#FA Success Ep 229: Navigating The Evolution Of Financial Planning Over 50 Years Of Building, With Alexandra Armstrong

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Wealth Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

What You’ll Learn In This Podcast Episode

Resources Featured In This Episode:

Full Transcript:

Michael: Welcome, Alexandra Armstrong, to the “Financial Advisor Success” podcast.

Alexandra: I’m delighted to be here, Michael.

Michael: I’m really looking forward to today’s podcast and the discussion of just your…I think it’s rather an incredible journey through the financial services industry. I know you were the first female CFP certificant in Washington, D.C. back in the 1970s when the CFP marks were first getting going. You were the first woman who…

Alexandra: Correction, Michael, correction. The first certificant. I was the first person to get certified as a financial planner in Washington, D.C., male or female.

Michael: Excuse me! I apologize! You were the first to bring the marks to the city altogether!

Alexandra: You got it, though, admittedly, it’s not a huge city.

Michael: And then you were the first woman to chair the IAFP which, for those who don’t know, was one of the predecessor organizations to what is now the Financial Planning Association.

Alexandra: Right.

Michael: And in an industry that, as I’m sure you know, has struggled to bring women into the industry for really over the, I guess, entire arc of your career that you’ve witnessed it. Nearly 30 years ago, about 23% of CFP certificants were women. And as of today, it is still 23% of CFP certificants who are women. It has basically not moved a percentage point up or down in literally decades.

Alexandra: Which is amazing.

Michael: I’m fascinated to learn more just about your journey of what it’s been like going through the industry as one of the early pioneering women to go down this road.

Alexandra’s Career Journey During The Early Years Of Financial Planning [00:05:01]

Alexandra: I always say I started in the right place at the right time. My first job out of college was as a secretary in the research department of a regional New York Stock Exchange firm in Washington, D.C., and I was fortunate. It was very strange, it was in the ’60s. But two of their, as we used to call them then, top producers were women. One was a widow with four children to support, and one of them was divorced with two children to support. So they both had an economic motive. But both of them were exceptionally good at bringing in clients, and keeping them, and prospering. And so I was lucky enough to be in a firm like that. So I had role models way before I even knew what a role model was.

Michael: And do you view that as one of the key components? I know there’s a lot of discussion in the industry these days of kind of the philosophy, “You can’t be it if you can’t see it”, that having clear role models, like being able to show what those successful opportunities look like, whether it’s for advisors who are women or advisors of color, becomes one of the drivers for young people coming in to see like, “Oh, that’s what it looks like. If you can be that, I want to be that too.”

Alexandra: I think definitely that’s true. I was lucky. Both women were attractive, well dressed, liked their husbands, liked their family, and liked their career. And way before, “Can you have it all?”, somehow they did have it all. But as I said, one of the drivers behind it was they needed to make money, and they found they were good to do this. And so they worked out a way to do it. It was Julia Walsh, who was the first woman on the American Stock Exchange, who was my immediate boss. And the other woman was Gail Winslow, who went on to be…she was vice-chair of the company when she retired finally. And they really liked what they did. And as you said, you wanted to be like them. So I do think if you have a role model… They built their business by giving lectures, it was back when only rich people invested. And so it was the beginning of the era when people started to say, “Oh, I guess I could invest.” It was way before retirement plans and 401(k)s, etc. But they would give lectures to the local Alumni Association of Smith College, or they would give it to foreign service officers ready to retire. And they built their businesses that way. And that’s actually how I built my own business.

Michael: I find it such a powerful thing to just recognize how much the industry, and, in particular, access to investing has changed. We sort of take it for granted today that just…the internet is a thing, online brokerage is a thing. I can buy a stock from my smartphone in a couple of seconds. Even 20 years ago, at least I could start buying stocks directly for myself on the internet. As E-Trade famously showed, it’s so easy even a baby can do it. But when you go back to the 1960s, and 1970s, you literally couldn’t get access to investing unless you found a stockbroker to sell the stuff to you. Brokers were literally the gate people to have access to markets, and their job and their career opportunity were convincing people that it’s a good idea to invest and not just own CDs in your local bank, which back then actually paid a decent rate at least. “But don’t own CDs, there are these things called stocks, and you can buy them, and they give better growth opportunities than your local bank CD, and you can only buy this through me.”

Alexandra: Exactly. And then the other part of that was that in the ’60s, when you bought stocks, mutual funds were…they were there, but there weren’t that many of them. And they weren’t as accepted as they are now. So it’s amazing what’s happened in the mutual fund industry. But when you see the records of some of the old-line companies, like Capital Research, American Funds, they started out that way, and they were forging new territory, because not that many people bought mutual funds. They would buy AT&T and IBM, etc. But then I was lucky enough to stumble into finding out about financial planning in the ’70s. And it really came out of the fact that what I ended up…I wasn’t always the secretary of the research department. That lasted about a year. And then I realized I didn’t like the academic part of this, I wanted to be talking to clients and working with them. So I was fortunate to end up working for Julia Walsh, who was the star in the firm. Because she said, and this is funny, because we hear so much about balance, but she said, “I don’t want to work this hard. I’m making good money. I have four children, I want to enjoy them.”

But anyway, back to the subject, which is clients, I was her right-hand person, and we had a secretary underneath us to do some of the detail work. And the clients would say to me, “Well, what about a will, or what about my taxes?” And I’d say, “Oh, Joe Blow can take care of your estate planning, so and so.” But then I thought to myself, “I think I want to learn more about that.” And there actually was a CFP in our area, whose name escapes me, which he’ll probably never forgive me. But anyway, I met him at a due diligence meeting for an oil and gas program. Remember those? And I met him, and I started talking to him about it. And he said, “Oh, there’s this program out of Denver, and you can sign up for it, and it’s a correspondence course.” And I said, “Okay,” I thought the worst that would happen is it might help me personally. And I was in my early 30s at the time. So I took it, and I finished it in six months. I will say it was not quite as hard as it is now to take that test. But anyway, so then I started lecturing on how you couldn’t do investing in a vacuum and that you would do better investments if you did it within the framework of the financial plan. And I think my first financial plan was three pages long.

Michael: Which you dutifully typed out by hand?

Alexandra: Exactly, exactly. In fact, one of my clients kept it. And she, believe it or not, is 96 now, and she gave me the original she had kept all those years, a few years ago, so I could see what it look like. And I said, “Oh my gosh, did I really do that then?”

Michael: Oh, I hope you’ve kept it and framed it. That’s amazing.

Alexandra: So then, because I was in the CFP course, I was invited to the first financial planning conference. And it wasn’t the first one they ever had, but it was one of the first. And it was in Philadelphia and they had Legionnaires’ disease, so they had to move it. So that takes you back. The first one was in Atlanta. And then I found this amazing group of people. I had led the sheltered life of the New York Stock Exchange where everybody was in three-piece suits, and they were all men. And I realized that ours was a very special situation. But if I ever went to a meeting in New York, or whatever, I was usually one of two women in the room. So anyway, I went to this, and it was the first IAFP conference. And again, the women were very much in the minority at the time. But I found out that there was a local chapter. And so I went back. And I found all these kindred spirits. Karen Schaefer was one of them, by the way, who is still very active in the business.

There’s always a vacuum of leadership and people to volunteer for something. So I ended up being president of the chapter. And then they were looking for women on the national board. And I ended up being on the board. But what was great was then I met financial planners from all over the country. And as you know, in the early part of the business, all ideas were coming from the South and the West. New York was still clinging to their old traditions and was slow to join the party. It was a couple of decades before they…they said they believed in financial planning, but they really didn’t. But the South and the West very much did. So I’ve met people like Bill Carter, and people like that, who were other pioneers in the business. And because they were in Dallas or Atlanta, they were quick to share their ideas. And all of us wanted financial planning to succeed, because we believed in it so strongly, that we would all help each other. We’d say, “I had a problem with this.” And it might be with the business as much as with the actual planning part of it, because many people do not realize that you’re running your own business. And that can be a challenge. I think planning and working with the clients is the easy part, the hard part is running a successful business.

