I recently had the pleasure of speaking with Kelly Adams, fee-only financial advisor and founder of Harbor Light Planning. Kelly is a NAPFA-Registered Advisor (National Association of Personal Financial Advisors) as well as a member of the Alliance of Comprehensive Planners (ACP), and during our discussion shared with our listeners how she has used the ACP model and methodology to grow her advisory practice.
Click here to listen to the audio recording.
A transcript of the interview is posted below.
Marie Swift: Hello and welcome to Best Practices in the financial services industry. This is your host, Marie Swift. Today, I'm joined by Kelly Adams of Harbor Light Planning. Good morning Kelly, it's so nice to have you here with me today, how are you?
Kelly Adams: Good morning Marie. I'm doing great, thank you! How are you doing?
Swift: I’m doing great – it's a rainy day here in Kansas City. I really appreciate your time that you would share with the listeners about your career path and the choices you've made and what's driving your success. I think it's so wonderful that other practioners can hear from people like you – someone that is so accomplished and tenured. Maybe, I can get you talking about how you got to where you are today. Why did you make the choices you made and how did you become the owner of Harbor Light Planning?
Adams: Well, actually my story is a little interesting because I originally went to school to become a scientist. Couple of years of that and quantum physics, which did me in and had me changing my career path. I actually was always good at numbers so, I ended up going into – not what you would think, finance or accounting – I went into hospitality. Which is actually a business degree at Michigan State. So I had a lot of business courses and thought I'd go into hotel accounting. Came out, decided that the hospitality industry really wasn't linear enough for me in my thinking processes. I needed a little bit more mental challenge. So I ended up going into taxes. Took the CPA exam once and said “Yeah, that's not the direction I want to go, but I really enjoy working with people and doing their personal taxes.” When I was working at Ernst and Young in the tax compliance department, one of the partners there said, “You should look into financial planning. It suits you well and you're already working with the financial planning department to supply all the taxes they need,” and that's how I got on the trajectory of becoming a financial planner. From there, I did some self-study and took the CFP course work and the exam, and ended up doing a nation-wide search for a job because I didn't have the sales acumen to go into sales at that point. I started in the industry twenty years ago and it was more of a salesman-oriented type of career. Somehow, I stumbled upon NAPFA and from that it led me to Bert Whitehead at Cambridge Connection who started the Alliance of Comprehensive Planners twenty-five years ago. I ended up going back to Michigan; I was actually in Kansas City at the time, and moved back to Michigan to work for Bert for five and half years. After about five years, I was like “You know, I think I'd rather be self-employed and go out on my own,” and luckily that was one of the things Bert really supported and I was able to start my practice from there in December of 2003 when I left Cambridge Connection and started Harbor Light Planning. Interestingly from there, part of my employment contract with Bert laid out the plans for my ability to have a succession plan with the clients that I was supporting. I started my business by being able to buy out a good portion of my clients, obviously the ones that wanted to go with me, to start my new practice. So, that's really how Harbor Light Planning got off the ground.
Swift: Well that is a fascinating story Kelly and I know that in my interactions with NAPFA and ACP members there is a particular way of thinking, a methodology, that comes with being a NAPFA practioner and also an ACP practioner. I guess I should say what those initials mean for any listeners who don't know the acronyms: NAPFA is the National Association of Personal Financial Advisors and ACP is the Alliance of Comprehensive Planners. How are those organizations different and helpful to you in your work with your clients?
Adams: For me, not being a sales-oriented type person, I was looking for some other way of helping people. NAPFA is fee-only. ACP is fee-only which means we’re here to service the clients, to provide support and advice, let them benefit from our education and experience without selling a product. We are basically selling our advice, our service, our knowledge. The clients pay us directly. There are no commissions. We don't receive commissions, rebates, kickbacks, or anything like that. It's truly a fee for service type of an approach to working with clients. One of the things that set for me in working with ACP is really the holistic approach to financial planning, that financial planning isn't just about somebody's investments – it's about their whole life. It's about what are we doing that can benefit them to lower their tax liability? What is their insurance in place? Do they have their estate plan set up? Is everything working properly with their estate plan? What are their goals in life? That's the whole driver of all of the financial planning, and then looking at how does everything work together to make sure somebody is living their best life.
Swift: So one of the things I know you added onto being a NAPFA and ACP member is the practice that the Kinder Institute of Life Planning provides, the evoke process and the whole basis of the seven stages of money maturity. Can you talk a little bit about how that helps you with your clients?
