There are almost as many different types of financial planning firms as there are individual financial planners. There are firms consisting of multiple generations of the same family--fathers, sons, uncles, and cousins--and there are firms made up of individuals who've come to financial planning as a second career. There probably aren't too many however, that fit both of those descriptions, other than Topkis Financial Advisors in Wilmington, Delaware, where William M. Topkis and his daughter, Nicole Topkis Pickles, ply their trade.
The elder Topkis spent more than 30 years in the insurance business, with Provident Mutual, before retiring in 1994 at age 55, when he decided to embark on a second career as a comprehensive financial planner.
Always An Entrepreneur
A man true to his roots, Bill Topkis was born and raised in Wilmington, where he became an Eagle Scout at age 13, part of a family with a long history in the state. When he graduated from the University of Delaware, he really had no idea what he was going to do, but he knew he didn't want to take one of the offers he had gotten from either of the state's largest employers, the DuPont Company or Bethlehem Steel. Topkis always had an entrepreneurial bent and met someone who convinced him the life insurance business could be the avenue he had been seeking.
"So I went into the life insurance business," he recalls. "My wife and I moved to Philadelphia and lived there for five years and very early on I became a member of the Million Dollar Roundtable."
At age 28 he moved his wife and baby daughters back to Wilmington and took over an agency that had been started by Provident Mutual. Within a few years, Topkis was able to reverse that agency's fortunes and it soared from 69th in the company rankings to fourth, he recalls.
Then, in the early 1970s, he was approached by some young doctor clients from Jefferson Medical College in Philadelphia who wanted him to help them set up Keogh plans. Topkis found a small brokerage firm in Pennsylvania that would sponsor his license and brought the idea to the Provident Mutual. The insurer's response was to threaten him with termination.
"Well, they didn't fire me and I passed the test and I became one of the first agents in Provident Mutual to sell mutual funds," he recalls. "Eventually the Provident Mutual had their own series of funds because they formed their own broker/dealership."
A decade later he went back to Provident Mutual with another request--that it share the legal startup expenses for forming an RIA. They agreed this time and he became the first of the company's agents that was also a registered investment advisor.
"I started an RIA as a result of a study group I was in," he recalls. "There were eight of us in this group, and we had a consultant from McKinsey who told us that at the turn of the century, because of the way we trained people, we would probably be involved in the financial planning industry, whatever that was at that time."
After Topkis retired from the insurance business in '94, he decided to make that consultant's prediction come true by becoming a comprehensive financial planner, using his existing RIA. In 1995, after talking to a number of leading fee-only planners who told him one of their biggest stumbling blocks was finding insurance people they could trust. Topkis says they advised him--since he had such a strong insurance background and the requisite licenses--to adopt a fee-based model for his practice.
In his early years as a planner, Topkis had one or more partners but last year he felt it was time to fly solo. He felt that he and his partner at the time, Dan McDermott, were moving in different directions and had an amicable parting of the ways.
No Client Profile
Unlike most financial planners, Topkis doesn't have a particular type of client in mind, nor is there a stated client minimum. "I decided a long time ago that I'm not going to have a client profile," he says, adding that what attracted him to his second career is that "financial planning is all about people; it's not about products, it's about helping people. It's about life planning."
To show what he means by life planning, Topkis relates the story of a client referred to him by a local negligence attorney (who also happens to be a client). The woman in question is 79 years old and recently received just over $4 million as her share of a settlement from a bus accident six years ago that cost her both legs. Topkis estimates that he's spent 50 hours so far this year on life planning for this client, which included having a special van built to her specific needs, doing the due diligence to find her an independent living facility with the ability to transition to assisted living, if her physical condition should deteriorate, not to mention putting together an investment plan to manage her now substantial assets. They decided to keep close to $1 million in CDs and Treasuries and put the remaining $3 million into a diversified portfolio. For managing this client's assets, Topkis is charging between 75 and 80 basis points. "I hold [the asset management] separate from the financial planning and life planning," he explains. "Asset management is only one leg of the stool of what we really accomplish with the client.
"My hourly rate today for financial planning is $200 an hour, but clients don't want to know that, they don't care about that. What they want to know is what's going to be the minimum fee if we do planning with you?" Topkis says. "And we talk about that early, in the second interview, after we discuss the process they're going to have to go through, and I've given them what I call their homework, which is gathering all the information they'll have to give us, and I say the fee is really a process of time."
