Journal of Financial Planning: September 2022
You’re a Financial Planner...Now What?
Hannah Moore, CFP®
Owner and Principal Financial Planner, Guiding Wealth
Host, You’re a Financial Planner...Now What?
www.linkedin.com/in/hannahmoorecfp/
JD Bruce, CPA, PFS, is chief of innovation at Abacus Wealth Partners. He talked about the unique business model that allows Abacus to serve large and small clients at scale and how their rigorous training program produces advisers who can handle the complex interpersonal challenges of talking to people about their money.
Why Abacus Doesn’t Say ‘Retirement Planning’
Although JD is considered a retirement expert, he does not do retirement planning. Instead, his approach is geared toward helping clients use their money to increase their quality of life, now and in the future. He notes, “Most of the people that I’ve worked with who ‘retire’ end up making more money than they did before.”
Along with the other advisers at Abacus, JD helps his clients shift their thinking about money. Although they may come in asking, “How soon can I stop working?” the specialized onboarding process at his firm requires them to start asking, “How can I use my money to live more of my values?” As a result, JD’s clients often end up offering consulting services in their areas of expertise or moving into areas of giving and investing that they find fulfilling.
The values-based approach at Abacus helps planners give nuanced advice and create plans with personal significance. JD says, “At the end of the day, what people value is what they end up doing first. And where people mess up with money is when they’re doing things in opposition to their values.”
How Does a Large Firm Like Abacus Manage to Serve Smaller Clients?
One thing that’s notable about Abacus is that, for a large firm, it serves a lot of small clients, in terms of their accounts. Normally, this is unprofitable to do at scale, but JD explains that the unique service model at Abacus makes it successful. To serve smaller accounts, the team needed to find a way to price and structure their services so they could give small clients what they need without placing the burden for profits on large clients.
JD says this comes down to creating a coaching relationship. This type of work takes less time for advisers to deliver than full-service account management. By contrast, when the firm analyzed the actual work done for large clients, they found that they were typically undercharging as well as missing opportunities to provide more value. By recalibrating their retainer model and becoming really good at forecasting the needs of their low- and high-end clients, Abacus created a more consistent and ultimately more profitable pricing structure.
It’s not about the services that people are asking you for, as JD puts it. It’s about what they need. “You need to think about how much time it is going to take to serve this client, and then make sure that you’re charging them an appropriate rate.”
Turning the RIA Model on Its Head
Although many financial advisers believe that serving small clients will limit their success, JD has found that including them in his strategic client base creates excellent opportunities for growth.
“We have clients who pay us a few thousand dollars a year, and we have clients who pay us a few hundred thousand dollars a year. The breadth of our clients, I would argue, is greater than most other RIA firms out there.”
Rather than focusing on a certain size of account, each team at Abacus focuses on a client archetype. JD’s team looks for people who are at the center of their social circle, who are deeply connected to others in their network, and who love giving back. They find that no matter what scale of assets those clients may have, they are highly likely to bring in a large number of profitable referrals. Plus, JD adds that when you serve hard-working, ambitious people who are at the beginning of their career, “They will eventually become high-level professionals. And they will remember who helped them before they were successful.”
JD coaches his advisers to seek out clients who bring in not a minimum asset level, but a minimum enjoyment level. He explains that this isn’t just strategic in terms of growth, but also a great way to manage your time and energy. He says, “Clients who are a good fit for you take up less capacity than clients who aren’t. If you love talking to someone, they just take up less space. You actually enjoy every time they call.”
Carving Out Your Own Path in the Profession
The structure of Abacus, and even JD’s experience in the profession, are quite unique. How can other young planners create their own definition of success, like he has? It starts with finding the right training program.
When you’re evaluating training programs as a candidate, the question JD would ask is, “How many people have gone through this program?” He says that larger firms will tend to have more structured, longer programs, while smaller firms may not have an established learning plan, giving you the opportunity to set your own goals and take ownership of your process.
If you’re a self-starter and very entrepreneurial, a small firm might be the right place for you, according to JD. On the other hand, if you like a lot of structure or want to feel really confident before you start facing clients, you might be more comfortable training with a large firm.
Most of all, JD encourages new advisers to find opportunities to be trained in the behavioral aspects of advising, to look for a program that will let you start shadowing in client meetings as early in the process as possible.
Some firms make associates learn how to process paperwork for a year or more behind the scenes before they ever get to meet with clients. It’s an important part of the work, but you don’t need to master administration skills before you get exposure to real-life financial advising. The sooner you get to see financial planning in action, the better.
The biggest takeaway from JD? Whichever route you take in the profession, practice tuning into what’s underneath your client’s requests. Help them use their money to elevate their quality of life and use your own values and affinities to drive your career forward.
