At age 32, Chad Burton, CFP, has realized as much or more business success than many financial advisors who are 20 years his senior. His fee-only financial planning and investment advisory firm has $115 million under management and three bustling offices located in Vancouver/Portland, Ore. and Larkspur and San Mateo, Calif. Burton's NewFocus Financial Group is growing at a steady clip of well over 10 percent a year. Thanks to a popular radio show of his own that ran three-and-a-half years in the Portland area and regular TV and radio appearances with San Francisco-based money manager / media personality Rob Black, Burton draws hundreds of prospective clients to a continuing series of wealth preservation and financial planning seminars. With a standard account minimum of $250,000, NewFocus usually attracts from three to four new clients--and investable assets well in excess of $1 million--each month.
Although these accomplishments are impressive, Burton says the best is yet to come. NewFocus plans to open additional offices in Walnut Creek and San Jose, Calif. in the near future. The NewFocus model calls for one CFP, one paraplanner and one receptionist/office manager at each location, with 150 clients per planner team. Burton, who still sees clients and works as an advisor, also serves as CEO of NewFocus Financial Group.
"Success profiles" usually focus on the gray-haired masters, but Chad Burton and his team of young, ambitious advisors may be able to teach the "old dogs" some new tricks,
DISECTING BURTON'S SUCCESS
My team and I have had the pleasure of consulting with Chad and providing money management and outsource solutions to his organization for about two years now. When Chad came to us, he had a broker/dealer relationship and was outsourcing a portion of his organization's asset allocation and money management needs to a handful of TAMPs. Chad felt that the traditional broker/dealer relationship was expensive and created a number of road blocks. With the business structure and back office support he received through FocusPoint Solutions, he felt confident in removing what was for him an unnecessary level of regulation and complexity. Chad felt the TAMPs had decent portfolios, but there were "serious flaws" with the system. For instance, he wanted to do some of the strategic allocation himself, using mutual funds and ETFs as core holdings, while alliance partner Rob Black was primed to focus on stock picking and tactical asset allocation strategies. The TAMP platforms were not flexible enough to implement their investment philosophies and their direct contractual relationship with clients made Chad uncomfortable. In addition, Burton says "in order to keep costs down" there was a push to use the broker/dealer's proprietary products, the portfolio reporting was limited ("our clients wanted more detail"), and "the advisor had to track and make the process work."
Burton liked the idea of The E-Myth, a great book by Michael Gerber that he and I both would recommend to any entrepreneur, so in the early part of our relationship, we worked a lot on developing policies and procedures, and systemizing everything possible. FocusPoint Solutions' business consulting and transition teams helped Chad make decisions at crucial junctures and streamline his business. "This is vital as I transition into CEO while still being an advisor. I need all the time I can get to meet with clients and promote the NewFocus agenda," says Burton. "It's been a bit of a challenge to learn how to do that, and I want to make sure that every single office is running the same, answering the phone the same, sending out new client letters the same way, and so on. FocusPoint has the systems and technology in place to help us set up and maintain multiple offices that can all run virtually in the same way."
Another part of Burton's success hinges on the fact that he got started young--at the age of 18--and was mentored by his grandfather, a long-time financial services professional and master salesman. "I got into the business with my grandfather," says Chad. "I was going to Portland State University majoring in engineering, math and wrestling. Grandpa had worked at various banks for 25 years or so. After a slew of mergers in the late 80s and early 90s, he decided to take his book of business and set out on his own. He basically sold fixed annuities most of his career, and then the last four or five years also got into selling mutual funds and variable annuities. When he left the bank, he asked me to come help him several hours a day--help him get organized and start contacting clients to let them know where he was. I also set up appointments and things like that. Eventually we realized that if I was going to be calling people and talking to them about their annuities and investments, that I'd better get licensed. So, that summer after my freshman year of college, I got my insurance license."
As Burton began to realize what he was doing, he "fell in love with the business." But, unlike his grandfather, he never did picture himself as a salesman. The industry was evolving, and he could see that the future belonged to fee-based financial advisors. Chad liked numbers and was "pretty analytical," but, thanks to his grandfather, he realized that dealing with people and earning their trust was the most important thing. Shortly after that, he got his Series 6 and 63 licenses so he could offer mutual funds and variable annuities. By then, Chad's grandfather was in his mid-seventies, and they were starting to get calls, a couple every month, from a distressed spouse saying that the husband or wife was in a nursing home. "It threw me into dealing with retirement and estate planning," Chad recalls. "I was lucky this happened then, and that I got started early. That's what my specialty is today. Because of the age of the clientele I was working with, I had to read up on Medicaid planning and spousal impoverishment laws and other related things. I started to meet several of the higher-end elder law attorneys in the area and started building my practice through that niche."
As a result of his hard work and relationship building, Burton started to receive significant referrals from estate planning and elder law attorneys. Eventually Chad realized that working in a transaction-based environment was not for him. "There wasn't a real strong connection with the heirs, and we were getting almost as many death claims as new clients," he explains. "I realized the business was essentially dying, and it wasn't anybody's fault but the age and the way that business was received--which was through a bank and through a product. So I started reading about fee-based financial planning and eventually determined to make the transition. I was ahead of the game as far as an early transition to fee-based planning, but I was also very young."
Burton, who says he has always looked four to five years younger than he really is, somehow managed to earn people's business and their trust. About that same time he started listening to Rob Black, a money manager who had a nationally syndicated radio show. Burton checked him out. They met, liked each other and started referring clients back and forth. "I'd send Rob clients who needed money management. He'd send me people who needed financial planning," recalls Chad. Rob eventually invited Chad onto his radio show, and the flow of educational commentary and seminars began.
After five years of working together on a referral basis, Black and Burton created NewFocus Financial Group as a vehicle for joint activities. Eventually they found FocusPoint Solutions, which helped them nail down the additional systems and solutions they needed to run an efficient, unified operation across multiple states. "We knew we needed to outsource everything we possibly could so we could concentrate on financial planning and our clients--not managing the technology and 10 to 15 people in the back office. This is the perfect solution for us," Burton says. "We now have a fluent business structure. Everything from compliance to portfolio management, trading, reporting and account reconciliation to the servers, software and IT is handled, and our primary focus is right where it needs to be--taking care of our clients and bringing in new business."
A couple of interesting side notes on the educational seminars that Burton and Black host: They mention upcoming seminars on the weekly radio and TV shows, and post the schedule on their Web sites, www.NewFocusFinancial.com and www.RobBlack.com. They never promote their firm--either on the air or at the seminars--other than to mention their Web site. They also offer an "investor one-on-one," which is really just a way of helping people that they wouldn't take on as clients. It is common for 250 to 350 people to pack the hotel meeting room. There is a small attendance fee, but all proceeds go to charity.
If you are an advisor on the West coast, you'll want to keep an eye out for Chad Burton, Rob Black and their teams. Heck, you may just want to join them.
Brent Hicks, CFP, is a financial planning veteran and a fee-based pioneer. He is the founder and President of FocusPoint Solutions, (www.FocusPointSolutions.com), a firm that specializes in helping financial advisors build profitable fee-based businesses.