My guest on today's podcast is Kimberly Enders. Kimberly is the Lead Financial Planner and Managing Partner of Enders Wealth Management, a hybrid advisory firm based in Sterling Heights, Michigan, that oversees $50M in assets under management for 85 client households.
What's unique about Kimberly, though, is that after building a practice jointly with her husband, in 2015, she had to reinvent herself after a divorce left her without a practice and starting over with just 12 clients and $7M in assets and how, in the 8 years since, she has built herself up by developing a highly customized 12-month onboarding process for new clients that has driven her ability to generate rapid growth through referrals .
In this episode, we talk in-depth about what Kimberly learned through entering and then exited a business relationship with her husband that was, unfortunately for her, not structured in a way to fully protect her claim to the clients and revenue of the practice, what Kimberly did to turn her career around through honing in on her ideal target client and steadily pruning away those who are no longer a good fit , and how Kimberly has structured her 12-month onboarding plan for new clients that focuses on comfort with the technology and advisor/client relationships with her before she even starts to approach financial planning after a full 6 months with a new client… a system that has allowed Kimberly's firm to grow almost entirely from referrals alone.
We also talk about Kimberly's journey of trying every "Food Group" in the industry (all the different industry channels where you can work as an advisor) before starting an independent practice with her now-ex-husband , the way that Kimberly and her ex-husband grew the practice but each focusing on their individual strengths (where he drove marketing and business development, and Kimberly was focused on the client portfolios), and how Kimberly realized that while growth is good, too much growth too quickly can be detrimental to both her clients and her own ability to serve them to her high standard (which helped her get comfortable with letting go of early clients who were no longer the right fit).
And be certain to listen to the end where Kimberly shares why she suggests all new advisors try out a lot of the industry's "Food Groups" before picking a path (as she notes that knowing and getting experience in the other paths in the financial advisor industry helped round out her own knowledge, and find the path that truly aligned to her own values ), the unexpected surprises that Kimberly struggled with while starting her own advisory firm, including managing coworkers, starting an LLC and the headaches that come with payroll and benefit packages for her employees (beyond the client and portfolio work she was so comfortable with), and how Kimberly's definition of success has increasingly focused on the autonomy and control she has over her time to do with it as she pleases… while recognizing that business and financial success are what provide the money that allows her to have more control of her time in the first place!
So, whether you're interested in learning about how not to run an advising firm with a close friend or spouse, how to maintain a stable job regardless of the number of different companies in your employment history or how to create a practice that is so client-centered that everyone you serve can't help but tell everyone about it, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Kimberly Enders.
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Michael: Welcome, Kimberly Enders, to the "Financial Advisor Success" podcast.
Kimberly: Hello. Hi. Happy to be here.
Michael: I really appreciate you joining us today. I'm looking forward to the discussion and just getting to explore a little the challenges that start to emerge when advisory firms come together in partnerships and then the partnership doesn't work out and it has to split, and the additional complications when it turns out that your business partner is also your spouse.
Kimberly: Yeah, that's the fun part.
Michael: Yeah. It adds a whole other level. As I've commented to some people, to me, business partnerships, good business partnerships often really show up as marriages. You have to invest into the relationship, you're trying to create something of a shared vision together as a couple, as a pair. Ironically, even I know for some business partnerships that have broken up, in a divorce, assets get split 50/50. In a business partnership breakup, often, it's not even 50/50 because the parts are worth less than the sum of the whole. And everybody can end up needing to do a total rebuild when a business partnership splits and breaks apart. You have unfortunately had to travel the challenge of both and when both come together.
But I see so many advisors out there these days that build practices with spouses, with significant others, and that's wonderful. A lot of us get a really powerful reward out of being able to build a marriage with a partner and build a business with a partner and have that be the same person. But I thought it would be valuable to get to share a little bit of what the journey looks if unfortunately that doesn't work out, and you're trying to figure out what happens next with your business and your practice when you have to do that split.
Kimberly: Yep. And for a lot of us, that breakup of the marriage and the breakup of the partnership happens at the same time. So, it's not like you get to heal from one to tackle the other, you are going through them at the same time. You're still going to work and seeing your partner who's soon to be your ex-spouse, you're carrying on working with the team, working with the clients. And then behind the scenes, you're grieving. You're grieving the loss of your marriage that's ending. So, we get the joy of going through that together.
What Brought Kimberly To The Financial Advisor World? [05:58]
Michael: I think to give some context before we go and get into that part of your story and your journey, just help us understand your journey through the advisor world. What brought you to financial advisor world in the beginning?
Kimberly: Sure, sure. So, I became a financial advisor right out of college. I have an undergraduate degree in psychology from Michigan State University. And I slowly realized that my job opportunities were either to continue on to get a master's or to sell something. All of the psychology majors are interviewing on campus because Those were the days when you would go to your career counseling office and you'd read the little pages hung outside in the hallway and see what job interviews were for you. It was always some kind of sales. And the 2 predominant jobs for someone with my major was to sell insurance or to sell stocks. And so I said, "Well... "
Michael: As a fellow psychology major, I'm feeling and remembering the same journey and looking at the posters in the career center.
Kimberly: Yep. So, my job was to continue school or to go into sales. So, of course, I went into sales, as every good psych major would. And I landed in a job here in my hometown in Detroit, Michigan selling insurance. I was 22 years old, bright-eyed, bushy-tailed. I technically didn't take a math class in 4 years of college, so I had to start learn what is a stock, what is a bond, and what is financial planning. I had zero financial literacy. It was not spoken about in my house at all. And that's how I started my career, just right out of college, selling life insurance to pretty much everybody in my mother's Christmas card list.
Michael: So, why financial services and insurance investment sales? There are at least some other sales paths, even if you were saying, "I'm not going to go to grad school for psych, so I guess I get a sales job?" Was there a particular draw to the advisor world?
Kimberly: I think the draw was, I was told that I could help people help. It was either going into trading stocks or going into insurance. And of course, when you start selling insurance, the goal is to help families. And so, I stepped into that role naturally to want to be able to help people. And very quickly, very, very quickly, like 18 months in, I realized that was not the path for me. I was not destined to be a life insurance salesperson. And I quickly jumped what I would just say through all the food groups. I started by selling life insurance. And then from there, I got recruited to the bank. And so I sold investments through a financial institution. And then quickly from there, I went to the wirehouse and I was in sling and stocks with the best of them at a wirehouse.
And I would say about 6 to 7 years into my journey, I ended up being independent. And when I went independent, my ex-husband's career was also progressing at the same time, and we chose to go independent together. He went independent about two years before I did. So, he had already made that big move right from captive to independent as I went through all the different food groups, going from insurance, to banking, to wirehouse, and then I landed independent and joined his practice.
Michael: Okay. So, I'm struck by just this, as you put, I went through all the different food groups over the span of what sound like, was it about 6 to 7 years of insurance for a little while, bank for a while, wirehouse for a while. So, I guess I'm curious to hear more on that end of what kept you going to keep trying more food groups instead of just saying, "Maybe I'm going to get up and go to a different table?"
Kimberly: Oh, I think it's because I knew the industry was for me. And it was when I decided to leave the insurance industry, I said, "You know what, I really want to help people, but I don't think life insurance is the only product that can help people." So, then I went off to the bank, and the bank taught me products annuities and mutual funds. And I said, "Okay, I have annuities and mutual funds at my disposal, but I don't think those are the only things that can help people," because remember life insurance, that's a good one too. So, I left that lane and went to wirehouse, and then I learned how to build stock portfolios. I started doing wrap accounts, I started doing ladder bond portfolios. And I said, "Well, you know what, I don't think that wrapping everything or selling individual securities is really what everybody needs."
