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Investing Specialists

Lazetta Rainey Braxton: Financial Planning for 'The Rest of Us'

A leading financial advisor discusses her digital-only firm, their diverse population of clients, and how to make the advisory profession more inclusive.

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Our guest on the podcast today is financial advisor Lazetta Rainey Braxton. Lazetta is the co-founder and co-CEO of 2050 Wealth Partners, a virtual financial planning and wealth management firm geared toward serving individuals who haven't traditionally been recruited by other financial advisors because of their income, age, race, or gender. She has frequently appeared on national television shows, and she's also a member of CNBC's Digital Financial Advisory Council and a contributor to The Wall Street Journal's Experts blog. Lazetta was the recipient of Investment News' inaugural Women to Watch and Excellence in Diversity and Inclusion Awards. She also received the Association of African American Financial Advisors' Leadership Legacy Award and the Heart of Financial Planning Award from the Financial Planning Association. Lazetta received her bachelor's degree at the University of Virginia and her MBA at Wake Forest University. She's also a certified financial planner.

Background

Lazetta Rainey Braxton Bio

Rianka R. Dorsainvil

2050 Wealth Partners

CBNC Digital Financial Advisory Council

Launch of New Firm

Lazetta Braxton and Rianka Dorsainvil target young, diverse clients with ‘fully virtual’ firm,” by Jake Martin, citywireusa.com, Feb. 10, 2020.

Two Investopedia Top 100 Advisors Launch New Firm,” by Irene Huhulea, Investopedia.com, Feb. 12, 2020.

Planning During the Pandemic

Coronavirus market plunge is making people question if they should sell stocks and run to cash,” by Sharon Epperson, cnbc.com, March 23, 2020.

Steps You Can Take to Utilize the CARES Act,” by Lazetta Rainey Braxton, 2050wealthpartners.com, April 2, 2020.

Coronavirus Giving You Financial Anxiety? How to Avoid Debt During the Pandemic,” by Sharon Epperson, 2050wealthpartners.com, March 31, 2020.

Financial Pros Offer Smart Investment Tips During the Coronavirus Crisis,” by AJ Horch, cnbc.com, April 21, 2020.

Reaching a Diverse Population

It’s Past Time to Advance Black Advisors,” by Lazetta Rainey Braxton, financial-planning.com, May 26, 2020.

An Open Letter to Planners of Color,” by Rianka Dorsainvil, 2050wealthpartners.com, Sept. 17, 2019.

More Black Investors Should Look to Stock Market to Grow Their Wealth,” by Lazetta Rainey Braxton, 2050wealthpartners.com, Feb. 20, 2019.

Helping Underserved Clients Turn Income Into Wealth,” by Jane Wollman Rusoff, thinkadvisor.com, Feb. 14, 2019.

Association of African American Financial Advisors

Building a Diverse and Inclusive Culture,” webinar with Lazetta Rainey Braxton, John Mackey, and Anand Sekhar, institutional.fidelity.com, Aug. 31, 2020.

We Asked, Advisors Answered: How Can the Industry Increase Diversity?” by Bernice Napach, thinkadvisor.com, July 1, 2020.

Record growth for black and Latino CFPs; status quo for women,” by Charles Paikert, financial-planning.com, Feb. 28, 2020.

Firm Operations and Business Models

2050 Wealth Partners’ introduction process

2050 Wealth Partners’ comprehensive planning

Understanding the Sandwich Generation

Michelle Singletary: ‘You Need Diversity,’” podcast, Morningstar.com, July 1, 2020.

The Advice Profession

NAPFA: The National Association of Personal Financial Advisors

CFP.net

Financial Planning Association

XY Planning Network

YNAB: You Need a Budget

AAAA Foundation

Transcript

Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, global director of manager research for Morningstar Research Services.

