Updated: Jul 24
Welcome to episode 22 of the Innovating Advice show.
I’m joined by Geof Brown, the CEO of the National Association of Personal Financial Advisors (NAPFA). NAPFA a professional association of fee-only financial advisors in the U.S.
We’ve talked about the regulatory environment and where the profession is headed in a number of countries on this show, and in this episode, Geof and I discuss what that looks like in U.S.
On the regulatory side, regulation varies between state and federal and differs among the 50 states, presenting a unique challenge in the U.S.
We chat about recent regulatory efforts, why it’s unlikely that commissions will be phased out or banned in the U.S. and how NAPFA joined forces with other professional organizations to present one voice on policy objectives.
We also discuss why more people are gravitating towards the fee-only model, whether it’s necessary to specialize or have a niche and how NAPFA has embraced changes in the profession and streamlined the process to become a member.
Geof Brown, CAE is the CEO of the National Association of Personal Financial Advisors (NAPFA). NAPFA is a professional association of fee-only financial advisors in the U.S. with nearly 4,000 members. Geof has led initiatives that resulted in increasing membership by 45% with three straight years of double digit growth and member retention well over 90%. Geof is a dynamic association executive with expertise in strategic and operational planning, enhancing membership value coalition building, organizational governance, government relations, fiscal management and volunteer management.
Kate: Hey Geof, welcome to the show.
Geof: Kate, thanks for having me.
Kate: It’s so great to have you here today. So let’s just go ahead and jump right in and have you share the story of why NAPFA, the National Association of Personal Financial Advisors was initially created and what it looks like today.
Geof: Sure thing. So NAPFA was founded back in 1983 by a group of financial planning professionals that really felt like there was a better way to service their clients. You know, at the time the model was really geared toward a broker dealer, sales orientation, things of that nature. And that group of men really felt, and women felt like, you know what, we can’t serve two masters.
And they wanted to have a relationship with one versus a relationship with many. And so, you know, when they kicked off this association, it was really geared towards the concept of let’s be client-focused, client-centric, and really work on behalf of the people that we truly serve. And that’s the public.
You know, when it was started, we’re talking, less than a handful of individuals who were really focused on how they could do things differently than what was available to them as professionals at the time. And I doubt that they really thought that what they created back in 1983 would emerge into a nearly 4,000 person membership organization with the reach that it has in 2020.
Kate: That’s awesome. And so really they were innovators back in 1983 and I won’t give away my age, but there’s a chance that’s the year I was born. So a very young organization.
Geof: You know, I think innovators, pioneers and you know, the thing that has always struck me about this community is the fact that some of them are still involved today. They’re still practicing, seeing clients, you know, making meaningful contributions to this professional community and to society at large. And you know, that just speaks volumes about what they created and the fact that there’s so much interest today in that model. It’s exciting.
You know, when I’m on a college campus and I hear students that, you know what, I want to be a fee-only planner when I’m done with school. You know, that’s like a lasting legacy that I hope all those guys and women that were in the room acknowledged the fact that, you know, they created something that’s going to live beyond them.
Kate: And that’s, it’s so true. The people that were pioneers in the profession all those decades ago. You know, financial planning turned 50 in the U.S. last year. And the amount of them that I still see at conferences, still actively involved. That’s one of the things I used to tell my clients when I had a practice was so often people are looking to just say, okay, I want to retire. I don’t want to work anymore. And it really was, look, if you’re in a profession that you love, you don’t have to be working. You could be volunteering, be on the board, be active in committees and stuff. And that’s what makes this such a great profession is that people don’t leave.
Geof: [Laughs] Well, you know, on one hand it’s, take the advice that I’m giving you my client. But then it’s also, it speaks to the fact, that this isn’t a job for a lot of people. You know, it isn’t just a career, it’s a calling. And so the fact that they can continue doing it and doing it in a meaningful way, and then also find different avenues to contribute to what it is that we’re trying to accomplish. It’s just, it’s really exciting.
Kate: Yeah, it is. And so from a handful of people back in 1983 to 4,000 members today, was that a slow transition or, you guys have actually had pretty tremendous growth since you’ve been the CEO over the last six or so years.