And so really I would say, Michael, it was me just very quickly evolving into the holistic financial planner mode that I am today. It was just always knowing that there was more. And then when I found my way to be independent, I felt like, "Okay, this is the lane that I want." I was able to take all my experience from the insurance days and the financial services days and the wirehouse days and saying, "Wow, I have a really broad range now of real use case with all these different products. And now I feel like I'm equipped to be able to bring whatever tool that I need to my clients to help them accomplish their financial goals."
Michael: And did you worry about the, I don't know, I just think of it as the proverbial perception of job hopping, or, is it going to be bad on my resume that I have a lot of different firms? Was that a concern for you?
Kimberly: No, I didn't. And I remember going through this, because this big 7 years was between 22 and 30. So, those were the 20s years where a lot of people say, "Oh, you should, you should stay where you are." Nope, I didn't worry about that because I knew in my heart that I was leaving these companies because I didn't agree with the philosophy that the of a one-size-fits-all, that those particular products were not the only products needed for my clients. And so, when I was looking at my personal career path, it's not like I was really flipping inside of that industry. I wasn't going to 5 insurance companies or 5 wirehouses, I was going from a captive insurance agent to a financial institution, to a wirehouse, and eventually independent.
And once it became independent, my broker-dealer bought another broker-dealer who bought another broker-dealer. And now my U4 is 10 miles long, but it's also, that's out of my control. I'd like to say to anyone, if I could go back with a little bit of wisdom in my 20s and say how would I answer that when people said, "Oh, are you worried about job stability?" I would say I have had a stable job the whole time. I've been a registered representative for 28 of my 28 years. The business card keeps changing, but I have not changed my job.
Why Did Kimberly Decide To Go Independent? [13:19]
Michael: So, what drew you to the independent channel, as you were going through these various food groups that you were trying out?
Kimberly: I'm going to say it really two major draws. The first was, after working with all the different products, I really felt that each client had their own individual needs, which would be their own recipe of investment products. And I didn't want to feel pigeonholed in the saying, I only could do wrap accounts, or I only could do captive mutual funds." Because Back in those days, you really just sold your broker-dealer's mutual funds suite plus maybe 3 annuities. So, I didn't want to be pigeonholed to just those products. So, that was one driving force.
The second driving force was my ex-husband had already gone independent and I was 29 years old, and we wanted to start a family. So, as a woman in this industry, I have the huge, huge, huge opportunity that a lot of women in the 9-to-5 space don't have, which is complete flexibility of my schedule. So, we wanted to start a family. So, I chose to go independent at that time to saying, "Okay, I can accomplish two goals. One, I can have the flexibility of the product selection that I feel is right for the client. And then number two, I can have the flexibility of my schedule to be able to work around raising a family."
Michael: Interesting. So, I just think of that, to me, it's always this strange, almost quasi-joke in the financial advisor world that I feel in most careers and professions, I find people tend to seek out... Like when we're thinking about starting a family, we look for large firms with stable jobs that have maternity, paternity policies so that we can manage the time off while we're starting a family. Except in the financial advisor world, we're like, "I've got a great idea about how to be able to have the flexibility to start a family. Let's become an entrepreneur who's self-employed." I feel like that's not usually how the story plays out in other careers, but it sure does in ours.
I think for what you said, the complete control of schedule that you do get in making that transition, particularly when you've been doing it long enough that you've got some base of clients and ability to get new clients and comfort in serving the clients that you've got, so you don't have to learn everything all at once at when you make that transition after you've been in for a while.
Kimberly: Yeah. I had been in the industry for 8 years and I was going into a partnership, not a traditional partnership, but a partnership with my husband. And at that time I wasn't a true partner, I was just joining his branch more just as his spouse as a way for me to quickly be able to hang my license somewhere and to have them... I was far enough in my career that I knew I could make it, but yet I was still young enough in my journey that I didn't even dream of it going wrong or what should I have done before I decided to make this move that I know in hindsight, because when a partnership breaks up, you have the business in play."
And when you're 29 years old saying, "Hey, I just want the flexibility of the time because I want to start a family. Oh, my husband is also a financial advisor, we'll just work together," you're looking for all the flexibility in the right ways. But then fast forward 10 years, and that flexibility proves to have been in all the wrong ways because without any structure in that partnership, when you do go to dissolve it when the marriage dissolves, it was very messy.
Michael: So, were you already married at this point?
Kimberly: Yeah. We were every compliance officer's nightmare couple, because we were two separate broker-dealers. We were colleagues, and so we had met, I don't know, like 4 broker-dealers ago. And so, we had decided that if we were going to pursue a committed relationship and eventually marriage, that we shouldn't be in the same broker-dealer. Because dating your colleague is never a good idea, and so that's when I went to [crosstalk 00:17:25]
Michael: So, you had consciously stated separate broker-dealers initially...
Kimberly: Yeah, yeah, we did.
Michael: ...to just avoid that perception?
Kimberly: It was to avoid the perception and also have the separate practices too, because we were at the same broker-dealer together in the same office. And so, we made the conscious decision for us to separate. So, I went to banking, eventually going to wirehouse, and he stayed in insurance. And so, we were a dual-broker-dealer household, which had its own set of compliance challenges. And each compliance officer every year said, "You can't do this. You have to be one. Here's all the reasons." And we're like, "Nope, we can do this and we're going to do it." And we did
Michael: Because they're all afraid that you're going to you're going to front run each other's clients and all the...
Kimberly: Oh my God, the selling away. They were all afraid of the same thing, that I was going to find a higher commission payout with him because he was still in the insurance industry and I wasn't, or the fear on his side was that he could then refer his clients to me and I could share revenue with him because I could sell individual securities and he could not. So, everybody, everybody hated the fact that we were married with competing broker-dealers. Oh. So, when we did...
Michael: So, it wasn't even just the BD, the mere fact that there are two BDS involved and two compliance departments, which is challenging enough, but you're, in essence, you're not on the same payout grids, you're not on the same commission schedules, you don't have the same license. It sounds like you're series seven's license, he's not. So, there's all sorts of ways you could crisscross clients and revenue in the household in ways that just turn a chief compliance officer's stomach in knots.
Kimberly: 100%. We would go to each other's top producer trips too, and so then his whole leadership team would meet me at the top producer trips and they're always trying to sway me to the other side like, "It'd just be a lot easier if you're a one. If you were just in one office and one compliance issues, we wouldn't be barking at you all the time." It was, Michael, to be fair, him and I always said, we're going to do what's best for our clients first and what's best for our family second.
Michael: So, was there something that shifted around? The mindset concern of this initial concern you had about not being viewed as the colleagues who worked together and then got married and the optics of dating colleagues, it sounds that was a concern at the beginning. That doesn't seem to have been a concern by the time you got to the independent stage. What changed?
Kimberly: No. I think what changed is that when we were colleagues, we were both young in the industry. You have a mentor, you have a boss, you have a lot of eyes on you in the cubicle. But when he went independent, he had a large well-established practice, and it was his office. It was his office. He started that on his own. And so, when I joined the team, there was no colleagues or pressure or anything that. We were just a very small office here in Michigan with our OSJ 5 states away. So, it really was just transitioning what we talked about at the dinner table every day, to now being at the office and talking about it and we were just finally playing for the same team.
Michael: So now, help us understand a little bit more what this, I guess structure, or maybe not-structured structure was when you came in? Is he the OSJ and you're under his OSJ at this point, or you're simply two reps next to each other under someone else's OSJ? What was the actual structure here?
Kimberly: So, this is where it gets complicated. And we said, "Okay, what's our strengths and weaknesses?" And he had been in the sales industry longer than I had. He just had a really good network, was just really good working with people. And through my time going through all the different food groups, I had a really great grasp on product knowledge and I had been building stock and bond portfolios in the wirehouse. So I really was in a position to become a portfolio manager.