Benz: Our guest on the podcast today is financial advisor Lazetta Rainey Braxton. Lazetta is the co-founder and co-CEO of 2050 Wealth Partners, a virtual financial planning and wealth management firm geared toward serving individuals who haven't traditionally been recruited by other financial advisors because of their income, age, race or gender. She has frequently appeared on national television shows, and she's also a member of CNBC's Digital Financial Advisory Council and a contributor to The Wall Street Journal's Experts blog. Lazetta was the recipient of Investment News' inaugural Women to Watch and Excellence in Diversity and Inclusion Awards. She also received the Association of African American Financial Advisors' Leadership Legacy Award and the Heart of Financial Planning Award from the Financial Planning Association. Lazetta received her bachelor's degree at the University of Virginia and her MBA at Wake Forest University. She's also a certified financial planner.

Lazetta, welcome to The Long View.

Lazetta Rainey Braxton: Christine, thank you for having me.

Benz: Well, thank you so much for being here. We want to start out by talking about your firm 2050 Wealth Partners. You launched the firm with Rianka Dorsainvil in February of this year. So, was it always the plan for your firm to be digital-only versus a traditional financial-planning setup where you'd see clients in your office?

Braxton: Yes, we designed 2050 Wealth Partners to be 100% virtual. Prior to merging our previous firms, we were virtual as well, too. The key is, access to financial planning and what better way to say that we are available to you regardless of what state you're living in, and we also noticed that living in metropolitan areas, people really have difficulties finding parking and dealing with commuting. So, we really wanted to make the client experience as easy as possible, with minimizing stress factors such as what I just mentioned--commuting, leaving work early. Now that they can meet us in any place in any state, we have satisfied that goal or met that goal of providing financial-planning access.

Ptak: Are you finding that clients are coming to you with different types of concerns these days than they were before the pandemic began?

Braxton: What we're seeing now is people really are allowing themselves to dream even more. With financial planning, we like to say, let's put everything on the table. And we can decide based on what your goals are, your values are, and the trade-offs of what should come off the table and what should be added on. And so, now there's a heightened appreciation for life. With this pandemic, people are thinking about what really matters to them. And we're seeing that they're living into their financial plan. They've been great savers, been very prudent with their finances, and now venturing a little bit more in terms of reshuffling what's important to them, whether it be buying a second home, or investing in a startup, because a lot of innovation happens during crisis and a lot of people don't think about that. But when things are tough, that's when you are most creative oftentimes.

Benz: I've been thinking about this Lazetta: Do you think that the time that we're in, because it's in a lot of ways really stressful for people, is this a good time to be making major financial decisions? On the one hand, people are thinking more expansively about their lives, which is good, but I just am wondering, what's your thought on that question?

Braxton: This is a risk-management question. With unemployment rates being high, excessively high, a lot of uncertainty regarding the markets, it is something to consider about risk mitigation. So, your question, is this the time to do certain activities? It depends. How strong is your balance sheet? Can you handle if, in fact, you have this second home and this second mortgage, and you can't do the Airbnb rental to help subsidize the cash flow that's needed to sustain that property? So, these are the questions we're absolutely asking. And we're running projections as well too, thinking about what if you can't sell that property, how much equity you have in your current home? So, this is not a one size fit all. Once again, I'm going back to our principle of saying what you desire and see if the numbers really support that, along with the economic conditions for which we don't have a crystal ball but we definitely have some indicators that we have to monitor.

Ptak: You used the term “saying what you desire.” That can be somewhat paradoxical in markets given the fact that we as human beings are sometimes prone to panicking. And what we desire is to get out of the market as soon as we possibly can amid market tumult and the like. And so, I'm curious how you work through that with your clients during the pandemic when they might have been given to panic and try to sell out of their investments? How did you talk to them about that?

Braxton: We do a tier approach when it comes to safety nets, if you will. This sounds very fundamental, rudimentary, but this is how it helps clients feel comfortable about their situation. So, we say, “OK, what do you like to have in your checking account at all times? What do you like to have in your emergency--or I like to call it a cushion--account?” When you think about cushion, you think about pillows, helping you sleep at night. There used to be this rule of thumb, or maybe it’s still out there, about three to six months or more of a six to 12 months having that just kind of strong cash holding. And then, from there, we say, “OK, what's in your brokerage account in terms of liquidity; next, knowing that that's subject to the market and then your retirement account.”