Michael: I’m struck by that comment that because they were in Dallas and elsewhere, they were quick to share ideas. So I guess there was this dynamic of, we’re bringing together early financial planners across the country, and because you’re across the country, but most of us do business locally, particularly then, there was no perceived competition. We’re all in this together trying to create a movement across the country in our own respective areas.

Alexandra: That’s true, but I will say it was also there was, and still is, a lot of camaraderie locally. We had some of the big leaders come out of Washington, D.C., as you know, LeCount Davis, who is an African American, was our first African American president of the IAFP in Washington. And we all know that he went on to start the African American Association, way before anybody else was thinking of that. And so there was that camaraderie locally, and still is because we still are fighting the fight of what is “a financial planner”, and what is “a wealth manager.” And they’re often two different things. I have a stepdaughter who is in San Diego, who is a doctor, and she’s in her 40s. And we had a conversation the other evening about this, and she really didn’t know the difference, even though she had a financial plan, etc. She didn’t know that there were people there that all they did was manage money, whereas financial planners bring so much more to the table.

Michael: So I’m curious, as you started getting involved in this world of financial planners and the IAFP in the 1970s into the 1980s, you had said more than once it felt like you were finding kindred spirits, you were finding your people. What made the financial planning crowd so different than the finance crowd? What was so different that you felt like these were your people, but not with the circles you had been in before?

Alexandra: WellI remember Julia Walsh saying, even as a great role model as she is, “Why are you bothering with this other stuff? This is distracting from the core of your business.” And I said, “Because, first of all,” I said, “I think it gives me a competitive advantage if I offer more than ‘what is a stock’ and ‘what is a bond’. And I think that I could actually help people this way, rather than just…I wouldn’t say just making money for them, but that it was more rewarding to do this.” And that this whole group of people, Elissa Buie was part of this group too. She was a little younger than we were. But you wanted to help people.

And I think that’s the unifying thing of financial planners. I’m not saying stockbrokers don’t, or wealth managers don’t want to help people, I’m sure they do. But it’s hard work being a financial planner, it’s a lot more work than just doing investments. And there are a lot of things you can do. You can make mistakes more easily, there’s more liability. You have to really be convinced that this is important, and that it does bring value, and it does help people.

And as I am at the end of my career, it was very rewarding to look back and see how you helped people accomplish their goals when people are old. That’s why people have trouble retiring from this business because everybody is saying, “Thank you for bringing me, I couldn’t have ever done this by myself,” etc., etc. And who doesn’t want to hear that all the time? Of course, the market has helped, too.

Michael: So can you help paint more of a picture for us of just, what did financial planning look like when you were doing it then, when you were getting going in the business? You got your CFP marks, you found the IAFP, there’s this scattered group of other people who are doing this while the bulk of the industry is still traditional finance, traditional stockbroker. So what did financial planning look like then? What did you do for clients that made you a financial planner or meant you were doing financial planning at the time?

How Alexandra Differentiated Her Financial Planning Service From Other Investment Services [00:18:58]

Alexandra: I think the big thing is that — and this still happens to this day — people came in and said, “My grandmother died, just left me $200,000 or $1 million,” whatever it is, “And I haven’t had much experience with this, and I need some help.” Or they were getting ready, they were thinking more about retirement, they were in their 50s. And they said, “Gee, I guess we should start planning for that. And this is the money I have.” And we’d say, “No, no, we need to look at your total picture. And if you’re a couple, we need to look at it from both points of view. Because you may find in talking that you have different goals.” The famous one about retiring, one wants to retire in Phoenix, and one wants to retire in Maine, and they’ve never talked about it. But once they get into financial planning, this is the sort of thing that we can uncover. And of course, there’s always the psychology of this business, the people part of the business is fascinating. And just explaining to them how we need to know the total picture.

And I always laugh when brokers or other people talk about capturing all your assets. If you’re a financial planner, you have all their assets, because you have gathered them in a financial planning process. So they’re not going to say, “Oh, there’s million dollars over there that we haven’t told you about.” Because we have to know if we’re going to do financial planning. So how was it different then? It was simpler. It was more basic. I said the first financial planner I did was 3 pages long, but I remember going to a conference in San Francisco where I was introduced to one that was 100 pages long, it was full of numbers. And it had all these things. I was overwhelmed, I just said, “Oh, my gosh, can I do this?” But that’s the other part about financial planning business is that, as you were saying earlier, nobody does it exactly the same way, there isn’t a financial plan. There are components of the financial plan, or you do hourly financial planning, or you do it in different ways. But back then there weren’t as many ways of doing it as there are now probably.

Michael: What did creating a plan literally look like? Because I’m cognizant that just if we’re getting all the way back to the start of your career, we do not necessarily have personal computers in the office quite yet.

Alexandra: We did.

Michael: Are we actually in a world of typewriters? Did you find a change in what we were doing in plans when computers in the office started showing up and becoming a thing?

Alexandra: Well, I don’t have that historic thing, but I do know we did have computers in our office. They were big, bulky things. In fact, they were memory typewriters, I remember to this day, when somebody calls up and wants to learn about our services, we send them the A3 letter. And A3 was the part on the IBM computer that spewed out the new client letter. So there was automation, it just wasn’t nearly what it is today. And of course, it was tedious doing all the tax projections and that sort of thing. It took a lot longer. But I will say one thing I developed then, and I’m a big believer in conferences and learning from other people. You can pick up one or two ideas in the end that can make all the difference. But I think one of the secrets — if there is a secret to my success, if we call it a success — is delegation. And while I majored in math, my first few years in college, it got too abstract for me. And I’m a detail person, but it is not the part of the business that I liked.

So early on, I hired somebody who was much more numbers-oriented than I am, and who liked doing that stuff. So we have in our firm always had a financial somebody that all they do is financial planning. And our job is to present it to them to do the initial interview, to present it to the client, to explain it, to give them the ongoing advice. But we’re big in having somebody else do the detail part, who was really up on all the intricacies of this. And because it’s a tough business, I honestly don’t know how a sole practitioner can do it, because there are so many facets, and it seems like each year exponentially, it gets more complicated. Who knew we were going to have to learn about crypto, and that sort of thing, which is still sort of a foreign language to me, but I’m trying to learn it.

But it’s constantly changing. And you need more than one point of view. I’ll give you an example. I’m known as a decision-maker, I just move from one place to the other and people said, “Oh, you make decisions so quickly.” I said, “That was my business, you have to gather all the facts, and then make a decision.” And sometimes that’s wrong, but you just have to keep on, you do the best you can. And then you keep on. But if you’re only looking at it from your point of view, you’ve got to have some people around you who might have a different perspective, a different background.

Michael: I’m struck by the dynamic of just trying to delegate. I feel like that’s always been a challenge for a lot of advisors. It’s this idea of, “If I’m the advisor, either, A, isn’t my value to do all the analyzing? I’m supposed to do all that stuff. How can someone else do it because it’s my value?” Or, “How do I present it to the client and bring it to them if I’m not the one that made the plan and did the number crunching and did the analyzing?” Was that a challenge for you?

