From the July 2013 issue of Investment Advisor • Subscribe!

Succession Planning for an Entire Industry: Why Study Groups Are Critical

An FPA legacy study group provides a look at the future of the profession

Compliance curmudgeon Tom Giachetti doesn’t think much of study groups.

“Study groups are a bunch of people sitting around convincing each other they’re right,” the chairman of the securities practice group at Stark & Stark (and Investment Advisor columnist) said recently.

Mike Anderson is having none of that. The advisor and de facto head of one of the more engaging study groups to come out of the FPA’s NexGen community pointed to concrete success directly related to time spent with the group.

“Let me be general and specific,” Anderson, vice president of financial planning at Dallas-based True North Advisors and famed advisory firm Evensky & Katz alum, began. “Seven of our 10 members have experienced major personal and professional transitions during the time frame of the group’s existence. Imagine our meeting after 2008; tears were definitely shed. But the body of knowledge this group possesses is immeasurable.”

As for the specific, he described a member who laid out goals for a coming five-year period and took them to the group.

“I was able to watch as this person ticked them off as each goal was reached,” he said. “I watched them start deep in the red and finish in the black.”

Mike AndersonFar from the study groups we all were thrown into in college, where productivity was hampered by the fact that we often didn’t know or didn’t like certain participants, once members join this study group, they don’t quit. Each member immediately points to Anderson as the group’s leader, even though no formal hierarchy exists, but they figure it has something to do with his time spent serving under Gen. David Petraeus in the 82nd Airborne Division at Fort Bragg. Whatever the reason, it works.

Initially, the group sought members from different geographical locations around the country, but “for some reason a lot of us ended up in Texas.” Yet if geographical diversity has been tough to maintain, diversity of business model has not.

“We have employees of firms, partners of firms, sole practitioners—really all types of models,” Anderson said, adding that it’s one of many reasons Giachetti is wrong. “We’re not in some sort of echo chamber with the same issues and challenges. Because we’re so diverse, we can look at a problem from a number of different angles.”

The group meets in person once a year in a different part of the country to which a particular member is attached. Despite the military efficiency ingrained in Anderson, the meetings are surprisingly relaxed and unstructured. At the same time, they’re not there to mess around, and make good use of their time and peers. When not at the in-person meeting, they’re at their computers, and the discussion threads fly.

“Members will bring different planning issues that they’ve experienced or are experiencing, and they present them to the group for discussion,” Anderson explained. “Some members are more open than others in the information they want to reveal, but the privacy of the clients is always protected.”

The group is proudly geek-heavy. Member Michael Kitces, director of research with Maryland-based Pinnacle Advisory Group, titled his high-profile blog “Nerd’s Eye View.” Advisor Bill Winterberg delights in showing off his summer blockbuster trailer which, instead of a movie, features the group at a recent retreat. That geekiness is something that translates to the study group name itself—Xcelsior.

“Some of us are kind of geeky,” Anderson understatedly admitted. “The coolest ship in the old Star Trek movies was the Excelsior. We also all—to our comical and cynical pleasure—have similar horror stories when using Microsoft Excel.”

Although the group evolved from the FPA’s NexGen community, membership in that organization wasn’t a requirement. For instance, member Dan Moisand is slightly older than the others, and will be “thrilled to be part of a profile of young up-and-comers,” Anderson quipped.

“When we all ‘aged out’ of the NexGen community, we wanted to continue the discussions because of the quality of the membership and what we were all getting out of it,” he added.

Other reasons for putting the group together, according to Anderson?

  • They like the people involved.
  • The NexGen group grew fast and went from interpersonal conversations to more of a “technical resource.”
  • A study group was a natural outgrowth of NexGen.
  • They wanted individuals from all across the country.
  • They wanted to have different types of people: entrepreneurs, owners and employees of firms.

“We really feel we have the best consultants in the industry as part of the group,” he said. “We might come from different business models, but we all have the same values that are instilled at our firms.”

With strong personalities like the aforementioned Kitces, Winterberg and Moisand, as well as FPA 2013 President Michael Branham and past NexGen President Sabrina Lowell, does it ever get, well, overwhelming?

“We have Kitces and Branham and other high-profile people, but some of the lower-profile, less-public people have ideas that are just as good as the others,” Anderson diplomatically responded.

Like many advisors who have found success in the profession, many in the group were originally unaware that the independent advice channel existed before entering their professional lives. Winterberg was a software engineer for Hewlett-Packard and LeapFrog Toys. Like many in the tech sector a decade ago, he suddenly found himself with some money. While researching how to properly invest it, colleagues came to him for advice. The rest is history.

Lowell, who grew up in Washington, always remembered a large lot near her house, on which sat a few office buildings. When she received a small inheritance, she researched the company and decided to invest. It was Microsoft—you might have heard of it.

“It turns out I had an aptitude for investing, and I wanted to be a stock broker,” she said.

Other than Anderson, who received a master’s in personal financial planning from Texas Tech University, Branham is about the only one who came from a related field, having worked for a large broker-dealer prior to finding the independent space. He is now head of a 23,300 member-strong national financial planning advocacy organization. In response to Giachetti’s earlier assessment, he credits the group with getting him this far.

“I would not be the 2013 president of FPA if it had not been for the group, period,” Branham argued.

“I asked the group for feedback on a major professional decision—whether to work for someone else or start my own firm,” added Winterberg. “The pros and cons were thoroughly vetted, discussed and debated at one of our in-person retreats. With the support of the group, I eventually made the decision to go out on my own, and it’s been an overwhelming success.”

Anyone who follows Michael Kitces’ seemingly ubiquitous presence on Twitter, reads Nerd’s Eye View or his blogs on AdvisorOne.com, or is aware of the myriad of businesses he's started, wonders when he has time to sleep. Twitter posts at 2:00 a.m. are not uncommon, and he’s often asked to deliver social media sessions at conferences around the country.

“I would not be on Twitter if it was not for the group,” Kitces said. “It was Bill [Winterberg] who sat me down, convinced me to do it and walked me through it.”

Perhaps the most emotional story comes from Elkhart, Ind.-based Aaron Coates. Coates left his former firm (where he was a partner) to start his own in February 2008. On Oct. 11, 2008, barely eight months later, The New York Times called Elkhart “the white-hot center of the meltdown of the American Economy” with unemployment going from 5% to 20% in 11 months. President Obama visited the area five times between May 2008 and August 2009.

 “That is the environment in which I started,” Coates related. “My survival and my sanity hinged on the fact that the study group was there to encourage me.”

It’s easy to see why the Financial Planning Association approves of the group and would like other discussions to continue in a similar manner outside the Communities of Interest housed on the organization’s social media platform, FPA Connect. Beginning with student FPA chapters through NexGen to groups like Xcelsior, small study groups would go a long way in building needed awareness and engagement.

Concrete results, the expertise of the group, colleagues as friends, life-changing decisions: Although he’d never admit it, even someone like Giachetti would be hard-pressed not to see the value of a study group like this one.

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