So, if our buckets are filled the way that we have decided they should be filled based on those tiers, then people are really not thinking about short-term shocks. Because if there's a short-term shock, they go to their checking account. And then, if that has to be used, then they can go to their cushion account that has to be used, and they go to their brokerage account, then if that has to be used, and you look at other variables--do you need to kind of shake loose some liquidity from assets that are not known to be as liquid, i.e., retirement accounts, because there are penalties with the exception of tax treatments like the Care Act? Do you have to do a home equity line of credit as well? So, when you have that kind of padded security and different tiers, that really helps our clients know that they can do short-term movements, but not a lot of impact to their long-term goals.

Benz: So, one thing you alluded to, Lazetta, is that one of the target clients for your firm is people who are going from being employees to entrepreneurs, but many small businesses are really struggling through this period. Have you found that the pandemic has affected people's willingness to start these businesses? And how do you counsel them on the prudence of doing so right now?

Braxton: There are statistics that say that small firms really don't make it past three years, and many absolutely fail at the five-year mark. So, these are statistics that we keep in mind. Being a small business ourselves, we have been able to identify some actions that really kind of help people know or navigate this terrain of being an entrepreneur. It is definitely not for everyone. You have to have a certain degree of risk that you're willing to take because of the failure rate that is known to be true.

What we found is when you identify, and this is within any business, a need and can articulate that clearly and removing the noise, that really helps. So, what I mean about articulating the vision? Rianka and I both are very committed to access to financial planning. When you read our blogs, when we're on podcasts, such as these, anything that we do, we're homing in the same message and we're also honing in who we serve. And I think what is really, really key that people have to realize is that you are your business. So, if you're true to yourself, and true to who you want to serve, there's a hunger that comes behind that that's almost relentless. And then, you add that to a passion, with a good team in place--those who can kind of help you navigate some of the highs and lows of operating a business, along with a business-cushion account as well when the income is not coming in. Those are some of the factors. And your network as well, too. So, we kind of really do our little checklist about how committed this particular person, do they have a stomach to be an entrepreneur? What they're offering, is there a need and do they have this niche to be able to serve it?

And then, we share with our network. So, with our clients, we do a client newsletter, we create community as well too to get the word out. Because if you're front of mind with people, when that need comes up, you come up as well, too. We help them with social media, which has been extremely important as well, have a strong website, helping with the content. So, we're helping them give birth--imagining give birth and follow along the way. And then, also, we say begin with the end in mind. This is something that I'm fortunate my husband has shared with me, I'm sharing with others as well, too, such that, if you see that that end is not the way that you want it to be or what you thought it would be, be willing to dissolve it. And sometimes it's hard for people to realize that if they gave it their best, and it's not going to work and you need to pivot, then that's what we help them do as well, too. It's time to pivot to something different.

Ptak: One of your goals with your firm is to serve individuals who have traditionally been underserved by the financial-planning community. I think you call it “financial advice for the rest of us.” What types of clients haven't been courted by traditional financial-planning and investment-management firms?

Braxton: We see a range interestingly enough. So, starting off first with kind of the mass affluent, most firms like to see clients with assets under management of $1 million or more. What we're finding is that there are a lot of individuals across different generations that have high income but haven't built the investable assets outside of their retirement accounts. So, they have significant cash flow and building those assets, so they get disqualified from a lot of the firms who want that AUM to establish a relationship. So, in our case, we're able to generate the fees that pretty much is very close to those who have the assets in the business. We just say, we're turning income into assets. That's been a wonderful niche for us. So, that's one segment.

And then, we have another segment of people who've done all the right things--fully funded their retirement accounts, had their cushion accounts, have this wonderful cash flow and assets, but really haven't been identified as a viable option in terms of treatment. So, whether it is because of their race, their gender, just haven't gotten the attention that they believe that they deserve. We recognize people's humanity. We want them to live their best life. We try to eliminate as many barriers as possible. We're very true about what our values are, what's important to us. We stand firm in those. And so, if that aligns with the client, then it's a win-win. And I would say probably 80% of our clients have never worked with a financial planner before.

