When accountant and attorney Leon LaBrecque told his dad about the estate and wealth planning business he was forming, the conversation wound up changing his business plan.
His dad, a retired machinist, marveled at the sort of help LaBrecque was providing to his clients. "He told me that he could really use some help like that - he just couldn't afford it," LaBrecque says. "It occurred to me that people like my dad needed financial planning a lot more than wealthy people. So I started working on a new business model."
That was more than 20 years ago. Now, LaBrecque's Troy, Mich.-based planning firm, LJPR, brags of more than 1,100 clients and $560 million in assets under management. Specializing in the sort of "working affluent" people you'd meet every day, the fee-only firm accepts clients with as little as $100,000 in liquid assets. The minimum annual fee is $1,150, or 1.15% of assets - but that is negotiable, LaBrecque says. "I give all of our advisors leeway," he says. "They can waive the minimum fee if they feel the client's assets are going to grow at an unusual rate."
The business model LaBrecque settled on works in tiers. At the minimum asset (and fee) level, clients get investment planning advice but not much else, unless they choose to buy another service Ã la carte. When client assets step up to $250,000, the firm provides additional services, such as retirement planning, benefits review and tax planning advice.
More services - such as will preparation and insurance reviews - are provided once a client's assets exceed $500,000; and at $1 million, the client gets almost everything LJPR offers. While the bulk of the firm's revenues come from a percentage of assets under management, any client can pay for additional services at an hourly rate that ranges from $250 to $350.
LaBrecque says the practice has been growing at a 20% annual pace, which he attributes partly to the firefighters and policemen who make up about one-quarter of his clients. "Firefighters are often sitting around the firehouse talking - and sometimes what they're talking about is us," he says. "They don't make a lot of money, but they are wonderful clients."
NO POACHING THREAT
Few planners are trying to poach LaBrecque's clients. "I have friends who chase doctors. But I say, 'How many times do you think your doctors are going to be called by other planners? A lot. How many times do you think somebody is calling my cops?' Our retention rate among cops and firefighters is about 99%."
Police officers, in particular, start out skeptical, LaBrecque adds. "When I have a first interview with a cop, he sits and stares at me for the first 20 minutes," he says. "Somewhere after the 20th minute, the arms uncross and he says, 'OK, let's do this.'"
But after gaining a client's trust, LaBrecque says, both he and his planning firm become part of the "brotherhood," which puts them in a relationship where everyone is watching everyone else's back. That's something LaBrecque values and returns in kind. He helps with police and fire fundraisers. And when he finds that a first responder has been lost in the line of duty, he offers to do the surviving spouse's estate and tax planning for free that year.
These instances trigger a number of onetime payments and funds, LaBrecque explains. But at such an emotional moment, trying to cope with the paperwork and the requisite changes to a financial plan can be confounding.
Meanwhile, his clients refer their friends and recommend the planning firm to their pension boards and unions. LaBrecque says it's remarkable how often a client with modest means will end up being the pivotal element in hooking a much bigger fish.
Outside of referrals, LJPR's marketing plan has a lot to do with the firm's 17 employees. He encourages community involvment and pays to help them continue their education, pledging up to $2,300 annually for classes.
Certainly, a good portion of that is spent on the sort of continuing education requirements you'd expect of an 11-planner firm rich in credentials. (LaBrecque is an attorney, CFP, CPA and CFA. His colleagues have so many professional designations - from personal financial specialist to accredited investment fiduciary - that LJPR publishes an addendum to the required disclosure to explain which professionals have which credentials, and what education each requires.)
But LaBrecque also encourages employees to enroll in classes that have nothing to do with financial planning. Take a course in dance, art, language, cooking - anything, he says. "We want our employees to spend 25% of their education budget on something that's not financial," he says. "There's more to people's lives than money."
It's the activities planners do outside of the tight constraints of their workday that allow them to connect with clients and build lasting relationships, he contends. Besides, it makes LJPR's planners happy. And LaBrecque thinks a key to running a successful business is to treat your employees with the same care and attention you'd devote to a client.
"We try to structure their compensation so that [employees] are not in a box. We want them to all be high income and moving in the direction that they want," he says. "We aim to have the same kind of retention with our employees as we have with our clients."
On a day-to-day basis, LaBrecque's clients are low-maintenance, he says. Though the firm attempts to have multiple client touches throughout the year - from holiday cards to newsletters - face-to-face meetings are usually scheduled just once a year.
Those meetings are fairly predictable, he says, because young families have many of the same issues and goals: getting their kids through college, meeting retirement objectives, dealing with small inheritances and with the everyday demands of a working life, from deciding on benefits to buying a home.
"Our advisors work in teams and are well versed in what the normal problems would be," he says. "We have a checklist of the things that we should be talking about and thinking about. It's not cookie-cutter, but it's a little like a recipe book."
Because the police and firefighters LaBrecque works with typically have generous pensions that allow them to retire far younger than the average American - often in their late 40s or early 50s - many want second careers. But they may also need to fund a gap between careers without tapping retirement assets, so LJPR advisors set up a plan for that, too. The firm also creates portfolios that invest client assets in a broad mix of stocks and bonds in both domestic and international markets - mostly through low-cost funds.
"I take a look at some of my 50-year-old cops and I realize that they are going to retire, get another job and keep growing their assets for another 20 years. They are going to see me once a year and they are going to be happy," he says. "That's an ideal client. I love that client."
Kathy Kristof, a Financial Planning contributing writer in Los Angeles, also writes for Kiplinger's and CBS MoneyWatch.
LJPR Troy, Mich.
Credentials: JD, CPA, CFA and CFP
Experience: Accountant and attorney; co-founder of LJPR and LJPR Tax Services
AUM: $560 million
How I see it: "This is a business built on trust. Being honest and doing a great job can really work out for you."