When the editors of Financial Planning sat down to decide which nominees deserved to win in each category in the magazine's second annual Influencer Awards, we found we had far too many worthy contenders. That was only natural: The financial planning community has consistently turned out smart individuals who strive to bring their best to clients and the profession as a whole. Of course, we could choose only one winner per category, but we felt compelled to name several notables alongside the winners given how strong some nominees were.
In the Industry Contributor of the Year category, recognizing an advisor who's made extraordinary efforts to benefit the profession during the past year, our winner is David Grant, a young planner from Illinois. We were struck by Grant's enthusiasm and his willingness to take a leadership role as the founder of the National Association of Personal Financial Planners' Genesis group, a networking and support organization for new advisors. Our notable mention in the category is Eleanor Blayney, the CFP Board's consumer advocate. Blayney is dedicated to helping families of all income levels gain access to financial advice.
The award for Practice Management, for an advisor who's gone above and beyond to introduce innovative ideas to the industry, goes to Kathleen Miller. She has developed important ways to guide people, especially women, going through divorce. Andy Loving of Just Money Advisors in Louisville, Ky., is our notable in this category for his work incorporating community impact investments in portfolios.
The prize for Technology Innovator goes to Greg Friedman, an advisor and co-developer of Junxure software. His customer relationship management system is the standard in financial planning offices throughout the country. In this category we had two notables, Joel Bruckenstein, a prolific writer from Miramar, Fla., who helps advisors understand what is possible with the right technology; and Troy Onink, CEO of Strategee in Russell, Pa. Onink, an authority on education funding, has developed web-based tools advisors can use to help clients make financial choices when it's time to plan and pay for college.
The winner in the Wealth Creator category is Todd Millay of Choate Investment Advisors. Millay's work in reducing risk in his clients' portfolios by recognizing the frequency of black swan events has earned him the notice of colleagues. Legendary advisor Harold Evensky of Evensky & Katz is our notable in the category because he has helped generations of investors build wealth through his astute investment principles. According to the advisor who nominated Evensky, "His book [Wealth Management] is by far the best resource for financial advisors and wealth managers."
Recognition for being a dynamic Legacy Builder goes to an advisor who's working to further the careers of newcomers to the profession. That's been Alan Goldfarb's goal for close to 40 years as a mentor to new generations of planners.
Finally, the Lifetime Achievement Award was given to an individual who's served as a role model during a notable career. We chose Bob Veres, who, though not an advisor himself, is a voice of the profession through his newsletter, Inside Information. (Of course, Veres' provocative thoughts are also found in Financial Planning and on financial-planning.com.) Two notables in this category: Thomas A. James, son of Raymond James founder Bob James. The younger James became CEO of the firm in 1970. Also, Dan Moisand of Moisand Fitzgerald Tamayo in Maitland, Fla. Moisand has excelled in various leadership roles at the national level, including as leader of the FPA.
The Kids Are Alright
David Grant's Genesis group is making sure newly minted fee-only planners have a network of peers with whom to share their journey.
The financial planning community is increasingly acknowledging that the profession lacks a well-laid career path for new entrants. While such a freewheeling structure may have well served the early, entrepreneurial generation of financial planners, for young people completing academic programs today, it leads to frustration.
David Grant, 29, a financial planning analyst with Vantage Financial Partners in Arlington Heights, Ill., understands this all too well. To help better explain the landscape to young planners, the winner of this year's Industry Contributor Award founded the Genesis group through the National Association of Personal Financial Advisors in 2010. "I approached NAPFA about starting a young planners' group and they said, 'Great, go ahead and start one,' " Grant says.
Already, Genesis is making an impact. In its first year, the group has attracted 85 members nationwide who keep in touch daily through an active forum on NAPFA's website, as well as groups on LinkedIn and Facebook, and via Twitter feeds.
The goal of the organization is to show young planners what's in store as they make their way. The age limit is 33 years old, three years younger than the FPA's NexGen group. "We decided to shape the group around the people just coming out of school," Grant explains. "We're all going through this journey together."
Grant himself came to financial planning circuitously. While on a work visa in 2005 from his native England to a YMCA camp in Fox Lake, Ill., Grant met his future wife and stayed in the States.