How Alexandra Delegated Within Her Firm And Their Unique Process For Sharing Financial Plans With Clients [00:24:41]

Alexandra: No, not at all. I started my business in the ‘80s, ’83. As I said right from the beginning, we had a financial planner who that’s all she did. And in fact, we at one point had a department that had three financial planners. That was when we overexpanded. But that’s another story, which I could talk about. But anyway, so the financial planner would go into the meeting with me, and we’d gather all the information. And then we’d say, “We’ll be back to you with this.” And then she would develop the plan, and then give it to me, and I would review the plan. And I would question, because I knew how to do it. I might question this thing or another thing, or say I would change the verbiage here, but supposedly one of my attributes is I can translate complex concepts into simple ones. And so sometimes they would start talking technically. And I said, “They’re not going to understand what you’re talking about. I won’t say ‘dumb it down’, but we’ve got to make it a little simpler.”

And then we would produce the plan. And we actually had a written plan, which we sent to clients. Purposely, I know some people presented in person, but we think that people need time to go through it, and to earmark, “I have a question here.” And we say that to them, I said, “Where do you have a question, or maybe we missed the mark, or maybe you’ve thought it over and you’re thinking something else. Put a marker and then we’ll sit down and talk about it.” And so then we have a follow-on conversation. And the planner, again, would be there because that’s how he or she learns. And so then we’d come. And if we had to modify the plan, then we can redo it. And also, we would send two copies, and we still do this. One to the husband and one to the wife, if it’s a married couple, because again, they may have two different reactions, or one might understand it right away, and the other might not.

And I say that follow-up interview is really…an interview, I said, “This is your meeting, I want you to ask any questions you have, we’ll go through it together.” Because I think if you present a plan to someone in person, it’s not their language, it’s our language. And they will sit there nodding, and they don’t want to pretend that they don’t understand what you’re talking about. And it is regardless of what their background is. We have a lot of lawyers as clients, they’re very good at what they do, but this is a different world to them. And you have to explain it to them that way. So, anyway, to answer your question, that’s why I delegated it to someone else, it’s really a team effort. But as we all know, crunching the numbers takes a while, and to think through what the solution to the problem is takes some time, and I’d rather somebody else took that time. And then I look at their conclusions and review it with them.

Michael: I’m fascinated with this framing, though, of always sending out a full copy of the plan in advance, and specifically sending two copies to a couple so each one can go through it. I’m just imagining the client scenario where they come in for the meeting, and one of them, you can tell they probably never even cracked the spine. And then the other one has tabs and stickies coming out of it from all the different places. You get a really clear understanding the moment they sit down at the table where the questions are going to be coming from and how they may have approached the planning process differently.

Alexandra: But the other thing, which again, is a little off the subject, but it speaks to the meeting, I’ve always been amazed and actually questioned the statistic that the widow goes to a new advisor. What is it, 80% go to a new advisor? That’s because the advisor did not do a good job to start with. You have to always make sure that you involve both people. And lots of times the spouse — and let’s make it female, and it usually is, unfortunately — doesn’t speak up because they may be very good at their…even if they’re a career woman, they might be very good at advertising or whatever their bailiwick is, or as a doctor. But this is a new language to them, and they don’t understand. You have to make sure that you turn to the spouse and say, “What do you think about that?” And I think sometimes too often, an advisor doesn’t do that. They work with the person who’s answering their questions or who is opening up and ignoring the other person.

You may know Joni Youngwirth who is one of the principals at Commonwealth. And I think it’s so funny because she went into the trust department of the bank with her husband who was an eye surgeon. And it was a woman, she was was meeting with. And that woman directed… this is a woman who is the vice president at a broker-dealer, say she directed all the questions to her husband. And in fact, she made more than her husband, and she had more assets than her husband. And that was the end of that, she told me the story afterward. She said, they walked out, and Steve, her husband said, “Oh, I thought that was really good. Didn’t you?” And she said, “No.”

Michael: “I felt like I had a real connection with that advisor.”

Alexandra: And so Joni said, “No, we are not going to that person. Are you kidding me?” And Steve hadn’t even picked up on the fact that it had been all to him and not to her.

Michael: He was having fun in the meeting.

Alexandra: Yeah, right.

Michael: So this does make me ask, though, I feel like for a lot of advisors there’s a hesitancy around sending the plan in advance to the client because, as you’ve noted, it can be kind of complex, this may not be their language, it’s like a lot of numbers and charts. And I find a lot of us seem to be concerned that they’re going to be even more confused if we give them the plan, like we give them the standalone plan and let them just peruse it and sort of run amok with it. And then they come in after they may or may not have gotten themselves even more confused by trying to follow things that they didn’t necessarily entirely follow because this is unfamiliar terrain for them. And that was our whole goal, we were going to talk it through with them. Did you find there are troubles where they got lost or made mistakes or had problems because they were going through it on their own and didn’t necessarily have the finance background? Or that’s just part of the learning process? Or do we worry more than we should about that in the first place, we just need to get over ourselves?

Alexandra: Well, I would make the case you make the plan readable and understandable. And you don’t make it too complex. That you don’t because there’s…we do little things like double space so it’s easier to read. If it’s an older client, we make it a bigger print. We minimize the charts and the numbers, we make sure that what needs to be there is there. But if they want backup, we got it back at the office, but we give them basically the executive summary version. I’m not saying it is…it’s not 50 pages, it’s more like 20 pages, and it’s the basics. And at the end of it, we have a to-do list, we say, “One, you need to do this.” And then there’s a little space and say it says, “Date done.” So you’re supposed to put in the date it’s done.

It might be as simple as, “go see your estate planning attorney”. It may be, “need to see your pension plan, more of your pension plan”, or something like that. I’m not saying it’s a primer, but I’m saying it’s a layman’s version. And if they want all the backup, we’ve got it. But we give them the basics. So it’s rare that I’ve seen somebody overwhelmed. And people seem to fall into one of two categories. One of them was to go through it page-by-page, and it’s like, “Oh, my gosh,” but that means they’re engaged. Others say they go to the back of the thing. And they say, “Okay, let’s do this, this, and this. I don’t understand this.” It’s a personality issue.

Michael: I like that, that is a good point. I’m just you get a real clear understanding of their communication style and their approach when they just come to that meeting. And yeah, either they’re going page-by-page, or they go right to the last page, but it’s going to get clear in a moment what kind of meeting you’re going to have, what kind of client you’re sitting across from.

Alexandra: Right. And that’s another question, which is, I think another secret of success, which is a luxury you sometimes can’t afford at the beginning, is being picky about your clients. I mean, in the first interview meeting we have with a prospective client, we say, “This is a two-way street. We want to make sure, we consider this going to be a lifelong relationship. That’s what financial planning is all about. And so we want to make sure you’re comfortable with us and vice versa, that it’s a good relationship because we want to do a good job for you, and we want you to pick the right person.” And not everybody is the right mix. And I think a lot of mistakes can be avoided if you are picky about your client.

Because what I say is our target market, and I know you’re big into niches, but our target market is the client who is too busy or is not interested in doing this for themselves. They might be able to do it for themselves. But that isn’t what they want to do with their time. And of course, being in Washington, D.C., we have a lot of those people, because they’re working 24/7, so they just want somebody that they can trust who they think is knowledgeable to help them, so they can delegate that part of their life to somebody else.

Michael: And so you’ve always been clear early on, “We’re here to work with delegators.”

Alexandra: Yes, exactly. Yes.

Michael: And did I hear, as you were talking about how you would frame up the plan itself that sort of executive summary and limited charts upfront, recommendations page at the back, and did you say there’s a blank next to each recommendation where they are writing in which ones they want to do and when they are going to do it by?

Alexandra: No. The heading is “Date done.” So you’ve got, “One, do this, blank, da, da, da, da, da.” Above it states that they’re supposed to write the date they did it.

