My foray into financial planning.
My decision to leave Spirent in 2003 and embark on a new career as a financial advisor was a culmination of a number of different factors. On any given day, one or another would be dominant, but it was an accumulation of them all that drove me to make a big change in my life. I’ve touched on these factors in other posts (Spirent, 2003 First Half, Investments Part 2) but to summarize, they included:
- Early 2003 marked the end of the two-year “handcuff” period after the Spirent acquisition so I was eligible for a bonus equal to a year’s salary.
- Though I was in charge of communications for the biggest part of a global company, I was dissatisfied and often miserable in my role, particularly over the last half of 2002 and into 2003. I was the head office corporate goon and didn’t really have a constituency or even really a “team” that was my own in an organization built around competing operating divisions. I felt a little like a wallpaper hanger at Versailles just before the French Revolution, papering over problems but not really fixing anything.
- My job required what felt like a lot of travel, typically one or two trips each month. I was away maybe 10 days each month which put an extra burden on Barb and made for less time with Allie — who was already spending most of her days in the care of others. Plus, air travel in the post-9/11 world was much less enjoyable than it had been.
- The telecom industry bubble had popped and the industry was pretty clearly in for a period of retrenchment and decline. Layoffs were looming, and though my own job seemed safe, the longer-term outlook was not pretty. Better to leave before being pushed (though if I waited to be pushed I was eligible for a good severance package).
- I had a substantial investment portfolio, probably enough to retire on but I wasn’t really sure. My experiences with several financial planners over the years had not been great and I thought I could probably do a better job than they did helping people plan their futures and make investment decisions. I thought there must be a better approach to financial planning and I could help provide it.
- Even if I could afford to retire, I didn’t want to completely do so at age 45, especially while Barb was still going to work for another 15-20 years. It felt much safer and proper to find a line of work that would bring in a modest salary, enough to cover my basic expenses and guarantee I would have plenty for true retirement at a later date.
- Life as a financial advisor could let me control my own schedule; I could work from home and be there for Allie more easily, taking a load off of Barb who was very committed to her work and career.
- I could study for a financial advisor certificate from home for the year or so it would take, which seemed like a nice transition period.
The accumulating factors and potential directions percolated in late 2002 and early 2003. I finally decided I would leave Spirent in the spring of 2003, after the previous year’s bonus was distributed. I more or less took the summer off, spent more time with Allie and went on a bunch of small and large vacation trips when I wasn’t taking Allie to school or Kumon or dance classes or lacrosse.
I enrolled in Kansas State University’s online financial planning certificate program starting in August 2003. I researched various online programs and K-State’s, ranked one of the best, seemed the right match for my needs. My schedule was very manageable, one course at a time for about 8 weeks, worth 3 credits each, covering the waterfront of basic financial planning topics. Even better, as far as I was concerned, the courses were pass/fail.
- Aug. 31, 2003 – Oct. 26, 2003, FSHS 624, Fundamentals of Financial Planning
- Nov. 2, 2003 – Jan. 4, 2004, FSHS 766, Insurance Planning for Families
- Jan. 11, 2004 – March 7, 2004, FSHS 762, Investing for the Family’s Future
- March 14, 2004 – May 9, 2004, FSHS 772, Personal Income Taxation
- May 16, 2004 – July 11, 2004, FSHS 760, Retirement Planning, Employee Benefits and the Family
- July 18, 2004 – Sept. 12, 2004, FSHS 764, Estate Planning for Families
I started the program just as Allie started 3rd grade at Glenelg Country School. I drove her to school each morning and tried to get healthy by going directly to the Columbia Gym to work out (at least 3 days per week, anyway). Not knowing my way around the workout machines and to enforce some more discipline in my workouts, I decided to enlist the help of a personal trainer.
My trainer started with a review of my health and lifestyle, helped set my schedule and routine, taught me the basics of using various exercise machines, set goals and monitored my progress. After a few months of this, it occurred to me that there was a parallel between a personal trainer and the ideas I had of a financial planner — someone to review your situation, recommend best practices, set goals and monitor progress, offering encouragement and guidance along the way.
It should have been a clue to me that I only stayed with my personal trainer through that one school year. By the time spring 2004 rolled around, I’d been working with her for about 6 months with only a minor improvement in my weight and physique. She didn’t have much new to teach me and I started to resent paying monthly for her to keep track of my lack of progress. Once Allie’s school was out for the summer and I stopped driving her there in the morning, it was much harder for me to find a routine for going to the gym. Guess what…I never did again.
I hadn’t fully absorbed that lesson by the time my financial planning classes concluded in September 2004. I passed each class and received my certificate (which I have somewhere…I’m sure). I faced two remaining hurdles before actually hanging my shingle out to become a financial planner: I had to take the national exam to become a Certified Financial Planner and find a business model or firm to work with.
I considered a variety of avenues for working as a financial planner. My first thought was to partner with my investment advisor, George Hayes. I had been working with him since 1994 and we discussed my growing interest in offering a planning function that would supplement his investment advice. Over the course of taking my classes, however, I became increasingly convinced in the merits of passive investing and grew disenchanted with the advice I was getting from George. By the time I was finished my classes, it was pretty clear to both of us that we would not be working more closely.
I investigated other financial planning firms in the area even met with a few of them, but it became clear pretty quickly that I wasn’t a good fit with them. I wasn’t prepared to work full time and was not interested in selling any specific investment, insurance or annuity products. Through my courses and my own preferences, I was interested in the “fee only” approach to financial planning, and more specifically, the hourly or flat fee approach as opposed to getting compensated for “assets under management.” Most firms operated based on assets under management because it was the most straightforward way to make an actual living as a planner.
