Colleen Knopinski plans to celebrate her 50th birthday in a rather unusual place: Standing atop the snow-capped peak of Tanzania’s majestic Mount Kilimanjaro, gazing out at lions, giraffes, zebras, and rhinoceroses dotting the misty plains of the Serengeti.

It’s a far cry from the typical birthday-cake and black-balloon celebration–the only “roasting” on the agenda will involve meat or marshmallows–but Knopinski, 48, isn’t just dreaming about it, she’s training for it, lacing up her hiking boots and summiting as many of the “fourteeners” (14,000-foot mountains) as possible in the nearby Rockies. Her birthday climb will take four to five days, and ascend more than 19,000 feet into the African sky.

Attaining the summit will require several steps: determining what resources are needed to make the climb, finding the appropriate professionals to guide her, and planning ahead for the unexpected. Fortunately, those are all skills she’s honed in another setting, as she helps the clients of Lighthouse Financial LLC (the planning firm that she and business partner Lynn Gingrich run in Boulder, Colorado) achieve their financial goals. Even the best planning can’t erase all risks–clients can lose their jobs or have unexpected expenses, hikers may be sickened by the altitude or get eaten by lions–but preparation, she says, is the best predictor of success.

Guides Along the Way

By climbing Africa’s tallest mountain, Knopinski will be taking the advice she often doles out to clients: Don’t wait until you’re retired to do everything you want to do. And just as she’ll be researching tour companies to make sure she has the right guides by her side during the climb, she helps her clients assemble a team of professionals to assist them in achieving their retirement goals. “It’s very centralized: We guide our clients in working with their attorneys and accountants. It’s almost like a family office, but at a much lower net-worth level,” she says. The firm’s 116 clients, who include business executives, professionals, and members of the tech industry, have between $500,000 and $10 million in assets. The firm strives to build relationships with the best accountants and attorneys it can find, but no money changes hands: “We’re not going to choose an attorney to refer our clients to because he happens to refer clients back; we choose an attorney because he’ll do the best work for the client,” she says. “In some cases, it becomes a reciprocal relationship; in others, it doesn’t.” Indeed, one attorney whom Knopinski respects greatly and works with often almost never refers clients her way; others provide many more referrals to Knopinski than they receive.

Interestingly, Knopinski’s firm takes the idea of leading a client’s financial team one step further than most by assembling a database of other resources that clients might need. If a client raves about his interior designer, landscaper, or even his plumber, the praised person’s name goes in the database. Then, when another client wants to redo her kitchen, add flowers around her pool, or has leaky pipes in the basement, voil?, out comes the list. “It’s not that we portray ourselves as the go-to person to find you an interior designer,” says Knopinski, “but should that come up, we have a network connection to someone that we have confidence in.”

As members of the clients’ team, Knopinski and her partner also play specific roles in clients’ success: While Gingrich concentrates on getting the word out about their services to prospective clients and handling the firm’s long-range planning, Knopinski concentrates on the technical aspects of financial planning, managing client portfolios, and writing the financial plans.

As for the firm’s staff, Knopinski and Gingrich make it a point to recruit specific types of people for specific work, in order to keep the firm humming like a well-oiled machine. While many planners rather subjectively look for “a numbers person” or “an outgoing person” for certain positions, Knopinski and Gingrich administer personality tests, also known as psychometric tests, to all prospective employees. It’s all part of an effort to recruit the best team to serve the client. “If you have people doing things that come naturally to them and are their areas of gifting and their passion, they’re not only more productive, they’re happier,” she says. “We’ve very overtly and explicitly worked on this as a company, and it’s worked really well.”

The firm uses the Caliper test (www.caliperonline.com) to measure traits such as gregariousness and introvertedness/extrovertedness, and uses the Kolbe test (www.kolbe.com) to determine the type of work the employee gravitates toward: launching new projects (“quickstarters”), conducting detailed research (“fact-finders”), creating physical products (“implementors”), or maintaining systems once they’re in place (the “follow-through” factor). Everyone in the firm knows the others’ Kolbe scores, and they each wear name badges listing their top traits when they attend quarterly strategic planning meetings. “If you know what the other person’s strengths are, it really helps you work well with them,” says Knopinski. “For instance, I like creating new things. I have high research and ‘quickstart’ capabilities, but I don’t have much follow-through: if you sit me there to maintain a system day after day, I’ll go nuts. But we have other people who have a high follow-through capability and no ‘quickstart’ at all, so I know that if I create a system and give them a lot of support up front, I can then walk away and know they’ll do a great job maintaining it.”

Indeed, Knopinski credits much of the success of her partnership with Gingrich to their differing personalities and interests. “She’s not a technical person, and I’m very much a non-marketing person, so we do very well together,” she says. “Besides, financial planning is hard and there are a lot of things to know, so dividing the work gives us a real depth.”

