Mitch Kramer, principal of Fluent Financial in Dallas, is like many advisors. He understands the business world but is equally focused on serving his clients, and he uses several strategic partnerships to do so. He started as a commissioned broker, but has evolved to a fee-based model. But he’s also someone who thinks about the broader world in which advisors and their clients operate, who worries about the many “Americans who can use our help but can’t afford us,” about the work ethic of young people, and about a society where there is a crying need for financial literacy education, since “there’s no playbook or instruction manual when you get your paycheck.”

The plain-speaking but sophisticated Kramer spoke to Editor-in-Chief Jamie Green in early February.

How did you get into the business?

I got out of school in the mid ’80s, and in north Texas the economy was terrible, so I went to work for, I think it was Prudential, and they said, “We need 300 names of people that you know that you can call.” I said, no, I’m not going to do that. That ended my career after one day because I didn’t want to cold call. I went into banking for three years, then went to work for a large national law firm as the administrator/finance person and spent seven-and-a-half years there, during which time I got my MBA. After I got my MBA, I talked to my boss and asked if there were opportunities for me at the law firm, He said, “The only job you can take is mine, and I’m not going anywhere. You can go to law school.” I said that if I needed to go to law school after going for three years to get my MBA, I’ll have to get a new wife.

I talked to a lot of people who said, “Go to American Express, they have the best training program, then after two or three years, leave.” I wound up spending almost nine years there, but as my practice grew and I became more fee-oriented, their model and mine went down divergent paths. The other problem was that they didn’t put much resources into advisors’ practices. Their ideal model was someone who would write a million and a half, two million dollars, have a cast of thousands to service, and you’d take home maybe half a million. Whereas at LPL, where I went in August 2005, you can get by with probably a quarter of the staff and make significantly higher margins. I don’t want to sound like a commercial for LPL, but I’m very pleased with them as a broker/dealer.

What about planning intrigued you?

A lot of it has to go back to my father, Raymond, who started his own computer company in the 1970s, took it public in 1980, and had Arthur Andersen set up some very sophisticated tax shelters to raise money for R&D. But in 1985 the IRS said the tax shelters were illegal, and shut down the company. He spent four and a half years fighting the IRS, the IRS spent three and a half million dollars fighting him, and the judge who heard the case found him not guilty on all charges. My father lost everything, but he said to me, “Mitch, you’ll never be totally happy, you’ll never be compensated what you’re worth, until you can sign your own paycheck.”

I enjoyed numbers and accounting, and I enjoyed people. So what kind of a job can someone do that marries those two? Financial planning.

What do you provide your clients?

You have to be expert in a number of different areas. I have a lot of lawyers and doctors, and small business owners, as clients–a lot of these people are highly educated. So you have to be knowledgeable, though as I get older [I realize] the more I know, the less I know. I’m constantly reading and learning, and I work with three CPAs very closely, and an estate and business attorney who I’ve known for more than 20 years. He’s a very valuable resource; we refer a lot of business back and forth; same thing with the CPAs.

This sounds a little boastful, but I’m very empathetic–I care a great deal about my clients. I don’t put shot clocks on my meetings; I don’t want to have a huge practice where someone calls me and says, “Mitch, I need to see you,” and I say, “Okay, two weeks from Tuesday.” Clients can get in to see me today or tomorrow. I want to have that flexibility with my clients.

I’ll work with them on negotiating a job; if they have stock options, I exercise them; I have a counselor who I send clients to–unfortunately, I average about a divorce and a half a year among my 120 financial planning clients. I try to help them with all aspects of their lives that involve money or significant change.

I also like to refer my clients to other clients, who may not know each other, for business reasons. I’m like a Webmaster of putting people into contact with someone else for a mutually beneficial relationship.

I do a news broadcast [for clients], with national and international news, and I say “I’m telling you this because here’s what I think we have to do with your portfolio, your plan, to help eliminate this potential risk if something is going on in D.C. or the Middle East.

Let’s talk about investing.

For about four and a half years, [I've used] the S&P Platinum Portfolio, which has performed nearly double the S&P 500. I treat it like a separately managed account, but it’s customized because every client’s portfolio may not hold all the same stocks at the same time, and because I use some separate filtering to modify it based on the client’s risk tolerance and other holdings. I use that as a basis and manipulate allocations based on other holdings and risk.

I went to S&P to do my due diligence on my own nickel, because I like to visit with money managers and meet eyeball-to-eyeball.

I’m passive, using iShares and ETFs, and then use more active management, the S&P portfolio. S&P doesn’t do IPOs, so it has more objectivity. One of the neat things about S&P is that the analysts have been there many, many years, and walking around that facility, you can tell that people really enjoy working there. I do a lot of site visits with business owners. You can walk into a business and within a minute, you can know if they’re making money or not, and if they’re happy.

What do you look for when you’re hiring someone?

When I hire people, they need to have the same values I have. Sometimes that has been a challenge, because I think the Generation Xers and Yers, in general and compared with baby boomers, have a higher sense of entitlement. The problem is that Mom and Dad bust their butt and build a nice lifestyle, and their kids think it’s normal, but they don’t know what Mom and Dad did to get there. I’m thinking of writing a book about entitlement because I think this is a big problem in society.

What about the future?

There are so many Americans who could use our help who can’t afford us. The bottom line is, we’re either going to take care of them directly or indirectly, through higher taxes that we all will pay because they don’t know what they don’t know. There’s no playbook or instruction manual when you get your paycheck, so it ends up at WalMart or the mall or whatever.

We have to have some kind of medium or person to educate the average American. Those people aren’t getting help. I don’t know what the answer is in our profession, but the Social Security/ defined benefit pension model does not work, and if we don’t do something to help people take care of themselves better, we’ll all pay for it.