The other piece of this is, is that we're anchored in financial planning and advice. We see investments as an integral part, not the starting point. So, for us, we are really anchoring in that person, that human capital, what's important to them. And then, we look at the other areas that help support that: investments, estate planning, tax planning, small-business planning, college planning, whether they want to buy another house or do a 1031 exchange. It's very holistic and it's very community, a deep-relationship oriented. We're in it for the long haul with them.

Benz: A goal for your firm is to serve diverse populations. And you've articulated some of the principles that you bring to bear on how you serve them. But can you talk about how you try to empathize with your clients and really understand them and understand their life experience, their cultural experience? Can you talk about how you try to tap into that?

Braxton: We start out with our name 2050 Wealth Partners. The Census Bureau says by the year 2050, the U.S. will be a mosaic. And we're living into that changing demographic, and we want wealth to go along with it. So, by our name, we're saying very boldly, we're living into the future, and those who want to take that journey along with us, let's do it.

The next thing is that we are women of color. And I say women of color--my heritage is African American; Rianka, my business partner, her heritage is African American and Chilean. So, our own experiences because of our race, geographic location, because of our gender exposure gives us, we believe, a competitive advantage, because there are just not many CFPs--certified financial planners--of color. The statistics for African Americans and Latina is 3.5% or less, even less for African Americans. And then, we haven't seen the statistics on women of color, who have their CFPs, which I'm sure is lower as well, too.

So, in essence, we, unfortunately, are still considered pioneers in this industry, because the numbers are so low. And when I say CFPs--certified financial planners--that number is over 80,000 and growing. So, our cultural differences, our backgrounds from who we are, how we were raised, how we were trained, and then our integration to other firms, majority firms, really makes us versatile and very nimble.

The other aspect of this--I'm a Gen Xer. Rianka is a millennial. So, we have kind of the middle generations, right? She has two generations younger: Gen Z and Gen Alpha. She just had a little one. My daughter is Gen Z. And then, obviously, our parents are baby boomers and silent generation. We have two generations ahead of us, two generations younger than us. So, well-positioned to do intergenerational wealth conversations, which we do as well, too. We're fortunate that our experiences, although very challenging for being one of few, also gives us a competitive advantage.

Ptak: What do you think could be done to promote greater diversity in the planning and financial advice fields?

Braxton: A lot of people have a difficult time combining mind and heart. It's very easy to want to compartmentalize what is business and what is personal. And I'm back to the concept of our humanity, how can you separate those two important pieces of who you are as a person, whether it is you're thinking about this as being the client, or you're thinking about this as being the professional. And then, if we're homing in on the professional and the work environment, people thrive when they feel like they're being valued and appreciated for what they bring to the table. And a lot of times people don't know how to communicate or engage because they haven't been exposed to a lot of different environments, a lot of different conversations. It's very easy to live isolated.

So, when it comes to diversity in the industry, when it's predominantly a white male industry, then it's like, what opportunities have white males or other majorities have in terms of really understanding the needs and opportunities of what is now the minority? So, what does this mean? You have to get out of your comfort zone. You got to care for the well-being of those who don't look like you, haven't been raised in the same context that you've been raised, haven't had the same issues--societal issues that are very much a forefront and have been in this country for several centuries.

The opportunity comes now to say how engaged are you willing to be? What will you expose yourself to that may make you feel uncomfortable, such that you have a better understanding and a better way of interacting and engaging with someone or a population that's different from you? There's some risks there. But since we're talking about investments, just in general, in terms of the conceptual stock market, I'm talking about the investment in human capital, we know that returns don't happen overnight. You got to analyze, you got to engage, you got to assess the risks and what you think that return is. In our mind for our firm, we say the return is keeping up with these trends that say the demographics are changing, that's reality. It's happening sooner rather than later. And if you decide to be late to this investment, just like for those who are late saving for retirement, you got to put a whole lot more in the longer that you wait. So, why not start now? Take the chances, be ahead of the curve, prepare for this next transition that we will see in this country and therefore within our profession.

Benz: What advice do you give to people of color who are considering or embarking on a career in the financial-services industry? What do you think when you reflect on your career so far, what do you think have been the main contributors to your success?