Michael: So what if, as of the new plan when you’re just delivering it, they haven’t done anything yet, or the idea is, “You’re going to keep this and we’re going to look at it every time we come in and see if you’re checking things off in the date that you got them done”?

Alexandra: Right. But in some cases, it might be we make portfolio recommendations as well as combining, let’s go see, estate planning, check your insurance, umbrella insurance, that’s fairly easy to do. You would know what the 401(k) choices would be. But in some cases, we will make specific recommendations which they say, “Go ahead and do them.” In other words, investment recommendations or something like that, they would say, so we can say, “Date done? Okay, we’ll do that this afternoon.”

Michael: So help me understand the journey of just how your career got going in the early years. You said you started at the brokerage firm as a secretary in the research department, in relatively short order you ended up getting a job on Julie Walsh’s team and became her right-hand person. And then a few years later you were starting your own business. Can you talk to us a little more about what was that path? How did that journey work?

How Alexandra Went From Working As A Secretary To Starting Her Own Broker-Dealer [00:36:36]

Alexandra: Well, phase 1 was the first 10 years when I worked with Julia Walsh, because I was in the same firm with her when I was the secretary in the research department. And then the second decade, she decided to break off from the brokerage firm and start her own business, which was a New York Stock Exchange firm, which in this day and age, nobody would do it that way. But that was the way we did it.

Michael: So when you went to launch your own advisory firm, you literally launched a broker-dealer.

Alexandra: Yes, exactly.

Michael: Not joined a broker-dealer. Made the broker-dealer.

Alexandra: Yes, we launched our own. And I was the financial planning department and I had one person working, and I had just gotten my CFP. And she really didn’t know what it was all about. But she thought it sounded like it was good. So I developed it over the years, I kept going out on lectures. In the middle of it, I got a divorce, and I had been married five years and no children. So that’s when I got, I have to admit, more serious about my career because I thought, “I really like what I do. And I want to really get involved in this.” And so I was probably dedicated more to it. So anyway, then I built a department up to five people. And then another firm came along, Tucker Anthony, and bought our firm. And I found that they had two people in the financial planning department in Boston, and that was it. I had a feeling this was not going to work. And I thought, “The worst that can happen is that I start my own firm. And if it doesn’t work, then I can go to work for a brokerage firm.” That’s what I was thinking then. Though, I interviewed with Dean Witter. And the manager told me during this process, “I’ve never hired a woman.”

Michael: Just literally…

Alexandra: He admitted it. He shouldn’t have, but he did. He pretty much said, “I’m not going to start now.”

Michael: I was going to say, I’m assuming the context of that conversation was not followed by, “But I’m ready to make you the first.”

Alexandra: Exactly. Apparently I didn’t impress him enough. Anyway, so when they were bought out, I decided to start my own firm. So I took my unit of five people and started my own firm with the thought that if I didn’t do it now, I never would. I didn’t want to be in a rocking chair down the road and wish I had done it. And being single at the time, and having no dependents helps a lot, because I only had myself to support so you can take on more risk. And at that time, I didn’t know what a business plan was. I had a good friend in the financial planning group who worked for a bank. I said, “I think I need a line of credit.” And he said, “Looking at what you’re showing me, I don’t think you need it. But you should have a business plan.” I said, “What’s a business plan?”

Michael: “That sounds neat. What’s that?”

Alexandra: Then I found out it was just a road map. They have these fancy names for things. And I said, “Oh, okay, I could do that.” So I did that. And I did get a line of credit, not from him, but from another bank, which actually was a woman’s bank, but I never used it, but it was good to have as a security blanket that I knew that if I needed it, I had something to fall back on. So that started in ’83. And again, starting out I had all these friends in IAFP around the country who had started their own business around the same time, and what obstacles that they overcome. We’d be sitting around, which is what you miss at conferences now because of COVID, but you’d sit around and just say, “Oh, I hired the wrong person,” or, “I did this or did that.” But you had people to talk to to make it easier. So we were pioneers, but we didn’t realize it.

Michael: I love the framing of just what it sounds like your mindset was at the time of like, “I’m going to go try this. If it doesn’t work out, I can go back and get another job. There are still jobs. It’s not like if I do this, and it doesn’t work out, I’m unemployable. I’m going to try it, and if it works, that’s great. And if it doesn’t, I’ll go back and get a job later.”

Alexandra: I was told when I left the firm, because it wasn’t very popular when I left the firm, even though they were being bought out and they were getting money, I was told that they were betting I wasn’t going to make it, that I wouldn’t last more than a year. Talk about incentive.

Michael: Basically, you just did it to prove them wrong.

Alexandra: Exactly.

Michael: So help me understand what the business looks like as you launch. You said you actually were bringing some people with you from your financial planning department, but did you have clients of your own at this point? Were you bringing clients, or you were bringing a team and then had to go get clients? What was the actual business that you were getting, though?

The Structure Of Alexandra’s Firm When She First Launched [00:41:33]

Alexandra: Julia pretty much let me run my own division and if people wanted just investment advice, they went to her, but she understood that financial planning might be something…she was at least that open-minded. And so as I said, I would speak maybe three times a week to different groups of people, preaching the message of the investments, particularly for women. I just knew that women needed to know more than they knew. And the basic theme I used was — which I use to this day — you may not be involved now, but there’s going to come a time that you will have to be involved either due to death or divorce or just longevity. And that you don’t need to know all the answers, but you do need to know the questions to ask. And here are the basic questions to ask not about how to find a planner, but things like wills and taxes and retirement plans and that sort of thing.

So I basically had a 45-minute speech that I would give to different groups, and I just beat that drum. And it apparently resonated with enough people. But I will say, I didn’t attract all women. I also would speak…I’d modified the speech for couples, and planning for the future, and how investments made more sense and a plan. So how I built my business, while I was in Julia Walsh and Sons, was I built up my own clientele. And Julia would give me…some people would come in, and maybe they were younger, and she would move them over to my side. So I was very fortunate that basically, I was allowed to take everybody with me who wanted to come. And that was pretty much the whole thing. So that’s how it worked out.

But what was really fortunate is that I would have been in a New York Stock Exchange firm, a regional firm, I’d seen what people did and didn’t do that seemed to work and didn’t work. And then at Julia Walsh and Sons, we started from scratch. So I knew, again, the basics of starting a business and what worked and didn’t work. So it would have been good to have a business school background, but I think I got my own business school from just observing what other people did, and then trying. And of course, you make your own mistakes, but at least they say most businesses that succeed are doing what they did before. In other words, if you worked for a dry cleaner, and then you’ve set up your own dry cleaning business, you’re probably going to succeed, but if you decide you’re going to open a restaurant, you may not. It’s the same principle here. Having had the background of the financial business, I sort of…

The first thing I did was to go to a major accounting firm, and say, “I need your help.” And believe it or not, I set up my own broker-dealer then because that’s the way Julia had done it. So I thought everybody should have their own broker-dealer, having no idea of what I was encountering. Within about six years, I decided this was not a good path for me. And so I gave up my broker-dealer and affiliated with a broker-dealer firm. But I do believe in getting good help. And as I said, “I know I’m not in your bailiwick as a client, but would you consider taking me on?” And he said, “Yes.” And so that was very helpful. And I think it’s good for credibility that if you had a broker-dealer, you had a name firm behind you.

Michael: So what was the business model at the time that you were launching in the 1980s doing financial planning, I was going to say under a broker-dealer, but like with your own broker-dealer? What was the business model of it at the time?