So, that's what we decided to do. It was that he would remain the outward-facing salesman, for lack of a better word, and I would become the PM. And I had already been doing advisory accounts, what we called them wrap accounts back then, since about 1998. So, I had a few years of experience working with wrap accounts already and it was something new to him. He had never done advisory before. And so, with my skill set in advisory, I became the portfolio manager. He then became the rainmaker. And together, we worked as a joint team bringing new clients into the practice with him having, really, the outward relationship. And then once they came into the practice and they met with me and I did portfolio construction.
And we ran that for about maybe 3 years. That was the dynamic, always just now going towards the same goals. The commission never mattered whose name it was in because obviously we're married. So, in that kind of situation, the outward-facing registered representative tends to have the portfolio in their name, like a rep... I didn't have a rep number...
Michael: I was going to ask, was this all split rep codes, or whatever, it doesn't...
Kimberly: No, not at all.
Michael: Quote unquote, "It doesn't matter because it's the same household."
Kimberly: It doesn't matter because you're married. Because you're married filing happy. So, it doesn't matter who earns the income. But once we did that, maybe a few months went by like that. And we did sit down because obviously, we're both financial planners. And so we wanted to do what was best to just make sure our nest egg grows. So, I did have enough commission come into me to get my 40 quarters in for social security. So I did. And after running like that for maybe two years or so, I was becoming more and more a part of the story as the clients understood that they had a portfolio manager in-house. We weren't farming this out to a TAMP product. I was actually doing portfolio construction myself. And as our practice grew and our experience grew, that means our AUM grew and now we're talking with clients with higher dollar deposits and saying, "Oh, here, do you have questions about your asset allocation? Why don't you talk to Kim? She's the one that actually builds them." Very slowly, I came out from behind the curtain and stepped up in more of a client-facing role, because as I was in the background just building portfolios and in my happy place just trading stocks, I also had a baby.
So, I had now a newborn to a toddler, and I'm just building portfolios, I'm doing all the financial plans, I'm running all the Morningstar accounts. The joke had become that he was the beauty and I was the brains. I was really doing all of that legwork behind the scenes, but in a very, very flexible way since I didn't have to meet with clients. I could be home with my child, or she started daycare, okay, she's sick, now I want to be home with her. And was able to really be hands-on raising my daughter during those years because I had this behind-the-scenes role.
But as the branch grew, as the financial acumen of our clients grew, having me in the forefront. And that's when him and I sat down and said, "Okay, I have to have more income." Just now I have to think about, okay, what about social security? And making sure I'm not just getting my quarters, but am I going to start to max my own social security benefit? And it was very important to him that I both had enough income running through my social security number to maximize my benefits, but also, I think, he saw in me that I was really growing as an advisor and putting me in front of the clients was really helping me also just become better in my craft.
But definitely not a partner, this was still his practice and I was his support person.
Michael: Okay. And that was part of your marital dynamic and your business partnership dynamic? The framing, as you said, it was his practice and you were a support person for it?
Kimberly: Yeah. And support person can mean a lot of different things to a lot of different people. A lot of people hear support person, you think, "Well, it's a CSA." No, I actually started collecting more letters and numbers. The support person was a full-registered representatives full series 6, 7, 63, 65, all of it. But I chose not to do sales.
And so, we both were able to really dig deep into our strengths and we became this powerhouse husband and wife team and saying, "Hey, guess what, you have mister, who's here is your relationship manager, he's going to know all the stories, knowing where the grandkids are going to college, and the whole ball of wax, be able to pick through everything very quickly saying, 'Here's your problem, here's your solution.' And then hand them off to me where I'm like, 'Okay, I know the problem, I know the solution. Okay, these are the products we're going to use. What do you need? Do we have to do any NUA here? What's going on?'" Back in those days before Roth IRAs, do we have any after-tax? And the 401(k) rollover, pull that out.
And so, I got to just go deep in the weeds all day long, and we operated like this with me, more of a supportive position until our broker-dealer got sold. And when our broker-dealer got sold to a new broker-dealer, they had a policy that you needed an onsite OSJ. And so, everyone looked around and said, "Okay, who's going to be the OSJ?" And everyone looking around is me and him and our admin, it's the 3 of us in the office. And I said, "Well, I guess I'll be the OSJ because I don't have the burden of carrying the book. I don't have the burden of carrying the relationships. And I'm already in the weeds anyways, so I guess I can learn OSJ compliance stuff." So, as I came out of this almost like a hibernation of where I was behind the scenes in a supportive position, in the blink of an eye, I became the OSJ and I now took the leadership position in the branch.
That made things very interesting because it was still his practice. He was the lead advisor. We set up a split rep now with me as the OSJ. I did not take an override. We just did a split rep number and we did enough, again, that I made sure I had income. Now we're making sure my social security is fully maxed, that I'm hitting all my levels I need to so we can do good financial planning for us as a husband and wife team. But again, we're not worried about the business per se because we never really called it a business, it was just a practice. We think of it more just as a practice. It's us and our clients. And so, when I became the OSJ and became in a leadership, and now everyone had another problem with us saying, "Well, you can't OSJ your husband."
Michael: I was going to say, if compliance didn't like you being, being a couple that they have to oversee, I can't imagine they were thrilled about you being the OSJ for him.
Kimberly: No, they were not thrilled. I've never taken the easy route, ever, ever, ever. But what we did though is that we were then able to say, "Hey, remember all those years that we weren't the same BD household, we always walked a straight and narrow?" So, we did get the blessing. And I did pick up a few other registered representatives in southeast Michigan. So, I didn't just OSJ him, I OSJ-ed, other advisors as well.
But being that husband and wife team, every year, we go to the conferences, I would meet the executive leadership team, they're like, "You really OSJ your husband?" By then, now I'm a little older, I have a little bit more experience and wisdom. And one day I just shot back at one of the compliance officers, I said, "Wouldn't you always want your OSJ to know all the secrets that your advisors are telling their wives at night?" And he looked at me, I said, "I think I can OSJ him better than anybody else." And then it just stopped from there. They trusted me. And we stayed in that capacity and that was the capacity we were in until about two years before our divorce when, again, the broker-dealer got sold out to another broker-dealer and they said, "No more in-house OSJ. You can't OSJ yourself." All the OSJs went to the home office.
And then after that incarnation of changing and saying, "Okay, I don't have to be the OSJ anymore, I can just go back to being the portfolio manager." He says, "Nope, you're way too good for that. I'm never going to put you behind the curtain again because you have such a big role in this firm. I think you need to become the certified financial planner that we've been talking about for years." So, when I relinquished the OSJ role, I started the course to become the CFP. And what we were building at that time was I was going to be the CFP of the office and I would do all of the holistic planning for the clients. And again, he's the rainmaker, going out, finding the solutions to help everyone grow their retirement nest egg. And that was going to be our new dynamic with him being the salesperson. I would be the financial planner who would just sit with the clients and do financial planning.
Again, I don't have my own book. I had given up my book through all this. I had my 3 OG clients from back in the day, but we were always working off his clients. And then that got us to, I think that was the year 2015 when I said, "This isn't working." And he says, "What?" I said, "All of it. The marriage isn't working." And he said, "I agree with you. Let's do this." And once we said, "Let's end the marriage," it was, "Well, what do we do about the business?" And he said, "Well, it's my practice." And right there is when...I thought things got complicated before, things got real complicated then because after now going from my own registered representative, my own salesperson, we're out there, dueling broker-dealers, we come together, we're together. I'm the PM, he's the outside rep. And we held that for a long time. Then I became OSJ. And again, it was his practice, but I was every step of the way building it because this is our future, this is for our family. And you never go into a partnership...
