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| > The Practice > Practice Builder |
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| Life Planning for Middle America |
| by
David J. Drucker
| 12-21-06 |
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What I find so inspiring about planners targeting middle-class clients is the sacrifice it takes. Charging by the hour for financial planning advice is not the way to quick riches. But it's a great way to make a respectable living while serving clients who otherwise would have no access to objective advice. All of us want to see clients of modest means get the same help as our wealthy clients, but how many of us put our business model where our mouth is?
When I heard about a planner following the Garrett Planning Network's blueprint for serving the not-as-wealthy and also giving her clients the benefit of life planning, I had to find out how she was doing it. Kathryn Nusbaum, working with her husband, Bob, in their Pittsburgh firm Middle America Planning, Inc., let me know when I met her in a recent Practice Nirvana workshop that she's received life-planning training from George Kinder and applies it daily in her work with clients.
Bob Nusbaum started Middle America Planning soon after the 9/11. The devastation of the World Trade Center, which was adjacent to his office in the World Financial Center, put an end to his 13 years with Merrill Lynch as a senior financial analyst. The couple moved their company to Pittsburgh in 2004, just after Kathryn left her own position of 10 years with Merrill. The Nusbaums had decided to serve the middle market as fee-only advisors after finding it difficult to obtain unbiased advice for themselves while working amidst the world's largest financial institutions.
If you're familiar with the Garrett model, you know that it's designed to serve individual clients who want to pay for advice by the hour. It can be a challenging business model. It requires a high level of efficiency on the part of the advisor, who has to learn to charge not just for time spent in meetings but preparatory time and time spent helping the client implement recommendations. Some Garrett advisors also manage money or provide retainer services to make ends meet.
It's miraculous, then, that a Garrett advisor could work the additional hours required for life planning into her practice. Yet, Kathryn Nusbaum feels it's essential. Kinder will tell you that it takes, on average, about six hours to "life plan" a client. In that period of time, Kinder expects to be able to "light the torch," or find out what the client is passionate about doing with his life. Financial planning is the natural adjunct to life planning because it attaches dollars to the passion, showing the client how he can afford to follow his dreams.
I asked Nusbaum how she makes time to "life plan" a client when clients are already sensitive to the total number of hours they'll be paying you for. She responded, "We can do life planning in just one or two hours, meaning we sit down and clarify the goals and desires of the individual that we will need to address from a financial perspective. We may not light the torch for every client; sometimes we just find out what will give the client a feeling of day-to-day financial security. In other words, the life planning component may not always lead to something 'grand.'"
Yet an accounting of some of her clients' experiences contradicts her modesty. Nusbaum told me, "One client I worked with was a successful career women who would take her two young children to her mother's each day because their day-care program started later than the time the client needed to be at her job. The children's grandmother would take them to day care later in the morning. From there, a bus would take the kids to school when it opened even later in the day. In the late afternoon, the bus would take the kids back to day care and, finally, the client would pick them up after work. Then, there was just enough time left in her day to feed them, make sure they did their homework, and put them to bed."
The client's daily grind made it difficult for her to even stop and think about alternatives to her grueling, 60-hour work weeks. For her, the torch was simply discovering that there were alternatives to her present lifestyle. "First, she needed to know how to set up an emergency fund," says Nusbaum. "Since she was afraid of being laid off, we helped her adjust her spending and increase savings so she could investigate another career that would be both satisfying and allow more time for her children." The answer, says Nusbaum, was getting the client to a more stable place, carving out more free time, and investigating employment alternatives.
But how did the life planning factor into the overall financial planning engagement? "With this client, we spent about two hours just on goal setting and life planning. In that amount of time, we were able to investigate why her life was the way it was and what was driving her to get up in the morning and continue doing it day after day." What Nusbaum and the client both discovered was that the client had a very high need for career satisfaction and that she'd build within her life an expense structure that was difficult to maintain. If the client were to lose her job, she would probably have trouble finding another job that would support her cost of living. Perhaps most important, her high expenses were a function of her not being able to spend as much time with her kids as she knew she should.
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An independent financial advisor since 1981, David J. Drucker, MBA, CFP has also been a journalistic voice since 1993. Collections of Drucker's entire body of work can now be purchased at www.DavidDrucker.com.
The author is not an employee of Morningstar, Inc. The views expressed in this article are the author's. They do not necessarily reflect the views of Morningstar. |
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