In an industry stricken by plummeting fees and declining assets under management, Stepp & Rothwell's assets may be down, but their client base and revenue are up. The firm's assets under management declined from a high of $393 million at the end of 2007 to approximately $300 million today, but at the same time, says co-founder Kathy Stepp, gross income edged higher from $2.1 million in 2007 to $2.3 million in 2008. Even amidst tumbling markets, this Overland Park, Kan., practice continues to attract 10 to12 new high net worth clients a year.

What makes the firm so attractive to clients, Stepp says, is the attention that she and Howard Rothwell, her husband and partner—who merged his practice with hers in 1998—lavish on their 169 clients. They proffer a level of service more typical of a family office than a planning firm.

Around the Clock

The firm's nine advisors are available for calls 24/7 and constantly reevaluate their clients' estate plans, tax positions, benefits and insurance coverage. The three principals spend a significant amount of time doing family vision work with their clients. This work includes everything from estate and philanthropic planning to, as Stepp laughs, "talking the adult son of one of my clients into paying back a loan to his parents."

This intimate level of attention is enabled by a client-to-advisor ratio of 18 to one, compared with the industry average of 74 to one, according to a Moss Adams study. "Because of our advisor-to-client ratio, we know our clients and their finances intimately," Stepp says. "And because of that background, our response time to client issues is rapid. They know we have their back."

Planners in the firm are expected to socialize with clients with no business agenda. Stepp beams that one client recently invited her to a Coldplay concert. New employees coming to Stepp & Rothwell from outside firms marvel at the depth of the relationships.

Stepp is extremely picky about whom she hires and how those employees relate to clients. All advisors are CFP certificants save Rothwell, who sports a Wharton MBA, and Stepp and Ken Eaton, the firm's third principal, are CPAs. Before joining the firm, applicants undergo an intense multi-interview process. Stepp looks for a very specific type of employee that she labels "old soul: hardworking, salt of the earth, outgoing. In addition," she says, "they must be very, very sharp."

Composite Fees

How can an advisory firm sustain such a level of service with so few clients? Stepp & Pothwell does it with a unique two-part fee structure. Fees start at an annual minimum of $10,000 and are based on two factors. First, clients pay a percentage of aum: 75 basis points on the first $1 million under management, 50 basis points on the second million and 40 additional basis points on all assets over $2 million. (according to the moss adams study, the average industry fee on $1 million under management is 1% per year.)

The second factor is an annual retainer based on earnings. In clients' first year with the firm, the retainer is 2% of their pretax earned income (salaries, bonuses and commissions). This drops to 1% in their second year and .5% after that. For example, a client with $1 million in assets and annual compensation of $500,000 would pay a first-year AUM fee of $7,500, plus an income fee of $10,000. When clients stop working, they pay only the AUM fee.