Ross Levin, the man behind The Wealth Management Index--the book and process that have influenced nearly a generation of financial advisors--is really a people person. That's right: The CFP responsible for devising grids, graphs and work plans to appraise your performance as a wealth manager and measure it against your clients' goals and plans, seems far more comfortable discussing subjects like work/life balance, holistic planning and communication.
That doesn't mean the index doesn't deserve its vaunted place in the sun.
"When we developed the (WMI) concept, we were trying to figure out a way to quantify a successful practice, to bring congruity between clients' assets and values," Levin, founding principal and president of Accredited Investors, Inc., told Wealth Manager in a recent phone interview from his office in Edina, Minn. "We still use it as the central part of our practice, how we establish what we do for the client--like a pilot's checklist," he adds.
But as the business of wealth management has evolved, so has the WMI--and its creator.
"It's sort of ironic that clients may come to us because they've heard of the index, but we're considered holistic planners; we've developed in another area.
"When I say 'another area,'" he quickly interjects, "I should add that comprehensive planning was always the goal. The index still helps codify comprehensive planning. It has always provided a touchstone for the planning issues. The part that has evolved is how you fit the qualitative with the quantitative."
In fact, Levin won the Journal of Financial Planning's 2005 Call for Papers with a work entitled "Quantum Planning" in which he posits that quantum physics can provide an answer to the debate between life planning and financial planning. To quote from the executive summary:
"Another way of looking at this issue is the contrast between context of justification and context of discovery. Justification for advice is based on objective analysis, the financial planning pyramid. But planners also need to "discover" and apply the uniqueness of the client, the holograph of client experiences and emotions that surround the pyramid of justification.
Moreover, client situations are not static; they're evolutionary. Clients are influenced and changed by their environment, by changes to their own body and mind, and even by the interjection of the financial planner."
WM: What are some of those evolutionary changes that have been incorporated into your use of the WMI?
One of the key things is long-term care, which was just nascent when the book was published 13 years ago. Nobody talked about it. Other areas, like retirement planning, have become more nuanced. We were doing retirement planning, but not as much with RMDs, and Roth IRAs didn't exist, so we certainly weren't doing any conversions."
WM: Have you thought about updating the book?
I've been asked to do so by the FPA's publisher but, it's hard to find time. I write for the Journal of Financial Planning and a column for the Minneapolis Star Tribune.
WM: You're also frequently quoted and interviewed in the financial press, both on TV and in print, and you're a popular presenter at industry conferences as well. You must get a lot of calls from wealth managers and aspiring wealth managers.
I like to think that people find me accessible and authentic. I've made a lot of mistakes along the way. I'm not different from anyone else.
WM: What questions are you asked most often?
A lot of people are exploring how to find a partner. I have two in my firm. My advice is to look for someone whose skills are complementary. The way we think about it is, what kind of a life do you want to lead? We have teenage twin daughters, and my wife and I knew we wanted to be involved in their lives. So I needed to have an infrastructure that gave me the work/life balance I wanted. There's more to life than having a successful business!
WM: You worked with your original partner, Wil Huepel, in a previous business where you were not so successful. What made you think you'd be good partners when you founded Accredited?
I have some skills that I'm very good at and a bunch that I'm not. You have to appreciate the person who does the things that you don't do well. Wil is an internal guy. He runs our operations and financial planning but hadn't brought in much new business. He has been integral in keeping the clients that I brought in. When I appreciated he had other skills--separate and distinct from my own--we capitalized on them. And we worked on communicating; we said that we were going to make this work.
WM: Is the business of wealth management more challenging today than when you started out?
Well, the good news is that the consumer now recognizes the value of comprehensive planning. In 1982, no one knew what that was. The bad news? Now the challenge is that many [advisors] say they offer comprehensive planning, and don't--and how do you distinguish between them?
WM: Do you think professional standards should be codified?
That's kind of a can of worms. The CFP Board has done this in a way with practice standards. Ultimately, I think we need to get certain criteria, certain benchmarks to test against. I think there needs to be a bar out there, but the reality of what we do is, that for every two clients, there are two different solutions.
WM: Accredited Investors has 33 employees, including four principals--three of them partners--and 300 clients. Do you have plans to "grow your business?"
We have about $750 million AUM; we've never said we'll have a billion in three years because we want to have the right clients. The internal challenge is to hire the right people and retain them. We keep our feelers out. If we do our screening right, we hire about three to four new people a year, mostly kids out of school. There are over 100 financial planning degree programs now, and these kids come out way smarter than I did with a business degree. But they need the wisdom that develops over time. They may have a high IQ, but we try to give our younger employees a chance to develop their EQ--emotional intelligence--by giving them a chance to work with clients.
Another thing we do from a staff standpoint is hold strategic planning retreats four times a year. We're all together in a room with a facilitator. We also provide a lot of nice benefits--charity days, an exercise room (added when the firm bought its building three years ago), yoga every Monday.
WM: What other questions do colleagues ask?
The greatest number are looking for ideas about how to run a business. There's not necessarily a silver bullet. I was terribly unsuccessful for many years! My advice is just stay in the business. The numbers begin to work in your favor if you just stay with it. I'm pretty resilient, pretty optimistic, and my wife was always supportive because she knew I loved what I was doing--even though I wasn't doing it well.
WM: You started out in this business at 23 in 1987. What are the changes you've seen? And how have you changed?
It's so funny because early in the business you were sent to sales training seminars. The purpose was to get someone to commit to action. It's completely different today. We don't try to convince a new client to become ours. Some don't like our style.
I'm going to be 49, and every year I realize how much less I know than I did the year before.
WM: That must be hard to convince your peers. Didn't you initiate a program to benefit the Financial Planning Foundation that invites 20 professionals from other firms to spend a day in your office?
We call it the "Be Our Guest" program now. Three years ago, it was just our firm. We asked each participant to make a $1,000 contribution to the foundation. Last year, after we brought the idea to a board meeting, it grew to five firms, and we raised $60,000; this year there will be seven--including Glenn Kautt, Cheryl Holland, Bill E. Carter, Norm Boone, Alexandra Armstrong and Roy Diliberto--each on a different date. Ours is Sept. 15. We'll close the office for the day, and the visitors--from people just starting out to advisors from firms much bigger than ours--spend the day seeing how we do business. They leave with our procedures manual. It's always a fun and invigorating day. If anyone is interested, the dates are posted on the foundation's Web site (www.foundation-finplan.org).
Nancy R. Mandell is managing editor of Wealth Manager.