Geof: You know, it was slow and steady for a number of years, and then I would say probably in the last five, six years, it really has taken off. You know, some of that was driven by things that we did differently here at the association. But then a lot of it was just driven by the fact that the regulatory environment is becoming more favorable for financial planners. It was already, but it’s really becoming even more favorable. But then, you know, undergraduates and career changers, they understand now that this is a viable option for joining the financial planning profession and that you can dive right in and immediately start making contributions.
Kate: Yeah, absolutely. So talking about the people coming out of college, to the people that have been around a long time, what is the average age of NAPFA members?
Geof: The average age of NAPFA members is still hovering around 48, 49, 50. It’s getting a little bit younger. We’re definitely seeing more and more people under the age of 30, which is great. It’s, some of that has to do with what’s happening on college campuses. Some of it has to do with the work that the CFP Board Center for Financial Planning is doing to contribute to some increased awareness of financial planning as a career opportunity. And then it’s still a viable option for people that are looking to switch careers. You know, I remember when I first started, that was the thing that struck me.
You know, every other association that I’ve worked for, you know, you’re sitting around the table and I was like, Oh, I went to school to become a database administrator. I went to school to become a plastic surgeon. You know, when I met my first group of NAPFA members, I was a school teacher or I was an ER doctor. I was an accountant and then I found financial planning and it’s become my life’s work.
Kate: Yeah. I got a degree in photography. So as I always say, that was the natural path into financial planning.
Focus On Diversity, Equity and Inclusion
Kate: So what about diversity within the membership?
Geof: Diversity is one of those areas where, you know, we’re putting a lot of resources behind it. It’s definitely got an intense organizational focus and we’ve got a great steering committee that is involved in a process of really trying to understand what does our member community look like? What do we want our member community to look like? How does that fit within the broader financial planning profession?
And then how does that fit within the broader American public landscape? There was just a lot of energy around this idea of making sure that the NAPFA membership mirrors the larger professional community and ultimately mirrors the American public. You know, I have to give a lot of credit to the co-chairs of our steering committee, Cameo Roberson and Daphne Jordan. They came to me a few years ago and they said, you know what, we think this can be different.
We think that there’s more that this association can be doing to be a welcoming environment for people that identify as part of a minority population. And you know, my response was agree.
Geof: We’re trying to think about what can we do to position ourselves to create opportunities for people that identify as part of a minority population to not only become a part of this association, but to become a part of the profession. The steering committee just wrapped up a set of listening sessions, to hear from NAPFA firms about the things that they’re doing from a hiring standpoint.
The things that they’re doing from a recruitment and talent acquisition standpoint and then how they’re trying to position themselves to be champions for a more diverse profession. And I think ultimately, all of that research, the member conversations, are going to lend themselves to creating, the sources and toolkits that firms can use to do their part.
Because that’s really where the change is going to happen. It’s great to have a diverse professional association. But if there isn’t an inventory of jobs for those planners, then they’re not going to remain a part of this community. And then, the last thing I’ll say is that we just want to support the good work that other entities are doing.
So groups like Quad-A, which is The Association of African American Financial Advisors, the Center for Financial Planning. This is one of those issues that it doesn’t matter whether you’re a fee-only planner or you’re working in a wirehouse. We can make financial planning more diverse together. It’s an industry problem. And so we all need to do our part together.
Kate: Yeah, absolutely. And letting people know that firms are working on it. I talked with Lauryn Williams of Worth Winning a few weeks ago on the show and we were sort of talking a lot about diversity, equity and inclusion, and how for a lot of people, whether they’re – I would say especially career changers – because there still is that perception that a lot of the industry is still on the sales/commission side, build a book, do cold calling.
And so how we’re seeing a lot of people decide that they want to be in the profession, understand the importance of financial planning, really wanting to help, especially their colleagues and not finding an opportunity within firms. So they’re going out and starting their own practices.
Geof: You know, I think Lauryn’s an excellent example of someone who could have lived in that multi-adviser firm world. But then, she didn’t see what was going to make her whole as a professional. And so she went out and created it herself. And I think it’s great that planners have both opportunities because I know that there are going to be people that will find that firm that’s a good fit for them on so many levels. But then for people that don’t and want to create something different, they should have that opportunity.
I applaud the work that Lauryn’s done and being a champion for diversity, equity and inclusion issues. I remember her TED talk at the CFP Board’s Diversity Summit, which is still one of the best events that happens within financial planning. It’s like a well kept secret. But just the way she talked about her own professional journey. I think it could just open the eyes and the doors for so many new professionals.
