Forget the one about a tree falling in the forest. Here’s a better question: If a company’s building burns down and the company’s auditor is inside, will he notice the fire before next year’s audit? “When I was an auditor, we used to joke that if the building burst into flames, we wouldn’t know about it for a whole year,” laughs advisor and CPA Bernie Kiely of Kiely Capital Management in Morristown, New Jersey. Accountants are trained to look into the past, reviewing the past tax year and examining audit periods gone by, while financial planners are trained to look into the future, he says. And these differing perspectives can make it harder for a CPA to morph into a planner than you might expect.
Luckily for them, some people are born with an eye for both the rearview mirror and the crystal ball. Thirty-six-year-old Robert Walsh, president and founder of Lighthouse Financial Advisors in Jersey City, New Jersey, started his career as a corporate accountant, and worked his way up through the ranks to a post as an international tax specialist at Ingersoll Rand. When stocks and bonds caught his eye in 1994, he leaped with both feet into the heart of the investment world, taking a 50% pay cut to join the shouting hordes on the trading floor of the New York Stock Exchange. But while his appetite for stocks was sated, his analytical, accountant-oriented brain cells nearly died of starvation. From there it was something of a ping-pong match–off to a CPA firm, then to a fee-only planning firm, and finally to the realization that he was going to have to build his ideal firm from scratch. “I really liked investments, and I really liked tax season, but I hated auditing,” he says. “So I said, ‘What if I combine the two that I like?’” Out of that decision bloomed Lighthouse Financial Advisors, the tax and financial planning services firm he founded in May 1999 and currently runs with the help of an assistant planner and an intern.
The Cambridge Connection
Just as he was getting the firm off the ground, Walsh happened upon an ad in the AICPA magazine for a company that could help CPAs launch practices that combined tax services and fee-only financial planning. Founded in 1995 by advisor Bert Whitehead, Cambridge Financial Advisors provided a systematic approach to providing fee-only planning services for middle- and upper-middle-income clients. Intrigued, Walsh did some additional research on the company, then flew to the company’s headquarters outside Detroit to meet with its management. When he got there, he decided it was a perfect match. “I said, ‘This is it. This is what I need to get my business off the ground,’” he recalls.
“It” was the Cambridge system, a package deal that provided templates, software, conferences, and coaches to help him launch and run his firm. The ingredients weren’t rocket science, but Walsh was drawn by the idea of getting a ready-made business model that had most of the bugs already worked out. “They gave me a template to build my practice on, and they had already made all of the mistakes,” he says. “It really jumpstarted my firm. Because of them, I was profitable within the first quarter after hanging out my shingle.” Indeed, as advisor Kiely, a friend of Walsh’s, recently told him, “If I had known about Cambridge when I was launching my business, it would have saved me seven years” of research and trial-and-error.
Cambridge was a great match, Walsh says, because the model practice included doing a client’s tax returns, something he wanted to continue to do. And it was also a fee-only structure, which jelled well with his accounting background. “I don’t understand why some accountants, when they decide to get into planning, suddenly want to sell mutual funds [for a commission],” he says. “It flies in the face of the role they’ve always had: the advice-driven role.”
What also appealed to him was that he could be independent without being entirely on his own. “My biggest thing was, when I sat down in front of a client, I didn’t want to have to say, ‘Well, this is me,’” says Walsh. “With Cambridge, I have 80 advisors I can call if I have a situation that I don’t know how to handle.” Having a lifeline–actually 80 lifelines–gives him confidence to broach difficult client topics, and the clients appreciate the depth of knowledge he has available to him. “I can say, ‘You know what, I don’t know the answer, but I’m part of a group that can get it. I’m sure one of them has worked on something like this before,’” he says. “Clients really like that.”
Walsh’s clients, who include New Jersey individuals, families, and business owners, also like the idea of deep bench. “They know that if something were to happen to me, somebody out there would come in and help with my practice,” he says. Like many Cambridge advisors, Walsh has set up an arrangement with two colleagues who have agreed to take over in case of an emergency: to assist his staff, help his family, possibly sell the practice, and make sure that the clients aren’t left behind in the shuffle. These colleagues are well-equipped to do so, says Walsh, because all Cambridge practices are set up in a similar manner. “It’s not like going into someone’s practice that you know nothing about,” he says. “We could all work with each other’s client effectively.”
