Welcome back to the 113th episode of Financial Advisor Success Podcast!
My guest on today's podcast is Stacy Francis. Stacy is the president and CEO of Francis Financial, an independent RIA based in New York City that manages nearly $280 million in assets for 140 affluent clients.
What's unique about Stacy, though, is her deep dive niche into working with and financially empowering women. From her RIA's focus on hourly consulting with women going through the divorce process before working with them as ongoing wealth management clients, to her launch of Savvy Ladies, a nonprofit dedicated to providing financial empowerment to women, and all stemming from Stacy's own challenging family situation of witnessing a beloved grandmother who stayed in an abusive marriage until the end because she wasn't financially empowered enough to leave.
In this episode, we talk in depth about Stacy's unique niche focus in working with women who were recently widowed or going through a divorce, the unique referral network that she's been able to develop by becoming known for a targeted specialization, how she effectively gets paid to market her wealth management services by getting paid hourly to consult with women going through the divorce process and then finding that nearly 95% of them stay on board for an ongoing basis thereafter, and why her biggest regret in the business is not making the decision to go all in to focus on her women and divorce niche sooner as her firm has grown as much in the past 3 years within her niche than in the prior 15 years leading up to it.
We also talk about the unique way that Stacy has structured her firm and developed her team to deliver services to clients. From a rotating team structure where one lead advisor may work with up to three different support teams of analysts and associate to service clients based on who will work with them best, to the firm's use of interns to efficiently deliver the labor-intensive aspects of their investment and financial planning process, why the firm has two full-time employees and its own intern in marketing to help support in its ongoing growth, and why Stacy not only uses a business coach to guide her own success but also hires a separate coach to work with her team members and navigate their success as well.
And be certain to listen to the end, where Stacy shares why and how she ultimately decided to grow her advisory firm beyond just delivering services to clients herself, and why she believes that financial planning is an especially good career for women because of how flexible it is to mold the business around your life, even as she recognizes that she didn't take advantage of that flexibility and ask for help early on in her own career when, in retrospect, she wishes she had.
What You’ll Learn In This Podcast Episode
- What drove Stacy to launch Savvy Ladies. [05:08]
- Why Stacy launched Francis Financial. [10:29]
- How Savvy Ladies is structured and what they do. [21:24]
- An overview of Francis Financial. [28:17]
- The firm’s unique team setup and fee structure. [34:00]
- The firm’s process for making new hires. [44:04]
- Why they have two full-time employees and an intern in marketing. [52:51]
- How Stacy utilizes coaching for herself and her firm. [1:00:48]
- How they find ideal clients. [1:04:51]
- The firm’s onboarding process for clients. [1:07:02]
- How Francis Financial charges for their services. [1:16:21]
- What Stacy wishes she had done differently. [1:32:51]
- What surprised Stacy the most about building a business. [1:36:42]
- Stacy's plans for the future. [1:46:42]
Resources Featured In This Episode:
Michael: Welcome, Stacy Francis, to the "Financial Advisor Success" podcast.
Stacy: Thank you, Michael. It's really exciting to be here. I've listened to...I think I've only missed a few. So it's really an honor to be able to be on the podcast as well.
Michael: Fantastic. So, like, welcome to the other side of the microphone, the other side of the headset...
Michael: ...of, you get to say it and not just hear it. And I'm excited about the episode today because I think you have a very unique sort of, I was going to say not even just background, but a business of what you're executing and what you're doing that, you know, for a lot of us I find in the advisor world, like, we have what we do, it tends to be for some fairly affluent folks, sort of the nature of the business model, for which we, at least a lot of us try to balance out by saying, "Look, you know, I do some work with some more affluent people and then maybe I do some pro bono services or something to help reach a wider range of people than what I can do in my practice itself."
But you have taken this to just a whole other level in wearing two hats of an advisory firm and a nonprofit called Savvy Ladies that helps to empower women who perhaps can't afford traditional financial planning services. And I know you have integrated these much more than just people who do their advisory business and do some pro bono work on the side. So I'm just fascinated to talk about how all of this came about and how you've created this sort of two-headed balance between...I was going to say two-headed monster but monster feels like the wrong label.