By chance, he picked up Dave Ramsey's Total Money Makeover, and liked what he read. He abandoned his plans for a teaching career, enrolled in a planning course and sat for the CFP exam. Through the NAPFA website, he found a job in 2006 as a junior paraplanner with CCP Financial Planning in Palatine, Ill., and moved to his current position last year.
He says he needed a group like Genesis during those first years. "In the training programs, I don't think there's enough education to know what's expected of you as a planner," Grant says. "It's all book knowledge, and you have to learn how to apply that in a client situation."
Because the group is national and firm budgets often don't include money for junior staff to travel to conferences, Grant initiated a series of webinars with some of the profession's veterans, including advisor Michael Kitces of Pinnacle Advisory Group; marketing expert Marie Swift; and Rick Kahler, originator of the financial therapy movement.
Earlier this year, a new Genesis member posted a request for job-hunting tips. The response was swift: Other members got her some interviews and she landed an entry-level position as a paraplanner. "Thankfully for her, there were people she could reach out to," Grant says.
Splitting Up Is Hard to Do
Kathleen Miller has built a career making sure women get the best financial outcome in divorce.
Divorce is a messy business. Few financial planners know this as well as Kathleen Miller, president of Miller Advisors in Kirkland, Wash.
She hasn't gone through the process herself - Miller has been happily married for 40 years. But for more than 20 years the financial planner has counseled thousands of divorcing partners, mostly women, on how to best protect their financial interests. Divorce mediators may be trained in helping couples compromise, but they can't always tell them the future financial implications of those compromises. That's where Miller comes in, and her trailblazing work earned her the 2011 Practice Management Award.
With her network of divorce lawyers, tax specialists, career coaches and therapists, Miller brings a financial forecast to the proceedings. "Oftentimes it's our spreadsheet that's the only spreadsheet in the whole mediation," she says. "We do the refinements going back and forth."
Miller is a pioneer in the field of divorce planning, a niche that emerged in the early 1990s. In addition to an M.B.A. and a CFP designation, she's also a certified divorce financial analyst and author of Fair Share Divorce for Women. An early client in Miller's planning practice asked her for help in working through a divorce settlement. Miller enjoyed the work and went on to do the same for others. All along she managed money for clients in her planning business, which now has $140 million in assets under management.
One mistake Miller sees women making in divorce is trying to hold on to the family home. It may have sentimental value, but it's often a bad financial move. One salary may not be enough for upkeep. And if there's a loss from selling the home later on, it will be absorbed by the woman alone. "It often makes more sense to sell the house, particularly in this market, and both take the hit," she says.
Another big change she's seen: Men are more interested in playing an equal role in parenting. Ex-husbands with equal custody may not be required to pay much in child support.
As a result, Miller counsels married women clients not to leave the workforce to care for their children. "The biggest money mistake women make is they lose their ability to make money," she says. "It's extremely difficult to regain what you lost and courts are not sympathetic to that." Yet divorce options these days can go a long way toward enabling former spouses to move on. "With this approach, you own the compromises because you understand the financial implications," she says.
The Power of Technology
Gregory Friedman's Junxure is customer relationship management software for advisors.
In the late 1990s, Greg Friedman faced a problem: He needed technology to keep up with his fast-expanding planning practice, but couldn't find a good programmer in the midst of the Bay Area's tech boom.
The need was immediate. Once his firm, Friedman & Associates, surpassed the 50-client mark, Friedman says it got harder to keep track of important facts about his clients. If he didn't do something, service would suffer. "Up to 50 clients, I remembered names, birthdays, no problem," he says. "But then things were slipping through the cracks."
A robust customer relationship management program would allow him to keep track of all of his clients and improve service. He wanted to make sure his 100th client had the same personalized experience his first client was getting. Friedman knew that the right technology would enable him to grow without having to hire additional staff.
He could have tried to manage with readily available software, even if they weren't tailored to the planning business. But Friedman wasn't satisfied with that approach. He teamed up with Ken Golding, a software developer in Texas, and got the solution that suited his needs.