Braxton: If you are a person of color entering this field, know that we are very much aware of the opportunities for growth and expansion of diverse talent and opportunities to include this diverse talent into our firms, into this profession, and creating conditions, hospitality so that this talent feels like that you belong.

Have your community. One of the things that has been very important to me is that I engage many trade associations--the Association of African American Financial Advisors, for which I've had leadership roles in along with NAPFA, which is the fee-only, as well as FPA, the CFP board. Figure out where there are like-minded people who will support you who understand and also give you room to be you. So, keep searching till you find your group. And you can start that large with these associations. And then, you can move to mastermind groups where it's more intimate, more targeted. And keep networking, keep having the conversations and stay true to who you know and what you can provide to this profession.

Realistically speaking too, you need to have a cushion. A lot of people who are coming to this industry as career changers are not ready for the change in salary, because you're kind of starting afresh. It's not apples to apples normally in terms of compensation. For those who are freshly out of college, make sure that the firms that you're going to are really invested in your human capital, will help give you room and time and compensation to be able to study for the exams that you need to be successful in this industry. And also, are willing to compensate you such that you can have a strong foundation. This “eat what you kill,” it is not working anymore. The younger generation are straddled by student loan debt. They made some sacrifices in the human capital, and there's got to be some balance to help absorb them and have a good start as well, too. So, really be intentional with negotiations with your employers, and also read the surveys to see what you should expect in terms of range of compensation. And hopefully, you'll be able to make the transition. Because the first few years are pretty tough if you have to do it on your own.

Ptak: Let's shift gears and talk about how your firm operates. With a typical client, what percentage of your time—ballpark—do you spend on financial-planning matters and what percentage goes to investment management?

Braxton: We design our experience to be consistent among our clients. So, the first year, we lead the first four meetings as really kind of getting to know them, getting them onboarded to technology, doing a data scrub and then delivering their plan. After we've delivered the plan, then we move into implementation. And typically, that starts with investments and then risk management, tax planning. And those areas really could be switched based on the time of the year and the need that it's taken as well, too.

So, once we've kind of gone through building the plan, getting them on board and acclimated to our 2050 Wealth Partners family, delivering their plan--we call it the big picture so they can see it. And oftentimes we say, I know this feels like drinking from a fire hydrant but it's so wonderful to get everything on the table. And then, we'll take deeper dives.

So, within the first year, we've built the plan and started the implementation. And then, the subsequent ongoing years include the ongoing investment-management meetings, the tax-planning updates, the estate planning if it hadn't finished that process as well. That's an area that you don't necessarily change every year. But if you had a baby, if you got married, those types of things. So, our ongoing calendar gives us the opportunity to look at each area of the plan to see if there's any updates that's needed. And if there's something that has happened throughout the year, the clients know that they can schedule with us at any time.

So, we have a rhythm with our clients. In terms of percentages, as you can tell from how I've just explained it to you--first year, we set the foundation; the ongoing years, we intentionally have quarters for which we focus on certain areas; we meet with the client at minimum two to three times a year, thereafter the first year, more, if necessary. All done virtually.

Benz: Could you ballpark that breakdown between what percentage is financial planning and what percentage is investment management?

Braxton: It's hard to segment investments versus financial planning, because investment planning is a part of our financial-planning schedule.

Benz: True.

Braxton: I'll tell you the strategy that we take. So, when you think about investments, we have the core that we're looking at that is totally index, passive investing. And then, from there, we look at alpha from human capital. So, that's negotiations, you know, making sure that human capital, they're getting what they deserve, moving along in their career, or helping them build a business. And then, we also see real estate as a part of that portfolio as well, too. And so, when you're thinking about us for investments, because we are planning for them for the long term, and we're doing an index, passive investment approach, maybe 30%, with taking an index passive, we're keeping up with the markets, but we're not picking stock. So, if we were more active managers, obviously, there would be more time. But our active management is human capital, real estate, and then their investments as well, too, which we take a passive index approach.