Michael: This is the marital unit building. You don't really make the distinction of who does what in the marital unit, you're building something together.
Kimberly: Correct. And again, if I could go back in time and tell 24-year-old Kim anything, it would say, "Whenever you're going to a partnership, you need to know what a business is. You need to know what an LLC is, a partnership. There's documents for that attorneys. And yes, you love this person, and yes, they're family, whether it's your parent, your sibling, your husband, your child, even when they're family, you still have to go into this as a business." I wish I would've known then what I obviously learned the hard way. Things would've been much different for me because at the end, and fast-forwarding through all of the nonsense of the divorce, it was deemed that it was his practice and I was truly a support person, just instead of receiving a W2, I received a very small stipend through my commission run because I was cut in on those cases, and that was it.
I walked away with my original clients from the partnership and the marriage, which was 12 humans and $7 million. And at the age of 40, with 20 years in the business, I had to start my practice all over again with 12 humans and $7 million. But lucky for me, that the month that our divorce went final, I sat for the board exams of the CFP exam. And so I was able to get those marks during... So, we're going through a divorce, we've got kids. I now have a 10-year-old child, and putting her down to go to bed at 8 o'clock, which is my break to do my stay-at-home CFP courses. So, we were gearing up for me to become the certified financial planner. I have my daughter, we're doing the things. Now we're getting a divorce. I'm like, "Well, I'm halfway through my CFP exams or my CFP learning modules."
And he is like, "Well, no, this has to end now." So, I finished the learning modules, I took my board exam. I passed it the first time, Michael, because I knew I didn't have an option. There was no plan B for Kim. I had to pass it that first time because I had to restart my entire career. And we worked together for two years as a going through a divorce slash divorced married couple for two years. I did that. And the only thing that kept me going, the only thought I had was, there was a woman at a conference when I had just started working with him years and years back and she got up, it was a broker-dealer conference, and she told her story. She said, "Yeah, I used to be a husband and wife team, we got a divorce, but I left the marriage, I restarted my practice, and here I am. It's a beautiful practice today. This is why I'm on the stage talking to you."
And 27-year-old Kim was like, "Whoa, it's a great story." And I always remembered that. And just in that little piece of the back of my mind, I always said, "Okay, that kind of sounds like me. I'm going to remember that." And as I was going through that real dark period of having to tell my daughter why dad doesn't live here anymore, as I'm getting ready to prepare for my CFP board exam the next day, I remembered that woman, and I said, "Maybe I can do this too. Maybe I can continue as a financial advisor and go to the other side, back into sales, which I didn't want to go to," because if she could do it, I could do it too.
The Separation And The Determination Of Whose Practice It Was [38:20]
Michael: So, this dynamic where it's coming to the point of the separation, and you said, ultimately, it was deemed his practice and you were a support person from the financial perspective. Was that a divorce determination or is that something that gets settled on the broker-dealer side as they're trying to decide just literally how to split clients and rep codes and payouts? Where did that get decided?
Kimberly: It was a divorce decision. So, of course, he's saying the practice is his, and I'm saying, "I helped you build this practice, the practice should be half mine." So we are at a standstill on the valuation of the practice during divorce. And so, my attorney, his attorney, everyone locked horns, we had to bring the broker-dealer in. And after all the dust settled because he was the lead financial advisor, he was a rainmaker, clients sat down with him, they signed it with him. And yeah, my name was joint on the app, and yeah, it was a split rep code eventually, I was always the PM or the OSJ, I was always in that supportive role. And when I really pushed back hard and I said, "I don't understand how I could have helped create this large financial planning practice and I'm going to walk away with nothing. Help me understand that, attorneys and attorneys and attorneys."
And they're just like, "You don't have any documents. Where's your partnership agreement? Where's anything that anyone's ever signed saying that this is half your business or you have any ownership rights to it?" We had operated, Michael, for decades under this belief that we're not a business, we're just financial planners out here helping our clients. And when you're an eat-what-you-kill commission salesperson, that's all you ever really think you are. But somewhere along the way, we stumble into founder status, and then we stumble into small business and then, oh, and now we have a human or two. And we've gone from just writing them a check every two weeks to maybe we have payroll, maybe we don't. We never got large enough to cross into the area of you're an LLC, you have a team, you have payroll, you have documents.
We never got that big, but we were that behemoth husband and wife team that you can just do it all on schedule C, and everything was fine. So, I got caught in the crosshairs of having this big family business that really didn't look or feel like a business. And so, when everything was said and done and I asked for an independent evaluation, it was just like you had said earlier, "What can we sell the chairs for and the computers?" And I walked away from that marriage with zero starting over again in my business
Michael: Because at the end of the day, the client signed with him, the "client relationship" was with him. And so from that perspective, the view was, well, then the business is really built around him, your role notwithstanding.
Kimberly: Correct. And for how much, that I thought to myself, "What am I going to do?" So, "I'm what am I going to do?" I'm a single mom. I have 19 years in the industry at this point. And again, I've been through all the food groups, I have been a portfolio manager, I've been an outside commission eat-what-you-kill salesperson, and I've been an OSJ. I thought, "Well, I'm pretty employable. I have a few skills now." And I started looking around saying, "Okay, obviously... " When you're a single mom, I know the agenda. I go get a job. I'm going to go get a W2 with a steady paycheck because I have to figure out how to pay my bills.
And every time I talk to a recruiter, and every time I had an interview, something inside of me said, "This feels wrong. This feels wrong. You want freedom, you want the flexibility to build and be a single mom." And I really, and I would always remember this woman in the conference, I'm like, "Okay, if she could do it, I can do it too." And when I really sat down and thought really hard, I thought the most important thing to me is the flexibility and the freedom of this industry. And now I'm going to be moving from a place of saying, "I want that flexibility and freedom of the product choices for my clients," to, "I need the flexibility and freedom to be a single mom."
And I said, "I have to do this. I have to rebuild, because to have a boss again, to have a 9-to-5 again, to have an expense report or being somewhere and doing something that I don't agree with or it's not fundamentally in my ethos of what I think financial plan should look like," that scared me more than being homeless. Because I knew I really wouldn't be homeless, but I just might be really broke for a while. And so, I took all that fear slash all that hope. And two years working with him, I was able to get my book from $7 million to $14 million. So, I doubled my book in two years. And this is all just through...he gave me his C leads. He's like, "Kim, here are the C leads. See if you can make something happen."
And I'm like, "Okay, I'll do anything." Well, I got in there and I'm like, "Hey, I remember how to do this. I remember when I used to have to go out there and sing for my supper every day." And I started getting into it. And he was very, very generous with me with his time, meaning, "Hey, what case are you working on? Let's talk about it." And he almost turned into a senior-junior, almost a senior agent for me to be able to help me brush up on my sales skills because he knew that this was going to be the best job for his daughter. He knew that his daughter would thrive with a mom who would have some flexibility. And so, when we sat down for those two years that we worked together going through the divorce, and then after the divorce, we said, "You know what, it was always client's first, family second. We're going to make a little change here, child first, client second, family third. And our disagreements and why we weren't going to be married anymore, we're a firm third place."
Our daughter became a firm first place, and the clients and the practice was the only thing that we knew that we could talk about that we even agreed on at that point. And for two years, he helped give me those sales tools I needed. I looked to my broker-dealer and I said, "Hey, broker-dealer, I was an OSJ for him and a bunch of other people in southeast Michigan for a while. I would like to learn some practice management skills because I have this opportunity to now regrow my practice in a way that these guys never could.”