Before long, other planners were asking if they could have access to Golding's software. It turned out these colleagues were stumbling over the same problem of how to automate critical functions.
"For a year, I really tried to avoid starting a software company," says Friedman, now 50, of Novato, Calif. He could fend it off for only so long. Soon Friedman and Golding founded Palmdale, Fla.-based CRM Software, with Junxure software as its centerpiece. Friedman is the firm's president and Golding its vice president. Friedman's role in the creation of Junxure - and its ensuing success - is what made him the best choice for this year's Tech Innovator Award.
Last year, CRM Software posted $4 million in revenues from 9,000 subscribers, who pay between $3,200 and $12,250 for an annual license. In 2007, Schwab Institutional recommended Junxure for its Portfolio Center suite of products.
Even beyond Junxure, Friedman continues to innovate. Recently he helped roll out Your Silver Bullet, a consortium of integrated software for the planning profession. Despite his tech success, Friedman has not abandoned planning, splitting his time between the two endeavors. His practice merged with Salient Wealth Management in 2009. The combined firm, Private Ocean, has assets under management of $750 million.
"It's been a critical part of what we do," Friedman says of his commitment to his planning clients. "I understand the customer because I am the customer."
Todd Millay of Choate Investment Advisors is on a mission to help investors avoid portfolio meltdown.
Conventional wisdom says that even when a portfolio takes a beating, investors should stay the course because markets eventually rebound. Todd Millay, managing director with Boston-based Choate Investment Advisors, thinks conventional wisdom could use a tune-up.
"Too many advisors sat down with their clients in 2008 and 2009 and thought they were heroes because their client only lost one-third of their money when the market lost 37%," he says.
When Millay, now 40, joined Choate in 2008, his goal was to revamp the investment strategies to better account for risk. His timing couldn't have been better.
When the strategy was put in place that May, the firm's balanced portfolio, which targets the risk profile of endowments with a 60%/40% split between stocks and bonds, was down 22.9%. The portfolio recovered quickly as Millay's models found opportunities to invest at the market bottom in March 2009.
For the two-year period ended in 2010, the balanced portfolio lost 5.75%. That beat the returns of major university endowments, including Harvard, Yale and Stanford. Millay's innovative approach to portfolio management earned him the Wealth Creator Award.
As Millay sees it, advisors need a greater appreciation for risk. "The standard tools that people use to assess risk are flawed," he says. "They are based on the assumption that we can represent the behavior of a market through a curve of some kind." In reality, he says, data show otherwise: Returns don't neatly distribute along a bell curve, as often seen in mathematical models. While investments have a standard deviation, that alone can't predict black swan events that can whipsaw a portfolio, as happened in 2008 and 2009.
The answer, he says, is diversification. He is a believer in alternatives to equities and bonds, including international bonds, frontier market equities, commodities and TIPS. Nonetheless, "The more broadly you invest, the more you have to anticipate that these events are going to happen," Millay says. "There's going to be an event somewhere."
Another cornerstone of his thinking is that he imposes tight allocation limits. In the balanced portfolio, for example, extremely volatile investments such as frontier market equities have a band that's between 4.3% and 7.6%. "That's because of how volatile that asset class is," Millay explains. "One percent more of something that's so radioactive can make a big difference in an overall portfolio."
Millay became drawn to investing while a consultant at McKinsey for five years. Prior to that, the Yale-trained lawyer clerked for a U.S. Court of Appeals judge.
When he chose to pursue finance in 2003, he landed at CCC Alliance in Boston, a consortium of family offices. At Choate, Millay's clients aren't as wealthy, though they still have investable assets of $5 million to $50 million. He's brought much of what he learned from the family-office environment. "You see a lot of innovation in family offices because they have a very streamlined decision-making process," he says.
Changing of the Guard
Alan Goldfarb has always appreciated that new planners need a seasoned veteran to smooth their way into the profession.
Alan Goldfarb knows the value of mentoring. When he first began in the business at the Dallas office of Financial Services Corp., his mentor was Kay Baird.
Baird, who died in 2004, was a pioneer, having graduated in the first class of CFPs from the College of Financial Planning in Denver. Goldfarb, 70, credits that relationship with smoothing his way after he made a career switch from engineering, earning his CFP designation in 1978.
