedding. The motor home, which drives more like an overstuffed U-Haul than a sleek land cruiser, was on its way to the first in a series of seven house calls.
"I had a new client in Gainesville [a well-known professional athlete] who wanted his wife to meet us," Lubitz explains, "and I don't know a thing about sports." Norm happened to be in Miami that week, so the two decided to meet with the new client together--it didn't hurt that Boone is athletically well-versed.
The trip ended up being one of the best experiences they've had, Lubitz says, though she wasn't entirely sure how her clients would react to their mode of transportation. "It was On the Road With Norm and Linda," she laughs. "We were driving up in this big old RV and thinking it was silly, but the clients thought it was a great idea. They loved it," Lubitz declares. "We spent one night in one client's driveway with long extension cords plugged into their house; other nights we stayed in an RV park just 40 feet from the ocean."
While road trips are a bit out of the ordinary for most advisors, traveling is second nature to Lubitz, 55, and Boone, 58, co-authors of the book Creating an Investment Policy Statement--Guidelines and Templates (FPA Press, 2004). In fact, it's such a passion that they have established a New Year's Eve tradition of being in unique places when the clock strikes midnight. Three years ago they rented an apartment in Paris on the Champs Elysees, two years ago they were on Mt. Kilimanjaro, and last year they were in Mendocino in Northern California, which was when Norm proposed.
Lubitz, president and founder of the Lubitz Financial Group in Miami, and Boone, president, founder, and principal of Boone Financial Advisors, Inc., in San Francisco, travel several times a month to be together. "Linda spends every other week in Miami running her business," Boone says. "She spends the off weeks in the Bay Area as the managing director at my office, and every other week that she is in Miami, I am with her. We spend three of the four weeks a month together."
Running two successful planning practices on opposite ends of the country has posed some professional and personal challenges for the couple.
Different Goals, Similar Values
As presidents of their respective planning firms, Lubitz and Boone agree they have different management practices and business goals, but also have similar values. "Norm once said he was surprised at how different our implementation styles are," Lubitz says. "I am a little weaker at closing the deals and getting the money in than Norm might be."
Lubitz describes Boone as more growth oriented and business focused; he has spent the last five years setting up systems to help his firm grow rapidly over the next five to 10 years. As of now, his firm has about $250 million in assets under management.
"I would like to add successful advisors who are tired of being out there on their own and want to join a team," he explains. He anticipates housing a number of advisors around the San Francisco Bay area and "providing them with a hub of services such as investment management, financial planning, technology, personnel," and so forth.
Boone and Lubitz are working with a coach to help them lay out a plan for their businesses. "She's helping me decide if I should shrink or grow my practice in Miami," Lubitz says. "I love going out and getting clients; I love meeting with them. But my staff often tells me that I can be an impediment to administrative progress. To some extent, a financial planning firm mirrors [the management style of] its leader."
Linda is a marketing machine, Boone interjects. "She will walk down the street and collect clients before she gets to the end of the block."
Lubitz's firm is about half the size of Boone's, with $120 million in assets under management. "I went through a deliberate process when we decided to be life partners," she explains. "It became apparent that Norm's firm is dominant and that I would spend more time in California than he does in Miami. The question became, what does that mean for my business? My coach was amazed my staff and clients stayed with me during this uncertainty."
Boone and Lubitz have spent a lot of time deciding whether Lubitz should sell her business. They discussed everything from reducing her client list and turning away all referrals to laying out a growth plan and maintaining both practices. After what she describes as a very emotional process, Lubitz decided to maintain and build her business. Currently, Boone has 13 employees while Lubitz has six. "I decided it would be stupid to cast away this business that I have been working very hard at for the last 15 years. I have developed a pretty good reputation in Miami," she says. "I have been here for 35 years and know a lot of people. I feel a responsibility to my clients and my staff."
To accommodate her decision, Lubitz has hired a new director of operations to take over some of her workload and to provide her with more time to spend with clients. Lubitz has also changed her schedule and will alternate every two weeks between Miami and San Francisco.
"I haven't determined how big I want to get," she adds. "A typical CFP can work with 80 to 90 clients. That offers some good growth potential, but I don't have a vision of growing too large."
Their businesses are thousands of miles apart, but Boone and Lubitz have virtually the same values when it comes to serving clients, and as a result, cater to very similar people. "Though we do not target a particular group of clients, we like to work with those who value financial planning and have investable assets between $1 million and $5 million," Lubitz explains. The average age of her 115 clients is 55.
She describes her office as very "high-touch," noting that the majority of her staff has been with her for at least five years.
"I love to work with people in transition. Some planners would say that everyone is always in a transition, but I view [it as people being] at a juncture in their life where something has happened to upset the status quo." They may have just gotten divorced, become a widow or widower, lost their job, or received an inheritance.
Boone's 230 clients are working professionals, corporate executives, and business owners whose average age is also 55; about 25% are retired. Their investable assets range from $1 million to $10 million.
Boone and Lubitz have comparable investment strategies. "Conceptually we are very similar," Boone offers. Boone has an in-house investment department that implements and monitors clients' investments using modern portfolio theory and a combination of mutual funds, ETFs, and separate accounts, depending on the client. All his clients are given individualized financial plans and detailed investment policy statements, Boone says. "Linda is more on the active side than we are. We are not entirely passive, but still have some exposure to active. We are not entirely anything."
Lubitz differs from Boone's firm in that she meets with clients on a more regular basis. "That's because she has dinner with them most of the time," Boone adds.
"He's joking," Lubitz cautions, "but not really. It is just a different style. I meet with 50% to 60% of clients between two and four times a year. Most of the time the focus during these meetings is not on investment performance but on catching up with what is going on in their lives." She is however, working to develop a much more systematic approach.
Boone meets with his clients six to eight times the first year and has rotating topics he is sure to bring up every two or three years.
As founding members of the FPA and active speakers at planner conferences, Boone and Lubitz hope they are making some contributions to the financial planning industry. "We co-wrote a book last year on creating investment policy statements," Boone says, "and have become evangelists" on the importance of IPSs in the planning process. That zeal has led them to develop IPSAdvisorPro(TM), an online investment policy solution for wealth managers that will be available this fall via www.IPSAdvisorPro.com
As of now, Lubitz says their retirement plans are best described as "thirds." "I want to spend a third of my time working with our clients, a third traveling, and a third involved with community service."
Boone claims he doesn't have any retirement plans for the near future. "I really like what I do and who I spend my time with, which is kind of what retirement is supposed to be all about," he argues, though he expects to be spending more time traveling, sharing "some of Linda's passions for getting to know the world better."
Despite the extensive travel and the distance between their practices, Lubitz is happy with the direction that her career--and Norm's--is taking. "I love to watch him ask questions of clients; he is so good at that. He listens to people and is happy to help them discover things they may not have been aware of before."
She enjoys using her analytical skills and working through the puzzles people bring her. "I love to fix things and can earn a handsome living doing so," she says. "It's an amazing and comfortable combination. We make a difference in some people's lives, and hope we have made some helpful contributions to the profession."
Megan L. F. Robert is a freelance business journalist in Fairbanks, Alaska. She can be reached at firstname.lastname@example.org.