And so, for two years I worked with my broker-dealer, they gave me a dedicated coach, and I did all the coaching programs. I got involved in your programs very heavily. I was reading the blogs every month. I'm on the website. I'm listening to the interviews that you've done with other financial advisors taking just notes, pages and pages, just yellow pad after yellow pad of notes of saying, "Practice management's very important. I learned the hard way that this is a business. So, if I'm going to redo it, I to redo it right.
So, I'd to think that with hindsight being 20/20, I was able to rebuild my career quicker, leaner, more intentional because of this situation. Because I was able to start over with all this experience. And that was a critical two years for me of whether I was going to make it or not. I'm happy to report that I made it. Yeah.
Michael: So, I'm struck just notwithstanding going through the divorce and then what I'm sure was at least some amount of acrimony intention around splitting the practice. That notwithstanding all of that, you now ex-husband, you're still sharing a business roof with your ex-husband. He's still referring you clients and trying to help you build your book, even as you've split and just gone through the awkwardness of the fact that you have to build a book, because he's keeping all of those clients on his end. You were able to navigate that part of the relationship, that he's still working with you to build a practice for yourself, even after going through the split of not having the practice be allocated to each of you in the first place.
Kimberly: Yeah, that was complicated. Those two years of going through the divorce and then the year...so a year of going through the divorce and then a year after the divorce, and we worked together for those two years. And starting the year 3, I left, I started my own branch. I got my own office and started my own branch. And then when I officially cut from him and had my own independent branch, same broker-dealer. But in those two years, I can remember that we were still running appointments joint. And here, this is a person that I was really just only talking to through my attorneys because we were very much talking about custody battles, and I'm trying to get half of the practice, he won't give it to me. Now we're just being in that mean, like, "No, your mom gave me that lamp." You just go down that path when you get a divorce sometimes.
Michael: Right. But you're doing that, we only talk to each other through our attorneys unless we're sitting next to each other in a joint client meeting?
Kimberly: Next to each other, right next to each other, Michael. A client would come in, time for their annual review, we'd both sit down, we were right next to each other on the table. He would do his bit, I would do my bit. We're having those wonderful conversations. And when the clients left, I would get up and leave, and I never spoke to him again until the next client came. And I think that when you're in our business, when you truly follow the fiduciary doctrine of your client's best interests, the prudent man rule, do no harm, when you truly drink the Kool-Aid, when you truly say, "What is the real role of a financial advisor? To do what's right for our clients and to put their interests above my own, to do what's better for them, not for me," that's truly what this business is about.
You know that you're following that when you are sitting next to the man that you're divorcing because you have to do a 12-month portfolio review. And I think that we looked at each other, and we had shepherded multiple, multiple clients through divorces. We're the only person that wins the attorney kind of divorce. And I remember, we looked at each other and I looked at him, I said, "You know what, we can either do this the easy way or the hard way. We'll either burn each other to the ground, or we can shake hands and play nice and maybe we'll come out the winners, not the attorneys." And he looked at me, I looked at him and he said, "I can do it if you can." I said, "I can do it."
And he let me do the judgment of divorce with all of the cash, all the investments, just not the business. He trusted me with all the money, just not the business. So, we dug deep and said, "We are truly going to do it in our client's best interest, which we still have to show up, we have a job to do because our client's still retiring next month. Our client's daughter is still starting college in 3 months. Their lives didn't stop because our lives are going up in flames." And we did that with intentionality, but we agreed upon, we did it together. And I have to think looking back at those years now, it's like you found those out of body experiences, you just don't even know how you're doing it till you're doing it. So, I feel that a little bit, like, "Whoa, how did I actually do that?" We didn't tell anybody we were going through a divorce at that time.
After the fact, did we start telling clients? Yes. And we even agreed after X amount of time, once a divorce was final, we said, "Are we ready?" And we said yes. And it was when we were both ready, we started telling the clients.
Michael: So, from the financial planning brain goes to the divorce fanning division of family assets. So, if I heard right, as you went through that, there was kind of a division of the household balance sheet in terms of economic value that he left the marriage with and economic value that you left the marriage with. The challenge here is that in terms of the business itself, it wasn't splitting the business. You didn't split economic value or clients of the business. So, sound like he got the business, you got cash and other assets in the division of marital property dynamic. Except then you get to the other side of that and he has an ongoing practice and you don't have an income until you start getting clients or getting a new job aside from the 12 clients you got to keep while he kept 500. Am I understanding that split right?
Kimberly: Kind of. How it really worked, just to be totally transparent, how it worked was, it was as if we had no business. Our business valuation was zero. So, that was completely taken off the table. And it was any other network...
Michael: Because it's such a commission-based practice, "Well, hey, it wouldn't have any value if he wasn't doing it, so we're going to say it has no value?"
Kimberly: Yeah. But I kept going in and saying, I remember back in the days when my peers would have advisory practices, back in my wirehouse days, we did a lot of wrap accounts in the wirehouse. And I remember when advisors would retire and junior advisors were buying the practice and it was always like a split. It started as a 90/10, 80/20, 70/30, 60/40, and you did this long 5-year split. So, I kept going to the attorney saying, "But there's financial advisors that there is a valuation of this practice. There is value here." And I couldn't seem to get anyone to be on board with that, including my own attorney. And it was always deemed there was zero value. This is not a business, this is not a business.
And so, I was frustrated beyond belief because I knew there was, I couldn't seem to get anybody on board with that. At the same time, I'm also dealing with custody. I want to make sure I have my daughter with me. I'm also dealing with, he is my business partner, I need to make sure I have some income going forward, because my income, my trails was about $12,000 a year. That was it. My income, that would be it. So, I was going to be fully dependent on any spousal support or child support. So, it went at some times that if this was my business partner, I probably would've hired a different type of attorney and gone after them and said, "No, we built this together." But I was going through a divorce, completely different mindset.
Michael: So, that becomes part of the dynamic, like, I can't just, "treat" this as what would I do if I'm splitting a business partnership where I feel like I had more of a stake in the partnership, I'm also trying to negotiate custody. I'm also trying to negotiate spousal support because this is a divorce as well alongside. And so, now all of a sudden, there's more things on the table that we have to negotiate through. And so now, you just have to start making decisions of, what am I willing to compromise on? What are my deal killers? Because there's just only so much you can fight through at that point.
Kimberly: It is, because when you're going through this business valuation process, the other side of that is you do have to play nice, because this is also the father of my child, this is also the man that's going to have all of income that's going to be paying child support. So, at what point do you start to lay down a little bit and roll over on the business because the other side of that transaction is my life? This is my child. There's no economic value there. That's priceless. So, as a woman going through the divorce saying, "Okay, I have these multitude of things." Like, "Okay, I get the marital house. That's fine. This is a 3,000-square-foot house, how am I going to maintain it by myself without having any income?
And then, "Okay, I have a daughter. I have one daughter, and she's going to be with me 80% of the time, how do I juggle that as a new working mom? And oh, by the way, I don't really know how I'm going to make any income yet. And when I do, it's going to be 100% commission/advisory fees." And so, there was a part of me that always knew that I was being wronged, but I did roll over eventually and just say, "Okay." I couldn't get anyone to see my point of view, but Kim rolling over doesn't mean Kim giving up. So, what I was able to do was to saying, I finally conceded to a zero valuation of the practice, and then we just split everything else 50/50 the way it should be. And I did though, put on there a separate addendum in the divorce that talks specifically about the business and I got the broker-dealer involved.
