Hello everyone, thank you for coming to our Ted Talk this week! Today we’re going to cover the state of the firm, the mission of the firm, and the 2022 vision going forward.
A Bit of History
The firm started as Daniel’s personal financial planning practice in 2015, originally affiliated with Waddell & Reed Financial Advisors as an independent practice. Succinctly, they provided compliance support, research and coaching, and technology in return for a split of revenue. This relationship was beneficial in our early years for getting off the ground, gaining experience, and receiving mentorship to bring the practice to the high level of quality I envisioned. In the summer of 2019, I made the decision to take the practice away from its present fee-based model and to a fee-only model. To execute on that decision, we separated from Waddell & Reed in October of 2019 and received the Colorado regulator’s approval to launch the new practice in December of 2019 (yesterday was our two-year anniversary!) In the past two years, we have grown the firm’s revenue by 53.68%, increased its number of clients by 39%, grown the sum of assets under management and advisement by 193.28%,* and the team size by 100%, all while reducing the average client’s costs by 58.33% as part of the move to a fully independent service platform. We are both proud and humbled to be Longmont’s first and only fee-only CFP® Professional firm and are proud to serve the clients who entrust us with the vision they have for their lives and goals every day.
The Firm’s Mission
Since the outset of the firm, the primary goal has been to provide the highest quality financial planning possible for clients. That has culminated in the pursuit and completion of the Certified Financial Planner certification, along with Chartered Financial Consultant, Accredited Investment Fiduciary, Certified Divorce Financial Analyst, and now the work of a Doctorate in Personal Financial Planning. Supplementing those accomplishments earlier this year was the hire of Samantha Rauch as a graduate of the University of Colorado Boulder’s Financial Planning program and her pursuit of the CFP® certification in addition to her master’s over the next few years. Ultimately, we have built the firm around three primary values: Integrity, that our recommendations are absolutely in the best interest of our clients; Loyalty, that we act with a duty of loyalty and care for our clients; and Selfless Service, in the understanding that we are nothing without the community we surround ourselves with and the clients we serve. In light of those values, the firm has constantly strived to perfect its financial planning process, as well as to develop the next wave of opportunity for those who are interested in joining the profession of financial planners and those who can benefit from the work that it does.
With this in mind, the current vision of the firm is to grow as a bespoke enterprise. As such, clients are not “Daniel’s clients” or “Samantha’s clients,” but clients of MY Wealth Planners, who can ultimately be assisted and served by each financial planner within. We ultimately aim to give great emphasis that you don’t have “a” financial planner, you genuinely have planners working on helping you live your best financial life. This means there are a few fundamental parts to how MY Wealth Planners will continue to grow in how it serves you:
- You will always have at least two planners who work on your financial plans, assist in your investment management, and understand your own financial planning vision. This ensures constant continuity and that there are no gaps in your financial planning experience with the absence of one or the other. Long term, we aim to have at least three planners involved in your financial planning needs.
- As the team grows, those planners who specifically work on your plan may rotate into new roles. This isn’t to say you’ll have “a new planner every week,” but that as the team grows and develops, that we want to ensure each new planner is being given the growth and development opportunities to go from an assistant helping develop your financial plans to the lead planner who is your primary relationship with the firm.
- You will always be able to contact or work with “your original planner,” whether that be Daniel, Samantha, or a subsequent planner. You will never be “too small” for the attention of anyone you’ve worked with at the firm.
Looking at the Future of Investment Management Services
A major item of interest to all of our clients is the ongoing merger of TD Ameritrade after its acquisition by Charles Schwab. When we took the firm independent two years ago, we deliberately selected a relationship with TD Ameritrade over Charles Schwab because we felt the service and support offered by both their staff and platform were more client-friendly, in addition to having a more modern platform. We have watched the news of the merger carefully since its announcement in early 2020 and have followed the developments of the merger since its finalization in late 2020. This has included our process of annual due diligence regarding whether we would move to another custodial platform or would accept the merger into Charles Schwab. During our due diligence in 2020, we did not see a reason for an immediate move, nor a suitable replacement for custodial services for our clients. Now in 2021, we are engaging in a thorough due diligence process for a potential supplemental or replacement custodian. At this time, we have begun beta-testing a relationship with Altruist & Apex Clearing. Altruist is a wealth management platform (platform-as-a-service, or PAAS) specifically for independent financial planning and investment management firms, which custodies client assets on Apex Clearing, another independent custodial offering. To be clear, we are not moving imminently to their platform, nor have we finalized a decision as to whether we will move all clients to that platform, stay with TD Ameritrade as it merges into Schwab, or whether we will offer a hybrid option. We expect to spend most of 2022 on this due diligence process, and if things look promising, may open up Altruist for client beta-testing later in 2022. We of course would love your feedback and thoughts on this process as we evaluate these and all other options, and will keep you informed as to the progress of this process and what final decisions we make.
