“Our clients don’t come to us to be their friends,” says Nancy Gardner. “They come to us as professionals to manage their money. They want someone they trust who can take care of them.”
That professional relationship, however, doesn’t preclude a personal approach. “I care about our clients, probably more so than they realize sometimes, because you don’t want to get too emotional. It distresses us when something negative happens in our clients’ lives, but we have to be the voice of reason; we have to be the stabilizing factor.”
Gardner is the executive VP of Houston-based Tanglewood Capital Management, a fee-only firm with some 370 clients and about $600 million in assets under management. A self-described “Helpful Hannah,” Gardner knows that as much as she enjoys client interaction, not every client is looking for a “touchy-feely” relationship. If she senses that the client wants an all business, by-the-book approach she keeps it strictly on that level.
“They ultimately decide what kind of relationship they have with us,” she says, noting that while she enjoys sharing opera tickets with clients who have the same interest, for example, she also realizes that they have busy lives, and most would rather spend their free time with their families than their advisor. Of course, friendships between advisors and clients who share similar interests are not uncommon. (See “The Feeling’s Mutual” sidebar.)
“We have to be professionals first, but it doesn’t mean that we can’t form friendships with our clients,” she says. “It also doesn’t mean that we form a personal friendship with every client. I don’t think it’s mandatory, but when it happens it’s very nice.”
Career of the Future
Like many of the best advisors, Gardner came to financial planning as a second profession. In college she studied petroleum land management and began a career in the oil and gas industry, but the 1980s were a turbulent time in the energy business, particularly in Houston. “The company I worked for had, over nine years, 17 rounds of layoffs,” she recalls. “That doesn’t give you a whole lot of security.”
In 1990, Gardner recalls she read a magazine article about the careers of the future, one of which happened to be financial planning. She decided that when it was her turn to be laid off, she would become a financial planner. Much to her surprise, the company she worked for stayed in business and kept her employed for another five years.
Ultimately, however, she was laid off, on a Friday afternoon, she recalls. Early the following Monday she was on the phone to a firm whose help-wanted ad for a financial planner she had cut out several years earlier. She got an interview that week and then a couple of follow-ups and was offered a position contingent on passing her Series 7, Series 63, and insurance license exams. “So I took my severance and sat home, not knowing a thing prior to that about finance or investments,” Gardner recalls. “I taught myself, then took the tests and passed them.”
Without any mentor or contacts in the financial services industry, Gardner feels she was fortunate to have landed that initial position, “but I didn’t like their method of doing business with clients,” she says. “I didn’t like selling proprietary, loaded mutual funds. I didn’t like selling expensive insurance. I didn’t feel like I was getting the opportunity to put the client first and I had a problem with that. I guess I was too idealistic.”
Feeling frustrated, she left that firm, knowing that what she really wanted to do was to work for an independent registered investment advisor. She tried cold calling a few firms but was never able to get past the receptionist, so she went back to her previous profession and was hired as a consultant to run the land department of an independent oil company headquartered in Houston. She enjoyed the work, she says, but missed the interaction that she had with her financial clients, not to mention the ability to help people.
One day she went into a local Schwab branch with the intention of purchasing some stock. When the rep she was dealing with heard that Gardner had experience and was licensed, she called her manager. And so she began her three-year stint as a Schwab employee. Although she speaks highly of her time there, she says that ultimately she was frustrated because she still felt she couldn’t give the kind of advice she really wanted to offer. “But I did the second-best thing,” she says. “I referred them to the Schwab advisor referral program.”
Gardner became her branch’s referral coordinator and then was asked to do training for the advisor coordinators in a three-state region. That in turn led to the creation of a position where Gardner traveled to Schwab branches in that region to train branch personnel on how and when to refer clients to a Schwab-affiliated RIA. The position was eventually eliminated in a Schwab reorganization and Gardner returned to a branch office.
But after working with so many advisors, Gardner now had an array of contacts unavailable to her three years earlier. She approached John Merrill, founder and CIO of Tanglewood, and asked what he thought about hiring a marketing professional. “Fortunately, he liked the idea and about six weeks later I started here,” she recalls. “That was in June 2000.”
The Thrill of the Chase; the Warmth of the Relationship
Gardner’s role at Tanglewood entails both business development, which is where the marketing comes in, and client relationship management. Although she originally thought that she would eventually move into a strictly planning role, she’s found business development to be something that she really enjoys. “I like the challenge of it,” she says enthusiastically. “I love the chase of business development, but I love the feel-good of the client relationship management. John let me shape it so I have a combination of both. Most of the people that I’m the client relationship manager for are people that I brought into the company. I also help with their financial planning as they need it.” Gardner estimates that she personally is the relationship manager for 80 families.
All of Tanglewood’s revenue comes from asset management fees, which work out to about 87.5 basis points on the first million dollars and slide down from there. Investment portfolios comprise no-load mutual funds found on the Schwab platform, while any non-investment advice or planning is included in the asset management fee.
“As far as we know, Tanglewood was the first fee-only firm in Houston,” Gardner notes, with a certain amount of pride. “I really like the idea of no conflicts of interest. I think all of my colleagues embrace that and our clients appreciate that. They really know that when we give them advice, it’s the best possible advice.”
The Three Niches