Stacy: Especially when you're talking about nonprofit. Yeah, I agree.
Michael: We're trying to do good things. This isn't a...I mean, it's a monster that you have to run two of them at the same time, that's kind of an interesting business challenge, but, like, two different really cool good things but very different types of people in financial need.
What Drove Stacy To Launch Savvy Ladies [05:08]
Stacy: You know, I will agree. When I first started the nonprofit and, you know, really for a few years after some of the hardest years of my life. And I started Savvy Ladies first, and it came from watching my grandmother stay in an abusive marriage till the day she died. And when I was strong enough and, you know, I asked her why she stayed, and she said because of money. And that, you know, for me was a game changer. It's actually why I changed my major. I was studying French and Spanish at Middlebury College and projected my life being a, you know, professor and eating baguettes and croissants for the rest of my life.
And my sophomore year had this coming to God conversation with her, and it was the biggest wake-up call of my entire life. Because here's this unbelievably amazing smart woman who just admitted to me that she, you know, stays with my grandfather because she doesn't understand money. And wow, that could happen to me. And that's what launched my life forward of essentially going into the finance world, and I tried to be as finance-focused as I could, which was investment banking.
And then shortly after she passed away, and unfortunately, the news came out years later that she passed away because my grandfather...she didn't trip down the steps, she fell down the steps by him pushing her. And when you lose someone and you struggle with what you could have done, when you struggle with the death of someone, for her she was the closest person other than my mother in my life, I wanted to make a change and to help other women. And that's when I launched Savvy Ladies. And, you know, the work that we do, we do have a good number of women who are suffering with unhealthy marriages, but we also have many other women, from, you know, girls who are graduating college and getting their first job, figuring out their 401(k), to women who are, you know, behind the eight ball with retirement that know they need to do something more. So it's really become essentially a love letter to my grandmother to pay it forward and help all the women that I know she would want, you know, us to help.
Michael: Well, it's a painful journey to have gone through that. When did your grandmother pass away as you were, like, going down this road of deciding that this was going to become the work you wanted to spend your life focused on?
Stacy: Yeah. So she passed away, and I had been thinking about this idea of a nonprofit. But to be honest, it was very scary to me and very frightening. You know, when I launched Savvy Ladies, I think I was 26, and then quickly after realized that a nonprofit is no profit and that really for the charity to do its best work, I was going to need to become very financially stable and successful so that I could essentially give money to the charity to do the work. And so then a year later, when I was 27, I launched my RIA, I always say IRA but I mean RIA, Francis Financial. And just kind of like you were talking about, you know, running the two being really difficult, I will be 100% honest, they were some of the hardest years. I would work about 35 to 40 hours as a non-paid executive director for Savvy Ladies, running that business. And I say a business because a nonprofit truly should be run like a business. And then I also then spent about 40, 45 hours, sometimes even 50 hours a week running Francis Financial. In fact, there are large swathes of time that I don't really remember a whole lot but...
Michael: They were just kind of 80 to 90 hour a week blurs.
Stacy: Yeah, it was. I mean, the positive is is that when you are passionate about what you're doing and you know what you're doing is the right thing, that that helps so much and it really fuels you. The other piece is that when you're in your 20s, when you're in your 20s, and to give you an idea, I went to bed at 7:45 last night, right? So I don't have the same, you know, steam and, you know, energy that I had back then. I have to say back then I had a ton of energy, you know, so I could get a lot done with not as much sleep as I need now necessarily.
Michael: So you were, like, relatively fresh out of college. I think you said like, you started...you landed in investment banking side of the finance world initially and then made this transition just a few years later to launch Savvy Ladies when you were 26 and then your advisory firm a year later?
Why Stacy Launched Francis Financial [10:29]
Stacy: Yeah. And, you know, I look back and think, "Wow, did I have gumption?" It's pretty amazing. But for me, I realized that there really wasn't a choice. This was work that I truly believed that I was put on the face of this planet for. And running a nonprofit was really important. And trust me, Michael, I tried to get a job at another fee-only firm. I interviewed with them all, but unfortunately, particularly back then, you know, in the early 2000s, there were not that many large fee-only firms that had besides just the owner and maybe one or two planners. So there really wasn't much of an opportunity. And I tried working at MetLife. I did that for about a year. And for them, this nonprofit, you know, they really were excited about it as a marketing tool. They thought it was brilliant. And that was so against.
