How much happiness does money buy? It's a vital question for advisors working with clients, as well as for for planners themselves. Many planners find the deepest satisfaction from maximizing AUM and, as a result, their compensation.

Others want to emphasize quality-of-life issues, like a flexible schedule, or find deep satisfaction building a roster of clients who may not generate large fees but urgently need a planner's vision. Nearly 325 advisors who fit this description are members of the Garrett Planning Network.

If the wirehouses, family offices and select independent advisors are best known for pursuing the über-wealthy, Garrett is the nation's best-known organization at the low end. Satisfied Garrett planners say they get great support from other advisors in the national network and are happy delivering holistic planning to the masses (25,000 at last count) at a more affordable price.

At the network's recent annual conference in Kansas City, Mo., Sheryl Garrett, who founded the company 13 years ago, met with Financial Planning to discuss its competitive position and future potential. The conversation, and conference, were casual affairs: Garrett arrived for an interview in shorts and sandals; later, she proudly introduced her newly adopted 2-year-old daughter to all the attendees. Below is an edited version of the interview.


How do your short-term goals match your long-term vision?

I want to focus on how simple things can be - appropriate and accurate and valuable - without getting any more simple than that. So often, in our industry, everybody tries to make things complicated. Some say, "Let's look at a new formula or tool or technology or strategy," but they're designed for really high-net-worth individuals, doing highfalutin financial planning that folks like me may run into once in a decade. What about the stuff we run into every day? How can we do that more smartly, more efficiently, more simple for ourselves and our clients? What can we do to run our business, our practices, more efficiently, as individuals, and leverage the power of the group and the group sharing? Because that's one thing that this community definitely has in spades - this amazing sense of not only do we want to succeed ourselves, but we want to make sure our colleagues do, too.


The ultralow cost is clearly the value proposition for clients, but how do you define it for advisors?

I wish I knew how to better.


I suspect you do.

It's such an intangible, and I'm not good at selling intangibles. The value proposition from the members' perspective is the community. For somebody on the outside, if they've never been in, our discussion boards are incredibly vibrant when you really want to zone in on something that applies to your practice or clients and the way you serve them. Also, there's a lot of discussion in our industry about independence and how independent are you? I was speaking with a group about the degree of independence. A few were affiliated with independent broker-dealers -one was an employee, one was an independent contractor. If you're affiliated with an independent broker-dealer, depending on who they are, you have a certain degree of independence.

I said, "To me, independence is like, as a woman, going braless. You have full freedom and no support. Or you can wear an underwire bra, and you've got full support and very little freedom." So depending on what your needs are and how you want to work and who you want to work with, there's all these varieties in there. I said, "Independence, in a very literal sense, means you have no backup. You have nowhere to turn, other than your own personal network or connections that you've established." What we hope to provide is basically the fee-only, broker-dealer equivalent. You've got the community of peers. You've got folks that provide compliance and marketing and technology support.


Why do you think some advisors leave the network?

They tend to leave at the end of year two or three, if they're going to leave, or they stay forever. It takes, usually, two to five years to really ramp up and get going. Sometimes, people have one of a few discoveries. One is: I wasn't meant to be an entrepreneur; I knew I needed a community, but I don't like working alone. That's a very normal and legitimate concern.

The other major issue is running out of cash before the snowball grows large enough - if you're not feeling the traction and it's not growing as fast you want. I'm sure you've heard the phrase, once you become self-employed, you'll never go back. There's a lot of truth in that. To talk about a lifestyle practice, you have to think about how much money you need to make.


How much do they make? What is the average compensation of a Garrett advisor?

It's very similar to the averages we see in a Moss Adams study: $75,000 a year. A lot of folks working with high-net-worth individuals, managing lots of money and stuff, would look at $75,000 and sneeze. That's chump change to a lot of people. But it's a very professional wage to many people. It's definitely trailing the wirehouses, guaranteed.

Getting much more than that - say, $120,000 or $150,000 as a solo - you're either a machine and have no other life, or you're tapped out and need to leverage yourself with additional staff. If people do add that leverage, they could really ramp up the amount of money they could make and be quite competitive - still probably not in the $300,000 to $500,000 range that a high-transaction broker on Wall Street might make in a given year or something like that, but I don't think we would tend to attract those folks anyway. We're starting to see many more that have five to six planners in their firms, and they look like small law firms. I find that to be very exciting.