Like his mentor, Goldfarb went on to serve in national leadership roles in the IAFP and then the FPA. He's currently the chair-elect of the CFP Board of Directors and former chair of the CFP Board of Professional Review.
All the while, Goldfarb, winner of this year's Legacy Builder Award, has kept an eye on the next generation of planners. "Anyone new coming into this business should have a mentor," Goldfarb says.
At his firm, Weaver Wealth Management in Dallas, where Goldfarb is chief wealth strategist, he always has a mentee. The firm also hires interns, some of whom land full-time offers. In addition, Goldfarb mentors two new planners through the FPA's Dallas-Fort Worth chapter. "I invite them to our office so that they can get exposure to how we do things," he says.
As enthusiastic as Goldfarb is about working with young planners, he acknowledges that the profession itself has not embraced mentoring. That's understandable, he says, given that the majority of firms are small operators with limited staff. It's hard for an owner to carve out time to guide a new entrant.
Life is a bit different for planners who come through academic programs. Goldfarb knows this from serving as the director of the Financial Services M.B.A. program at the University of Dallas Graduate School of Management and teaching the capstone course. "In the academic programs, we've always stressed the internship model," he says, pointing to Weaver's adoption of this thinking.
However, certificate programs, through which the vast majority of new planners are trained, are not well-suited for internships. Those students tend to be older than those enrolled in undergraduate or M.B.A. programs and are most likely already working, making internships impractical. But he hopes more students can gain access to mentoring or internships because there's a lot they can learn. "Students have a lot of unrealistic expectations," he explains.
Bob Veres has been keeping financial advisors in the know for close to three decades.
It's nearly impossible to pick up a publication devoted to advisors or attend an industry conference without catching a glimpse of the white mane and beard of Bob Veres. Not a planner himself - "I'm completely unqualified in financial planning," he insists - Veres nonetheless has been telling advisors what's most interesting about their profession for close to 30 years. This year, his vast body of published works earned him our Lifetime Achievement Award.
The 60-year-old Veres was first drawn to financial planning in 1982 when he became editor of The Financial Planner, then a newsletter published by the International Association of Financial Planners, precursor to the Financial Planning Association. The publication later morphed into Financial Planning magazine.
Trained as a journalist, Veres applied an outsider's curiosity. He asked planners what they thought were the more important developments in their profession and reported the findings. "I found the phrase, 'Please help me cure my ignorance,' to be really powerful," he says.
He soon realized the emerging profession of financial planning attracted some of the most idealistic people in finance, people who really wanted to help ordinary citizens make sense of a complex world.
The 1980s was a time of big industry changes. In 1986, when President Ronald Reagan signed the Tax Reform Act, it reduced the tax shelter benefits of limited partnerships, which many financial services firms were peddling. "The entire profession was in a transition," Veres recalls. "What more can a writer ask for than to have a story like that to report?"
Veres' greatest contributions to the profession, however, came long after he stepped down as Financial Planning's editor in 1990. He wanted to be a freelance writer, but found his articles about practice management couldn't find a home. So he published them himself as a newsletter called Inside Information. Over the years, it's become an industry must-read. Each month, Veres brings his conversations with advisors to a broader audience. He discusses not just practice management, but also portfolio construction, marketing and client services.
"I write for the smartest people in the profession," he says of his audience. "They are people who don't have time to gather this information for themselves, but they really need someone who can be their eyes and ears."
Aside from the newsletter, Veres also shares insights in research papers, like last year's 100-page-plus treatise, The Future of the Financial Advisory Business: Opportunities, Challenges and Trends in the Second Decade of the 21st Century, or in books, such as The Cutting Edge in Financial Services, and at conferences.
He continues to keep close to the trends in the profession by maintaining his network of advisors. In a fast-changing regulatory and economic environment, there is more to write about than ever, Veres says. "I fill 16 pages of my newsletter each month and I despair at what I have to leave out," he says.
Ilana Polyak is a New York journalist who's written for The New York Times, Money and Kiplinger's. She contributes regularly to Financial Planning.