And so, we had the broker-dealers, attorneys, and his attorney, and my attorney. We all wrote a little love letter to each other that said, "Dear, everybody, should ex-husband ever sell his business, Kim gets the rights of first refusal." And that was finally the one thing that we could all agree upon was that I would at least have the opportunity to that practice in the future first. I didn't know how that would help me, I didn't know if it could help me, but at least it was something. It gave me some kind of something to show for all those years of hard work. And I also said, "Okay, I'm going to roll over a little bit on this topic because he is helping me regrow my business." He is saying, "Here's the C leads." At least you have a warm introduction. It's not like I had to go cold call again on the phone book.
He would help me close cases if I needed to. He would come in, he would do the joint with me, help where I needed the help, and then he would walk out of the room and it was my name and my rep number 100%. So, he was very, very generous on this other side of the transaction, I would say, just 0 on the practice. So, I think I had to take my wins where I could get them. And that's why I wanted to be very transparent and talk about this and say, no, if I would've known then what I knew going through this, I would've said, "Hey, I love you, you're my husband. Let's build this together. It's going to be great for a family, tons of flexibility, but what are your roles? What are my roles? Is this a partnership or am I an employee? Can we have something in writing? And hopefully, we never use it, but if we do, it's going to save everybody a lot of grief."
I wish I would've treated this as a partnership and a business, not a husband and wife hustling together to build a great future for each other.
Where Is The Business Now? [59:45]
Michael: So, 2015, you're going through the separation, you're rebuilding with 12 clients and $7 million of AUM. So, where is the business now?
Kimberly: So, now I am at 55 million of AUM, 100% organically grown. I was up to about 150 households, which is about 225 clients. But as I've been growing the last two years, I've also been paring back. So, I'm doing the whole 80/20 rule of 80% of your revenue comes from 20% of your clients. So, I have been paring back the practice and reassigning clients as needed, as it's a good fit for me, a good fit for them. And so, even know my...
Michael: Where do you reassign them to? Where do they go?
Kimberly: I have a trusted financial advisor in the community that I give them a warm introduction to. And if the client doesn't want to work with the other financial advisor, then they're reassigned to somebody else within the broker-dealer. I'm not doing a package, I'm not selling them or anything like that. I'm having a heart-serve with the clients.
Michael: It's not a partial sale or split rep codes or any of that, just you're trying to find them a good home. If they like that home, that's great. If not, the broker-dealer reassigns them.
Kimberly: Exactly. Because it hasn't been a big sweep. It's been here and there over the last few years, but I've probably reassigned maybe 30% of my practice. So, as I grew, I would pare back, and as I grew I would pare back. And so, my growth has been a lot of stops and starts, but I'm to 55 million of AUM now with 2 support staff here in the office with me. And that's 119 households. So, it's 185 social security numbers.
Michael: So, how do you decide which clients to reassign as you go through this pruning process?
Kimberly: I have a niche. When I restarted my practice in 2015, I actually read one of your newsletters and it talked about the importance of niche marketing. And it was the first time I'd ever heard something kind of like a podcast. It was, "Here's the big written interview," but then you can listen to it at the very bottom of the website. And I thought it was amazing, that I heard people talking out of my computer. It was a guest that you had on that talked about niche marketing, and I said, "Well, I'm starting over, so maybe I should do this." And so, what I've done the last 2 or 3 years is I've really honed in on my niche. And if you're not within that niche, then I am having hard conversations with people and saying, "I really want to focus in on my niche. I know where my strengths are."
I work predominantly with retirement assets, engineers, and 401(k)s. That's really all I'm doing now, is retirement assets for engineers or 401(k)s. That'd probably be a better way of saying it. And then people that have non-qualified only with me, or they're not in my niche, that's how I am making the decision. And it's always very hard. It's always a very hard decision because some of these people maybe have been reassigned to me through the broker-dealer and I've never really had a relationship with them, that was a little bit easier. But the people that did choose me, and they did choose to work with me along the way as I was regrowing my practice, that's a tough conversation when someone chooses you as their financial advisor and 5 years later you're having the conversation saying, "We're not a good fit anymore."
But I've been very honest and transparent with everyone through the process and saying, "You know what, I found a home that hopefully will be a better fit for you than I am."
Michael: I was going to say just, how do you broach that conversation with them?
Kimberly: It's usually something to the effect of, "You know I have a really tough conversation to have with you. When do you have time to talk?" There's no sniper fire with me. It's, "I have a really hard conversation to have. And it starts with me and not you, and that my business is going in a different direction.
“I'm focused on retirement planning and I'm best serving engineers with over a million dollars of retirement assets or small business 401(k)s. And as I become more ingrained with these two types of financial planning relationships, I'm not able to serve your account in the way that you deserve to be served. And I have a personal introduction. I have a friend in the business who really works with your type of account or your neighborhood or your state. Maybe as a client, I only have one client in a state, and I'd be happy to make that warm introduction. Or if you feel like you can do it yourself, I'd be happy to teach you how to go to XYZ website if you think you can manage it on your own."
So, I come from a place of service, a place of care and concern of, "Yeah, this is my decision, not yours, but I'm going to do everything I can to make sure that you're well taken care of, both through this process and beyond."
Michael: How do you think through that dynamic of, do you owe them something because they worked with you after the divorce when you were trying to rebuild?
Kimberly: I really made it, Michael, about me, "And this is how I can best serve my clients. This is how I can best bring you value. And it's not your fault. There's nothing against you. This is a me problem and I'm looking to go in a different direction, but I understand fully that you're going to be naturally affected by this. So, how can I help you through this?" That has always been my approach that I've taken. And I would to think that I've done it in a very ethical way. It's not easy, that's why you start slow with maybe 2 or 3, and then it gets a little easier from there.
Michael: So, I'm struck. A lot of how you framed the years when you were working with your husband was this, we settled in the roles that suit us well that we enjoy, so he would seem wanted to be out there and doing the business development and doing the proverbial client schmoozing. So, he did that. You really enjoyed getting to do the portfolio work and the financial planning work, and so you had taken the more behind-the-scenes role. So, what changed that? Now, you did this transition to your own practice and suddenly you're out there powering this so much growth, 100% growth, I've got to prune to manage all the growth. What changed to go from behind-the-scenes Kim to look-at-all-the-growth Kim?
Kimberly: I would say that two things really affected that change. Number one was sheer grit and determination. It was this force inside of me that said, "I have to do this. There is no plan B. I am not operating with a safety net." You get enough of that and you're going to make it. But number two, it was working with a coach. It was working with a business coach who is designed just for financial advisors. And through working with this business coach, I was able to do practice management almost out of the gate. I had gone through a segmentation tool. When I got to my first about 50 clients, I went through a segmentation tool and learned how to really do good segmentation. It was building procedures and building policies and having just all my... I had an onboarding matrix.
I had, okay, if they're an advisory client, we do this. If they're a commission client, we do that, or a consulting client, we do this. I had processes and procedures for everything. And when you're looking at a mature financial planning practice and you want to start tinkering with the engines, it's pretty hard. But I thought, "Geez, I was the OSJ for two top producers in this country. So, I know how the sausage is made behind these very large, I'm going to say, one-man show financial planning practices. I know how it's done." And I saw all the challenges and I thought, "I need to have really good procedures in place and really good policies in place. I need to know my vision, my mission." I went through CWS training.
I did all the things, I got all the letters, all the practice management, and I said, "I don't like to sell. So, when I get someone here into this office, they need to be able to refer me their friends and family that will be inbound phone calls. I need inbound leads, please." And so, by building this wonderful, I'm going to say a really strong foundation of how to really care for your book of business, I found the referrals exploded.