Mapping the Course

With a master’s in economics and an analytical bent, Knopinski is the kind of person who dreams about spreadsheets; she claims that if she had to take a sabbatical that didn’t involve mountain climbing, it would probably involve achieving another of her dreams: writing new financial planning software to help clients more accurately chart a successful path for the future. For one thing, she’d like to write a program that is “time series instead of cross-sectional,” she says. If she wants to compare a client’s actual rate of return, amount saved, amount spent, or year-end net worth with the amounts she predicted for this year, there’s no software currently available to help her do it, she says. Or if she wants to compare those figures for last year and the year before with this year’s figure, “there’s nothing out there that can help you compare that through the years,” she says. Creating a software product that could easily make these comparisons “is definitely something on my wish list,” she says.

Another software program she’d like to write is one that incorporates into a Monte Carlo simulation how cash reserves can blunt the effects of a bear market on the client’s retirement portfolio. “If you look at a Monte Carlo simulation, you can almost completely ‘solve’–and I put solve in quotations–the problem of running out of money if you never have to take money out or sell an asset when it’s in a down cycle,” she says. “The way you take assets out has a tremendous impact on the long-term, 20-, 30-, 40-year analysis.” The trick, then, is to figure out how large of a cash reserve is needed to “bridge” a given bear market, thus providing the client with needed funds without having to sell any assets. Stashing away too much will sacrifice the client’s overall returns, while putting aside too little will negate the purpose of the cash reserve by forcing the sale of assets during grizzly times. “I was pretty sure that [the required reserve] was somewhere between one and five years” of client cash needs, and “we had basically settled on about three years,” she says. “Of course, by the time we got to the third year of the bear market, we were starting to wonder, ‘Are we going to make it?’ It was really down to the wire! It takes a lot of discipline: when you’re looking at assets dropping rapidly in the stock portion of the portfolio, and you just have to let them drop, and use the cash first, and then the client’s shorter-term bonds”–and cross your fingers that the economy turns sunnier before you have to dip into equities.

Lighthouse Financial divides its clients into three categories: Preservation clients, who have enough money for retirement and simply want to preserve it; accumulation clients, who are generally younger and still increasing their wealth; and withdrawal clients, who are in retirement, are taking money out of their nest eggs, and have to make a certain amount of money last the rest of their lives. “Rather than just creating 60/40 or 80/20 portfolios and applying them across the board,” says Knopinski, “we have different ways of managing and allocating money for each of our three categories.” Not surprisingly, the withdrawal-phase portfolios are the most challenging, and it is primarily for them that Knopinski launched the aforementioned research into bear-market cash reserves. In addition, she also evaluates the types of income–not just quantities–that withdrawal-phase clients are counting on. “We do a subjective analysis of the risk factors affecting Social Security income, versus real estate rental income, versus a pension or a stock portfolio, because they’re all different,” she says. “We will even consider taking part of an investment portfolio and annuitizing it in order to insure against the client outliving his money. ‘Living too long’ is definitely an issue that a lot of these individuals face.”

Despite the varying designs for client portfolios, all portfolios are structured with three main parts, which Knopinski illustrates with a diagram of a bull’s-eye. In the center–the bulk of the clients’ assets–are the “core” investments: a diversified pool of low-cost investments (think ETFs, index funds, and bond ladders). The next ring comprises “select” investments, which include funds run by managers who “have a very good long-term record, and whom we think can add value above a strictly indexed type of product,” says Knopinski. Finally, the outer ring, or “tactical” investments, is made up of funds that seem poised to do well in near-term market conditions, or funds run by “go-anywhere” managers who don’t confine themselves to any style box. But the tactical portion “is a relatively small piece,” she says.

When it comes to investing, Knopinski generally takes the long view, because even a client nearing retirement has a long investment horizon ahead of him. “I assume, for planning purposes, that everybody is going to live to be 100. So if the client is 55 years old, that’s 45 years to plan for. That’s an awesome responsibility,” she says. “Forty-five years is a lot of history. In 45 years, our institutions won’t be the same, the economy won’t be the same, nothing is going to look like it does today.” The desire to squeeze out every last iota of investment return pales in comparison to the responsibility of making sure the whole financial plan doesn’t fall apart, she says. “You have to analyze, ‘What are the disasters out there that are really capable of completely undoing the plan I’m putting together?’” she says. “We have to make decisions in an uncertain world, and I feel a very large responsibility to protect the client on the downside.”

By helping clients assemble the right team of professionals, chart the course of their futures, and mitigate unexpected risks, Colleen Knopinski uses skills that will serve her well on her mountain-climbing expedition. As she trains to conquer Mount Kilimanjaro, she hopes to help her clients reach the height of their dreams, too.

Assistant Managing Editor Karen Hansen Weese can be reached at khansen@ia-mag.com.