Learning the Ropes
Like all new Cambridge advisors, Walsh attended a sort of “freshman orientation”–a training conference to teach him how to set up a practice effectively using all of the tools and templates now at his disposal. Even the mundane tips, such as how to set up his computer folder structure, or what to keep in each client’s file, were helpful, says Walsh. He also gained tips about how to determine the proper amount of insurance for a client, and how to build an investment portfolio–”stuff that you learn about in a textbook, but don’t exactly know how to go about doing in the real world,” he says, pointing out that in order to gain CFP certification, applicants never actually have to produce a whole financial plan. “When you go through the CFP course, you don’t actually do a comprehensive plan, which amazes me,” he says. “You do the classes piecemeal, and then you take the exam, which is multiple choice, but there’s no plan at the end.”
Walsh also learned the details of his new business model. Cambridge advisors generally charge clients an annual retainer fee based upon where they are in their life cycle: the “early accumulation” years, “rapid accumulation” years, or “financial independence” years. Their financial plans are built over a series of appointments, one topic per appointment, so that at the end of several meetings, the financial plan is not only complete, it has also already been implemented. Working with the client over time “helps you get to know the client better, rather than just having the client drop all their information on our desks and say, ‘Here’s all my stuff, now create a plan for me,’” says Walsh.
The best part of the orientation, however, was the personal interaction and coaching, says Walsh. At the training seminars, Walsh met several other new advisors who have become a sort of informal support group for him. In addition, he was assigned a “coach”–a current Cambridge advisor who had been using the system for more than three years. “We would have a weekly phone call where he’d say, ‘Did you send out those marketing letters? How’s your Web site coming?’ So you had someone who was constantly making sure you were keeping on track,” says Walsh. “That was really helpful.”
In fact, Walsh was so enamored of the coaching concept that, after his Cambridge coach’s stint was over, he hired an outside coach to take over the role, and began to take some coaching classes himself. Walsh has served as a coach for three other new Cambridge advisors, “which is very rewarding,” he says, noting with laughter–but also pride–that his charges are “all doing well, thank God!”
In January, Walsh and a partner also launched a separate coaching company called “Mastermind Your Ideal.” Its first six-month session (which included monthly conference calls, weekly phone check-ups modeled on the Cambridge coach system, and a final conference session held in conjunction with the April NAPFA conference in Reno–a convenient location for many Cambridge advisors, since they are all fee-only planners) was aimed at helping 18 Cambridge advisors “mastermind,” or create, their ideal Cambridge practice, and soon Walsh hopes to expand the program for non-Cambridge planners, entrepreneurs, and other individuals.
The “mastermind concept,” according to Walsh, is the idea that most people know about 80% of what they need to know, but each person knows a different 80%. “So together, we can know 100%, and do more–it’s like putting a group of batteries together,” he says. Each person’s ideal practice may be different, but the combined power of everyone’s minds working together will help each person reach their ideal. Participants in the most recent session brainstormed about such topics as their ideal client, work schedule, marketing plan, and workspace; by the end of the program, each planner had created a document detailing her own ideal planning practice. The act of writing down your goals and telling others about them is crucial to the program’s success, says Walsh. “Strange things happen when you write things down–all of sudden, you have to do it, because you wrote it down,” he says. “It’s like Weight Watchers: You got up in front of everybody and said you were going to lose five pounds, so now you have to do it. People respond to that.” (See sidebar above.)
One Good Intern Deserves Another
The advisors of Cambridge bought out founder Whitehead in January 2002, and transformed the company into an advisor-owned, non-profit organization. The initial fee for membership is $8,500 (this includes manuals, software, training, and coaching); after the first year, membership is $1,500 per year, says Walsh.
One of the ongoing perks for advisors is the annual four-day Cambridge conference, a convention where all of the speakers tailor their presentations specifically to the advisors’ way of doing business, and advisors share their latest successes and discoveries. At one recent conference, Walsh gave a presentation about one of his own success stories. The topic? Interns.
