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What Makes a Planner?

Veena and Annette share their stories.

Veena A. Kutler and Annette F. Simon, 01/22/2009

This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.

We know a lot of people in the financial planning profession. Both of us have been struck by the way the profession is a magnet for people looking for second careers. We know planners who used to be civil servants, attorneys, doctors, journalists and building contractors. It's true that more colleges are now offering financial planning as a major and young people are entering the profession by going through the steps of getting the education, and then working their way up the ladder at a planning firm. The majority of the planners we know, however, are career changers who were drawn to the profession through a strong personal circumstance.

Both of us are career changers and our histories are detailed below:

Annette had very compelling and personal reasons for becoming a financial planner. Her story in her own words is below.

What makes someone want to become a financial planner? In my case you might call it a series of unfortunate events.

My father died from pancreatic and liver cancer almost 15 years ago. In the last year of his life he suffered terribly not only from the ravages of his disease but because his financial life began to unravel at the same time.

For most of his life he had been a successful businessman. He and his brother sat atop a small empire of retail stores and a variety of investments in local businesses in my Midwestern home town--a family business my grandfather built after emigrating from the Ukraine. We lived very comfortably in our small community while I was growing up; in fact I'd say my brothers and I were pretty spoiled, never wanting for anything. I saw my dad as a savvy businessman and a person of the highest integrity.

Our fortunes first began to turn when my dad and uncle decided to open a new store halfway across the country in Nevada. Until then I had been unaware that dad was unhappy with his life, but he was restless and looking for a big change. Boy, did he get it! Our family voted (four to one--I was the only one opposed) to relocate so that dad could manage the new venture. Soon after moving the family he left my mom and filed for divorce.

Not surprisingly, my mom chose to leave Nevada and headed back to the east coast where she had grown up. During her marriage mom had paid the bills, but dad really managed all other aspects of the family's finances. Every element of money management was new to her--living on a budget, buying a house on her own and making big financial decisions--and she was ill-equipped to deal with any of it. Over the years she was victimized by salesmen and brokers who won her trust and sold her inappropriate products with no regard for what she really needed.

Meanwhile my dad fell in love and remarried. While his love life was flourishing, changes in the IRS rules created massive tax liabilities for the family business. It was a financial blow dad never really recovered from, but he hid it from the rest of us even cooking the books to keep his brother in the dark. I think he believed his fortunes would turn and he would make it all right, but he got sick and ran out of time.

After his condition was diagnosed, dad began to count on a large life insurance policy he had purchased to keep the business afloat and to provide an inheritance for his wife and three adult children. The plan was in place and might have worked as dad hoped, but less than a month before his death my step-mother convinced him to transfer ownership of his life insurance policy to her. She promptly made herself the sole beneficiary and received the entire death benefit when he died.

That sounds like the end and enough to motivate me to want to learn more about financial planning, doesn't it? But there's more!

Dad's life insurance policy was what's known as key-man insurance, intended to carry his business partner--his brother--through several months during which he would find someone to fill dad's shoes and keep the business (which my dad had thrust deeply into debt) afloat. So it wasn't really dad's policy to leave to his children or his new wife, and it certainly wasn't his to transfer to a new owner. It's probably not too surprising that my uncle sued my stepmother and after months of very ugly back and forth they came to a settlement. She bought him out; over time she paid off and negotiated down the remaining debts. She owns and runs my dad's business to this day.

While all of this was happening I began taking CFP courses. I wanted to learn how to spare others from the mistakes my family had made.