Michael: Right. Kind of not the point.
Stacy: Right? Like, that's not what this is. That's just so not what it is. So I realized that if I was going to really make Savvy Ladies get up to working with, you know, hundreds and thousands of women each year, that I was going to need to start my own firm because I wouldn't question the financial commitment that we were going to have to make to make it, you know, reach that many women.
Michael: Right. Yeah to me, there's sort of an irony. Like, you launched the advisory firm to support the nonprofit and they were excited because your nonprofit can support the advisory firm. Like, literally, the polar opposite direction of what the grand vision was for you.
Stacy: Exactly. And I will say, and I've had a lot of very smart, fantastic people reach out to me to find out about launching a nonprofit, many times, you know, in the financial world, but, you know, other areas too because they see that it's a successful nonprofit that's, you know, doing some really unbelievable work. But the thing I would say again is that it's much easier to run a for-profit than a nonprofit, and a nonprofit you do need to have deep pockets. And, you know, I stopped counting how much money that I've donated because, you know, I think I probably would have sent my children to college several times over on that amount. But, you know, it's not the money that I really care about. As long as I'm financially doing the right thing for my family and we're hitting our financial goals, it's important for us as a family. And we talk about how part of our financial goals is to continue to make this charity live in honor of, you know, my grandmother, my children, their great-grandmother.
Michael: And it is a striking thing to me that, you know, we talk about finances and financial planning and, you know, having financial literacy so that you understand how to save and accumulate for retirement and invest those dollars to get there. And, you know, that's a lot of what we...just the world we live as financial planners. But to me it truly takes on a whole other dimension when the conversation shifts from not just, "Hey, I want to become more financially literate and save so that someday I can retire and not need to work and, you know, live the retiree life of leisure," but, "No, no, I need to become financially literate and save because it's the only way I can get out of an unsafe marriage." Like, it's just a whole other dimension than I think what most of us even the financial planning world necessarily are used to having conversations about and working with clients on.
Stacy: Yeah, not having financial smarts, not having money can put someone in a really dangerous situation, not only in their marriage but, you know, the types of women that typically, you know, find themselves being a victim of, you know, sexual harassment in the workplace not speaking up. You know, if you really look at it, it's not always us pointing the finger saying, "You should have said something." Well, she needed her job, she was paying for her child with, you know, maybe medical, special needs or whatever. She could be a single mom. And, you know, we're still dealing with, you know, about half the women who are supposed to receive child support don't receive 100% of their payment. And again, you hear from, you know, other people that might judge to say, "Well, take them to court." Well, you know, the cost of taking someone to court is not small potatoes either.
So I really believe that having good knowledge about money and then being able to start to save money and have that, those are the best gifts any woman could ever give to herself." And the unfortunate piece is, you know, of course, you look at the numbers, you know, women are much more likely...you know, three times more likely to be old, alone, and impoverished. When you look at those numbers age 65 and above, you know, the women living most close to this poverty line and sometimes even only truly on their Social Security check, women who are divorced. And it's really a problem. And that's where you start to see having fewer options in your life.
Michael: You know, again, I mean, there's just interesting parallels to me. We have these discussions about the idea of accumulating dollars and wealth for financial independence, for financial freedom, of, you know, to not need to work or do the work of your choice, but to me, you really highlighted a whole other interesting dimension, that the ways that money buys financial freedom is also the financial freedom to leave a dangerous relationship, the financial freedom to actually be able to speak up about sexual harassment in your workplace. Because you know what? If they decide to have a backlash against you, like, you're okay, you've got money in the bank. You can pay your bills. You can go find another job. You're recently financially secure. Obviously, we all hope that it doesn't turn out that way. But that's, you know, a real-world risk for anyone that wants to speak up about problems in the workplace and money indirectly becomes the constraining factor. Because all of a sudden you have to weigh like, "Is it so important to me to speak up about this that I'm willing to risk my mortgage and the roof over my kids' head?"
Michael: Because that's what happens when you don't have the financial stability in the first place.
