• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>Building the Business 101: Looking Back on 2007

Related Content

  1. Videos
  2. Articles
  1. Be Sure to Understand Your Medicare Rules

    The Social Security Administration's Doug Nguyen and Andrew Salata clarify misconceived Medicare rules, including premiums, enrollment dates, differences from Social Security, and more.

  2. Give Your Portfolio a Checkup

    Morningstar's Christine Benz shows you how to uncover portfolio strengths and weaknesses, determine the impact of market movements on your asset mix, and more.

  3. Managing the Risk of Outliving Your Assets

    Morningstar retirement expert David Blanchett covers the pros and cons associated with the key longevity insurance products.

  4. Session 2: Midyear Portfolio Checkup and Risk Factor Review

    Director of personal finance Christine Benz will help you check your true exposures and stress-test your holdings in session 2 of Morningstar's 2012 Midyear Financial Checkup.

Building the Business 101: Looking Back on 2007

The last year held plenty of challenges and opportunities.

Veena A. Kutler and Annette F. Simon, 12/27/2007

This monthly series of articles describe 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, $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the principals managing the Garnet office in Bethesda.

It was around this time last year that we finalized the merger of Mosaic Wealth Management with Smith-Rapacz, our Boston partners. After spending a lot of time in 2006 thinking through and negotiating our merger, completing it reminded us of the feeling we had when we stepped out of the car and brought our first child into our homes for the very first time. It was a proud and at the same time daunting moment for all of us.

Looking back, on our first year as Garnet, it has been both what we expected and full of surprises at the same time.

Sharing Successes.and the Rest  
By far the biggest benefit of our merger has been the opportunity to work with additional partners who bring so much to the table. Regular readers might recall that in the Bethesda office of Garnet, Veena's background and strengths are on the investment side, with more than 25 years of experience as an institutional money manager, while Annette is a CFP who worked in the management consulting business before entering the financial advisory business 11 years ago. Our Boston partners worked together for years in a family office-style setting, providing financial planning advice to high-net-worth clients. Bringing together our diverse perspectives and skills has enriched all of us, and we've had many lively and thoughtful discussions about how to best approach various aspects of our business.

Both offices have grown in 2007, though not dramatically. In Bethesda, we said goodbye early in the year to a few clients who had never been a strong fit for our practice, and  they made the decision on their own to move on. Over the year, we brought in new clients whose needs and financial profiles were a better fit for us. Around midyear, we reset some client fees that were either below our minimum or below the rate calculated by our fee schedule, allowing us to increase revenues without adding additional clients.

Early in the year we learned that our Boston partner, Tanya, was expecting her second child in August. This was wonderful news, but presented a planning challenge we had not anticipated in our first year as Garnet. Because our two offices currently operate as separate profit centers it was up to Tanya and Lisette to negotiate the terms of Tanya's leave. They came to an agreement that resulted in "graduating" some clients who were not a fit for their practice, as well as restructuring responsibilities within their office while Tanya is out. As we did, they adjusted some client fees that had been below the calculated rate for some time, and were able to add new clients and increase their revenues in 2007.

Unexpected Challenges and Change
As the year progressed, we in the Bethesda office were becoming increasingly concerned about the scalability of our business. We have always taken great pride in providing our clients with a proactive, integrated service. We meet with every client multiple times in their first year with us, and once or twice a year thereafter depending upon the complexity of their circumstances and their desire for face time. At each meeting we present an updated financial snapshot summarizing their financial planning accomplishments to date, their probability of achieving stated goals in the future, and their investment performance since inception. Preparing the snapshot report takes considerable time--and leads to a crunch at meeting time. We often find ourselves right before the meetings re-running scenarios in MoneyGuidePro, and updating reports with client performance data and comparable indices.

We did an analysis of the work associated with meeting prep, meeting follow-up, trading, rebalancing, and client service, and we realized that much of it required advisor time. Some of the data input and report generation on the financial planning part can be done by non-advisors, but many of our functions actually needed an advisor's hands-on efforts or close oversight. It hit us that if we two as the sole advisors in the Bethesda Garnet office wanted to maintain a somewhat flexible schedule but yet enlarge the business, we needed additional professional help.

With this thought in minds we listened with cautious interest when Laura, a colleague of Veena's from a prior job approached us about joining Garnet as an advisor. We were immediately impressed with Laura's obvious competence and her calm, assured demeanor, which were backed up by her academic and work experience. We knew she would be a great addition to our team, but worried that our future growth might not come quickly enough to support another advisor's salary. After multiple discussions and meetings we came to an agreement, and Laura joined us in November as a part-time advisor in the Bethesda office. She has been joining us in client meetings and gradually taking more and more responsibility for overseeing the preparation of reports and follow-up activities. In time, we'll begin to switch off, with just two of the three advisors attending each client meeting, freeing the third advisor to attend to other matters.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.