Ptak: One demographic that your firm aims to serve is the so-called sandwich generation. People are simultaneously raising children while also attempting to look after aging parents. What are some of the common predicaments that people face at this life stage? And how do you help people navigate them?

Braxton: We like to call the sandwich generation also the wealth protectors. When you have generations that are older than you and younger than you who need resources for support, wealth can be a little bit elusive. So, what we try to do, and this is so important for sandwich generations and families in general is, one, put on your mask first, know what you need as a household for economic stability and security. And then, there you can know how much you have available to support the generations ahead of you or generations that's coming behind you.

For instance, the generation ahead, sometimes our clients actually pay for long-term-care insurance for their parents. Their parents can't afford it. But it's a hedge of protection for that, say, Gen X, who has a baby boomer or a silent generation parent. So, that's a strategy--we're looking at cash flow, maybe they need to make that investment in long-term care, such that if they didn't have this policy, then that could be more exposure for their cash flow and their assets as well, too.

Now, thinking about a Gen Xer from the standpoint of a generation that's younger, or two, as you're preparing for college. So, what we do is we think about college. And plus, because we don't know how college trends would change now with virtual learning, as well as this student loan bubble, instead of putting all your college savings in a 529, maybe we say, let's do 529s, let's do Roth IRAs, because you can take out those contributions. We're looking at different funding sources, such that if the child doesn't need the funds for college, these funds that were earmarked for college, there's no penalty, or they can be pivoted and used for other uses. For instance, that Roth IRA is saving for retirement, but it can be used for education, vice versa, that type of thing.

So, we are looking at ways to mitigate wealth leakage, if you will, assessing from the standpoint of strength from that sandwich generation, and then also saying what can be done and what's available to support these generations that need resources to be able to live a comfortable life. And then, we're back to trade-offs and setting boundaries as well, too. It's easy out of just your heart to want to give away the resources that is not in a measured way, in a planning way. And we say to them, if you're not stable, then this really breaks the chain across all generations.

Benz: That's such an interesting point, Lazetta. Jeff and I had a great conversation with Michelle Singletary, where she articulated some of the same points and made the point to us that in her life, in her experience, helping family members is kind of like table stakes. It's what you do if you have family members who need help. So, how do you help your clients? Like assuming your clients are financially well. How do you help them put boundaries around their own financial well-being, while simultaneously helping them deal with that need, that impulse to help family members in need?

Braxton: All of our clients go through what we call--what we like to call it--a money rhythm; we like things to be in sync. So, money rhythm, most people call it a budget or spending plan. We also like to call it a lifestyle plan. We just say put everything that you spend core--expenses, itemize those. And the core expenses could even be a Netflix service, because that's something that you're going to pay for every month. So, what are your core? And then what's your discretionary? Your food, gas--maybe not so discretionary--but you're not paying for an automatic draft out of your account every month. And once we kind of get their lifestyle plan--so let's say your core, plus your discretionary, is $10,000 a month net.

From there, we say OK, if you’re bringing in $12,000, that leaves $2,000 left to satisfy your goals. So, what are your goals? We want them to have a certain amount in your checking account, we want a certain amount in your cushion account. If you want a down payment on the home, or whatever the case may be, or you want to care for parents. So, we just say let's put all the goals on the table. And so, then we start prioritizing what the goals are. So, I'm OK with the checking account cushion, I need to get to six months. This is what I currently have. And so, we just take this $2,000 and we divvy it up. And we figure out how to divvy it up based on the goals. So, if parental support or college savings or paying for the daughter's wedding, if that's on the table, then we say OK, when is that time frame? So, if it's college, we know that's x amount of years. If it's parents, they're doing fine now, maybe we plan for when they turn 80, if that's available, or even if you want something to give to them each month to pay for this policy, long-term care. Then we bake that in and to the money that is available. And if we realize there's not a lot of money that is available for certain goals, then we're back to the trade-offs.

So, when they really see kind of the lifestyle plan, they can make the choice if they want to make any adjustments with their lifestyle plan--what they said they want to live comfortably on. And we don't do any judgments when we're looking at the lifestyle plan starting off; we just say, just get it all on the document, just itemize it all. We don't say what you should and shouldn't do. See what's left over and then you can go back and revisit that. But I anchor everything in their best interest first. And I help them see that they are the party--if they're stable, then everybody else wins. If they're not, everybody else loses along with them.