Stacy: Yeah. Michael, you completely hit the nail on the head. And even the fear of negotiating your salary. You know, if I negotiate and God forbid they get ticked at me and eventually, you know, fire me down the line, I mean, there are so many different aspects that, you know, go into that. Even the balance of the roles of women and men in marriages, happy marriages, we've done a lot of research and interviewed women who have gone through divorce, and what's interesting, 70% of those women didn't really play a role with the investment decisions and financial planning. Men were more. The majority actually had a role in the bill paying. You know, the bill paying, the day-to-day, you know, which is great.
Michael: I feel like that's still the classic gender role dynamic we see amongst most clients. Like, he handles the balance sheet, she handles the cash flow. Like, he's got the investment accounts, she's got the bank accounts.
Stacy: Yep. And it's a problem for couples who end up getting a divorce because now she has no clue. She has a lump sum of money that she has to make typically last for the rest of her life. And even if a, you know, Prince Charming and they live happily ever after, you know, the majority of women are going to be alone at some point in their life, having to make financial decisions on their own just because we tend to outlive our spouses. So, you know, this money relationship that we have, the not getting smart about investments and retirement planning, it's got to stop and it's got to change. And that's part of...with Savvy Ladies, the goal is to bring that to women in a way that is not intimidating, without judgment. Even the name Savvy Ladies doesn't say money in it. And there's a reason that we didn't use the word "money" in the name Savvy Ladies. We wanted it to be interesting, approachable, and a place for women to go where they felt safe, heard with no judgment.
Michael: Right. Everyone wants to feel a little more savvy, right? It's positively aspirational.
Stacy: Exactly. Exactly.
Michael: And I love even that your tagline around Savvy Ladies is financial empowerment.
Stacy: Exactly. And financial empowerment is different, you know, for every woman, you know, and also what she needs might be very different than, you know, a person, her own image. So, on the website, we have hundreds of TED Talk-like topics. Everything from, you know, how to invest in your 401(k) to how to get out of debt to how to save for retirement. But then we also have live webinars where women can, you know, type in their questions and have them answered specifically about that topic.
And the piece that I'm actually most proud of is our helpline where women who have access to all this great information but still have questions about, "Well, what does that mean for me?" And I know I've felt that way. I've read a...you know, you read a great book and then you think, "But what does that mean particularly for my situation?" And so our helpline matches these women up with financial experts, Certified Financial Planners, to help with whatever, you know, financial challenge they're dealing with and helping them kind of think through that, talk through that. And of all the services that we offer, that has definitely been the most well received and I think also, you know, the most impact.
How Savvy Ladies Is Structured And What They Do [21:24]
Michael: So can you talk to us a little bit more at a high-level about just Savvy Ladies? Like, just, I mean, what is the structure of the organization? You know, what do you do? How do you reach the people that you're serving?
Stacy: We have an executive director. One of the best gifts I ever made to myself was firing myself as the executive director because that's not my background. But, you know, there's always this chicken and an egg where you have to be able to afford a good executive director, which we're very blessed we have. We also have a woman who plans all of our programming and events, and they've been with us each five years. It's really just a fantastic team. And they're the ones who are, you know, essentially making the wheels turn and getting the newsletter out, doing our social media, making sure that all of our Wednesday Wisdom series, all of our webinar programs are planned and going, you know, up live. You know, our live events. We just had an event here in New York. We had, you know, over 320 women sign up, so making sure that that's organized. You know, fielding questions from the helpline and matching them up with the right CFP with the right background and experience. So it's definitely a lot of work, but it's been wonderful.
And, you know, all of the different services that we provide, you know, the nice piece about it is again, there's no charge. And we also don't income-test, which I think a lot of people are quite surprised by. But my grandmother would not have qualified from a household income perspective for services like this. You know, they had some money. Not a whole lot, but they had some money. And, you know, I believe that we shouldn't necessarily discriminate against people who might actually have a 401(k) or individuals, you know, who maybe don't have debt. So we are happy to help wherever a woman is in her financial life.