While some advisors groan at the idea of training employees and shudder at the very idea of taking on an intern, Walsh enjoys teaching interns, and has found them to be a great boon to his firm. He’s recruited four consecutive part-time interns from the finance program at nearby St. Peter’s College in Jersey City, and recruited another from New Jersey City University; one of those interns went on to become his current assistant planner. He also has one full-time intern who currently attends Rutgers University at night.
Interns are smarter and more capable than many people give them credit for, argues Walsh; the concern is not that you’ll make their job too hard, but that you’ll make it too easy. “They know the computer as well as anybody; they can research, update portfolios, even input tax returns,” he says. “The biggest thing is to keep them diversified–give them small projects in different areas so they learn something, rather than having them spend their whole time on one project and getting bored.” The students aren’t the only ones who learn, adds Walsh; having interns has also taught him a great deal about how to manage employees. It’s important to make the intern feel like a part of your firm from the very start, he says, and it’s often a good idea to ask them to work in the afternoons, not in the mornings. “Our work builds up as the day goes on,” says Walsh, “so this way we have lots of work to give them when they come in.”
Initially, Walsh scowled about the necessity of training his interns, but he’s solved that with a surprisingly low-tech solution. “At first, I said, ‘Oh, brother, I’ve got to teach them how to do everything,’” he says. But then he started making checklists. He’s got checklists for everything from how to respond to referrals and personalize marketing packets to how to update portfolios and purchase stamps online. “Say a referral comes in. You look at the list, and it tells you exactly what to do: Go into this folder, open that file, and change lines A, B, and C,” says Walsh. “It becomes a matter of just handing them the checklist. It really streamlines the process.”
What Do You Want to Be When You Grow Up?
For Walsh, the greatest satisfaction of his work comes when a client makes a major life change that will make her happier, regardless of whether it will make her richer. He doesn’t balk at terms like “life planning” and “life coaching,” and he disagrees with the notion that planners are stepping beyond the bounds of their expertise when they broach non-financial topics with their clients. After all, he argues, every major life transition involves money, so why shouldn’t a financial planner be involved in those conversations?
Of course, he agrees, clients with psychological problems should consult a mental health professional. “But let’s say a client is stuck in a dead-end job. Why shouldn’t the advisor say, ‘Look, you have $300,000 in the bank. If you spent $25,000 on re-training and did X, Y, and Z, this is where you would be financially in a year and a half, and you’d have a job you love’?” he asks. “Why shouldn’t we be involved in that?” Walsh cites the argument for life planning that a fellow advisor recently shared with him: “People are always asking kids, ‘What do you want to be when you grow up?’ And the kids have no money, they have to go to school, and people are always telling them what to do. But the grown-ups who are financially successful, have a good education, and the means to do what they want to–nobody ever asks them what they want to be when they grow up. They’re the ones you should ask, because they’re the ones who can go ahead and do it!” Whether a client chooses to change jobs, or retire, or work more years at a job she loves instead of fewer years at a job she hates, Walsh celebrates. “Not everyone does that, but it’s really rewarding when they do,” he says. “They live a longer, more productive life, and they’re happier.”
Of course, if you’re touting the balanced life, it’s important to make sure you practice what you preach. “You can’t sit there and tell the client how he should be enjoying life more when you look like you’ve never been outside your office,” says Walsh. “My clients laugh if they call and I’m out on the golf course”–he laughs–”but we want for them to be out on the golf course, too, or fishing, or doing something they enjoy.”
And while Walsh pushes his clients to create the life of their dreams, he also welcomes a few pushes back from them, especially if they help to keep him on his toes. “I really encourage client questions, and I tell them, ‘If you have a dumb question, it makes me feel good because I can answer it.’ They always laugh about that, but the other part of that is, if they ask a hard question and I have to go research it, that helps everybody–them, me, and all the other clients–because I learned something new,” he says. “It’s our job to make sure we always keep learning–that’s what they hire us for.”
Assistant Managing Editor Karen Hansen Weese can be reached at email@example.com.