Benz: What are you encountering with your clients' willingness to pay for financial advice in general? We're in the midst of a period of high unemployment and economic stress, and even households that haven't experienced job loss may be looking for places to tighten their belt. So, what kind of pushback, if any, are you getting from clients or prospective clients about paying for financial advice at this juncture.

Braxton: I'm back to the “clearer you are about who you are.” And this is as a firm as well, you give people the option to see if you are the right fit for them. And if they are the right fit for you. We believe in transparency as well, too. So, on our website, we clearly say what our starter annual retainer fee is based on your household status, and if you're an entrepreneur, as a starting point. When we send the link for prospective clients to set up their initial call, they have to check a box to say that they have read our fees, read our website and noted our fees, because we believe in doing due diligence for investments, and they should do the same as well too. So, once they come to us, they have a good feel of who we are and how much we charge. So, it's a self-selection process. And if our fees don't accommodate or we feel like it's not a good fit for other reasons, then we have a network for which we suggest other colleagues, other firms that may be a better fit. So, we don't get any pushback at all on fees whatsoever. And we send our invoices that they pay so they know exactly whether it's through assets under management, because there is a component that we do AUM, above $400,000. And then everybody else is retainer, if they are retainer, they have the option. So, they know exactly what they're paying, when they're paying, how much they're paying. So that's not an issue for us.

Ptak: What was the thinking behind that fee setup?

Braxton: The thinking behind that the fee setup, arrangement. Yes. So the kind of standard $1 million, 1%, that's $10,000. So that's kind of the high-net-worth establishment. And we looked at the income that we're seeing for our clients, and really tested it out with the market. So, usually we're no more than about 2% to 3% of income. And when you think about income, that's pretty much a low percentage. And our clients have been OK with that amount. We've looked at leveraging, how we leverage technology in our human capital, too, to make sure that we continue to be a profitable and growing business as well. We just found a sweet spot. And we'll continue to kind of test the market and see how these rates will continue to be the same or grow accordingly. The other aspect of this is, we capture with our financial plans and our updates, the value that we've delivered. So, it's never a question of how they've gotten their money worth. Because we're very meticulous with our notes. We're very meticulous with our plans, not to overwhelm them in any way, just bullet points, and just touch points. So that they know that we're not just waiting for the market to change to have a conversation; we're actually engaged in their lives, and it's worth the money that we've saved them in terms of sleeping at night, making good decisions, and staying on track.

Benz: You mentioned that you have a network of advisors that you refer prospective clients who say this is more than I want to pay. What type of advisors would those be? Would they be hourly? What sort of business models do you like for really small investors?

Braxton: For small investors, I've done a lot of pro bono work through the Financial Planning Association for many years when I was based in Maryland. And I had the opportunity to really understand the organizations that provided free financial literacy. And then now there's this groundswell of financial coaches, as well. And then you have, just like you said, those who are financial planners who have different service models. We, as a prime example, had people on our waitlist. And when Rianka was on maternity leave, we said, we're not taking on new clients. We had people that signed up, not waitlist, on a priority list. And we kind of went through--we looked at their income level, what they were experiencing with their debt, what their objectives were based on the survey. And we said, based on this criteria, your income, your debt level, you might want to consider this accredited consumer debt counseling service, or you might want to consider a financial coach or you might want to consider this particular program that a person helps you to stabilize your debt and get going in investments and that type of thing. So, we are very in tune to the wealth spectrum. And also know that going to your question that we may not be the right fit, but when people say they're ready to live a better life based on their money and their finances. We want to be of service to them, even if we're not their financial planner.

Ptak: Shifting over to the advice profession… What advice do you give to people of color who are considering or embarking on a new career in the financial-services industry? What have been the main contributors to your success?