Kate: Well, that’s the thing that is great about the NAPFA community is you have the people that are in those small, medium, and large firms. You have the solo practitioners. I have a lot of colleagues within NAPFA on both sides. And so you get the benefit of all of that best practice sharing; the people in the firm saying, Hey, why did you decide to start your own practice? What are we not doing well enough to welcome you into our firm? And knowing that within the NAPFA membership, everyone has that same values around client-first, client-centric, fee-only financial planning.
Geof: Yeah, I mean it’s that one common denominator that I think makes this community so special. Because at its core, you know, we’ve all made a decision to focus and practice in a certain way and you know, nobody can take that away from us.
The Growth of Fee-Only Financial Advisors
Kate: Yeah. Well, and you mentioned the regulatory environment is kind of becoming more favorable towards fee-only planners. So, in terms of the growth that you’re seeing, is a lot of that coming from people that were already fee-only joining NAPFA based on a lot of the great work that you guys have done over the last number of years, or is it people that, because it’s becoming more favorable, are transitioning to fee-only?
You can build a thriving and viable business as a fee-only planner. And I think there are so many proof points that have emerged over the last four or five years and beyond, that support that thesis.
Geof: I think it’s, it looks like a lot of people that are joining because they are gravitating towards the fee-only model. We’re still not seeing this mass transition of people coming from different channels. Yeah. There are people that are doing it. I think it’s more of a slow trickle than it is ‘Let’s all jump on the ship and ride together,’ which is fine with me. I think that if we’re getting new entrants that understand that this is not the uphill slog that, people thought it might’ve been in the early two thousands, the late nineties.
I remember when I first started planners telling me that their former colleagues told them that they weren’t going to eat by becoming a fee-only planner. And I don’t think that, I think the fears of being a new business owner and having some meager years are still valid, but not the decision to practice under this model. It’s not going to be a death sentence or a trip to the poor house, if you will.
You can build a thriving and viable business as a fee-only planner. And I think there are so many proof points that have emerged over the last four or five years and beyond, that support that thesis. Would we love to get to a place where we start to see folks shift channels because this is the wave of the future? We’re getting there. This is the wave of the future. I don’t want to say that the regulatory environment is more favorable to us. I think it’s showing people that this is more viable, or it should be a stronger consideration.
The ‘Fiduciary Rule’ in the U.S.
Kate: Yeah. And on that note, one of the things that we’re seeing is really around the world from Australia to South Africa, Netherlands to the UK, commissions are being phased out or banned. And given what happened with the fiduciary rule, I don’t see that happening here in the U.S. but there still is that shift happening. And since the majority of listeners of the Innovating Advice show are outside the U.S. can you explain why the Department of Labor initially introduced the fiduciary rule and where it ended up?
Geof: So, back in 2015, 2016 when the DOL was working through their process for, a multiple time, through coming up with a new fiduciary rule or as ‘the fiduciary rule’ is called. They were really just looking for a way to address the conflicts of interest that are inherent in the financial advice world. And so we think that they promulgated a rule that really was what they intended it to be, which was be business model neutral, meaning that there was a pathway for someone that wanted to practice under a commission, or commission-earning model, which is fine. But then there were also a lot of safeguards for consumers. We thought it was just going to be a watershed moment for financial services, increased consumer protections. And just really ushering in a new era for financial services in this country.
It was a great year and some change while we celebrated. And as with everything, the party came to a crashing end. Since it was vacated by the fifth circuit, I think that things have changed from a regulatory perspective, due to the courts. But it didn’t do a lot to tamp down consumer awareness and understanding about the type of model of advice that they deserve and should demand. So I hear from more and more planners that consumers are walking into their offices and asking the question, “Are you a fiduciary?” And having, I don’t want to say it’s a high degree of understanding of what that means, but at least enough to be conversant and, enough awareness of the questions they should be asking to increase their own clarity, and their own ability to be good partners in that engagement process.
I think what happens or has happened outside of the U.S. is certainly inspirational. And it could give us a potential roadmap to follow. But as you noted, things are a little bit different here in terms of how policy is formulated and annunciated. And some of the forces that exist within the U.S. just don’t exist outside of this country.
Coming Together: The Financial Planning Coalition
Kate: Yeah. And as all of this was happening, I believe it was the fiduciary rule, but correct me on that, in true financial planning collaboration style, NAPFA is a founding member of the Financial Planning Coalition along with the Financial Planning Association in the U.S. and CFP Board. So talk us through why was that coalition created and what is it up to today?