Alexandra: Not as many people had their own broker-dealer, but it was doable. You have to have a certain amount of capital. And I was not independently wealthy, but I had built up savings of my own. So if I kept it small. But I would say most people were affiliated with a broker-dealer. At the time, I was dealing a lot with a real estate company called Winthrop, out of Boston, and they dealt mostly with the big-name firms. And they were not interested in going to the FSCs of the world, because FSC and other like companies had their hand out and they said, “If you’re going to do business with us, you have to give us money first.” And they were used to dealing with the big firms that weren’t asking for as much. It’s because it’s the world I knew. But I would say going back to financial planning, my friends in the financial planning field were involved with broker-dealers, which as I said, I soon came to the realization it was stupid to have my own, and that I should affiliate with a broker-dealer.

Michael: And the business at the time was just selling what within the brokerage environment? Are we still in real estate partnerships? Are we still selling individual stocks? Are mutual funds becoming a thing or not yet?

Alexandra: Mutual funds by this time. I started getting involved in mutual funds in the ’80s. And then we had tax shelters until the ’80s, the mid ’80s, when the tax law changed. Was it ’87 that it had changed? Something like that. So we had some tax shelter business, too. It was two-to-one, it wasn’t the four-to-one or whatever. It was the more conservative ones.

Michael: So the model essentially was, “We do comprehensive financial plans for clients.” And then ultimately, when you’re ready to implement and allocate your dollars, “We have mutual funds, we have real estate investment opportunities, we’ll help you invest your portfolio to achieve these goals that we’ve identified in the financial plan.”

Alexandra: Right. And you were free to do it elsewhere if you want to. From the very beginning. And to this day, we still charge a separate fee for the financial plan.

Michael: I was going to ask, were you charging separately for plans doing this?

Alexandra: Yes. From the very beginning. I don’t have a memory of what I charged. I don’t remember it being a huge amount. But I did charge. And we’ve always charged and said, “We want them to be two separate activities, we want to make sure that if you want to implement someplace else, you can.” The fact was 95% implemented through you because you had built up so much trust with the financial plan.

Michael: So when you started the firm, what did the business look like? You said you brought some people along from your financial planning department. So is that like you were doing the client stuff and then there were four support people, or were there other advisors as part of this?

Alexandra: I had a right-hand person who handled clients with me. In other words, they could call either one of us, then I added…I had the financial planner from the very beginning who was doing the financial plans. So I taught her how to do it. And then that was her department. We had a secretary. And we had another advisor who had his CFP and was sort of starting out. His prior career was teaching seventh grade. And I said, “If you’ve got the patience to teach, then you can be a financial planner.” And he’s still in the business today, actually, with a firm in Washington. But that was the nucleus. And over the years, when I had my own broker-dealer, I had a head of the broker-dealer, I had a due diligence guy. The overhead killed me. There were 30 people altogether. The financial planning revenue, that I had five people. John Cammack was one of my people whom you know, from T. Rowe. I had 5, and I paid them 50% of the revenue they brought in. And then I had all this overhead. And then when the tax law changed, and basically, I was earning nothing and everybody else was making money. And I thought there’s something wrong with his model.

So that’s when I collapsed it and said, “Okay, this is not working. I’m going to give up my broker-dealer and get out. I don’t need a head of the brokerage firm. I don’t need a due diligence guy. I don’t need an accountant.” And so we parted amicably. They all understood the reason for it. And we said, “We’re going to redo this whole thing. And I am going to have partners, and we’re going to share the revenue and we’re going to share the overhead.” So it was more like a law firm. It was how we reconvened it. So it was a complete reshuffling. And it really was caused by the tax law change, which also coincided, if you remember, with the crash of October of ’87. It wasn’t a good year. But you come out of it. You learn from your mistakes. And you say, “There’s a better way to do this. Let’s find it.” I’ve always had friends in the business, male and female, mostly male, who have said, “Think about it this way,” who have given me advice, some of it good, some of it bad. But I think that’s really what’s important, just listening to other people you respect and saying, “Would that work for me or not?” And take it from there. And one of the keys was trying to find a broker-dealer that was good for me. And at the time, it was FSC is who I chose, which is considerably different than it is now but fit my needs at the time.

Michael: What defined a good broker-dealer at the time? What was it that made FSC an appealing broker-dealer to affiliate with at the time then?

Why Alexandra Chose To Affiliate With FSC As Her Broker-Dealer [00:51:25]

Alexandra: Their CEO. At the same time, I had stepped down from being chairman of the IAFP. But one of my last acts was to put together the broker-dealer organization. And I said, “If we’re going to work…” Being from Washington, and I had a cousin who was head of the FCC, and given the New York Stock Exchange background, I said, “The people, the establishment doesn’t respect us, us the broker-dealer, independent broker-dealer. We’ve got to change that. And if we’re going to change that, we’ve got to be playing at the same table. So the first thing we’ve got to do is to get the broker-dealers talking to each other. And then from there, then we can go from there.” And so I convinced the IAFP that we should set up our own association within the association, which, as you know, was broken off and is now Dale Brown’s organization.

Michael: So the broker-dealer division within IAFP that became the broker-dealer division FPA that got spun off to FSI.

Alexandra: Exactly, which I don’t think was a good idea. But that’s not my opinion. I mean, that’s not my bailiwick. Anyway, so we got people sitting across the table from each other who are basically competitors, all men, all with their arms folded in front of them. And we even got a couple of broker-dealers that were owned by insurance companies. And we got a nucleus of 12 of them sitting around the table and saying… So this is ’88, around there. “Listen, if we’re going to work with the NASD, we can’t work with them fragmented, we’ve got to work as a unit.” And so it took about a year, but people started coming around, and I was chair of it the first year. And there was another guy who had his own broker-dealer, but all the rest of them were much larger organizations. But part of the reason, I’ll tell you another one, Joe Deitch was part of this group, who is now the founder of Commonwealth. And so it gained traction because people saw the logic of it, of what they could do united.

But I had an ulterior motive, which is I thought, “I’ll get to know these people and find the group that I would probably be the most comfortable with.” And at that time, Jim Wisner was the chair of FSC. And he had come out of Cigna originally. And I liked the way he handled himself and his vision, etc. They had bought it back from mutual New York, I think it was. They bought FSC back, and it was an ESOP. And so that’s who I ended up going. And how I chose it was, I liked what he was doing, and I liked the representatives I met who were part of his organization, and I thought, “This is the best solution for me.” So that’s what I did.

Michael: I’m cognizant as well, Cigna Connecticut General is one of the early insurance companies that was very, very financial planning-centric. Cigna did it on the insurance side and IDS, then American Express and Ameriprise did it on the brokerage side. Hewas probably coming with a much more financial planning-centric conversation that was jiving with what you were doing.

Alexandra: A big picture view too. He was not somebody who came out of a financial planning firm and started his own broker-dealer. He was somebody who had the corporate view. So he thought big.

Michael: So you’re now living in FSC world, you don’t have to have all of this organizational infrastructure and capital requirements to run your own broker-dealer because you’re now affiliated and tucked into a larger one so that you can just focus on the business itself. You wanted to build the model that was, as you would put it, more like a law firm with partners who share revenue and share overhead. So what came next then? Where did the business go from there? And I guess, again, how many of you was it down to once you got rid of the dozens of people in the broker-dealer infrastructure you didn’t have to have anymore?

How Alexandra’s Restructured Firm Was Organized And The Growth Of The Business [00:55:31]

Alexandra: I think there were 10 of us. And five of us were advisors. And the rest was support. So it was down to 10.

Michael: Down from 30-something that you had previously?