Braxton: Getting very involved, like I said, in trade associations, Financial Planning Association, Association of African American Financial Advisors, which is very dear to me, NAPFA as well. The CFP Board has some initiatives, and time is our currency. So, you have to be careful about how much time that you are investing in these organizations and whether you're looking at it from a service perspective or service and a volunteer perspective--the volunteers giving back to the profession. This is where you will meet like-minded people. So, for instance, NAPFA, and I’ll also add XYPN as well--they are fee-only. XYPN focuses on Generation X and Y, NAPFA has been around longer. And I'm involved in all these organizations, all of them because there are different aspects of me that actually I enjoy different engagements, whether it's a fee-only advisor or advisor firm predominantly of color or just a broad spectrum, like FPA has different models as well, too. So it's really good to have--we used to say rolodex, I don't know what we're saying now--in your contacts of people that you can say, “Hey, I see you on FPA Connect or Quad-A’s LinkedIn page, and I just have some questions to ask.” Or “Can you be a good dialogue partner?” Or “Do you know about any study groups?” It's really, really important to, like I said, find the people who you best identify with, who will invest in you, and you and them as you continue to grow in this profession. And then study, study, study, study, compensation models, study business models, figure out what licenses you need based on the segment you want to serve.

Make sure that you know your craft, inside and out, and people who are aligned in the same way that you are and how you want to provide your service as well, too. And then enough of us do not look at other industries and how they're servicing. We, within our industry, a lot of us want to mirror another financial-planning firm’s practice with no creativity and no innovation. And what we're seeing, even with technology, is that technology firms are coming in and then adapting technology to financial planning. So we, within our profession, need to really study other service models to see if there are ways that we can better deliver and communicate financial advice in a way that really engages people, because money is a difficult topic that really needs a lot of care, a lot of energy, and just good vibes, if you will, that it will be important for us to figure out creative ways to keep clients engaged in the future.

Benz: Our last question for you is for people who are just starting out in their financial lives, younger people, are there any resources that you recommend again and again, whether books or websites, any go-to resources that you find yourself recommending?

Braxton: One, a lot of people hear Mint.com, and it's free, but YNAB, You Need a Budget--it's a great tool as well to just track how you're spending--your lifestyle plan. So, there's one aspect about knowing what's coming in and what's going out. And that's even for those who, like my teenage daughter, who likes succulent plants and interior designing her room as a 15-year-old. We have to monitor and we set up her bank accounts, we've given her a budget of how much we are allotting to her for household spending for her to learn basic money management, just what's coming in, what's going out, how do you prioritize.

Another element for young money managers, and now investors, is we also, as an example, for our 15-year-old some years ago, set up a stockpile account. We gave her investment money to say, what companies do you like and what you follow. So, my daughter likes watching Netflix. So, she invested in Netflix. It’s done very well for her in these partial shares that she's invested in with her stock app. And I get to see what she wants to invest in and approve. So, I'm getting her exposed to money management; I'm getting her exposed to being a stock investor. And then I'm also getting her exposed to debt management. She is an authorized user on our credit card. When we see the statement of things that she can charge within her budget, she has to transfer money to our account for what she has spent that is outside of our allotted allowance. We're getting her exposed to money management, how to invest in stocks, stock market, and then we're also going to expose her to debt management as well too. And she's 15. We started with her when she was 8, when she started learning math and wanted to buy expensive dolls. And we're like, you may want to think about it. One doll costs $100. How many 20s are in $100 bill doing basic math, and she's like there are 20, 40, 60, 80, 100: five. And then we go to another store to say that same doll that you kind of like is not the same, but it costs a lot less. You only have to spend one 20 and still have four left.

For young investors exposure with some coaching allows them to take small risks, but they're measured with not huge loss, with some guidance to give them the financial confidence that when they're on their own, they've already had some great practice.

Benz: Lazetta, this has been such a great conversation. Jeff and I really appreciate you taking the time out of your schedule to join us today.

Braxton: It's been my pleasure. I appreciate your insightful questions and the opportunity to spread the gospel of financial planning.

Ptak: Thank you again.

Benz: Thanks for joining us on The Long View. If you liked what you heard, please subscribe to and rate The Long View from Morningstar on iTunes, Google Play, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And at @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)