Using Two RIAs
Topkis uses Cambridge as his broker/dealer, an arrangement that's continued from his previous firm. He said he and his former partner had looked at a number of B/D firms but found the best fit with Cambridge. "I have my RIA for financial planning, Topkis Financial Advisors, where the fees for planning come in, but I do all my asset management through Cambridge's RIA," Topkis explains. "I couldn't really afford financially from a compliance standpoint what they do in the asset management part of it. They support me, and they've come in for audits, but they do not look over my shoulder."
Currently Topkis manages an estimated $50 million "and growing" in client assets for about 100 clients. "We have several model portfolios that we use and research and monitor all the time. We use no-load mutual funds and we also use a third-party money manager, who is a large-cap manager, when we want to use stocks."
While Topkis doesn't have an official client minimum, he acknowledges that his usual investment solutions do require a substantial level of investable assets. "It really takes about $250,000 for our model portfolios to work. For anything less than [that], we use the Litman/Gregory portfolio. Litman/Gregory advises Cambridge and they have a lot of no-load funds in there and we just plug into that."
One vehicle that Topkis uses in his life planning are the new breed of variable annuities which, his daughter adds, they use for "older clients."
"I don't use them as a major part of financial planning," explains the father. "What I really like about the variable annuity today, is the guaranteed income benefit; clients like that. It's been a win-win situation. I explain to them about the cost, but they're not really concerned about the cost, what they're concerned about is the guaranteed income benefit. I would say that in a total portfolio, the annuity might represent no more than 10%.
"Our main asset allocation is probably 60/40," he says of the equity to fixed income ratio. "I say we're not out to get the best return, but if we use the rule of 72 and our goal is 8%, in nine years your money doubles."
A Genetic Succession Plan
One issue facing many planners that Topkis Financial Advisors will able to avoid is the question of firm succession. Bill is currently the firm's sole practitioner but that won't be the case for much longer. The number two person in this three-person operation is Bill's daughter, Nicole Topkis Pickles, who currently serves as relationship manager but is working on both her CFP and a Series 7 license.
Like her father, Nicki Pickles took a circuitous route to the financial planning business. After graduating from Emory University with a degree in psychology, she began a career in the not-for-profit world, first with Big Brothers Big Sisters of Atlanta, and then in Chicago with the American Cancer Society. Like many women, however, she felt the strain of the competing demands of a career at the executive level and of motherhood. She ended up taking a 10-month leave from the working world but then was presented with the opportunity of becoming director of development for the Joffrey Ballet, which had recently moved its offices to Chicago. She held that position for about a year and a half, before opting to stay at home for another period with her two young sons. By 1997 her husband was spending a great deal of time on the road and with two small children she felt the call of the East Coast and her extended family.
"I never thought I would end up working with my father," she says. "But as the boys got a little older, I wanted to do something and I didn't want to go back into not-for-profit. I felt that I had done my thing. The financial planning business is very close to the development side of not-for-profit. There's the entrepreneurial side and the people side and it was very appealing for me."
She started out by asking her father if she could just work in the office, doing filing or answering the phone so she could get a feel for the business and see if it was something she might like to get into. So she came to work at Topkis & McDermott and started on September 11, 2001, giving her something of a baptism by fire. "I started at the bottom, which was an excellent way to start, because I've learned about the financial planning business from the ground up," she says. Originally when Topkis and McDermott split their partnership, a paraplanner from the joint firm came along. When that person left unexpectedly in November, Nicki stepped up to fill the paraplanner role. "I was ready to take on that role and I stepped in." She had learned the basics of the position from her predecessor over the last five years, and what she didn't know, she learned in a hurry. As Nicki expanded her role in the firm, the third member of the team--Kathy Bevans--picked up the slack in the administrative area.
Although Bill has told Nicki he has no intention of ever retiring from his second career (he's fond of saying, "My wife, Judy, and I have been married for 46 years and she's my best friend, but she says it's not for lunch."), at some point, the firm's growth is going to be the responsibility of the next generation.
"I think that as I get my licenses and my CFP, that I'm going to be bringing in younger clients," says Nicki. "As I make more contacts, it's just going to build.
"Since we came over here a year ago, I've taken a lot more on," she continues. "I'm really behind my father in setting up the investment reviews and doing all the paperwork to get that together. I am looking at the portfolios with him now. I really feel like I have my finger on the pulse of what's going on in the business world and I'm slowly gaining knowledge and learning. It's a wonderful world and I really love what I do."
With the common bond of family and a passion for working with clients, the Topkises, pere et fille, seem to have found second careers worth keeping.
Managing Editor Robert F. Keane can be reached at email@example.com.