Initially, I saw my stepmother as the villain who stole my inheritance. When my uncle sued her and won, he joined the bad-guy team. But as I learned more about personal finance I realized that my dad and my uncle had an agreement and dad had broken it first by changing the beneficiaries of his life insurance policy and then by giving it to his wife. So my uncle was a victim too. Even my "evil" stepmother was going to be stuck with credit card bills my dad had hidden. I could eventually see that she was doing what she needed to just to keep his reckless acts from dragging her down financially. She wanted to save her house and the assets she had built up over a lifetime. I can understand why she did what she did.PAGEBREAK

My dad blew it by failing to plan, by denying the reality of his financial limitations, and of course by lying to everyone along the way. I'm even willing to see him as a victim--a victim of unfair tax laws and even more a victim of love! He was so eager to please his second wife he didn't want to confess his failings; he wanted to give her everything.

And in the end, I don't really see myself and my brothers as victims at all. We were clearly last in line for the insurance money. We didn't receive any inheritance at the time of his death, but my dad put us all through top-notch colleges and instilled a work ethic that has allowed each of us to survive and flourish on our own. And his missteps brought me to a profession I love--that's a pretty good silver lining in my book.

Veena came to planning from a related profession. She tells the story of her transition to personal financial advisory below.

As many of our regular readers know I started my career in finance on the institutional side. I have an MBA in finance and am a CFA charter holder. I began my investment career on the staff of a large pension fund that had substantial internal asset management. I then worked for a mutual fund company, where I managed portfolios for pension funds and other institutions.

I first became interested in personal finance 15 years ago, when my husband and I went through the estate-planning process. We used one of the most respected estate attorneys in our area and during the course of the planning the attorney spent a lot of time patiently explaining the estate plan and his recommendations. Even though I had spent many of my working years in finance and investments, and had the academic background, I remember being baffled by his explanations. I had no idea what he was talking about and why he was recommending that we purchase life insurance to fund an irrevocable life insurance trust for our children's benefit.

When I asked the attorney who we should purchase insurance from, he gave us two referrals. The first agent sold fully loaded policies and the second a relatively new product--low-load whole life insurance. The attorney said he couldn't make a recommendation on which policy was best for us and said we should go with the agent we felt comfortable with. This response instead of putting me at ease, made me very uncomfortable. I was baffled by the attorney's reluctance to help us evaluate the relative merits of insurance policies and approaches. After all, he knew all the details of our family and financial situation! I really didn't want to take the sole word of the insurance salesperson who was offering the policy. I realized that I would have to do the analysis as best as I could myself and dived into the illustrations and other material offered by the agents. I finally concluded that the low-load policy was the best for us and we went with it. At the time, I recall being surprised that we had no one to help us with this planning decision and realized that there was a need and gap to be filled. PAGEBREAK

My next brush with personal financial advising was when I left the mutual fund company to join a small money manager who worked with individuals rather than institutions. During that stint I learned two things. First, that most of the clients at the firm were desperate for planning help and that many meetings were filled with questions from the clients on the topic of planning rather than investments. The second thing I learned was that no one at this small shop did serious detailed planning. There was some attempt to answer client questions, but the knowledge and tools available to a professional financial planner were missing. I soon left that firm and went into business for myself working with individuals and families. I was convinced at this juncture that clients needed both planning and asset management in order to best achieve their financial objectives. Although I had some basic planning insight, I wanted to team up with an experienced planner to offer my clients expertise in both investments and planning. I was lucky enough to meet Annette, and today in our practice we provide all our clients with planning help.

Each of us entered the personal financial advisory profession from different paths and for different reasons--but both of us felt the same personal connection and interest in the field due to unique circumstances in our lives. How did you come to the field? Do you have a special story to tell? Send us an e-mail message at dc@garnetgroup.com and share with us. We might publish your tale in an upcoming column.

Veena A. Kutler, MBA, CFA, and Annette F. Simon, MBA, CFP, are founders and principals of Garnet Group, LLC -- www.garnetgroup.com, a fee-only wealth management firm with offices in Bethesda, MD and Boston MA. Both are NAPFA Registered Financial Advisors with more than 30 years of financial planning and portfolio management experience between them. Garnet serves the needs of high net worth individuals and families in the Boston and Washington, D.C. areas

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