Michael: Well, and you make an interesting point, again, kind of getting back to your grandmother's situation, that, you know, there, unfortunately, are households where, either household's balance sheet of net worth and assets or the household's tax return and income, like, this is a reasonably financially stable, well-to-do household, but that doesn't mean the woman in the household is financially stable and secure.
Michael: And in fact, that can actually be part of the point of the problem is that she's not. And it's an interesting point. You know, the moment you put income or asset limitations and even well-intentioned, you essentially disempower and disinvolve the financially disadvantaged spouse in an otherwise financially affluent household.
Michael: So when you talk about all these additional programs like creating these webinars and running the helpline, so you've got an executive director and then someone who's helping to organize all of this programming and events but, like, who does the webinars? Who does the helpline? Who's actually interacting with all of the women that come to Savvy Ladies for help?
Stacy: So a lot of amazing generous people who have expertise in everything from Social Security to tax planning. So we will often reach out to, you know, fellow financial planners to ask them, "Will you do a webinar for us?" Often, you know, we'll reach out to book authors, so Jean Chatzky has given a webinar and also spoken live. Essentially, we just go out there and blatantly ask and typically we get a resounding yes, "We would really love to support you." And whether that's, you know, a webinar or that's a live event. But we've been really blessed with just some of the most interesting, giving smart people in the finance world.
And sometimes even the topics are not what you would think as financially related, like how to dress for success, how to negotiate the corner office. But again, these are all important things that women need to know to get ahead in their life financially. So we've been very blessed that we have no lack of experts to give these presentations. But I will also say that anyone who wants to help out, either by giving a webinar on a topic that you might feel passionate about or getting involved with the helpline, you know, the helpline typically, our volunteers, we only ask one to two hours a month. So we're very careful about how many women we match them up with for that one time call.
And then the other piece that's really powerful is that we heard from our volunteers, which again are CFPs, many of the people that, you know, we know in common wanting to work with the women for a longer period of time. And so we tested a six-month relationship, a six-month coaching program. And we just launched that this year, in 2019. So that is going phenomenally well. And we are looking for more volunteers for that because it's obviously a bigger commitment, and we don't want to have our volunteers have to give any more than one to two hours a month just because we know that running a firm at the same time is a lot of work in itself.
Michael: So for anyone who's listening, any CFPs who are listening who are interested in that, in supporting as a volunteer, like, where would they go if they wanted to contribute a webinar or to, you know, be a helpline volunteer?
Stacy: So if you go to the website, and actually it's a really fun website, too, it's savvyladies.org, savvyladies.org. And, you know, there's a lot of great content and also information on how you can get involved as a volunteer.
Michael: Okay. And we'll include some links out to the website and the helpline area as well. So for folks who are listening, this is episode 113, one-one-three, so if you go to kitces.com/113, we'll have some links out to Savvy Ladies and helpline and other programs.
An Overview Of Francis Financial [28:17]
So you run Savvy Ladies and then you've got this, like, other advisory firm thing over here that...
Stacy: In my copious spare time.
Michael: Yes, and all this copious spare time. So talk to us a little bit about Francis Financial, the advisory firm.
Stacy: Yeah. So Francis Financial, I am so proud of where we're at. And we have so many really cool things going on. Everything from looking at employee ownership, essentially, and then a five-year plan, meaning that if I get hit by a bus in five years, no one is going to notice, to, you know, taking our operation manuals and actually, you know, embedding them into technology to be, you know, more automatized, to, you know, really growing our team bond through, whether it's retreats or working out with private trainers and yoga. I've never been more excited than where we're at right now.
And I think the biggest piece that I know I'm working on is that me as an owner, as I do this, which you know it's the right thing. Kind of like when you send your child off to college. And I have a, you know, soon-to-be 13-year-old and 10-year-old. So I have a few more years at least for that, but that feeling that a parent must feel of like you know you're doing the right thing as you launch your child into the world and into college and beyond, that's where I'm at a little bit with Francis Financial, because I'm launching it to be independent of me. And it's not that I want to retire. I'm 44, so, I mean, they'll probably kick me out of here when I am coming in still with my walker and, you know, doing the intervention.
Michael: It's the great thing about the advisory business, this whole like, there's going to be a wave of baby boomer advisors retiring because the average age of the advisor is mid-50s. I hear that I'm like, "Oh, so the average advisor can work for about 25 to 30 more years from here, why would you leave? It's a great business."