Geof: So that coalition was created a little over 10 years ago, I believe, 10 to 12 years ago.
Kate: Okay, time flies!
Geof: It was really created because I think that we realized that, you know, FPA was pursuing their own policy objective. CFP Board was pursuing a set of policy objectives. NAPFA was certainly doing its thing and at the very least the three organizations needed to communicate about where they were headed and what they hoped to accomplish. I don’t know that anybody imagined that it would have spawned, what is often the lone industry voice on behalf of the consumer and the public and advocating for strong fiduciary principles that it created. But it did.
The coalition right now is focused on a set of issues. I think fiduciary will always be a part of our focus. CFP Board has announced their intention this June to become all fiduciary all the time with financial advice. And so, I think that’s a centerpiece of the arguments that we make for stronger protections across the board.
But then we also have to think about what are the other issues that we need to be focused on? So, could it be retirement security? I think that that’s something that’s strong, bipartisan, future oriented. It’s hard to argue against the fact that there needs to be regulation and legislation that positions all Americans to be able to save for their financial futures in a meaningful way.
I think that the future continues to be bright for the coalition. But as with any entity when you’re bringing together three diverse partners, it requires a lot of care and feeding. I think it serves as a model for others to follow where you’ve got two membership organizations and a certifying body collaborating with one another on behalf of their shared practitioner constituents.
Regulating the term ‘financial planner’
Kate: Well, and it’s so important for the profession and professionals, whether, regardless of what business model you’re on, and they’re kind of doing something similar in Australia of bringing the various organizations together and uniting under one voice. So that helps consumers, that helps the profession. Having three different voices just adds to the confusion and there is plenty of confusion out there. And thinking back to the fiduciary rule and the coalition, I know one of the things the coalition wants to do is, wants the term financial planner to be regulated. What would that look like in an ideal world?
Geof: Recognition and regulation of financial planning and financial planners has always been a centerpiece for the coalition. And so, I think at varying times it’s been, well, let’s look for a federal solution to that. Then it’s been, let’s look for a state solution and now it’s, let’s look for the optimal solution. And so that could take a variety of forms.
It could be federal regulation where we’re writing into statute, recognition and regulation of financial planning as a new profession because right now, you all are regulated for the various functions that you perform in different ways as opposed to, for the one umbrella of what you do. It’s a very, very difficult path and a very difficult needle to thread. Because we have planners that are regulated and registered at the federal level with the SEC and then we’ve got tons more that are functioning at the state level. And then you have to factor in the fact that a lot of you do business across multiple States. And so it’s a very difficult prospect.
And so many will point to the accountancy model where there’s uniform regulation. And most accountants will tell you, yeah, it’s uniform on paper but not uniform in practice. You just never know like how one state is going to interpret something, what they’re going to write in to their state’s laws. And so we just want to be mindful and understanding that, you know, this is an evolving business. But we want the public to know who you are, what you do, how you do it, and we can solve the rest through regulation and legislation down the road.
I can’t imagine a scenario where rec and reg is not a part of the Coalition’s platform going forward. We’ve tossed around things like title protection where we’re trying to make sure there are safeguards or standards for people that are holding out as financial planners. That could be a great first step to getting us to a point where there’s some regulation that’s uniform across the board nationwide.
Kate: And that’s one of the extra challenging things is, I was thinking, you know, even if we have the term financial planner regulated, there is still wealth manager, financial advisor, financial coach, wealth coach, personal coach. I mean how do you even begin to reconcile these?
Geof: Exactly. I remember a couple of years ago we were looking at a piece of title protection regulation in a state that I won’t name. And we just did a scan of our own, our own database. So what are the titles that are used just within the NAPFA community and it was every one that you, you named and I was like, you’ve got to be kidding. What happened? How many ways do you say I’m an ER doctor? You say, I’m an ER doctor. And we need to make sure that in the future that we’re doing what we need to do to incentivize people to say, this is what I do. I’m a financial planner.
Some of that has to do with the fact that you know what, a lot of people avoid the conversation. I’m sure you’ve been to some cocktail parties and people have said, ‘well what do you do?’ And you’re like, wow, do I say I’m a financial planner? Or am I a financial advisor? Am I…? Like it’s that like, the wheels are turning of how do I respond? Because you don’t want people to run away. A lot of that just has to do with some of the historical baggage, the bad acts, whatever it may be.