New Developments in our Wealth Planning Model
Of all the services we offer, financial planning has grown and changed the most since the inception of the firm. During our original affiliation with Waddell & Reed, the focus was on project-based financial planning, in which clients engaged in a one-time financial planning process. Clients in the first year often paid as little as $300 for a financial plan, although that was then often supplemented with investment management services and the brokering of necessary products such as life insurance or long-term care policies. In the transition to a fee-only and fully independent practice, we followed the research and shifted to a long-term subscription-based model using a fee schedule that relied on client complexity for pricing, with factors such as household composition, types and numbers of different income sources, and liquid net worth being used to calculate the client’s fee. While an incredibly accurate system for establishing a fair fee for services, we’ve ultimately found that as new client interest has grown, that the complexity proves more confusing than helpful in showing clients why pricing is fair for their level of planning needs and services. Additionally, we established our fee with both an up-front fee schedule and ongoing subscription that enabled new clients to decide whether they wanted a one-time project or a long-term relationship, and with the pricing split in that manner, ensured we would be fairly paid for the 20-30 hours of work that went into the initial plan development, along with then funding the long-term services under the subscription model. However, after two years, we have found two problems with this model that we aim to fix: First, that the combination of an up-front fee can be cost-prohibitive for some lower-income clients or those who have tight cash flow. Second, that the research has continued to reinforce that financial planning is best executed as a long-term engagement that adjusts over time, rather than developing a one-time plan that will likely “expire” in a short period of time.
In the interest of fixing the aforementioned issues, we are shifting our financial planning service model to a simplified fee schedule of 0.25% of Net Worth annually, charged as a monthly subscription, with a minimum of a $3,000 annual fee. This engagement will include both the initial development of the plan along with our normal series of quarterly meetings to keep the plan on track, in addition to the unlimited support calls, emails, and meetings required on an ad hoc basis throughout the year. We understand that this change will limit those who will want to work with us (those looking for a one-time plan or who just have a handful of questions), but we ultimately want to provide our services along the best methods identified by research, and so we are simply no longer a good fit for those consumers seeking one-time advice. For those clients who are already working with us on subscription, this will only apply to new clients on a going-forward basis. For existing clients, your existing fee will continue as is, although it is subject to change based on the normal annual adjustments for changes to net worth. None of this changes any existing Investment Management, Company Retirement Plan, or Divorce Planning engagement pricing.
As We Move Forward
Our vision is and always has been to be a place that a client would have access to the highest quality, objective, financial guidance along their life’s journey. We want to be a firm that you can trust both with your personal goals, the management of parts of your financial life that don’t bring you enjoyment or satisfaction, or simply those things you want to get back the time and energy on. We have evolved rapidly since our inception and will continue to evolve as time goes on. We want you to know that we are entirely open to your thoughts and feedback, and want you to feel as much as a stakeholder in the growth of the firm as we are. Thank you again for your trust and support of us as your fiduciary financial planners. We are honored and privileged to serve you and look forward to doing so for many years to come.
We’re taking a break from writing until the New Year, so please enjoy your holidays immensely and you’ll see us again in January!
*While we wish we could claim 193.28% returns over the past two years, this is a combination of investment returns, the addition of new client investments, and the deduction of client income and withdrawals.
Including us by summarizing the past and future of your business plans is gratifying. I’m also relieved to hear that contact with my original planner (you), will continue in spite of the growth of your company. It’s too bad that Ameritrade has not continued to work out – continuity is a good thing especially now when so much in our world is scrambled. Nice to know that you are taking your time with extensive due diligence.
Pleasant holidays to you and your staff. See you again next year.
Hi Phyllis, thank you for the kind words and it’s great to have you with us on this journey. TD Ameritrade may still be an option we work with long term, we simply have concerns regarding the merger and whether the long term service level and support will be at the quality we expect. With that in mind, we want to engage in the due diligence process to determine whether we’re going to offer an alternative or ultimately move to that alternative entirely. It won’t happen quickly or overnight, but it’s a major area of consideration.