Real financial planning requires a comprehensive focus on client needs, according to Kathy Stepp, principal and founder of Stepp & Rothwell, Inc. a financial advisory firm in Overland Park, Kan. To make that happen, Stepp says, her firm uses “very high ratio of us versus them.” In fact, she says, the firm has a staff-to-client ratio that is “probably unheard of in the industry.”
Stepp & Rothwell has 15 employees and 170 clients. The firm manages more than $450 million. Its staff includes six certified financial planners, each of whom head a team for every client, plus a staff of assistants to the planners called analysts. Each of the three analysts works with different planners on different clients.
“Almost all the clients have a team of five people working on their case all the time,” Stepp said.
The five-person team for each client includes all three principals of the firm – Stepp, her husband Howard Rothwell, and Ken Eaton -- plus the planner and an analyst. That means “there’s always somebody available,” she said, when clients need help.
“We meet with all of our clients quarterly. If we can’t see them in person it’ll be a phone meeting,” she said. But the firm also “makes an effort to go and see them once year.”
One reason for the high ratio of staff to clients is due to the firm’s commitment to spending a lot of time working with clients throughout the relationship. The firm will help adult children of a client if needed, even of those children are not officially clients themselves. In a number of cases clients have named Stepp or Rothwell as the trustee of their estate to oversee the financial futures of their children when they pass away.
While many advisors may feel comfortable with a lower staff-to-client ratio, Stepp said that the smaller number of clients means that her firm can provide a high level of individualized attention, which is vital “when what you’re selling is intangible,” she said.
“I would say that only 10 or 20% of the time is spent on investments,” Stepp said. Many consumers think of financial planning as strictly investing, she says, largely because other kinds of investment professionals have come along in recent years saying that they do planning as well. But in her view, merely providing investment advice is not financial planning.
Instead, she said, her team spends the bulk of their time discussing issues like taxes, college funding, philanthropy, estate planning and “the day-to-day stuff” like mortgages and car loans.
That big picture approach could come as a surprise to some potential clients who are more used to investment-focused planning, Step said, but almost all her firm’s new clients come in through referrals from people happy with what Stepp & Rothwell has been able to do for them.
Stepp compared the role of a financial planner to a general contractor building a house. An individual may think they can act as their own general contractor, but find it difficult to deal with all the different pieces that must come together. As a planner, she says, her job is to coordinate a lot of different parts of a client’s financial life, and work with other professionals – such as lawyers and CPAs, and even the employee benefits department at a client’s employer – to make everything work in concert.
Stepp said she has worked with clients who have received bad advice before, often from financial professionals that claim to do real financial planning but aren’t looking at enough factors, or paying enough attention to detail, to come up with the right plan. She believes it is important that all the pieces of a client’s financial picture are considered.
In fact, she says, “when anyone approaches us and thinks they would like us to maybe do one part of what we do,” the honest answer is, “we don’t know how.”
All clients are kept on a retainer and the firm does not charge based on time spent. Stepp admit, “some cases take up a lot of our time,”
however, “what we’ve learned over the years is that it all comes up as a wash.”
She said that probably about 10% of the clients have something major going on that requires a lot of financial planning help at any one time, however, this may be after years of not requiring very much work from the firm. And the work that the firm does for families can cross generations, Stepp said, with grown children of long-time clients becoming clients themselves.
“We’ve got a lot of stickiness with our clients, a very low attrition rate,” she said.
And even with the already high staff-to-client ratio, Stepp said she is looking to add more staff to further serve clients. “Our goal is to bring on more of these analyst-level people so the planners have more support,” she said. The analysts, then, “are on deck to become planners” themselves.