You know, until we’re able to dispel some of those misconceptions or notions about what financial planners do, it’s going to be difficult to have people coalesce around one title or multiple titles that are in the same name.
Kate: Well it really is, cause I remember when I started my practice because nothing like it existed and you know, I was going the fee only totally virtual subscription model. And so I didn’t have language to use. And as I kept explaining it to people, like you were saying at cocktail parties, I got the instant, Oh I don’t need that. Or I already have a financial planner. And then I would try to really talk through what it was and everyone would keep saying back to me, they’re like, ‘Oh, you’re like a financial coach. I need that.’
And so I started using that language and I did my own kind of A/B testing and I started to tell people, Oh, you know, I launched my own business and I’m a financial coach. And the reception to that was so warm, but I felt this like internal guilt.
I was like, I worked so hard to become a CFP professional. I want to hold that out there proudly. But it wasn’t resonating with my target audience, or really anyone I was talking to. So I had that internal struggle about how do I help change the conversation and letting people know. But it kind of felt like an uphill battle I wasn’t going to win because there are so many people out there calling themselves financial planner that are just salespeople.
A Place for Salespeople
Kate: Circling back to the fiduciary rule, it’s not that there’s anything wrong with being a sales person, right? It’s just having that clarity in the market and with consumers. And not have everyone using the exact same language.
Geof: I think that’s dead on. You know, one of the things that I’ve seen members of this community evolve towards is, I think in this financial services ecosystem, there needs to be a sales function. You know, those folks are product specialists. They perform a service that is not like the service that a planner performs and it’s fine for them to exist.
But the consumer that engages with them should have 100% clarity of the nature of that relationship. You know, everything from how that person is compensated and where and when their responsibility to the client or the person that they’re selling to starts and stops versus their responsibility to their employer. And right now that doesn’t exist.
Kate: Well how much do you think the, I think it’s a pretty unique challenge. I mean I know Canada has it as well where they’ve got different regulators in all of their provinces. You know, having in the U.S. the fact that we do have, like you said, Federal, but then we have 50 individual States and the regulation is mind boggling and challenging.
And I’m talking with planners regularly that are working in multiple States. They’re regulated at the state level, they’ve got different rules and regulations, how much does that add to the complexity of trying to get uniformity in the U.S. around titles and business models and all that?
State Regulators: Important and Challenging Work
Geof: I think it does add a certain level of complexity. You know, I’ve always been impressed with the care and the commitment of state regulators. They have a yeoman’s job. They have to think about, let’s regulate this set of professionals that’s evolving at a very fast pace. But their mandate is very different. It’s a consumer protection mandate. And I know that most of them take that responsibility very seriously.
And so that manifests itself in some instances as skepticism of things that are new and different and not like what I grew up on. And so I think that’s where we have an opportunity as a financial planning coalition just to tell the story of here’s what’s happening in the field. Here is why this is happening in the field and here’s how you all as you know, the regulatory community can be a part of helping to shape and understand and mold this into what it needs to be, for the future.
Kate: Well, and a lot of people do have great experiences and I will say, when I started my practice in Washington, I had an amazing experience, having nobody that had ever done it before. I submitted my form ADV or my disclosure documents for what my practice would look like.
And the state called me and they said, Hey, we don’t know what to do with this because I was not selling anything. I was not charging assets under management. I was not doing hourly. And they were like, what What is this? And to their absolute credit, they actually got a team together and had a special meeting and they were super open to communicating with me.
And I told them, I think this is where the future is headed and you know why I thought that was, and it took a little while, but they were in regular communication and they ended up fully supporting me and I thanked them over and over again because they could have just said, Hey, we’re not going to allow this or taken an easy path.
And they really were accepting and I got registered in multiple States and I would say I had a similar experience and that was, what are we on like seven years ago now. Interestingly talking with planners, even the last couple of weeks, some people are trying to get registered in those same States are facing a different experience. But I’m hoping that it continues on this positive embracing aspect and that the coalition through the work that’s happening both in DC and at the state level can continue to get that message out because you’re right, the regulators, do you want to work in the consumer’s best interest.