Alexandra: Yes, exactly. Exactly. Actually, in the process, two of them were wooed away with sign-on bonuses. And actually, I was just as pleased they were. So it worked out fine. And one of the other advisors decided he wanted to do something differently. So it just sort of was natural. I mean, if you know, the old law firm is “what you kill is what you eat”. So it had to appeal to the entrepreneur type. And some people wanted more security than that offered. But we kept all our clients, they couldn’t have cared less what we did. As long as we were there to take care of them, that’s all they cared about. So there wasn’t any loss of clients. And, frankly, I thought I’d died and gone to heaven, because that was an awful lot of… ’87, as I said, was a bad year, between the tax law change, the market crash, and my mother died that year, I thought, “What else could happen?” But we got through it. But that’s it. If something’s not working, you got to re-examine it and say, “Is there a better way to do it?” And I said, “There’s got to be a better way to do it.” And there was.

Michael: What I’m struck by is when you were at the point where you literally have the decision, “Am I going to run my own broker-dealer? Or am I going to affiliate with one,” it strikes me, in today’s world, I feel like there’s sort of this expectation that your broker-dealer should pay out almost all of the revenue, there’s a lot of competition around payout rates. But I’m just thinking of it relative to this environment, when you get to go from 30 employees down to 10, in a world where we’re like, “Oh, I can work with another broker-dealer, and they just pay me 50% of my revenue.” That probably seemed like a really good deal at the time.

Alexandra: No, no, no, they were more like 85%, 90%.

Michael: Okay, they were that high even then when you’re shedding…?

Alexandra: Well, we had pretty good revenue. I mean, we’re at a billion now, but I don’t even know what we were at then. But I know we ranked in their top 10. So by that time, even then, I was sort of a well-known name. And so it was a coup for them to get me. So we got a pretty good deal. And my big criterion was I wanted to have access to the decision-maker. And Jim and I had built up this relationship over the years and had a lot of respect for each other. So I didn’t abuse it, but if something went wrong because we were one of the top producing offices in the country, he would solve a problem, so that was important to me as far as that goes.

Michael: It’s been a pretty sizable financial lift and relief then, just to move away from that much overhead and capital requirements and still be drawing in an 85% or 90% payout at the time. That’s a really big change.

Alexandra: And just somebody screening the products and bringing new ideas to you, instead of you, them coming to you, and you’re having to make all the decisions. And I mean, our due diligence people were good, but they were kids, and you needed another layer. And I was always worried about liability. My reputation is…I mean, everybody’s reputation very important. But it’s so easy to make a mistake for the right reason when you thought you did all the right things. So I wanted another layer of people looking at things, bringing new ideas, etc. And again, that camaraderie of not only the association, but also camaraderie of the other people who are affiliated with it. Jim Harrington on the West Coast became one of my best friends, and he almost ran a broker-dealer within the broker-dealer. You just need other people. You go to always get new ideas, you always have to, you can’t be stagnant in this business. It’s why I love it because it’s never the same. You always have challenges, you always have to keep learning if you’re going to succeed. And so it’s stimulating, and you never get bored. You might get ulcers once in a while, but you don’t get bored.

Michael: What I’m struck as well, the kind of focus on due diligence resources. In today’s environment, I feel like a lot of us in the adviser world sort of take that for granted. There’s so much information out there. It’s pretty straightforward to research things, a lot of stuff is relatively transparent, at least most of what we use in the advisor world these days. But in the 1980s when all the real estate, and oil and gas limited partnerships were a thing, they were heavily supported by the tax law that really benefited them right up until the tax law change, and it didn’t.

Alexandra: Until it didn’t.

Michael: And a bunch of those…people literally lost 100% of their value in some of them. Some of them were super leveraged and went to zero. We tend to talk about due diligence today, I think, in a very different manner than what it was then where the difference between doing good due diligence on a real estate limited partnership versus not was like literally whether your clients got their money back or didn’t.

Alexandra: Right, exactly. And what I wanted was also a broker-dealer that was proactive, that was searching out for other things. So what happened next was…I can’t remember how long we were at the FSA, maybe 16 years, 18 years. But then Sun America bought them out and things changed, and it was more the leadership. And although we were bought out, and we were one of the top offices, a year went by, and the head of the place did not take a plane from Atlanta, Georgia to Washington, D.C., to visit us, which I thought was a little strange. And I didn’t take it personally, but I just thought it was dumb business. You’re supposed to take care of your best clients. So that’s when we started looking. And that was in 2007, 2008, while the world was falling around us again. I remember one person saying to me, “Have you ever seen it this bad in terms of the markets and turmoil, etc.?” I said, “Yeah, I saw it in ’87.” I said, “I didn’t have as much personal money at risk, nor did I have as many clients.” And so, 2008 was pretty tough.

But anyway, we made the decision that, at that time, FSC… Sun America was owned by AIG. They were owned by AIG. And they were trying to decide whether they were going to spin it out or sell it to somebody else, their broker-dealer organization, which, of course, they did subsequently, anyway, but this was back earlier. And I thought, “I don’t want them deciding where we’re going.” And so that’s when we started looking. And we looked at Raymond James and FSC andCommonwealth, which is the one we went with. And, again, our decision-making was based on access to management and what they were doing in the technology field and what they were doing in the due diligence field, bringing new ideas. And also the fact that they had a division that helped you develop your business, which I thought was really good. They had people who would work with you acknowledging that financial planning was not just clients, it was running a business successfully, and how could they make you a better business person, which I thought was very helpful.

I’d like to touch on something else, if I can. I’m way off subject, I can see it. And you can go back to the other if you want. The other thing that I learned from Julie Walsh, way back when, was she was very active in the community. And I learned a lot from her over the years. She believed if you’re going to get your business from your community, you should give back to your community and be involved. And so I picked that up from her and really carried it through to this day. Somebody else told me, said, “If you’re going to be involved in a nonprofit and giving back to the community, pick one you really care about, don’t pick it because you think it might do the best. And then do the best you can on that board. But don’t expect immediate business out of it. And you may never get business out of it. But it does give the firm a good name of being part of the community and not just taking from the community, but giving back.”

And so again, starting, I joined the National Association of Women Business Owners back in the ’80s, and became its president, of course. But again, there was a vacuum of leadership. But then I got involved with the Kennedy Center, and with the Boy Scouts, and some others, but I only worked with two or three charities.

Michael: So help us understand the business as it exists today. What has the business grown to? What’s the team and structure look like now?

What The Firm Looks Like Today And Alexandra’s Transition Out Of The Business [01:04:49]

Alexandra: Thanks to the good market this last year, we touched on a billion under management since everybody seems to call that the criterion which we don’t consider the criterion, but it does make us feel good. And I think it’s maybe 600 families or households altogether. And I have four partners. Well, I shouldn’t say I have four partners. I have sold my part of the business to them. What’s rather unique is three out of the four started as interns in my firm. And you would think as a woman-owned business they’d all be women, but they’re not, they’re men. That’s just the way it happened. But they all started right out of college, two of them are University of Maryland graduates, one is GW, George Washington University. And so we have grown them from then. One of them just celebrated his 30th anniversary. One just hit his 20th, the other the 15th. I also have a woman partner who joined us 15 years ago.

But lest you think that I am not carrying the flag, we have three women in the firm who have their CFPs, and are beginning to have their own clients. And we’re working with them. So we have the four partners, then we have two that are close to them, then we have three under that. All I know is 20 altogether. We’re big on interns, because we’re downtown Washington — which used to be advantaged, right now, not so much — we have people from GW, American University, etc., who are studying finance, who want a job part-time during the year, during the summer. And we usually have at least three or four interns working for us at any one time. It’s mostly grunt work, but we try to make it interesting so that they leave with some value. And what has been good is many of them have either stuck and became permanent employees or gone on to something else and refer clients to us. So it’s a good feeling, and it gives them experience as far as that goes.

