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Soothing the Retirement Fears of Middle-Class Millionaires

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The way Certified Financial Planner Carol Petrov sees it, women in the advisory business “are given only two options: a financial advisor who hunts and kills for their meat, or somebody’s assistant with a steady paycheck.”

Petrov, the vice president of Kendall Capital, started out as an advisor, switched after seven years to be a brokerage assistant (which she did for six years) and then returned to her FA career when she joined Kendall Capital in Rockville, Maryland, six years ago. With $310 million in assets under management, the RIA’s client focus is Middle-Class Millionaires, and they’ve trademarked the moniker.

Petrov, 48, specializes in retirement planning for seniors, which is often challenging because most of the firm’s older clients became millionaires by dint of saving all their lives and now “worry that if they stop working, they won’t be able to pay their bills.”

In the interview, Petrov, who grew up in the Maryland suburbs and earned a B.S. from George Washington University’s business school, talks about what drove her to give up advising and work instead as a client service associate at Morgan Stanley. The 2008-2014 stint was not fulfilling, as she explains.

To help both her and other women to an improved experience, she urged the firm to offer, as an alternative to evolving into an FA, financial planning jobs with flexible hours and steady pay that would allow for a better work-family balance. That appeal proved to be in vain.

The wirehouse firm still does not offer such opportunity, she says, but it has two salaried programs for those who do aspire to become FAs: Wealth Advisor Associate, a diversity initiative leading to the Financial Advisor Associate Program, which trains people with no financial or sales background.

“Morgan Stanley offers several career paths to employees within the Field Service Organization,” a Morgan Stanley spokesperson said. “The [two noted above] are designed to guide employees through extensive training and development to help them succeed as financial advisors.”

ThinkAdvisor recently interviewed Petrov, who was speaking by phone from Rockville. She discussed her detoured career trajectory and her key goal as an advisor: “To help clients have a good experience. I want [them] to be happy and come back for more” and, she says, “refer their friends.”

Here are highlights from our conversation:

THINKADVISOR: Your firm specializes in serving Middle-Class Millionaires, a term that Clark Kendall, president and CEO, trademarked. Do such clients feel rich and have no worries about money?

CAROL PETROV: Quite the contrary. The majority have worked and saved by living within or below their means. They feel they have to continue to work and save, and that their retirement is the security of knowing they can keep living the way they’ve been living. So they feel just as insecure as before [they became millionaires] and worry that if they stop working, they won’t be able to pay their bills.

Did President Trump’s Tax Cuts and Jobs Act help Middle-Class Millionaires?

No. That tax package had a huge [negative] impact on them. It really wreaks havoc on the higher middle class, whose tax rates tend to be around 20%-22%.

Just what was the change?

The state and local tax — SALT — deduction was capped at $10,000 [$5,000 for married filing separately]. Most of our clients have property taxes alone that are well over that. So between [losing] the state income tax deduction and the property tax deduction, some lost a good two or three times what they used to be able to deduct.

Will President-elect Joe Biden’s tax proposal benefit Middle-Class Millionaire clients?

Thus far, he’s proposed raising taxes on income above $400,000. That’s far ahead of most of our clients. Most have $400,000, but they’re not earning that amount [or more]. So they’ll stay in the bracket they’re in now and remain hopeful that the SALT [change] will be reversed.

How did you get interested in working in financial services?

In 2000, I was in customer service as the manager of a restaurant in Bethesda and figuring out what I should do next. At the restaurant, I met three middle-aged [male] UBS financial planners who said I had the right personality to be an advisor. I wasn’t interested in stocks. They said, “No, no — not stocks. Financial planning.” I said, “What’s that?” And that’s how I got into financial services.

What’s your key strength that’s helped you in your work?

My ability to relate to people, to listen. As a financial planner, you’re working to help clients have a good experience. To this day, I feel like I’m still working for tips, [as in customer service]: I want my clients to be happy and come back for more, and refer their friends.

Your first job in the industry was financial advisor at Ameriprise Financial Services. From there, after a brief stint as an FA at First Financial Group, you joined Morgan Stanley as a registered service associate. Wasn’t that a step down on your career ladder?

It was. As a woman in this business, you’re given two options: financial advisor who hunts and kills for their meat — you get clients and make commissions — or else, you’re somebody’s assistant with a steady paycheck and regular hours.

Was steady pay and set hours necessary for your lifestyle?

At Ameriprise, I was compensated on commission. But [after becoming a mother with a young son and single], I needed [income] stability and good health benefits. That’s why I switched to being an assistant. At Morgan Stanley, I was able to have that.

As a woman in the male-dominated world of financial services, have you encountered discrimination or bias that’s stymied your career?

I got my CFP while I was at Morgan Stanley; they paid for it. But they wouldn’t put “CFP” on my business card. That was discriminatory.

Did you experience any slights there just because you’re female?

You’re definitely not part of a “club.” You’re not invited to golf outings or happy hours. There’s definitely a clique of men that you will not be part of. I personally don’t have any “me-too” stories, but Morgan Stanley is, kind of, notorious for the way they treated women. They had so many lawsuits when I was there.

Anything else that dampened your spirit?

You’re not taken very seriously by people in the industry. At Morgan Stanley, even the nicest of brokers would still see you as just staff. That’s when I realized there was nowhere to go unless I became an [MS] advisor. You’re either an advisor there or somebody’s assistant. But I didn’t want to become a broker [on commission] because I’d lose my steady paycheck. I wanted to find a better way. That’s when I started looking around and researching fee-only RIA advisors.

Did you try for a promotion out of your support role?

Yes. I spoke to Morgan Stanley folks in New York, telling them, “We have a lot of smart women [support staff] working here for years and years. They know your clients better than your brokers do. Would you make it so they could do financial planning, have client interaction and help bring in more business? But also, if you’re a mom, give us the flexibility to take time off if, for example, you have to take your kid to the doctor.

What was the response?

“Good point — we should reach out more [sounding offhand]. We’re designing another role for the women.” And they would come up with names for various roles.

Why did you leave the firm?

I was assisting three brokers. It was very much like being on a hamster wheel. You’re helping these people succeed, but you’re not going anywhere. So many women in this business are stuck in the wheel and can’t seem to see a way out.

You’re the vice president of Kendall. Is it possible for you to advance there?

Clark picks my brain and runs things by me. In that way, he sees me as a partner. We’re hiring people under me so I can be in more of a supervisory role some day and work only with clients that have the most intricate needs. The sky’s the limit here because we’re a growing [RIA] and don’t have as many restrictions as a broker-dealer.

How can the industry attract more women to become financial advisors?

By saying, “We offer you a career path that balances work and family life.” The firms have to acknowledge that most women still have the primary responsibility of taking care of their kids.

How, specifically, could they provide that balance?

They have to be more flexible with their scheduling. One of the reasons they lose [female] talent is by not being flexible. They need to say, “We know you work your tail off when you’re here. You’re not goofing off like those guys [FAs] in the kitchen talking about football for three hours on Monday morning. So if [a mom] needs to leave a little early or come in late [because of parenting responsibilities], they have to understand.

Any advice for women who are thinking of becoming a financial advisor or for FA assistants who want to move up but feel frustrated?

The most important thing is to invest in yourself. Once you have the experience and knowledge, you need to decide whether to move up. It’s helpful to join a financial planning association, attend webinars, learn more about different aspects of being an advisor — and get your CFP.

What’s the biggest hurdle?

Getting that knowledge and acknowledgment of being a CFP. Once you’re a CFP, you’re like, “Hey, I know my stuff” — and you have your ticket out.