The fee only approach had some champions, however, and one of the leading organizations was the Garrett Planning Network. This was a new organization, founded in 2000, promoting a national network of hourly, fee-based planners. It aligned well with my emerging philosophy and offered its own tools, templates, software and a marketing approach that seemed to fit my needs. I wasn’t completely eager to start a business of my own, but I decided to sign up.
One of the requirements to join the Garrett Planning Network was to attend a training and orientation session for three days in Kansas City, which I did in August, 2004. I enjoyed meeting Sheryl Garrett, her team and a group of other new planners from around the country. It seemed like a compatible group of people and ideas; I was happy to be a part of it. This Boglehead thread from 2010 offers some independent validation of the Garrett Planning Network, and they’re still cooking along in 2021.
By the time I attended the GPN training, I decided I would call my new endeavor “Planning Coach” and put together my basic marketing profile. There was no legal or market hurdle preventing me from opening up shop immediately, but I felt I should pass the Certified Financial Planner exam first.
Plus, we had embarked on building our Pfefferkorn home which consumed a lot of my time. I convinced myself that I wouldn’t start my own business until we were in our new home — which would also serve as my office and a place to meet with clients. I designed our new living room with doors, bookcase and table specifically to be a meeting place. I also started looking into the mechanics of registering a business in the state of Maryland and getting a tax identification.
I took the CFP exam in the spring of 2005 and did not pass, which is not terribly unusual but surprised and embarrassed me. One didn’t technically need a CFP to practice financial planning (a policy which later changed), but it gave me pause as I waited for our house to be completed. I thought about retaking the exam but figured I would forge ahead and see how things worked without it. I went ahead and set up Planning Coach as a business, registering it with the state and opening a bank account.
By August 2005, we had moved into the Pfefferkorn house and were more or less settled. I went ahead and filed the official SEC paperwork to register as a financial advisor. I was in business. I put Planning Coach on the Garrett Planning Network site and in a few local listings in Maryland.
Within a month or so, I had my first client, a gentleman who was divorcing and wanted advice on setting up his new financial life — how to deal with investments, housing decisions and insurance in light of alimony. After the first interview I started to realize that, while I was comfortable giving simple investment advice, I was not well-prepared to take on the wider range of life decisions that actually come with financial planning. In hindsight, it should never have been a surprise, but I honestly was not prepared for the anxiety that comes with giving someone life advice. They didn’t teach that in my classes.
I gathered all the information I needed to plug into the Garrett software, sent the gentleman away after an hour or so with a time to get together the following week for a readout. I ran the numbers and prepared a set of recommendations, but I had a hard time coming to grip with the range of questions he wanted answered. We met the following week and went through my recommendations. I would say neither he nor I were really satisfied with the results, but he did pay the fee.
That experience forced me to question whether I really wanted to build a financial planning business after all. The goalposts shifted for me in the time it took to take my courses and get the business established. I didn’t want to manage other people’s assets, and that was the main way financial planners operated at that point. I came to realize I was very uncomfortable taking on the responsibility of absorbing other people’s problems and giving advice for a fee.
I also came to feel like I was the proverbial man with a hammer — “if all you have is a hammer, everything looks like a nail.” My tool of passive investing was pretty much my answer to every financial problem. It would get mighty boring and not a little disingenuous to take people’s money to do a detailed analysis of their situation and then give them the same advice I could have given them at the outset. It seemed like a hollow way to make a living.
I valued the education I received in terms of managing my own financial life and investments. I’m still happy to offer the fundamentally free advice of a passive investment portfolio…but I began to realize that financial planning was not going to be a viable career path for me.
I admit there’s more than a little sour grapes attitude on my part. I should have realized much earlier that my personality was a bad match for building a career in the financial planning industry. I was also not going to be the one to revolutionize the world with a blazing new model — I didn’t have the credibility or fortitude for it. Heck, I couldn’t even pass the CFP test.
After considering options of teaming with other planners and looking for other paths within the financial planning world, I decided to retreat and shut down my Planning Coach business at some point in 2006. It took a while to unspool the business from the state of Maryland and the Garrett Planning Network, but by the end of the year I was done. Time to think of another path to occupy my time and generate something of an income.
As a postscript, I haven’t regretted going through the process of learning more about financial planning or even the exercise of starting and aborting Planning Coach. It was a learning experience, worth the expense of the K-State classes and joining the Garrett Planning Network. I felt bad that I might not have fully satisfied my one paying client, but I’m glad I didn’t go through similar experiences with others.
A year or so later when the 2007-2008 financial crisis began to hit, I was very glad I was not in the financial planning business. I hadn’t seen the crisis coming, had no idea how bad it would be, and could barely understand or explain it as it was occurring — though I was in no worse shape than any of the so-called experts on TV. And by the way, I can’t tell you how much it annoys me that most of those bozos, including Jim Cramer, Lou Dobbs, Maria Bartiromo and lots of others, are still on TV spouting nonsense to the masses.
I would have had no other advice during the crisis than to ride it out and hope for the best — advice I wouldn’t have paid a nickel for at the time. I’m glad I didn’t have to worry about a roster of clients through that period and I’m very glad that, in fact, the ride-it-out advice proved correct…eventually.
Related Post: WHD Planning/Live in Howard County
Related Post: Spirent
You must be logged in to post a comment.