Stacy: Yeah. I know. And I'm like, "You guys, you know how we are and we have that diminished capacity form for clients, you're going to need one for me so that, you know, you know who to call and say, 'Okay, she needs to leave.'"
Michael: "You've got to extract her now."
Stacy: Yeah, yeah. So it's, you know, I've never been more excited, more challenged. I've never been really more challenged, and not from a perspective of working hours. I definitely have much more work/life balance, thank God, or else I don't think I would have a marriage, and my kids wouldn't know me. But definitely more challenging from a, you know, managerial, thinking big, you know, just all the stuff that comes with what looks like, you know, phenomenally easy success is really a whole lot of work and trial and error.
Michael: So can you give us a sense of just the size of the firm now? Like, how many people are there? How many clients are you serving? How do you measure size? I don't know if you're revenue or assets under management? Like, help us understand just size and scope of the firm at this point.
Stacy: So we keep very meticulous count on numbers. And I have to say that's been a big part of our success. We have 140 AUM clients. We have about 40 divorced cases. And I can talk a little bit more because we have a unique part of our practice where we work hourly on divorce cases in addition to that AUM model for those other 140 clients. So that is our practice.
The way that we are set up with individuals is that we've got three teams. So each team takes a third of those 140 clients, so about roughly 45 clients, I guess, per team. And on the team is an analyst, typically a mid-level associate, and then someone who might be considered the lead. And they do everything for that client with respect to everything from account opening forms to trading to financial plan. So they're kind of like their own microcosm within themselves. And the way we're set up, let me see, we've got a total of six planners that are analysts and associates, then myself, and then my most senior colleague, Avani, who she knows if I kick the bucket, she's running the firm. So that's kind of the structure that we have. Something that's different about us than most firms is we have a pretty big marketing team. So we have two full-time people who do all of our marketing events, press, as well as an intern. And then we have another person who is my executive assistant as well as office administrator to make sure the office is running as, you know, cohesively as possible.
The Firm’s Unique Team Setup And Fee Structure [34:00]
Michael: So I've got a couple of questions around this. So you have these three teams of analysts, associate, and leads, so are you one of those leads and there are two other teams or they're like three separate teams with analysts, associate, and lead and then Stacy is like the...you know, rides over top of all of it and manages these three teams?
Stacy: Great question. So there's two permanent people, there's two permanent people on every team, and then who the lead is varies between, from one client it might be myself, typically the higher-net-worth client or a legacy client that's been with us, and for another client that comes in, it might be that team of two with Avani. And so as each potential client is coming in, we're doing the, you know, analysis and kind of looking at, "Okay, who's the best team to be on them and who's the best lead?" So there's actually a two-step decision process. So, you know, which analysts and associate are the best for them based on personality, expertise, and then who's the best lead?
Michael: So how do you set that team pairing then? Like, I get it for lead... this advisor has a deeper expertise in a certain topic or, you know, works better with older clients or is the fit for our most affluent clients or is the fit for our less affluent clients. Like, I know a lot of firms that pair that way. But how do the other team people, like, how does that matching system to a client work? Like, what would be the filter for why a new client coming in would get team A and not team B?
Stacy: Good question. Good question. Well, I will tell you a big piece of it is availability and workload. So, I mean, I'd love to say it is all philosophical, but that's a piece. So we met a woman, a potential client, she currently works with an advisory firm where it's all men, and she made it very clear that part of what attracted her to reaching out to us was our focus and emphasis on women. And so that was a no-brainer, where the team of Natalie and Al, they're always paired up together, they work really well, that, you know, Natalie and Al were going to be on that team no matter what because she specifically mentioned to us that she wanted to work with women.
Stacy: So that's how it goes. And what's nice about the teams is, you know, Natalie and Alexandra are always together. Davon and Shweta are always together. Peter and Paul are always together. I've been trying to think about hiring a "Mary" because I think that would sound really good on the team but...
Michael: Yeah. You would round out that Peter and Paul very well.
