In talking to Cheryl Holland about the Abacus Planning Group, her Columbia, South Carolina-based firm, perhaps the most striking thing is how little she uses the first person singular voice. She may be the founder and president, but Holland rarely says “I” or “me,” preferring the inclusive “we” instead. Instead of a group of advisors, each with its own roster of clients and a common support staff, the firm’s operating philosophy is collegial and team-focused. Clients don’t work with only one or two individuals–they meet with members of the investment team, the financial planning team, and the client services team.
“In everything we do, we tend to think two heads are better than one,” Holland explains. “So each client has a financial advisor and an investment advisor.” She describes the 12-member operation as a comprehensive financial planning firm with a roster of 130 clients who pay Abacus for both financial planning and investment management.
The path Cheryl Holland, CFP, took to where she is today has been an evolutionary one. She began her career with another firm, also in Columbia, but found that by the late 1990s the firm was turning away from financial planning to focus more exclusively on money management. “I felt that the way I wanted to provide advice to clients was to use the financial planning framework with the [client's] goals as the foundation and the rest of the house built on top of that.”
In 1998, with a total of about 30 clients, she decided to set up her own shop along with the assistance of Barbara Griffin, who is still with the firm today as client services manager with responsibility for business development. Typically, she chose to call her new business something other than “Cheryl Holland Financial Planning.”
In seven years, Abacus Planning Group has grown to encompass 130 clients and about $300 million in assets under management. Clients pay a combined annual fee, which includes a retainer for financial planning and a charge for asset management. “We have a minimum fee, which is $12,000 a year,” Holland relates. “But we have people who have come to us recently with only $200,000 or $300,000 to invest and an income that is not that significant. We provide excellent value for clients that have $1.5 million and up, but we have many clients who choose to come on below that, because they want the service. It seems sort of odd to me, but it’s in the eye of the beholder.”
Just like some people would rather shop at Nordstrom’s for the service than at Wal-Mart for the price, the high level of service and personal attention is what gives Holland’s lower-net-worth clients the feeling that their money’s being well spent. A good part of it comes down to what the firm’s Web site describes as holistic financial planning. “It’s evolving,” says Holland of that concept, “but from where we are right now, holistic means that we are going to think about you multidimensionally and you’re going to share everything with us multidimensionally. It’s not just financial information, it’s self information, it’s goal information, it’s value information. So we can design, with you, the ideal financial path.
“We try to think about you as a human-capital engine, not just you and your money,” she explains. “We need to know what it is that you want to do with your life and what’s important to you, but we don’t ever forget about all the basics like your homeowner’s insurance and whether your estate plan is done well or do your beneficiary designations dovetail with the plan that’s been created between us and you and the attorney. So we look at both the very macro and very micro. To me that’s what ‘holistic’ means.”
In order to provide that experience, Abacus has teams of individuals that work together to give each client individualized service, but Holland’s first step is making sure the team members are qualified. “In our office you need to be a CFP if you’re going to give financial planning advice directly to the client without having to run it by another individual in the office who does hold one,” she explains. “It is the gold standard for the financial planning team in the sense that we think it is a baseline expectation for a professional.” Currently the planning team includes one CFP besides Holland, two individuals who have passed the exam but don’t have enough experience yet to qualify for the mark, and another who has the experience and will sit for the exam next month.
Similar standards apply to the investment team, which is headed by chief investment officer Bart Valley, who is a CFA. Another member of the team is taking the first-level CFA exam later this year. Then there are Holland herself and another CFP.
“We’ve been very blessed in having the right human capital come in our doors as we’ve grown. We don’t have a business organization chart [that we] hire to. We’ve grown more organically. Now we’re at the point where we have to think more seriously about what are the holes and instead of hiring the next great person we find, we’ve got to hire the next great person who fits a certain need for the whole group.”
A Team of Clients
Abacus’s roster of clients comprises three different types. The first, and largest, group is made up of what Holland describes as “closely-held-business owners.” “Having that niche has always been a surprise to me because, being a younger woman when I got started, I always thought that most of my clients would be widowed and divorced individuals.” Such individuals do now make up about a third of the practice, but that’s a more recent development, she points out. The third group is made up of professionals, primarily physicians and engineers.
Regardless of which group the client fits into, in the first year with Abacus she will take part in a series of meetings with members of the firm’s different teams.