They absolutely generally only see the bad actors, only hear the bad stories. We’ve got to put ourselves in their shoes and understand where they’re coming from, how much they’re dealing with on a daily, weekly, monthly basis. And that changing the rules of the game as so many of us are. That’s a big thing.
Geof: No, they like, their work is so significant to making everything work. You know what I mean? And the fact that, I think you hit it on the head, that they’re more often than not, yeah, they’re working with a new professionals through the registration process, through the exam process, but their most significant amount of work really has to do with the bad actors. And if that’s where you’re spending a lot of your time, it can really shape your world view, sometimes to the detriment of people that are doing the right thing of trying to be future oriented.
Kate: Yeah. I think to be a good regulator, you have to have a healthy amount of skepticism and when you see something new go, all right, what’s the angle here? Let’s look at this.
Educating the Public
Kate: So talking about consumers, how does NAPFA help educate consumers on how to navigate all the confusion with titles, with business models and how to determine what financial planner is right for them? Because it’s not just business model based. There’s a lot of other elements that go into finding that right fit.
Geof: Yeah. So, we’ve been committed for quite some time to making sure that we can be a conduit for helping consumers navigate the process of identifying a financial planner, hopefully a NAPFA member. But we want to be objective in that process. So yes, we would prefer that they engage someone that works under a fee for service model, a member of our association because they’ve been vetted and verified for the fact that they are truly fee-only professionals.
We can come back to that later. But you know, I think it’s a couple of different ways that we can do that. One, it’s about giving them the tools and the resources that they need to understand how to start the process and then how to move through its different elements. So what are the questions you should be asking of any financial planning professional, whether they’re a fee-only professional or not.
So you want to understand things like what’s your educational background? What’s their disciplinary record? Do they have any designations of record? Things of that nature. And then really understanding, how are you paid? How are you compensated? I think a fee-only advisor or planner is a good way to address some of those questions.
But you still want to understand within that audience, and am I a planner that’s working under an hourly model? Am I a percentage of assets under management? Do I have some type of fixed fee model, whether it’s billed annually, quarterly or monthly? I think consumers need to be able to ask those questions.
For us, we also want to make sure that we’re engaging with the media to not just highlight,
Hey, work with a fee-only planner because they’re fee-only the planners and they’re going to work in your best interest.
But also talking about some of the issues and domain expertise that fee-only planners bring to the table as financial planning professionals. So the things that they can do from an investment management standpoint, retirement planning, education planning, so on and so forth. How they can just be an essential asset to you as you’re trying to navigate that process of planning for your financial future.
And so we found that that latter approach is really what positions members of the media to talk credibly about the value that you all can bring to the table for members of the public. The number of people that are committed to and focused on writing about consumer financial issues as a fraction of what it was, five years ago, 10 years ago. Because the media landscape has changed so much. We have to find new ways of different ways of getting the word out there.
And so we’ve started doing things like, multiple radio media tours, throughout the year that are linked to things like women and financial planning issues. We just did a very successful one on millennials where we were in, 10 major markets around the country, with airings on the NBC radio network. And it was wildly successful. And we can see the impact of that just by the visits to NAPFA’s find an advisor portal.
We also try to make sure that we’re pointing consumers to some of the other fee-only groups. So whether it’s the Alliance of Comprehensive Planners or the Garrett Planning Network or XY Planning Network. We want to make sure that we’re nurturing this entire fee-only ecosystem, if you will. Because, we still feel that it provides the most independent and objective avenue for consumers that are looking to engage with a financial planner.
Consumers are still unsure of what you all do, how you do it, how it can be beneficial to them. And so, I think breaking it down into smaller pieces or issues or topical areas just allows us to have that conversation in a more meaningful way. It’s about making it relevant to me as a consumer because not all financial planning topics are right for all audience. And so that’s kind of what we want to do.
To Specialize or Not To Specialize
Kate: Yeah. Well and on that, how much are you seeing financial planners really specialize in any niche area to really target their ideal client? And I think one of the best examples from years ago was, I’m forgetting his name, but he specializes in working with bass fishermen. Really being able to go super, super niche because that is speaking to, if you were Geof Brown bass fishermen, right, You go, okay, that is relevant to me and the lifestyle that I live. Are you seeing a lot of people really niche down into those specific areas or, I know a lot of planners are still staying pretty general.