Michael: So what does the structure look like then as you were looking to wind down? Have you completely sold shares at this point? Are you still…

Alexandra: Yes. I’m still being paid out. But most I did it over a five-year period. And I’ve done it two or three times. My partners are very fortunate in that none of them have had to go out and get their initial business, because I had two other partners who retired. And two of the current partners — they’re really principals, they’re not partners — we’re incorporated, but what they have done is they took over the clients from them. And then I spun off some of my clients like eight years ago to one of my partners. And then five years, I spun off some more. I got down to the 30 nitty-gritty of family and friends 2 years ago. And I finally let go of them last year, that was the hardest one. But we have not lost any of the clients. And I think it’s because…well, maybe two. But because everybody knows that they’ve grown up in the system, and they’re part of the culture. But based on those clients, they have referred other clients, and of course, we have next-generation clients too.

Michael: What’s it like making the transition of letting go of the last batch of clients?

Alexandra: Well, at first it was hard, but I am 81 years old, and there comes a time. I remember Mark Tibergien talking to me about five years ago and he said, “It’s only fair to your clients to let go before you have to let go.” And he made me see it in a light other than, I was having fun, and I loved working with the clients, and I loved the business, and I hated to leave it. But he maybe realized this little selfish thinking on my part. I certainly, from an economic point of view, didn’t have to keep working. So why was I still doing it? At first, yes, it was hard, but I got to say, as we were talking earlier, in March of 2020, I was just as glad that I didn’t have to hold those hands one more time. Our mantra is, “Stay the course, you got good stuff. Don’t change your mind.” All the time in the back of your mind you think, “Is this time different?” And of course, it never is. It’s just a question of how long you have to wait for it to come back. But it is tough. And I didn’t want to have to go through that one more time. And this time I didn’t.

Michael: So what surprised you the most about building an advisory business?

What Surprised Alexandra About Building Her Firm And The Low Point In Her Journey [01:09:44]

Alexandra: I don’t know. Frankly, I don’t know how I ever got into this business. The rest of my family are academics. There are no business people in our business. I didn’t have any role models in our family. I had a liberal arts college. My college degree is in history. I majored in math the first two years, I moved to history. I don’t even know how I got in this business, or why I ended up being good at it. So I’m not sure I know how to answer your question. What surprised me about the advisory business?

Michael: About building your business?

Alexandra: What surprised me? How sometimes people weren’t as passionate about the business as I was, that they had other goals. I just felt it was so important, and it was so energizing. And then there were other people where sort of it was a job. And I didn’t view it that way. I viewed it as this is something special. As I say, what’s not to like about this business? If you’re in that, you use your brain, you help people, and you make money. So what more do you want?

Michael: You use your brain, help people, you make money. What more do you want? What was the low point for you on the journey?

Alexandra: Actually, it was 2008. So we go on through the…the first crack was September, and it was December. Jerry and I had gone to New York for Thanksgiving, around then. And we went to see a Broadway show. I know it was “South Pacific,” and it was great. It was wonderful. And I started crying. And I couldn’t stop. And I couldn’t figure out what was wrong. I was in the middle of a Broadway theater. And so I sort of went off, and Jerry was trying to comfort me and I didn’t know what was wrong. And I said, “I’ve done everything right. I’ve worked so hard to build a viable business. I’ve done the right. I’ve been ethical. I’ve done my research, I’ve done everything right. And yet I could lose it all.” And I said, “It’s just not fair.” And it’s because I didn’t have control.

Usually, they say businesspeople are risk-takers. I don’t think they’re risk-takers. They’re risk-takers if they’re inventing Apple. But in a business like this, what you’re doing is you’re in an environment, you control your environment as much as you can. I mean, you don’t have to work with people you don’t like, you can build it in the way you want to build it. You can call the shots. It’s very satisfying. But this was a situation that I hadn’t foreseen or had any control over, and I didn’t know when it was going to end. And I felt responsible for all my clients, I felt responsible. And that was the other thing you had to go into the office every day looking cheerful even though you were dying. So that was the low point. But fortunately, March came and there was another life.

Michael: So what advice would you give younger or newer advisors looking to become a financial planner and start a firm today?

The Advice Alexandra Would Give To New Advisors [01:13:02]

Alexandra: Well, I would, first of all, make sure…I think it was very helpful for me to have worked with somebody else, worked under, to have a model to learn at the feet of somebody who knows what they’re doing. As I said, you may not always do exactly what that person has done, but either affiliate with a firm where you see there is an opportunity for you to grow. Or if you want to, go on your own. I guess I said, I would not be a sole practitioner in this day and age, unless you really have a niche that makes…I think you need at least one other person with you and a peer, not just somebody underneath you. But I would say, and I’d make sure that you have enough money behind you. I had a year’s savings, so I knew that I could exist for a year if I didn’t bring in a dime. And even if it took money to make money. So I think you have to have financial backing. But just make sure you’ve got solid footing, that you really know what you’re doing, or affiliate with somebody. But I think it’s really important to start working with another firm, with the firm or a person, maybe as their successor. Certainly, there is a big demand for successors in this day and age, and that’s a way. But taking over somebody’s business is a lot easier than starting from scratch. So that’s another way to do it.

So I wouldn’t be that anxious to start my own business, I would be looking for opportunities to affiliate yourself with a viable organization that is doing things the way it should be, and is always looking for new ways to do things. You don’t want somebody who’s stuck in the past, who says, “We’ve always done it this way.” Financial planning, I think, is still in that stage where they’re looking for other ways to do things. But your goal should be to be on the cutting edge, to be trying things, and maybe they’re not all going to work. But also, I would affiliate with somebody who has a good reputation and whom you can learn from and whom you can add to. I know that in our organization, I think of the three people who started with me, the oldest one is in his late 40s. And then we have a group that’s in their 30s. And they bring fresh ideas to us and we listen to them. We bring them into our meetings with clients, and that’s how they learn how to do things, because hopefully over the years, you get a lot of experience and can learn how to bring out a client and how to… Anyway, so I guess the bottom line is, I wouldn’t start your own business. I would affiliate with somebody who has a viable one, and where you have an opportunity to grow. Then if you don’t have the opportunity to grow, either go with another firm where you do, or then maybe consider it. But if you do, at least do it with one other person so you got somebody else to talk to.

Michael: And what do you think the industry needs to do to make it more appealing to women in particular?

Alexandra: I don’t understand, I think it’s a marketing issue. I think it’s ideally suited to women because, not to be too prejudicial about this, but women, as part of our upbringing, are taught to listen more and they ask questions, rather than to tell somebody what to do. I think sometimes men have the tendency to say, “You will do this, this, this, this,” rather than working with the client. Many of the men who are successful had to have the trait of listening and asking questions. So I think our personalities are suited to it. I think the idea that you’re actually helping people and maybe we have to get that message across that this is not all, you know, analyzing stocks and mutual funds and investments. It is a business of helping people achieve their goals, and the difference that you can make in their lives. That appeals to most women. And hopefully, you’re with a firm like this that is flexible enough.

I think COVID is going to…I know it’s ruined careers for some women. But I think COVID has shown that everybody doesn’t have to be in the office from 9:00 to 5:00, and that if you have to take your child or pick her up from school, that that’s okay and that maybe that’s your day from home. But if you’re with the right organization, there’s a lot of flexibility in your hours, which is very important to women, particularly married or single women who have children. So I don’t know who’s going to do the marketing because we sure have been beating the drum for the last few years, the CFP group has been really working on it. I don’t understand why more people don’t affiliate with it, don’t go with it. But not everybody wants to work as hard as I did, but you can work and do well.

Michael: So where’s your focus now? What are you still working on with the industry?

