When a successful, veteran advisor like Lou Stanasolovich of Legend Financial Advisors in Pittsburgh answers an interviewer’s question on what was responsible for his achievements in the field by quoting Tom Peters that “there are a lot of us who have failed on our way to success,” you realize that this is one advisor whose self-deprecation is matched only by his commitment to the profession and his firm. “I’ve transformed myself from advisor to business owner,” this member of the IA Leaders’ Council points out, “but I’m still struggling.” Note the use of the present tense; this is one advisor who has built a healthy, much-admired advisory firm but who continues to strive to improve. Proudly fee only, Legend will provide money management only to clients if they wish, but the firm’s meat and potatoes are in what Stanasolovich calls “high-level financial planning,” which includes, as a FAQ on www.legend-financial.com lists, “Reviews of employment contracts, real estate leases, wills, trust agreements, stock option agreements, property and casualty insurance, non-qualified deferred compensation agreements, private investments, hedge funds, corporate minutes, buy-sell agreements, retirement plan documents, business income tax returns, U.S. savings bonds, and even the evaluation of retirement village contracts.”
He’s careful to mention that longtime co-worker Diane Person has been on the Worth list of the top advisors in the country, but modestly doesn’t mention his own multiyear presence on that prestigious list, nor others like the IA 25. Moreover, in areas as diverse as employee recruitment, ongoing staff development, and the smart use of technology, voracious reader Stanasolovich is leading the profession into a future where he worries that the small shop suffering from compliance burdens and challenged by technology may not be able to compete. Stanasolovich spoke to Editor Jamie Green by telephone in mid-December.
On how you got started in the business.
When I got out of college [with a degree in accounting from Penn State], I became a cost analyst for U.S. Steel. A friend was taking a securities course, preparing to take the Series 7 test, and I decided to do the same for my own personal interests; I wanted to learn more about investing. I read about the IAFP in Money magazine, about 1980 or so, and learned it was starting a local chapter, I went to the first chapter meeting, and three years later I was the chapter president. I started our firm, Legend Financial Advisors, in 1994 with about $10 million in assets and 30 clients; we now have 200 clients and about $300 million in AUM. Diane Pearson’s been with me for 17 years now and has been on the Worth list [of the top advisors in the country]. In 1983 I took the CFP course and got the CFP designation in 1984, so I’m pretty old in the business.
On what you provide to your clients.
In some ways we’re a throwback shop–we’ve always done high-level financial planning work, stuff that most of the financial planning industry and certainly the CFP course doesn’t even talk about yet, like obtaining financing for a business to buy land or a building, or working with clients’ attorneys and P&C agents, HR guidance, things like that. An 80-year-old might start to look for a retirement village to live in. We may physically pick up that client and drive him around to various locations and see what he thinks. A normal part of our work is establishing retirement plans for medical practices or businesses, though for a lot of advisors that’s kind of new. These days, the two biggest issues are helping clients search for health insurance–we’re doing this on a fee-only business, so we’re not making commissions, but working with brokers to make it happen–and the other is identity theft protection. Equifax has a nice service called Three-in-One, where it sends monthly updates every time someone checks a client’s credit history, even if there’s no action they send you an update. It’s, like, $129. We do stuff like that.
On how you find and motivate people.
We hire interns who do tasks we can delegate down, like running basic research reports or performance reports. We have interns in finance, business administration, marketing and communications, and information technology. Our program is year-round, and they do 18 to 20 hours a week during the school year.
This year, we’ll make job offers to three finance majors and two in the marketing/communications area. They know how the firm operates, and also all our idiosyncrasies. I’ll be frank, our place is not for the average employee. We work really hard and we’re very particular about everything. We banned the use of cellphones in the workplace; we have a strict dress code. We hire only what we consider A-type players, to quote Brad Smart of Topgrading [the hiring process approach].
We have good candidates coming out [of the intern program] every year because we’re getting better spending time with them, and the younger they are, the stronger candidate they are, since they’ve been here two or three years.
You’re big on educating staff?
Absolutely. We have a dedicated education criteria and policy–about 25 pages–and an education committee that’s gone through it. It’s quite detailed. The focus is keeping staff well-educated. There are several categories. There’s professional development for the advisory team–financial planning or investing–you need 40 credit hours a year, and most of it we get internally. For administrative staff, it usually has to do with computer hours–everybody in the firm has to have 40 computer hours of educational credits. We also have 40 hours dedicated to personal development–things like public speaking or business management. Legend picks up 100% of all those costs.
The so-called mythical track that we hear a lot of young people in the industry talking about, that there’s “no path for development,” we’ve developed that for every position within the firm. It’s written, it’s unbelievably long–the advisory piece is about 35 pages. We have 13 classifications. They have to achieve all items on one level before they’re allowed to go up to the next level. I can’t be a Senior Wealth Advisor in my own firm, because I don’t have a CFA designation. It’s been painful to develop, but we’re getting there.
We’re also going to use a lot of these criteria for evaluations, bonuses, for setting pay levels. We’re trying to build a well-thought-out firm, and to give people something to shoot for.
This is a really hard business. This idea that some of the younger spokesmen of the industry have that you can become a full-fledged advisor within three years after coming out of school is absurd. I did that; but I didn’t know what I was doing. It took me 25 years to get here. I’m still not as strong as I want to be in certain areas. Certainly, the program track we’re laying out would help me get there.
On where you turn for advice.
Most of the ideas I have were stolen from somewhere else. I’ve been reading Inc. since the first issue was published in 1980. I’ll be reading about how they make bread in this little bread shop, and I think “Hey, we can do that,” though it’s about manufacturing financial plans. I read a lot–150 publications a month–and I listen to everything in sight. When I say I read 150 publications, I mean I speed-read and I flip through a lot of stuff. I’m always looking for new ideas on investments or planning techniques, but also on business, management, and HR.
On advice for an advisor starting out.
I’m part of NAPFA where there are a lot of one-man shops who rely on their Internet chat rooms, and that’s good–they tap each other’s ideas. However, I think there’s an advantage in joining a larger firm, and I’m talking about financial planning firms, not brokerage firms. The biggest problem we have is finding decent people. Every firm in our industry–big and small–has the same problem–they can’t get talented people. For a person who’s new in the business to not only find clients but also run a business, that’s really hard. I think they are far better off finding a firm near them, or even a spot in a bank planning department, to get some experience first, learn the business, before they get in over their heads.