I created a business that was referable, I became the financial advisor that everyone wanted their friends and family to work with. And I didn't have to go out and sell anymore. I got to do what I love to do. I got to sit back, sit at the conference room table, talk to people, "Tell me your story, what's going on? How can I help?" Go back, find the great products and tools and solutions that I have, this big arsenal, yada, yada, yada, and I didn't have to do any of the prospecting. And it didn't feel selling to me because the way I was doing it with these systems in place and doing true holistic planning before it really became popular, I thought I'm not selling anything because I'm following the CFP process, I'm doing the 13 wealth management strategies.
I'm following all of the systems that are designed to uncover all the financial landmines and saying, "Hey, I got the secret map in my back pocket. Maybe if we take a look at insurance or we take a look at a wrap account, or let's talk about your individual stock portfolio, and let's talk about the 401(k), and let's do some budgeting." I've been doing that my whole career and it took away this idea that I put on myself as being a salesperson. I said, "I am no longer a salesperson. I am truly a holistic planner and I'm just fortunate enough that my phone now rings." That's how I was able to pivot and grow so quickly.
What Is Kim Doing To Serve Her Clients Well That's Different Than Other Advisors? [01:11:16]
Michael: I see a lot of advisors, they work really hard for their clients, they try to give really good service. They try to be really responsive and provide good planning, and they're not dealing with 100% avalanche of growth referrals coming their direction as you did. So, do you have any sense of... What were you doing in this process to serve your clients well that's different than other advisors who I think would say, "I work really hard for my clients to serve them well, but my phone is not ringing the way that Kim's phone is ringing?"
Kimberly: I built a 12-month onboarding process that I think is really lacking in our industry.
Michael: A 12-month onboarding process?
Kimberly: A 12-month onboarding process. And when you think of an onboarding process in our industry, we think of, we're getting illustrations, we're talking about hypotheticals. They say, "Yes, DocuSign on the dotted line." We get them over, we do the transfers, here's a welcome letter. And when the dust settles, we're done. That's the way most people do it. And what I had developed through going through all this practice management was that when that's done, that's really just step one of my 12 month, that's just the end of housekeeping. Housekeeping is now complete. And I said, "We need to not just bring on a new client, but we need to get this new client in and we need to really get them in our way of doing things. Welcome to the practice. Welcome to the Kim Enders' way of financial planning 101, 201, 301."
And I developed this 12-month system of saying at the end of housekeeping, so now you're here, now the work begins. This is when we start our job. Because now at 3 months we're saying, "Okay, is everything good? Are you online? Are you getting your statements? Do you have any questions? Is your name spelled right?" "Yeah, yeah, yeah, everything's fine." Or, "Nope, they spelled my name wrong." "Okay. Well, let's get that taken care of," because that matters to people. Then we move on and at the four-month mark, we have a really nice gift that we send everybody. And it's just, we send luggage tags, because I love to travel and I assume everyone else loves to travel. So, we send out logo luggage tags with a nice handwritten card from me saying, "We know you have your choice of other financial advisors, thank you for choosing us. It's not lost the trust that you've given to me.
I chose 4 months because I did research on the psychology of the buyer and the psychology of the buyer is just about the four-month mark is when you start to get the buyer's remorse sets in, "Oh, did I do the right thing? I don't know. Should I have done that?" And so, at the four-month mark, I want to send them like a little lovey item, not much. We're talking $5, and a handwritten card, "Yes, you did the right thing. Yes, remember you've made these choices because this is going to help you accomplish X, Y, and Z." So, I'm doing that at the four-month mark. And then at the six-month mark, we have our first semi-annual checkup.
At the six-month mark, then we start saying, "Okay, now that the accounts are over and everything's settled and the dust is transferred, and oh, you're welcome for the luggage tags, no problem. Okay, now let's start planning. You came to me saying retirement was number one, so let's dial in. Let's look at the 401(k). Let's look at your spouse's 403(b). Let's start to get you in the financial planning software. So, we start doing the financial planning at the six-month mark. And that takes a few months, by the time you reallocate everything and you look at everything and you do your work. And then fast forward to 12 months and you're there before you know it. And then you're at your first annual review.
And so, I have now spent 12 months bringing on the client, transferring their accounts, making sure I'm talking to them when they might be second-guessing any decisions that they've made. At the six-month mark, I'm saying, "Hey, remember all the promises I made you when you signed? Well, let's do them now." And we get through that. And at the 12-month we're like, "Okay, how did the portfolios perform? We can't control the markets, so let's talk about that. And let's talk about, do you want your annual review every year on November 30th, just because this is the day you signed your paper? Or maybe are you in retail and this is a busy time for you. Would you your annual review in June? Okay, let's move it to June of next year so we're seeing you every year in June."
I have these conversations with my clients, and every few months for that whole year, I'm reinforcing to them that this is a client-centered practice, your needs matter, you are the boss here, not me. You are not going to do it the Kim way, we are going to do it your way. And so, through this 12-month onboard, and it's the same for everybody, and we have it in our red tail and we actually have it on paper, because I started doing it on paper. We still have it on paper as a backup, but we have all 12 steps, all 12 months of steps.
And I have found that this process, by the end of 12 months, they have such a deeper relationship with me that they're just blown away, "My other financial advisors have never done like this. They've never asked me what I preferred." And what I usually hear is the financial planner has a big practice because they're amazing and they're successful and they have a big practice and they have a wonderful machine and we fit into their machine. What I did, Michael, which I think makes me very referable, is I've said, "I have a really great machine, but it's flexible. How do you want to be treated? How do you want to fit into this relationship? Because my machine is here, it's going to take care of you. We're going to make sure you retire with dignity. We're going to make sure your kids get educated, but you don't have to fit into our machine. Our machine is flexible enough to fit around you. What is your family structure like? Do you work remote or are you in the office?" I don't know, "Are you working in Spain for the next 3 months? Maybe we should do a review like this."
I think that is what made me so different that when people did come to me from the wirehouse, from the banking channel, from my peers in the independent channel, they were blown away on such a client-centered practice, why wouldn't they just tell everybody about it?
That's the feedback I've gotten. So, I keep changing this process. I keep improving upon it. As I get feedback from the clients, I'll tweak things here or there, and it's organic. It's organically growing this new client onboarding process, tweaking it, especially after the pandemic, we tweaked it a lot to make sure it's truly reflective of, number one, making sure our systems, all of our T's are crossed and I's are dotted. Number 2, the client is getting great value out of it. And number 3, making us highly referable.
Michael: I'm struck that you said it's basically not until the six-month mark that you are starting the financial planning process. So, I guess I'm just wondering or processing out loud, you don't need to either, I guess, do more planning work upfront to show the proverbial value of why they should work with you in the first place or they're not pressuring more to say, "Let's get going on the planning work. Isn't that why I joined you?" It's fine that they're on for 6 months before you get to that part of the process?
Kimberly: I'm going to say 90% of the time, yes. What I do find is that someone's coming to me because they're coming to me because there's a problem. Some people don't see the dentist until they need a root canal. So, if somebody comes in and there's a problem happening, I am going to do 16 hours of financial planning in the first 45 minutes and we are definitely going to fix their burning problems. So, in isolated cases, I do the financial planning first knowing that the assets will come after. So, somebody's going through a divorce and they're going to see the attorney next week and they've been referred to me. Somebody gets a buyout letter from a Fortune 500 company. They need to make a pension decision to take the pension and do the rollover, and oh, by the way, they have to turn in tomorrow. You get those kind of situations, of course.
Michael: Those wonderful clients.
Kimberly: Yeah. And what I do with those clients is what I do then is I do a consulting arrangement with them and I say, "Here's a consulting arrangement. My fees are X, it's 50% upfront and 50% when we finish. So, 50% upfront. So, here's my consulting arrangement and you owe me a check for half the fees today. And then the second half, we'll do the financial planning and if you do put assets on deposit with me over my minimums, we will waive the back half of your fees." So, it's a way that I'm still compensated for my time. I have definitely gotten out of the business of doing financial planning for free hoping I get the business. I don't subscribe to that anymore.