Each of Abacus’s clients has a single investment advisor who initially works with them to prepare a detailed investment policy guideline. As for selecting investments, the investment team uses five basic models ranging from conservative to aggressive and based on a typical mix of stock and bond mutual funds, as well as some alternative investments. “It might be unusual, but to some extent we do have exposure to real estate, to oil and gas, and to commodities,” explains Holland. “In some of the more aggressive portfolios. we do have exposure to both emerging markets and international small company stocks.”
She notes that the firm’s advisors also pay a lot of attention to tax issues and so did a lot of selling when the market was down in order to book the losses. “We have to ask, ‘Where are we adding value?’ We believe our intellectual capital is better expended in thinking about asset classes and the things we can control like expenses.” She’d rather that members of the investment team put their energy into making a smart, non-traditional play that fits with the client’s profile than trying to pick one mutual fund over another.
To split the workload, each member of the investment team has a series of asset classes for which they are responsible, which includes taking a macro view of the entire asset class and doing the due diligence on the firm’s existing and potential investments. Each team member is also responsible for generating a two-page white paper on their asset classes, which can be helpful to the other advisors as well as to their clients. “So if you wanted to know. For example, why we have commodities in the portfolio,” says Holland, “we would have a two-page visual and written documentation of why it’s important. That really helps clients feel like you’ve done your homework.”
Holland’s own asset-class responsibilities are for private equity, oil and gas, real estate, and U.S. small-cap stocks. Based on her own reading and research, Holland says it seems clear that the current energy problems are not due to a supply issue, but rather one of refining and distribution. “When you see these price jags, a lot of it has to do with the fact that the gas and oil prices were so low that there was not reinvestment in the infrastructure,” she points out.
As anyone who’s read a newspaper or looked at the TV news in the past year knows, real estate and energy are hot issues, and any advisor well positioned with both asset classes is bound to look pretty smart.
However, Holland counters that positioning Abacus’s clients well in any asset class has to do mostly with making sure their portfolios are well balanced and within previously established risk tolerances. In fact, she adds, her firm probably hasn’t been as smart about real estate as perhaps it could have been. “About a year ago we decided real estate was overvalued and so for our clients we were rebalancing pretty aggressively and running real estate at the low end of the balancing range,” she says. There are still some real estate holdings in the firm’s portfolios, but the sector has continued to expand despite the best guess of Holland and her team.
The Secret of Her Success
In the eight years since Abacus was formed, the firm has seen its client base more than quadruple and its assets under management even more so. They must be doing something right. “We strive for excellence and I think we have a brand for that,” says Holland. “We seek to serve, so I think that people, especially the talented business owners, know that we’re not trying to supplant them, we’re looking to be a partner with them.”
Another, more intangible, element is part of Holland’s personality, and one that she believes is shared by others on her team. “We’re a very down-to-earth group,” she says. “Not in a folksy way, but more of a ‘Be yourself, be who you are, we’re here for you’ approach. We’re also great listeners. We do training around listening. We listen, listen, listen.”
Research has shown that men and women really are different (see the feature story “Gender Matters,” in the September 2005 issue of Investment Advisor), and although Holland feels gender neutral about the whole thing, the fact that both the founder and her first staff person are both women–not to mention eight of the current 12 team members–has certainly had an impact on the firm’s culture. “We’re very collaborative and very ‘Park your ego at the door,’” she admits. “We work on the soft skills, although we love using our brains and can do the hard skills.”
While growth has been steady, Holland thinks Abacus has barely begun to reach its potential. “We actually have a lot of capacity right now because our financial planning team, which was very young and inexperienced, is now getting more and more experienced,” says Holland. “We could probably double our number of clients with maybe one additional employee, but we don’t say the sky’s the limit. For us, growth is not a value or a belief system, although it’s something we check in with occasionally.”
Holland speaks a lot about collaboration and teamwork, and being partners with her clients. Her favorite part of the business isn’t the planning, or the investment strategy–it’s the people. “I guess being part of the circle of life with people is what I enjoy the most,” she says. “I feel very blessed as a financial advisor because it’s one of those jobs where you get to use your right brain and your left brain.”
Abacus has recently grown to the point where the firm actually has clients who didn’t meet Holland in their initial consultation. She doesn’t speak wistfully about what she’s missing, but rather about how excited she is for the younger people in the firm who can now handle some of the things she always took care of personally.
It’s really all about the team.
Managing editor Robert F. Keane can be reached at firstname.lastname@example.org.