Adams: Absolutely. For me to add on life planning as an element into my practice was not a far stretch. One of the core concepts or beliefs or philosophies in the ACP methodology is that the client’s goals are the driver of all of our advice. I actually learned about George Kinder twenty years ago, about when I was starting with Bert and getting into NAPFA, and I kind of followed him for the last twenty years. It just seemed to be the right opportunity to actually pursue and add in a more directed approach to finding out the goals, dreams and aspirations of the clients to really support them better in achieving their life. I love the concept of taking these people who seem to come in stressed and living in this whirlwind of a life and getting them to sit down in our client meeting space and allowing them the opportunity to decompress, and bringing in just a little bit of nudging to open them up and allow them to think and live beyond what their day-to-day life and stresses are throwing at them. Give them that space to dream and fill the room with the ideas and aspirations that they had as a kid, or today, or things they’ve always wanted to accomplish but don't think is possible. That's my driving force right now is just to be able to go in and have these poignant conversations with these clients and really learn about who they are and what's important to them. Implementing the Kinder methodology, the evoke process… and just to quantify I've been through the five-day and I'm currently in the mentorship portion of the program. So this is still new to me, but I've really started to incorporate a lot of the techniques and the ways of talking to clients into all of my meetings and it is amazing how the clients, even ones I've known for years and years – some of them I've had for twenty years – open up and tell me things that they've never told me before by implementing some of the techniques that I've learned in the Kinder training.
Swift: So over the past twenty-some odd years, you've had to attract and retain clients. I'm getting a very clear picture that since you left the Cambridge Connection and brought those clients with you and you've started to attract your own new clientele on top of that base, you've had to had something working for you. Some people call it marketing, some people call it PR. What's attracting clients to your firm?
Adams: Oh Marie, that's a great question. Wouldn't it be great if we could all answer that one so marketing was simple? Actually, my practice primarily has been built on three different buyouts of clients. So, the initial one from Cambridge Connection at the end of 2003. Then, ten months later, one of my peer advisors that had done the same thing from Cambridge Connection, that started her own firm, actually got ill and I ended up buying out her client base towards the end of 2004. Between the two of those they kind of helped me ride out that recession for the next ten years that we had in Michigan. Along the way I had gotten some new clients, but I've never done anything active. I would love to say that I have but I've never done anything active. I try to keep my website up-to-date and change that around every couple of years to have a more current look, but it's mostly been word of mouth and the beauty of the Internet and maybe the luck of being on the western edge of the Metropolitan area as far as NAPFA advisors go because that's where they find me. The ones that are just on the outside of the metro area – I'm the closest one to them, but it's kind of just a weird logistical location thing. Then, actually being female has helped. I have a lot of single female clients that are looking for another female client. When they hear I was a single parent building all of this, it's just a match made in heaven and they feel very comfortable. I actually just had this third buy-out just recently – last December 2017 I bought out another peer’s practice who had decided to retire. That is actually the basis of where my clients have come from: three different succession plans. It's a great way to do it, but you get a lot of clients at once so you have to take it with a grain of salt because it's a lot of work all at once.
Swift: Yeah, I'm fascinated and don't know if you are comfortable in sharing this, but are you doing personal notes? Did you get financing from a bank? How have you funded the buyouts?
Adams: The first one with Bert it was laid out in our employment contract the terms and payment options. Luckily for me, he was very generous and allowed payments over time based on the client’s fees coming in. There was a lot of trust there. Not a lot of formal paperwork but a lot of trust. The second one was just because that was almost a fire sale because she was ill, that was just a one-time when the clients paid me, I paid her the percentage that was agreed upon. This last one… financial planning practices for sale have become more expensive over the years – which is a good thing, which for someone who will be retiring someday in the future here I'm glad to see that prices have gone up. Again, because the person I was buying it from was part of the Alliance of Comprehensive Planners and I’ve known him for thirteen years, we came to terms – he actually did a seller’s finance agreement for me instead of me having to go look for outside financing. So I probably ended up with a better deal because it was seller financed over the next five years with a very reasonable interest rate. I ended up giving him a little more than I would have negotiated for if I had to do outside financing with a higher interest rate. Kind of a win-win: he gets a nice quarterly check and I got nineteen new clients that are really good people. So, it's been fun.
Swift: I love what you are pointing to. The power of community and in the succession realm – it was the ACP community, right?
Adams: Yes, all three were from within the ACP community.
Swift: And that makes perfect sense because you have this common methodology. All of the ACP members practice the same way on a fee-only, retainer basis, with tools and formulas. Can you talk just a little bit about that and how it works for ACP members?