If I do have to switch it and do the financial planning first, onboarding second, I'm doing it with a consulting, I'm charging a fee.
So, it's a one year for $1,500. And so, they would pay $750 today. I think that's a good reflection and enough skin in the game that at the end, we can just part friends. And if the money doesn't come to me because they've decided to stay working, so the rollover doesn't happen, "Okay, well, you have a lot of planning we need to do, so let's be best friends for the next 12 months and we'll do a lot of great financial planning and you pay me the $750 when we're done, we part friends." And then after that, they've gone through their new client onboarding experience. I've done the financial planning and the idea is when they do retire, they come back to me.
Michael: And out of curiosity, who was the coach that you were working with to help you sort all this out in the big formative transition years after the divorce?
Kimberly: Oh, sure. His name is Todd Klein. He is a business coach for my broker-dealer. He's available to financial advisors who are actively in growth mode at any age. If you're actively in growth mode, we have these coaches available to us, it's free. We don't have to pay for it. It's part of the perks of giving away the percentage in our grid. And he only works with financial advisors. He used to be a financial advisor. And I think having someone like that on your team to help you grow, it was huge, Michael, I can look and say that was a pivotal part of my career.
Michael: And can I ask you, who's your broker-dealer that supports you through this?
Kimberly: Shoot. Yeah. Cetera Advisor Networks.
What Surprised Kimberly Most About Building Her Own Advisory Practice? [01:22:50]
Michael: So, as you've gone through this path for the past 7 or 8 years in particular as you're now on your own with your own proverbial shingle, what surprised you the most about building your own advisory practice?
Kimberly: I think what surprised me the most about building my own practice is I find it a lot harder to be a business owner than I do to be a financial advisor. I have very little stress, I have very little concern when it comes to building portfolios, asset allocation, choosing products, weighing pros and cons. I'll get in the weeds and just read 5 prospectuses in a row if I need to. That part was always easy for me. What surprised me is how difficult it is to be a small business owner and then saying, "Wow, I have employees now and I have to start an LLC and I have to hire a payroll company. And there's things workman's comp and benefit packages." That to me, that's been difficult to learn and that's what's been so surprising and eye-opening.
What Was The Low Point For Kimberly For The Last 8 Years? [01:24:05]
Michael: So, what was the low point for you since you went through the relaunch and started rebuilding over the past 8 years?
Kimberly: I think the low point for me, I would say... Gosh, it's so hard. I haven't really had a lot of low points, but I would say the low point for me was I had a serious injury earlier this year and I was in the hospital in two different continents, 3 different surgeries with one injury. So, I was not able to work for a solid 2 weeks. And watching me being the only financial advisor here, everything came to a screeching, I'm going to say, it didn't come to a screeching halt, it came into a slow grinding stop. So, when I was off work basically for 3 weeks and slowly coming back to work as I went through physical therapy and got my strength up and I could come back to work and saying, "Oh, okay."
Well, the office didn't burn down, I had a great team in place, everything was covered, the clients got rescheduled, everyone's very understanding. But that cog wheel of new business had stopped. And a lot of it had stopped because I wasn't seeing people, the phone didn't ring as much. But you take for granted sometimes that you have a really great practice, it's going the way, however, your practice is running is the way it's running right and everything's going well. And then when the main advisor goes on disability, when I came back and seen that the new business had slowed down so much, the phone had stopped ringing and it was getting that going again.
And when you're a referral-only for your marketing, it's not like you can say, "Oh, I'm going to go hit some networking events. I'm going to go get some lunches going." It's like no, the referrals slow down to a very slow, slow crawl. That was very difficult this summer just saying, "Whoa, I feel busy. The business is humming, it's going, right, everyone's working. We're doing all the things, but I haven't opened up a new account in 4 months." So, that was a real low point for me to saying, "Okay. I can't be the only person, I can't be the only advisor. I can't be the only person that's being referred to because I was just walking down the street and oops, fell down a sewer grate and all of a sudden I'm not working for 3 weeks."
So, having to rebuild out of that and saying once again...obviously, I'm not starting my career over again, but saying, "Okay, how do I want to rebuild from that?" I'm now taking this as an opportunity, rebuild in a different direction. So, instead of ramping it all back the way it was, I'm making this huge pivot and now working with plan sponsors to do 401(k)s. So, again, in this low point in my career, instead of going back and doing the same old same old that had gotten me there, I'm choosing a different path to pivot and go forward in a different direction and saying, "Well, I have a really great practice here. I'm over $50 million in AUM, this is a really nice boutique financial planning practice. Maybe I can make a difference over here doing 401(k)s and reaching out to plan participants who would've never had access to a financial advisor, to somebody of holistic planning abilities.
So, in that darkness, I'm right now pivoting and going in that new direction of saying, "Wow, I'm really excited to see what's around the corner again."
What Does Kimberly Wish She Could Tell Herself 20 Years Ago? [01:28:14]
Michael: So, what else do now you wish you could go back and tell you 20 years ago as you were coming into the independent channel and starting to build?
Kimberly: I would definitely say to that person 20 years ago, you can't just spend all your time in the academic side of the role of a financial advisor. You can't spend all your time in the practice management side. You also have to spend time as a founder, as a CEO, as a business leader. I mean, I here I'm the janitor and I'm the CEO. I'm the HR consultant and I'm head of marketing.
What Advice Would Kimberly Give To Younger, Newer Advisors Coming Into The Business Today? [01:28:56]
Michael: So, what other advice would you give younger, newer advisors coming into the business today?
Kimberly: I tell the new advisors to do it like I did it. Specifically, go try out all the food groups, just go to the buffet and try everything, try a little bit of everything. Because if you get hired in the insurance industry and you're saying, “I'm doing what's in the best interest of my clients” but you're pigeonholed just to the insurance products, is that really in the best interest or not?
If you come in through an RIA and you are only using RIA products, is that the best interest or it's not? Maybe yes, maybe no. And so, I tell young people, pick your food group, pick your lane. Pick the lane that is congruent with your values. Do the one that you believe in, but still go out there and know all the other lanes.
So, I tell all young advisors, no matter which channel you're in, get to know the products and solutions in the other channels and know when those could be the best, know when you should say to your client, "Hey, Client, I know that the products and services that my licenses allow me to offer are this, but I'm thinking that maybe you should have something else, and let's explore that." And how can we bring that knowledge of all of the products into the one lane that the young advisors are working in?
How Does Kimberly Define Success At This Point? [01:30:24]
Michael: So, as we wrap up, this is a podcast about success and just one of the themes comes up is sometimes the word success means very different things to different people. It even changes for us as we go through our lives. And so, you're now on this path of wonderful success with the business rebuilding over $50 million in just a couple of years. And so, the business is in a good successful place now. How do you define success for yourself at this point?
Kimberly: I have made the decision that for me, the definition of success isn't a number, it's not a number, it's time. It's having the time to do what I want to do, the time to run a business the way I want to run a business, the time to have the professional flexibility, the personal freedoms. And sometimes for me, success looks like I get to work remote from Southern California in January. That's a successful life for me.
And sometimes I'm working 85 hours in Detroit, Michigan that week, and that's also successful. So, I think really, success is so personal to everyone, but it's that freedom, that flexibility. It's the whole, I'd rather have the time than the money, but we all know the money is what gives you the ability to have the time. That's how I would look at it.
Michael: I love it. I love it. Well, thank you so much, Kimberly, for joining us on the "Financial Advisor Success" podcast.
Kimberly: Oh, you're very welcome. Thanks for having me.
Michael: Thank you.