Geof: I think a lot of planners are still staying pretty macro. You know, looking at the public as the public, they may, go down to the point of, I’m going to work with just gen X, gen Y professionals, or I’m going to work with, gen X and Y business owners, or I’m going to focus on high tech executives because there are some certain issues that are relevant to each of those populations.
And the folks that are going all in on a niche are definitely reaping the benefits. It’s good to specialize, no one can argue with that. There are stories from within financial services and there’s a ton of stories outside of financial services about how it’s better to take your market and make it even smaller and focus so that you can amplify your own time and ability to be effective and efficient.
That’s not a bad thing and we’re never gonna argue against that. And so we’d certainly support planners that have made those decisions to go all in on certain subsets of the population. But there’s still a lot of people out there that aren’t going to fit one of those buckets in a really meaningful way and they need services too. So I think there’s an opportunity for both.
A lot of the business coaching world is going to tell you to specialize, specialize, specialize, but specialize if it’s right for you, if it’s right for your business, if it’s right for where you are, if you’re bound geographically. You started a virtual firm when you were, started your practice. Virtual isn’t for everyone, both on the planning side, but then also on the client side, some people still thrive on that ‘I need to go into a business and I need to see some Oak and I need to feel comforted.’ Exactly. Like some people still want that. And so, I think planners just need to understand who they want to work with, how they want to work with them. And then you can niche your way to success.
Kate: Yes. The riches are in the niches as so many business people say.
Becoming A NAPFA Member in 2020
Kate: So you mentioned earlier talking about how do you become a NAPFA member. And I want to touch on that because that was another interesting aspect when I started my practice is I think I was one of, if not the first NAPFA member that came from XY Planning Network, because I was a founding member there, and having a conversation with NAPFA on reviewing the financial plan and I never did a quote unquote traditional plan.
And so there was a lot of conversations with NAPFA on, okay, well what does the future of planning look like or what does modular planning look like. And that was an interesting shift as well. So talk us through how do you become a NAPFA member. Cause it’s a, it’s a pretty intense and I would say it was a really fascinating and worthwhile process.
Geof: Wow. Yeah. I think this is one of the things that has certainly contributed to some of the growth because as you noted, the way that planning happens is different now than it was, say five years ago, 10 years ago. Yes, the notion of the multi-volume, financial plan binder, it just doesn’t exist that much anymore, if at all. And so for the longest time, one of the requirements of membership, it wasn’t just that you had to be a, a fee only planner or a CFP professional, you also had to submit a financial plan for review. And I remember when I first started seven years ago, and I can’t take credit for this change. This is something that members said. This needs to be different. We need to keep pace with what’s happening in the operating environment if we’re going to be competitive and responsive, to tomorrow’s professional.
And so I remember my first couple of days in the office and I’m like, what are these, big Manila envelopes that keep showing up? What’s in there? And the team was like, Oh, those are people’s financial plans that they’re submitting for review. And I’m like, well, what happens with them? Well they come into the office or they got emailed, they probably came into the office because the files were too big to email back then.
And then they would get sent out to a reviewer. And so, there was already a dialogue that had been happening within the association about what’s happening in the future. And it was more of a team approach, more modular planning and that told us, well, what are we really trying to assess and review by having potential members submit these pieces. And it was just some domain expertise and an understanding of the process. And so that led us to the intention to do peer review, meaning that we’re going to assess a firm’s planning approach and process. And so that, at that point in time was kind of revolutionary, if you will, for this community. And there were some folks that were like, Whoa, wait a minute, you’re moving my cheese. Is this, what’s going to happen because of this? How are we gonna know Kate knows how to do a plan? And the sky didn’t fall.
I would stack some of the folks that came in under the peer review model up against some of the folks that submitted a plan and you’re both going to do very meaningful work for your clients. Fast forward a couple of years and when we started again, let’s look and see what’s happening in terms of how planners are getting prepared.
And most planners do a financial plan as a part of their capstone work in their CFP coursework. And so we said, let’s take a look at some of these student developed capstone plans and compare them to some of the ones that we’re seeing from people that have been practicing for a few years. And we had a subset of members, some of them were planners, some of them were members of the academic community, meaning that they were actually in the classroom preparing new professionals. And so they were comparing the two subsets.
It’s like, wait a minute, these capstone plans are really good. And maybe there’s an incentive if you’re doing it for a grade versus doing it for pay. I don’t know. I don’t want to make that judgment call. The net effect of that was, well, if Kate does a capstone plan as an individual through her coursework and she gets a certain grade, we’ll accept that transcript as evidence that she knows how to navigate that process.
