What with the potential for your old high school flame to show up on the arm of Mr. Universe and the school bully to stuff you in a locker just one more time, reunions are not the kinds of things that make most people tap-dance with anticipation. And yet people do show up, brimming with curiosity. Did “Most Likely to Succeed” fulfill her potential? Did “Most Musical” make it to Carnegie Hall? Is the “Class Couple” still together, and do they really have 13 kids? Does “Most Creative” really subsist on wasabi peas and live in a yurt?
Curiosity is alive and well at Investment Advisor, and six years after running a profile of Arkansas planner Cynthia Conger, we decided to look her up. How had her firm, the Arkansas Financial Group, weathered the cruel markets of recent years? Had she expanded into new markets? Did her professional partnership with planner Rick Adkins survive, and did they take on new partners? What had she learned? Did she now feel that she’d “arrived”?
As it turned out, some things hadn’t changed. For starters, she’s still based in Little Rock, her partnership with Adkins is still intact, and doctors are still an important part of the firm’s clientele. She’s still fee-only, still has an office of about a half a dozen people … and still says she wouldn’t trade her chosen line of work for anything.
Yet despite the passage of time, this experienced planner–who has appeared multiple times on the “Best 250 Advisors in the Nation” list of (the now defunct) Worth magazine, has served in a variety of leadership roles with the IAFP and other professional organizations, and has run a successful practice since 1985–doesn’t give the impression of someone who believes she has all her ducks in a row and can put her feet up to watch the profits pour in. True, revenues have increased five times over since 1997. But new challenges have arisen, employees (and the attendant personnel issues) have come and gone, the market has faltered and only started to revive. And the challenges of maintaining a partnership haven’t gone away, either; in fact, they’ve gotten more complicated, since she’s not only had to nurture the partnership with Adkins, but also devise plans to facilitate her own eventual retirement by taking on new partners. “I still have many of the same headaches I had years ago,” she says with a rueful laugh. “It’s just that now there are more zeroes attached to them!” Conger, like many planners, has discovered the challenging truth about running a practice: Just when you think you’ve “arrived” and perfected the ideal firm, the landscape shifts, and perfection moves just a little bit further down the road.
One of the most challenging issues Conger faces is her ever-changing business partnership. Conger and Adkins first met when she applied for a job as a CPA/planner at his office, a Connecticut Mutual insurance agency. Conger, then 33, was hardly impressed with her baby-faced employer-to-be, then a very young-looking 29. “He looked like a kid, and I thought to myself, ‘Oh my God, I can’t possibly work for this little boy!’” laughs Conger. But their views on financial planning meshed so well that she took the job; when Connecticut Mutual closed the office a year later, the two decided to open a financial planning firm.
They must have done something right: At ages 54 and 50, they’re still together. Part of their secret is having complementary personalities; another part, they say, is working as a team. “We figured out very early that it was better for us to have a division of duties within the company rather than a division of clients, because otherwise nothing would get done,” she says. “He’s a great starter, and I’m a great finisher, so that works out really well for us.” In general, Conger handles the financial planning and taxes, while Adkins’s purview is clients’ investment portfolios.
Yet it’s not entirely smooth sailing. Business partnerships are like marriages, says Conger, and while “we don’t have all the fun things about a marriage, we do have all the stresses.” And just as married couples feel the stress of new additions to their families, Conger and Adkins are feeling the stress of new additions to their firm. They now have a junior partner, CPA and CFP Kristina Bolhouse, who is a 1% owner of the firm, and Conger says she fully expects another new hire, recently certified CFP John Kelley, to eventually become a partner as well. Conger speaks highly of both young planners, who handle a significant portion of the firm’s workload and will likely own up to 5% of the firm each before the senior partners begin to step down. “But I wasn’t really aware of how much it would change the dynamics of the partnership to take on an additional partner–and it really does,” she says. “Rick and I are still equal partners, but the dynamics of power have changed. We’re still finding our way in this new three-way partnership.”
The new partners are part of the plan to prepare for the senior partners’ retirement; Conger, for her part, plans to significantly reduce her workload in about 10 years, and Bolhouse is her chosen successor. Yet Conger has learned that real life can wreak havoc on the best-laid plans. For instance, after a year at the firm, Bolhouse had to move to Michigan to care for her ailing father. During his illness, Bolhouse got married to a man from Michigan; when her father passed away, her new husband wasn’t keen on moving south–at least not yet. Today, Bolhouse telecommutes, and she visits the Little Rock office every three weeks for three jam-packed days. Within five years, she’ll have to move back to Little Rock to begin taking over the day-to-day management of the firm. “I’m really ready to give that up–being the one that makes sure the rent gets paid and payroll gets met every two weeks, and decides how much we’re going to spend on technology,” says Conger.
Other personnel additions have been even less predictable: One new hire chucked her position to move to Florida and start a cosmetics business; another handed in his resignation letter in order to become a teacher. Those exits turned out to be blessings in disguise, since the senior partners had hired enough staff to handle the 20%-25% growth rates they’d experienced in the late ’90s–staff that couldn’t be sustained in the rocky markets of the early 2000s. But such unexpected departures are still nerve-wracking for a business owner who needs to make long-term strategic decisions. “It takes me three years to train a planner, so I’m always having to think in terms of where we’ll be in three years,” says Conger. As she’s discovered, a great deal can change in only a few years.