Alexandra’s Current Focus In The Industry And Her Perspective As She Enters Retirement [01:18:04]

Alexandra: My passion has been, for the last 25 years, the Foundation for Financial Planning, which brings together financial planners with people who need financial advice on a pro bono basis. As you know, and you’ve helped us, and I appreciate it, Michael, we built from zero in the endowment fund to almost $25 million. We’ve worked with different…with the military, we’ve worked with the cancer victims, we’ve worked with the COVID victims, just with the basics, the basics of credit, and how you can manage your money, etc. It’s really Finance 101. But fortunately, there are a lot of CFPs around the country who have volunteered to help the underserved. And our board, our organization, has done a good job. We have corporate sponsorship of Schwab, TD Ameritrade, Pershing, Fidelity, and all the big players, as well as leading financial planners around the country. And we’ve got an army of volunteers. And you could say, “It’s just a drop in the bucket.” And it is, but it is leading the way, and it’s growing in its momentum. And I think the fact that we’ve been able to reach so many people and it seems to be growing every moment.

One thing we do is, if we give a grant to an organization to help a particular segment, for instance, they had a project in the Indian reservations at one time, they said, “If this can be duplicated, rather than our doing it at all, here’s the model and you can get our model and go from there.” So that’s number one. Number two is, I wrote a book for widows back in the ’80s, which is in its fifth edition with a psychologist. And I just finished one on retirement for women with the same psychologist. And the big message there is, these are not just financial events. These are emotional events. And the sooner you understand that there is an emotional component to retiring, like myself, letting go from a meaningful career and doing something else, which may not be as rewarding or may not be as purposeful, how can you adjust? This is a new thing for women, meaning, they’re lawyers, or doctors, etc., they’re facing the same thing, corporate executives, who are saying, “Do I really want to walk down the beach by myself? What am I going to do? I’ve been working hard all my life, really enjoyed it, have been stimulated, what can I do now?” And so how you deal with retirement, not just from a financial point of view, but also emotionally so that you do have purpose in, as we call it, the next chapter of your life.

So those are the two main things that I’m involved in. I’m also involved with the Boys and Girls Club here in Sarasota who is doing wonderful work with the underserved. And I’ve enjoyed working there. So that’s about it.

Michael: I am curious, as a financial advisor who’s advised clients on retirement for, coming close to 50 years in the business, anything that you’ve seen in living the retirement transition that makes you look at retirement differently now than when you were advising on it?

Alexandra: No. I think it’s because my clients shared so much information. And I saw them do things. For instance, we’ve just moved to a retirement community. And I remember with my clients, particularly single women, you would push them, they’d say, “Oh, no, I don’t know, I can’t move out of the house. I don’t know what to do with all this stuff.” And the moment they move, you talk to them two months later, and they say, “I wish I’d done this years ago.” So there were a lot of things that you experienced through your clients that sort of resonated with you as you plan for retirement. But the other thing is, the phased-in retirement. Now, as you saw, most people don’t wait until they’re 80 to retire, but the fact that I could gradually slow down, made the adjustments so much easier. I think it’s very hard for the corporate executive who gets handed something at 65 that says, “see you around”. Then there’s such a direct stoppage. But now employers are saying, “Oh, maybe you can work two days a week, or maybe you can work three months a year.” So I think the United States is getting much more realistic and not losing the talent pool. So I think I was pretty well prepared. But as we plan, somebody said, “You planned this so well.” I said, “That’s my business, is planning. Of course I plan well.” But anyway.

Michael: It does strike me though, all this discussion of there’s supposed to be this massive, massive wave of advisors retiring over the next 5-to-10 years because the median age of an advisor is creeping up towards early 60s and eligible for Social Security and traditional retirement ages. And I chuckled at this for years saying, “I feel like the people doing these studies don’t understand what it’s like to actually be an advisor well into your career with a good business and good client relationships.” It’s not exactly the sort of business where you say, “Oh, I’m eligible for Social Security now. I think I’m going to go ahead and sell my firm and leave.” You can hang out for quite a while thereafter, maybe gradually dialing down a little bit, but not necessarily just saying, “Social Security eligible, I’m going to ride off in the sunset now.”

Alexandra: Yeah, that’s the people who don’t like what they’re doing. But most financial planners like what they’re doing and find it very satisfying. And I know it’s a little hard on the younger generation, they say, “When is he ever going to retire? He says he’s going to when…it was five years, five years ago and he still hasn’t retired.” So I do think you do have to figure out a way to let go of the reins or decide that your role is different. For instance, I am “chairman emeritus,” and what that means is that I participate in the management meetings, which are once a month. All I do, I don’t do anything else with the firm, but what I do is bring up…like the last management meeting, sometimes I’ll bring up something because they’re so close to doing the business. I’ll say, “So what is our plan for going back to work? Are we going back? If we’re going back, are we going to phase it in? Who wants to go back to work, who doesn’t?” Because we’re still remote. And they thought about it and had sort of a plan, but really hadn’t focused on it.

So it’s things like that, because you’re away from it and you’re not right on top of it, that maybe you can’t add some perspective to what they’re doing. And the retirement community, I’ve been here six weeks, and they tapped me two weeks ago to go on the finance committee. And I was told that there were eight other people who wanted to get on the committee, and that they put me ahead because of my experience. So, again, you can find plenty of things that use your talents that can help other people. And just say, “This is the next chapter of my life. I’m going on to the next part.”

Michael: So as we wrap up, this is a podcast about success, and one of the themes always that comes up is just even the word “success” means different things to different people. And so you’ve had a wonderful path of success and growth in the business and building a billion-dollar advisory firm. But I’m wondering now, how do you define success for yourself at this point?

What “Success” Means To Alexandra [01:25:52]

Alexandra: The first part is, I said the fact that I think that my firm will survive after my departure is very meaningful to me, the fact that I have four partners who could carry on the tradition of our firm, who have been involved for a long time and are carrying the culture. That helped me be able to retire, because I knew that it wasn’t going to implode. They may sell out like people do, and if they do, that will be the right decision for them. But I think I’ve built a viable organization that has a good reputation, that is respected by clients and by our peers. I think being respected by your peers is probably the most important thing because they know the good from the bad. The fact that I’ve been able to create that out of whole cloth. And as I said, the Foundation for Financial Planning is a success that we’ve been able to move that too, that our profession has developed something like that that is outside our business that gives back. I consider that a mark of success too.

Michael: Pro bono services to balance out that we do have a little bit of a skew towards working with some more affluent folks.

Alexandra: No question.

Michael: So the foundation scratches the itch on the other end of the spectrum.

Alexandra: Yeah, just to reach the people we don’t reach in our daily practice. And I think some people shy away from volunteering for the foundation because I think we don’t understand this, but we’ve got a tutorial that helps you on that. So anybody who’s listening to this, think about being a volunteer if you have the time.

Michael: I so appreciate you, Alex, just for joining us in the podcast, but just the impact of all of the organizations that you’ve had and have been involved with. And just sort of those things like, “Oh, the FSI was just kind of a side thing in the 1980s, because, hey, it seems like all these independent broker-dealers should get together,” and 35 years later, this is like a 50,000-person organization is just amazing, and the firm, and involvement in the profession, and the foundation, everything along with it. So thank you so much for joining us on the “Financial Advisor Success” podcast.

Alexandra: Thank you for interviewing me, Michael. I was talking to somebody else earlier. I remember having lunch with you many years ago, when you were just starting out and you were speaking to, it seemed to me, like every IAFP chapter in the country. But yet you weren’t charging them anything. I said, “Michael, you need to start charging something.” And that was many years ago, as we know, but things have changed. I’m delighted to see how successful you have become and how much you’ve contributed to the profession. You’re a real credit to our profession and a real thought-provoker and I thank you for that.

Michael: Oh, thank you. Thank you.