Creating an Inclusive Practice to Help Women

Editor’s note: This article first appeared in the Q4 2021 issue of Morningstar magazine. Click here to subscribe.

As a financial advisor, Danika Waddell is on a mission: Let women know that they can handle their own finances just fine.

“I just want every woman to know that she has the ability,” Waddell says. “So many women are just really terrified of money. So, just leveling that playing field a little bit and letting women know they have the ability really drives me.”

Waddell, president and founder of Xena Financial Planning in Seattle, works with men, too, but her focus is on women in the technology industry. Many of them are executives, who have to navigate various types of compensation to maximize rewards, minimize taxes, and diversify concentrated portfolios.

Waddell, 45, didn’t enter financial planning until her late 30s. She took a hard look at what was a new industry to her and has melded it with her own philosophy. Part of her ethos revolves around inclusivity, or focusing on underserved groups, which also includes women of color and those in the LGBTQ+ community.

She also eschews charging clients a percentage of assets under management. She thinks that approach leaves behind too many people, especially those without much wealth accumulation. Instead, Waddell is part of a growing share of advisors offering flat fees for their counseling, charging by the hour.

“I really reject this whole notion of valuing our practices that way, and evaluating the client that way,” she says. “I’ve found there are a lot of people that don’t either have enough assets to manage yet, or don’t want their assets managed, yet are very happy to pay for advice.”

Waddell’s approach certainly has resonated. Since founding her firm in May 2020, she has gained 60 clients. She’s now looking for another advisor to join the practice to handle the load.

Finding Her Niche Like many advisors, Waddell found her way into financial planning after working in other industries. She majored in mathematics at Oberlin College and then took a teaching job at a private high school in Philadelphia. There, she found that she didn't like the discipline aspect of the classroom. She moved to Seattle in 2000, taking a job at a startup, which closed after six months when funding ran out, but she stayed in the city. She worked in accounting positions, working her way up to a controller position.

But something was missing. She liked math and knew from her teaching days that she liked explaining complex topics to people. That came in handy when helping her husband navigate the complex world of equity compensation when he worked at Amazon.com AMZN in the early 2000s. He hails from Great Britain, so while doing their taxes, Waddell had to school herself in the arcane nature of foreign asset ownership. She knew others in the Seattle market in the same predicament—expats working in technology—and saw an untapped market.

While working as a controller, she obtained her Certified Financial Planner designation and started working with clients in late 2014. She worked at a few firms in Seattle over the following years. At her last post, Waddell suddenly found herself sidelined for three months without pay because the firm failed to have filed the proper registration papers for her. The experience led her to look elsewhere for employment.

Yet in that search, she found that most firms in Seattle catered to high-net-worth clients, and their offerings struck her as too traditional, primarily focused on investment management. The environment of people wearing suits also felt alien. “I didn’t see any firms working with underserved communities or clients who have not yet accumulated $1 million in investable assets,” she says.

Many younger women in technology don’t have many assets to be managed but are making good salaries and are vesting in company equity. “That gave me a lot of confidence knowing that this model works, and there’s plenty of people willing to pay a fee,” she says.

Her fees are simple: She charges $3,000 to $6,000 up front, plus $750 a quarter for individuals, and $900 for couples. Fees are based on time spent, at $300 per hour.

Waddell specializes in helping women in part because she says they’re underserved when it comes to financial services, and she stresses inclusivity on her website. The name of her practice is inspired by the television show “Xena: Warrior Princess,” about a mythical female action hero. The character resonates with many women, and has a following in the LGBTQ+ community.

Getting People Comfortable Talking About Money Waddell encourages clients to be open about their finances, something she experienced at an early age. Growing up in western New York, when she was about 10, her dad had her write checks (he signed them) and balance the checkbook.

“It made me feel engaged in the household finances,” she says. “I could see what the balances were. It wasn’t a secret.”

As part of her practice, she draws on her own emotional experience with money and asks clients about their first money memory. Waddell’s was from when she was about 5, when her parents got divorced. While the separation was amicable, it left her mother reliant on friends and family, because she had been a stay-at-home mom, and that left an impression on Waddell. “I don’t think it’s OK for anybody in any relationship, regardless of what your gender is, to be totally reliant on another person for income,” she says.

These conversations help put clients at ease talking about money. “I have a real strong desire for all of us being more comfortable with talking about what’s going on with our finances, such as salary, budgeting, and cash flow,” she says.

Today, Waddell urges women to remain independent after getting married and, for those who are pregnant, to stay in the workforce, at minimum part-time—reminding them that things might be different in 10 years. “You’re making an investment in yourself, in your future career, because you don’t know if you’re going to stay married to this person,” she says.

With equity compensation, she helps clients with taxes and diversification. She notes how many people in the tech world have huge stock concentrations, with sometimes 80% to 90% of their portfolio in a single stock. There are multiple types of equity comp, and they all have different tax implications, such as the alternative minimum tax, which is triggered from exercising incentive stock options. Initial public offerings have their own complexities.

She guides clients into low-cost, plain-vanilla index funds, both mutual funds and exchange-traded funds, such as those offered by Vanguard. She uses Morningstar Workstation for research and analysis of funds.

To Waddell, it’s about having a path to financial success, not accumulating assets for her practice: “Your value to me as a client and my value to you as a planner is totally irrespective of how much money you have in your investment account.”

Profile Danika Waddell, CFP, founder of Xena Financial Planning. How she caught our eye: Inclusive advisor who is building a flat-fee practice focusing on women in tech. Career path: Graduated from Oberlin College with a bachelor's degree in mathematics and a minor in psychology. She first taught math in a private high school, then found her way into the accounting field, rising to the level of corporate controller. Unsatisfied with the work, she focused on a skill acquired in her marriage: handling the equity compensation of her husband, an Amazon.com employee at the time, and filing their taxes. She went back to school to become a Certified Financial Planner, which she achieved in 2014. She worked at various firms before striking out on her own in 2020. Favorite funds: Vanguard mutual funds and ETFs. Personal: Lives and works in Seattle. Married, with two daughters, ages 12 and 14. Serves on the western board for academic outreach for the National Association of Personal Financial Advisors. Likes cross-country skiing, alpine skiing, and hiking.

Charles Keenan is a freelance financial journalist.

Photography by Sara Montour Lewis.