What’s Up, Baby Doc?
Conger and Adkins have long targeted the medical community for prospective clients, and more than 40% of their clients are doctors. As they mapped out their succession plans, they realized that many of their best clients were doctors their own age, a situation that could pose a problem for the future of the firm. “We started looking at the demographics of our client base, and we said, ‘If we want to have something to sell 10 years from now, we’d better have some young doctors who are going to be our younger partners’ good clients, just like the doctors who started with us back in 1985,’” says Conger. “Otherwise there won’t be anything to sell.” Out of that realization sprang a special program to recruit young doctors who are just starting their careers, otherwise known as the “baby doc” initiative. “It’s not that they’re doctors to babies, they’re just babies themselves,” says Conger with a chuckle.
Those younger “docs” get quite a baby shower: By signing up, they receive a financial plan for only $300, and unlimited free access to Conger throughout their residencies, including assistance reviewing job offers and employment contracts. Once they land their first job, however, they have to grow up fast: They must purchase a full-scale plan and enter the firm’s standard planning and asset management program. The firm publicizes the effort through existing doctor clients, and by volunteering to speak at financial seminars for fourth-year medical students. Recently, the young doctors have also begun to spread the word among their peers. “Right now we have 13 people in the program, and some of them will be finishing up their residencies next year,” says Conger.
Advice for the Average Joe
While the “baby doc” program is intended to entice new clients to the firm, another initiative Conger started is aimed at referring prospective clients elsewhere. In 1998, she, Adkins, and Barry Corkern and Larry Waschka–two competing fee-only planners in the Little Rock area–got together to found a separate fee-only firm that could accept the clients that didn’t fit their client profiles. “We don’t have a minimum portfolio size, and we’ll always take anybody who is willing to pay our fees–but our fees are high for Little Rock,” says Conger (the average asset management fee is 0.5%, though the formula for determining fees is not simple; see sidebar, page 97). “We were getting a lot of calls from people who wanted fee-only planning but didn’t have a situation complex enough to justify the fee that we charge.” All four planners wanted to continue serving only high-net-worth clients; what they needed was a reliable fee-only firm to which they could refer the people who didn’t fit that description. “At that time, there was nobody fee-only [in the area] except us,” she says.
One year, many meetings, and $60,000 apiece later, the four founders opened a completely separate firm called Financial Decisions Institute in Little Rock and hired a planner to run it. That first planner didn’t last, but the second, Alvin Rogers, has been a success. The firm, which serves clients with relatively simple finances and approximately $350,000 or less in investable assets, became entirely self-supporting earlier this year and now has 180 clients and about $10 million under management. Client assets are invested in one of five standardized investment portfolios developed by Adkins, and Rogers can consult the founding planners for advice on difficult cases.
One administrative change that Conger has made since she last appeared in the pages of Investment Advisor is the way the firm charges for its services. Prior to 2002, clients were charged an annual asset management fee, and then could request an update to their plans as desired. When the market tanked, a number of asset-management clients who hadn’t had an updated plan in many years came calling. “In most cases we were able to reassure them, but there were a couple of cases where we had to make some significant modifications because of market conditions,” she says. As a result, the partners decided to create a new contract that included an initial planning fee and asset management fees (as before), but also included an annual planning fee equal to one-third of the initial planning fee, to encourage clients to take advantage of ongoing planning services. They reduced the asset management fees on the first $1 million under management to offset part of the costs for clients with smaller portfolios, and increased the fees on assets over $1 million. “We’ve been very pleased with the number of clients who were really happy about the change in the contract, and we’ve only had a couple who wanted to remain with the old contract,” she says. “We’re now doing updates for the people under the new contract, and they seem very pleased to have the planning updates relate their portfolio reports back to their planning goals.”
Despite the numerous changes in her firm over the years, Conger still finds the greatest pleasure in some of the simpler elements of the planning process. An avid traveler who makes a pilgrimage to Aruba every year after tax season and enjoys touring foreign lands with her daughter and daughter-in-law, Conger urges clients to enjoy some of their money now while also planning for later. “A common thing I hear, especially from doctor’s wives, is ‘Boy, I wish we could we could take a vacation,’ so I make sure they have money in their savings account to do that,” she says. “Sometimes people wait too long to do the things they want to do, and that’s the saddest thing in the world.” Indeed, one of the firm’s client couples waited to do their traveling until after the husband retired at age 75; by age 76, his health had deteriorated to the point that he could no longer travel.
Conger walks the walk herself, though she admits that it has required some “life choices” on her part. “I have peers who have houses four or five times as expensive as mine, but they also have mortgages four or five times the size of mine,” she says. By living in a condo, Conger can pursue her dream of travel without waiting for retirement, and can continue in her chosen line of work as well. “Running a business is stressful, but I love being a financial planner, and I love coming to work every day,” she says. “Knowing that every day I make a difference in someone’s life really makes it all worthwhile.”