When talking to new clients, many advisors get right to the numbers, walking prospects through budgets and investment strategies that will help make their retirement years golden.
Not Robert K. O'Dell. He wants to talk about families - kids, parents and grandparents - and not just who they are, but where they live and how much the clients are involved in their lives. Then he'll ask about milestones: when or whether the clients plan to retire or move, and when they expect their kids to complete college, marry or have children of their own. His mission: Understand the emotional issues that inspire individuals to see a planner in the first place.
In a numbers-dominant world, O'Dell believes talking about personal issues gets clients more engaged in the planning process. After all, he says, financial aims aren't really about numbers at all - they're about goals and dreams, often as unique as fingerprints.
O'Dell theorizes that understanding the emotional issues that motivate a client to plan will help him design a better savings and investment program. He's so certain of that, in fact, he bases much of Wheaton Wealth Partners' practice on so-called mind-mapping software that digs into emotional issues before crunching a single number.
"Most advisors focus on the investment plan because that's where their compensation comes from," he says. "We think starting with conceptual issues changes the conversation and the result."
There are many advantages to this approach for a practice like O'Dell's, which focuses on younger baby boomer and Gen X couples. Most importantly, it's inclusive. While the two age groups are different in many ways, they're similar in that partners in both age groups tend to plan together. Older generations, by contrast, often left financial planning to just one spouse.
Even so, two spouses may differ in their approach. O'Dell, who had worked for a more traditional planning firm before launching Wheaton in 2010, says he'd often watch a less numbers-oriented spouse - typically the wife - zone out during a traditional planning process. Re-engaging her was sometimes impossible.
With his current approach, that's not an issue. Initial meetings are held in a room dominated by a big-screen TV, with the clients' names in the middle of the screen connected by lines to four topics - family matters, legacy preservation, investments and planning.
FILLING IN THE MAP
At the start of the meeting, O'Dell asks questions about emotional and lifestyle issues. If clients have already completed questionnaires, Wheaton's planners may have filled in some of the blanks, such as children's names and ages and whether the couple has living parents or siblings that they want included in their plan. If not, as the clients answer questions, the planners type in the answers, filling in the chart on the big screen in real time.
In addition to family dynamics, O'Dell asks who might be on a couple's health care team if either spouse - or their parents or children - becomes ill. This brings up a range of practical issues, he says - whether the couple needs to execute financial powers of attorney or health care directives, or unique planning issues that might arise if a child is physically or emotionally disabled.
O'Dell also asks about personal milestones - weddings, retirements, babies, moves. It's not unusual for spouses to be surprised by each other's answers, particularly when discussing the timing of a milestone, O'Dell says. It's only after the conceptual issues that they move on to practical matters, such as a budget, Social Security and retirement income expectations, as well as an investment plan.
O'Dell says the mind-mapping approach offers a very practical advantage: It causes clients to sit up and take notice. "This is very visual," he says. "We wanted to create an 'Oh, wow' experience."
He and co-founder John Dragstrem launched the company in a competitive planning market without a single client; Dragstrem had been a chief technology officer at his previous firm, and O'Dell and a third founding partner, Heather Coulter, faced a two-year bar on soliciting their prior firm's clients. As a result, the group had to "beat the bushes" to find work, O'Dell says.
The partners zeroed in on targeted demographic groups to design their firm around, and did a great deal of research. They discovered that boomers and Generation X-ers were likely to view planning as a holistic process with a host of issues and a team of professionals - accountants, lawyers and insurance agents, as well as planners.
The firm purchased the mind-mapping software to encourage this approach. It allows them to attach related documents like tax returns, insurance policies and wills.
By wrapping in all the elements of a couple's financial life, the approach allows clients to leave the meeting with a neatly organized portfolio, leaving little chance that an oversight will land a couple in a tight spot during a medical or financial emergency.
O'Dell believes that focusing clients on broad goals can help them better handle market upsets, like the 2008 meltdown. In fact, the final step in Wheaton's process generates a five-page investment policy statement that spells out specific client goals, the time it might take to attain them and the types of investments to be used to fund each segment of their plan.
If clients have Wheaton manage their assets, Wheaton will determine the right asset allocations and rebalance when necessary. But the actual investment selections will be farmed out to a group of prescreened portfolio managers who specialize in different market segments, from stocks and bonds to alternatives, such as commodities and real estate. Because the core of most portfolios is invested in low-cost ETFs, this approach doesn't cost clients much more than if Wheaton had invested assets directly, O'Dell says. Typically, a client with $1 million in assets would pay between 1% and 1.5% of assets each year; a client with $8 million invested pays between 0.8% and 0.9% of assets.
Wheaton has about 75 clients and two offices - the original base in Wheaton, Ill., and a second office where O'Dell works, in Naples, Fla. Wheaton was created to be a lifelong partner for clients in need of help making economic decisions, O'Dell says, so the planning firm needed offices where their clients live when working, as well as where they live after they retire. "In this part of the Midwest, people complete their careers and retire to Naples, for better weather and a more tax-friendly environment," O'Dell says.
He adds that he's perfectly happy designing a plan his clients can use as a guide to investing themselves. Although Wheaton Wealth Partners has about $130 million in AUM, the planners also provide their services for a flat fee that can range from $3,000 to $15,000.
"If somebody just wants investment management, we're less interested," O'Dell says. "We use the term 'wealth partners' in our name because we see ourselves as part of a team."
Kathy Kristof, a financial writer in Los Angeles, contributes to Kiplinger's and CBS MoneyWatch.
Robert K. O'dell
Wheaton Wealth Partners
Wheaton, Ill., and Naples, Fla.
Credentials: B.A., Wheaton College, Wheaton, Ill.; CFP
Experience: Co-founder, Wheaton Wealth Partners, 2010; formerly a financial planner with LVM Capital Management
AUM: $129.8 million
How I see it: "Starting with the conceptual issues helps put the numbers in context."