Adams: Sure. So, when you join ACP, you're not buying a franchise or anything like that. No one is going to tell you, you have to do your practice one way or another, but what we do is teach all of our members a common core philosophy that we believe in. It really is this holistic viewpoint of being tax focused in the advice that we give. You don't necessarily have to prepare taxes if you don't want to, but we want you to look at it with a tax focus when you are making recommendations. So we all share a common philosophy and kind of a core way of doing business that makes it really a more seamless transition from one ACP advisor to another ACP advisor. It makes it really easy for one of us to step in and help another one if they are getting bogged down because we understand the methodology that they are approaching their clients with. Even though our end recommendations could vary slightly because we all have our own way of doing things, the core is there. So when I bought out this past advisor’s clients upon his retirement, he turned over his notes and recommendations he had. I looked and said, “Oh look, it's the same layout, the same template we apply at ACP. This will be easy.” The clients already had this feeling or sense of how things were going to go and what types of recommendations I would end up giving because they trusted Ron and they were able to take that short leap. I guess it’s a big leap – it's kind of a cavern because now they are trusting someone they don't know from anybody else, but because they trusted their current advisor they were able to transition that trust to me more quickly than if they were just going to somebody else that there was no interrelationship between the advisors upon that transition.
Swift: You know Kelly, you are also pointing to the power of being visible online and having a strong value proposition. I think you are down playing your marketing acumen because just being visible and having a modern good message and website, that's helpful. You call it luck but it's actually that you're smart, and then the other thing that you haven't mentioned yet is your member directory listings. You mentioned people find you, but I imagine you have a listing not only at NAPFA but also on the ACP find-an-advisor area. I think Kinder has one too. Have you had any quantifiable results, or can you share anything about how often you are hearing, “Oh I found you on such and such find an advisor system?”
Adams: That's been an interesting shift over the years. When I first got started the majority of the referrals that weren't word of mouth came from the NAPFA website. Of late, when I ask people, “Well how did you find me?” It's “I did an Internet search for fee-only” or “I did an Internet search for CFP”. It's more been Internet search now and I have to say I don't do anything about making sure my Internet keywords are SEO or whatever it is, I don't know any of that what is drawing them to me, but I do know that the fee-only, fiduciary, holistic, no sales – those are the keywords people are looking for right now. That is stuff that they've learned in the media and education and providing people that are looking for advisors. They are more educated, and they know what they are looking for and I'd have to say thank you to ACP for developing the stock website that I'm using right now. I'm working at developing a new one to tie more into my Kinder training and life planning to get the message out. I guess I'm not doing any active marketing, but I guess what I do have has worked and is working but I can't take credit for it because it's something that ACP had developed – the stocked template and verbiage on the website. I just said I want that picture, that picture, that picture and these colors and that was my website.
Swift: The other thing that you are saying is – and I teach this when I talk to groups about marketing – is hub and satellite. So, you've got a great hub with your website and then your member directory listings are like satellite entities orbiting around your hub. I bet if you were to look, or if I were to go and look, we would see cross linking between your hub and those satellite entities, and every time you do a media interview to the extent that a practioner can link out to that or if you can get the journalist to link out to your site, there is a search engine beauty that happens so you are more discoverable. But let's move onto the final question for the day, and I would just like you to share something about your journey – when you look back at the end of your journey. None of us know how much time we have on the planet or as a business owner, but it sounds like you have a really rich and full life and a really rich and full practice. So, when you look back what do you hope to have achieved when you retire? And if you could give any advice to your younger self, what kind of advice would that be?
Adams: If I was able to give my younger self some advice it would probably be to be a little less timid especially in social situations where you are in a group of people that you don't know. It's very difficult for me to enter a room of people that I don't know and start talking to anybody, let alone talking about my business, what I have to offer, and kind of give that information out. I would probably give my younger self that advice to say “Just get over it, get it done, don't wait ten years to figure how to walk into a room and not, you know… die!” (laughs). And then what do I hope to achieve by retirement… I don't know when retirement is going to be. I have quite a number of years left before I could reach it age wise; career wise, I'm just defining that. I just hired my first employee two years ago and he actually just got his CFP marks. So I need to reinvision where I'm going and what I want to do and how I want to build my practice for retirement. I'm kind of right now thinking about a ten year exit strategy and finding the right person – if it's the person that's working for me now, if it's not, then finding that other person who's going to come in and take over my practice, so it continues on after me. The other thing that I hope to achieve by the time I retire is that I've taken my own advice that I give to clients and lived out some of those life dreams where there is no reason to wait until later. So portioning out the money to travel and to have great experiences and do some of the things that I want to do now rather than waiting.
Swift: Well thank you, Kelly. I've learned so much from you and enjoyed our conversation. I've appreciated you taking the time to share with our listeners.
Adams: Thank you! It was fun.