So, in 2020, I would say the majority of new entrants to the association are coming through either peer reviewed, by a member of this community or having submitted their transcript from completing their capstone plan as part of their CFP coursework. And there’s still some misconceptions out there about the process of joining and completing the plan.
But it was just part of that, how do we just acknowledge that things are different in 2020 than they were in 1995 in terms of what’s available to a new entrant to this profession. And so the preparation and the understanding and the coaching and development that new people get is at a different level. And so we need to acknowledge that and accept those pathways into the association.
Kate: Yeah. Well and good on NAPFA for acknowledging that because it can be easy to say, Oh, this is how we’ve always done it. Let’s just stick with it. So good on you guys. Thank you for adjusting with that.
Geof: Thanks for the feedback along the way. I remember a couple of conversations that we might’ve had.
Kate: Yep, those took place. Definitely.
Adjusting To the Coronavirus Lockdown
Kate: So Geof, we’re talking sort of at what people are calling the, well I guess baseball doesn’t work around the world, but the first inning of baseball in terms of the coronavirus. So things are kind of starting to shut down. So one of the things I wondered is, how much do you see, you mentioned a lot of planners still like working face to face and I totally appreciate that and I know a lot of clients do.
Are you seeing chatter yet among the members on struggles of having to go virtual right now? Or again, we’re like right in the, in the height of everything changing on a minute by minute basis. And even once we get off this call, I don’t know what’s changed in the world since we’ve been talking. But are you seeing people sort of struggle to shift to a virtual model as everyone is working at home?
Geof: My contact is somewhat limited, but a lot of the firms that, and planners that I’ve spoken to over the last, few weeks, last few hours, and we have some volunteer meetings over the next couple of days. We’re going virtual this afternoon ourselves and we’re planning at least for a week, probably longer. But I think there have been some things that have happened either, natural disaster wise or just generally thinking about my lifestyle, how do I continue my business, that firms and individual planners have the capacity and the capabilities to take their businesses virtual.
Some of them may not like it. But I think everybody definitely wants to be able to do it. And it’s in times like this that being able to fall back on that capability is a good way to continue your business, but then also to really be there for your clients.
If you’re a planner and you know that, all right, we’re closing up shop in our physical location, I’m going to be working from my home office. I don’t have to worry about is it safe for me to go into the office, is it safe for my coworkers to be there. And you can really focus on being there for your clients. And I think it’s in times like this, I’m not sure how many people are worried about what’s happening in the market or that the impact on their financial plans.
But the fact that a planner doesn’t have to worry about their own infrastructure because they have the capacity to go virtually. It means they can be there when they get that phone call or that email and someone says, what’s this going to do to us longterm, they can prove that value or really cement themselves in the lives of their clients.
Kate: Yeah. Well and that’s such a good point. It is actually sort of a test for, we’re always told to do natural disaster preparedness or do a practice run if your office floods or there’s an earthquake or something. So this is kind of forcing everyone to do that.
Geof’s Favorite Tech Tool for Efficiency
Kate: So Geof, thank you so much for everything we’ve talked about. Before I let you go, as we’re talking about working virtually and leveraging technology, I always like to know what is your favorite efficiency tool for working in NAPFA. It could be virtual meetings, it could be something you use to sort of have prewritten emails. What’s your favorite tool for efficiency?
Geof: You know, I’m a big Zoom guy. And I know Zoom is like, what we’re probably like five, six years into Zoom these days, but it’s still continues to provide value and increases my ability to be efficient and effective. I think the, just the way that we can bring people together in far-flung locations and have a meaningful conversation and dialogue and drive some action, work on documents together. So for me it’s, Zoom. Ask me next week after working from home for a week, it could be something totally different.
Kate: We’re chatting on Zoom right now, so I’m right there with you. Even if we’re quarantined for the next eight weeks, I’m still going to be seeing people’s faces and smiles and not feeling so alone.
Kate: So Geof, thank you so much for your time today. All the best as you and the team work remotely and I hope the weather in Chicago is not too bad. Hopefully they’ll let us out. Go bike ride, go for a run.
Geof: Yeah, I hope so! Well, thanks so much for having me, Kate. I’ve, I’ve enjoyed it.
Kate: Thank you Geof.