But we are very, very protective of the lifestyle we've created for ourselves, and also, we've very protective of our clients. We don't want to lose any of that. I've had several people that said, I could make twice as much in my old job or going to work for somebody else, but I wouldn't feel good about it. It's not the money. Our subject matter is about personal finance, but we're not in it to make the most amount of money, or we would choose to be transactionary advisors.


There's a lot of focus in the industry about maximizing your practice. Are Garrett planners maximizing their profits? Do they drop clients?

I have a bit of a visceral reaction to a fiduciary talking about dropping their unproductive clients. I've got a serious, ethical problem with those conversations. First of all, you have to do what's in the client's best interest, so if you are not the right advisor for them because you have to charge too much, or you're doing more than they need, then it's not the client's fault.

Our obligation is to figure out what it is that we do in this business, and there's a lot of people catering to high-net-worth folks with lots and lots of complexity and lots of assets, who are willing to spend lots of money on fees and costs and commissions and everything. But what are you going to do with the other 85% or so of the population? When we talk about small clients and large clients, how small is a small client? Under 5 feet, less than 100 pounds? I think it is absolutely distasteful to talk about a client by the size of their nest egg. It just bothers me. When fiduciaries start drooling over how much money they can make off a client, I really start wondering about that.

I had a lady call me up and leave a voice message on my answering machine years ago. She was almost in tears. She said, "You're the last person on the list. I know we probably don't have enough assets for you to deal with, either. If you could just call me back and let me know, at least, if you could work with us, that would be really helpful. My husband and I, we only have $435,000 in our retirement account." You could tell she was on the verge of crying. This is on my answering machine. I called her back the next morning, and I said, "Honey, I don't care if you have $4.35. I'd be more than happy to visit with you and see if I can help." She cried then for certain.


Who is the ideal Garrett planner?

We tend to attract people who are absolutely not salespeople, myself included. We may have had a little bit of sales training. We may not have had much marketing training, and if we did, it's limited. We may be good practitioners, and we may have that entrepreneurial spark, but we really repulse against selling or possibly even marketing ourselves. Because it's like, no, I'm going to be on the same side of my client's table. We had to do some shifting -recognizing that you have to thrive, or you're not going to be here to take care of your clients. So it is your obligation to be successful.


What are Garrett prospects most looking for when they seek advice?

People don't want planning - they want the effects of planning or the benefits of planning. They don't go to a planner for planning. You don't go to a doctor for a colonoscopy. You go to the doctor to make sure there's nothing wrong with you, and they might do a colonoscopy. Planning is too much like a colonoscopy for way too many people, and we need to change that. It needs to be more like a checkup visit.


Garrett formerly had a partnership with Motley Fool. If another partnership or full-fledged merger were ever to occur, with whom would it make the most sense?

I get approached, in some way, shape or form, probably weekly by an outfit that wants our advisors. They've got a mechanism to connect with the public, but they don't have any advisors. They want our kind of advisors. They want people who can work with regular, middle-income Americans; W-2 employees with children at home would be ideal for this group. I don't want to name names because it might amount to something.

I know there are a lot of outfits out there, but as I've told our members, there are so few people or outfits that I believe that we are philosophically aligned with that I don't know who we would fit with. OK, just for grins, a Vanguard, maybe a NAPFA, if I could not deal with a committee structure. TIAA-CREF maybe, AARP kinda. I do not want to be part of a publicly traded company, period. The shareholder is the boss. We can't answer to the shareholder. We have to answer to our client. So no publicly traded company is going to be our option.

It would have to be a private group, or some amazing benefactor who thought what we were doing was absolutely amazing and just decided to plunk down some major human talent and money to allow us to really get to the next level. At the same time, we have this major philosophical challenge of: Are we ever going to find someone? It's like someone who can date forever but never find the right mate because there may not be one. Nonetheless, if we don't do anything really differently and just keep on keeping on, is that enough? Is that going to keep us relevant in the future? The general consensus is more people and more talent leads to more resources, energy and talent we can share. We can barely even touch the population needs if we add several hundred more planners.


Do you still want to grow to 1,500 planners?

Yeah, I do. Because I'm only 51 -I've got a long way to go.



Scott Wenger is editorial director of SourceMedia's Investment Advisor Group and editor-in-chief of Financial Planning.

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