California Advisor Takes a Slow, Deliberate Approach With Prospective Clients

Michelle Perry Higgins takes her time when she selects new clients. Higgins, a principal at California Financial Advisors, conducts as many as six meetings over the course of three to four months to see if a long-term partnership is worth it.

“I’ve got a lot of getting to know you,” she says. “We’ll date for a while before we decide together whether to pursue a marriage.”

Over the more than 25 years working as an advisor in San Ramon, California, she has perfected the onboarding process. The preparation and meeting time add up to about 15 to 20 hours of unpaid work before any money is moved. She wants prospects to dig into the details and report back. The process is partly a way for Higgins to judge their level of buy-in.

“I need to see up front that they’re committed to their finances and really getting involved in that process,” Higgins says. “I think there’s got to be that synergy of personalities where we understand each other, where we communicate well.”

In short, it’s intensive financial planning before there’s any decision made on where to invest, and how much. While this sounds like basic, good business sense for an advisor, Higgins is tapping into an underserved need in the industry. Only 14% of investors said they received comprehensive advice from their primary financial advisor, according to a 2022 study by J.D. Power, a research and consulting firm. J.D. Power’s definition of “comprehensive” included factors such as understanding client goals and needs, having a documented financial plan, and making recommendations in a client’s best interest.

Part of Higgins’ approach is defensive. She makes sure clients have roughly 10 years’ worth of income in fixed income, depending on their risk tolerance. The rest is invested in equities via no-load, low-cost mutual funds. Higgins charges annual fees of 0.8% for clients with assets of $750,000 to up to $1.5 million, 0.7% for those with $1.5 million to up to $3 million, and 0.6% for those with $3 million to $6 million. (The rate falls to 0.4% after $10 million.)

Higgins has built a large book of business over time. Her roster of 235 clients represented roughly $350 million of assets under management as of mid-May, up roughly 30% from Dec. 31, 2019. Over the past five years, her retention rate is 99%. She attributes part of that success to basics: Get back to clients promptly. She often finds that new clients come from advisors who took too much time to respond to their queries.

“We make our best effort to respond same day,” she says.

A Culture of Working

That kind of hustle is normal for Higgins, borne out of a work ethic developed from an early age. She spent part of her childhood in Los Banos, California, in the Central Valley. Her parents owned a Western store, where Higgins at times stocked and folded clothes, and a restaurant, where she worked as a cook and cashier.

Yet amid hard economic times, her parents changed course, shutting down the businesses. Her father took a job as milk and dairy inspector for the California Department of Food and Agriculture. The shift involved moving the family south to Visalia, still in the Central Valley, but roughly two hours away by car to the southeast.

The move uprooted Higgins and her siblings from their extended family living in Los Banos, but her parents used the transition as a reminder to be self-sufficient and appreciate earning money.

A self-reliance took hold. She earned enough to buy a rebuilt BMW Bavaria from her neighbor at age 17. Higgins would go on to earn academic scholarships to Saint Mary’s College of California, a private Catholic school in Moraga, situated in the Bay Area. But she still had to rely on school loans and income from working as a babysitter. She majored in business administration, and her professors encouraged her to get an internship.

As a sophomore in 1992, she landed a post with Lincoln Financial, where she met her current partners, Michael Maloon, Thomas Powers, and Mark Pitre. She worked early in the mornings, as it was the only time she had in her packed school schedule. Higgins would arrive at 6 a.m., ready to file documents, and only the partners would be there. Her superiors took notice.

After college, Higgins found a marketing position at Shell Oil. While the salary was good, she soon realized the upside for earning more income was limited compared with having her own business.

Having kept in touch with the old team, she rejoined Lincoln Financial in 1996, hired to do marketing, trading, client service, and operations work. (The practice would break away from Lincoln in 1998.) Business was booming. Pacific Bell (now AT&T) was headquartered nearby and was downsizing, presenting a windfall opportunity to take on new business of employees needing financial stewardship. Along with the partners, Higgins worked 12 to 14 hours a day, seven days a week, putting together marketing presentations. While giving presentations, she connected with attendees. “There was this great synergy,” she says. “I quickly realized I wanted to be in front of clients.”

Roughly a year after rejoining the practice, and after passing the Series 7 examination, she started working with clients directly. Referrals rolled in, mostly from the Pac Bell business.

Beyond AT&T, her roster now includes many other Fortune 500 company executives, a mix of young professionals, midcareerists, and retirees.

Ready for Everything

As she honed the way she worked with clients, she realized people keep financial information everywhere. To get people better organized, she put together The Everything Binder Book, which she later published in 2019. She gives the book to clients to help them organize information that’s needed in emergencies and family deaths. It includes primary contacts, medical history, insurance information, estate planning, retirement details, final wishes, letters to loved ones, and more. When clients have passed, the book helps heirs find everything in one place.

The binder also serves as a tool when she meets semiannually with clients, helping focus part of the meeting on recent changes and updates in their lives. Higgins also relies on Morningstar to give customers their Portfolio Snapshot, which highlights a comparison to the benchmarks, information on investments held, and valuable metrics such as the Sharpe ratio and alpha. Another report, Investment Details, provides thorough information on specific funds.

Morningstar reporting also helps Higgins and her colleagues research mutual funds. Higgins does the investing and rebalancing of portfolios. This year’s runup of growth stocks allowed her to do some trimming in client holdings. “I will prune where there is profit and build back up their defensive barriers,” she says. " I continuously discuss the safety in their portfolio, as that is the block used for their distribution needs, not the risk side.”

In the process, Higgins seizes on those teachable moments.

“Educate your clients every time you meet with them,” Higgins says. “And most importantly, take care of your clients like they are your parents.”