Stacy: Exactly. And, you know, for, you know, each one of them, again, it's when they're available but also, you know, who the client, the potential client, is really asking for helps. And in fact, I had a matrimonial case that I was working on, and a husband and a wife together. And in talking to the husband, I could tell based on who he was and his background, sounds awful, but I needed a person in there that he could essentially look to as a man. And so it was me, and then I put one of my male analysts in with me. And it helped the meeting go along much more successfully. And again, people can judge me on, you know, even feeling like I needed a man, but, you know, this was a gentleman that as soon as I walked in made sure that I knew that he had an MBA, that he, you know, had worked on Wall Street. You know, FYI, he's outspending by $400,000 a year, so at least after the meeting I could make a joke saying, "Well, what MBA is stupid enough to do that?" But I didn't say that to him, but yeah. So we figure out the teams based on that. So it'll be myself, it will be Davon, and then Shweta that will be part of that team for their case.
Michael: So it sounds like a lot of the team assignment for you is not necessarily, like, technical specializations and sort of area of expertise-driven, it's just very client communication, human dynamics-driven of like just literally, "I think these two people are going to do a better...are going to be a better fit for this particular client."
Stacy: You've got it, Michael. Because our teams are a little different, where, you know, we don't have a separate team that just does investments and advising there or a separate team that just really focuses on insurance or tax planning, each team is, you know, having to become competent and excel in all of those.
Michael: Right. No, I've got to ask from the lead advisor end. For so many advisors I know, and we do a version of this even in our advisory firm, you know, we've got essentially, I guess I call it dedicated team. So, like, there are planning associates and client service administrators that support our lead advisors, but they're very much, like, set dedicated relationships. Like if you're this lead advisor, like, these are the specific people that are always on your team working with your clients. And it creates a certain level of just rapport, comfort, and handing off team-related tasks and activities because you know the people that you work with day in and day out.
And so I'm just curious in this structure that you've got, I mean, it sounds like a lead could at any particular point be working with any one of three different teams just depending on who the client is. Is that a switching challenge for you? Like, does that create some synergies or positives that are unique to the model? Like, I'm just wondering how you came to that as opposed to trying to set dedicated teams of lead, analyst, associate all in one.
Stacy: So there's a couple of reasons for it. Let me go first to what I think are the positives is that because I'm working with each team, I have clients with every single team, as well as Avani. We can have really smart, intelligent conversations about where we see people excelling and where there might need to be more education or communication skills. So it's really powerful. And it also helps us make sure that there does not become any silos. Because you don't want, you know, one team doing performance reports and financial plans this way and another one doing it that way. And, you know, we have things in place. We have operation manuals. You know, we're doing all of that, of course, on top of it, but it helps us being in the heartbeat of the firm to make sure that, you know, our primary job of making the CFPs the best they can be, that we're doing that.
Michael: Okay. Okay. Interesting. So I like the idea of just it kind of forces the breakdown of silos when leads are rotating around to different teams. You will ensure, I'll call like a cross-pollination of ideas across teams. So I know the challenge, absolutely, for a lot of firms is once they have dedicated teams and they live into that for a while, the whole team tends to take on the, well, the lead of the lead. And since human beings are different, then over time the teams can start looking a little bit different in what they do and how they do it for clients. Because, like, you have to be proactive about creating cross-pollination across teams if you don't mix and match them the way that you guys do.
Stacy: Exactly. And they can also start to...you know, if you have the same team with the same people, they can function like their own firms. And that's an issue, just from a business owner perspective. We have, you know, really happy people, which is great, but I'm also not stupid. You know, I want to keep my toe dipped in to make sure that everything is going the right way and that the clients stay with us. And we've never ever had someone leave and take a client. And of course, we've done all the right things, we have non-competes and we have things like that, but I also have heard horror stories from some of my colleagues. And that's enough to scare the bejeebers out of me.
Michael: Right. Well, yeah, it's an interesting point, right? You know, the risk in team-based environments I think has always been, if a team gets too set in its own ways and structure with this dedicated base of clients and becomes, we'll call like too reliant on only themselves, it literally becomes easier and easier for them to break away as a team. I mean, the good news, at least, is if it's a team, you can't just have one person break away, they've got to break away as a team. And I know some firms that have actually gone to team-based because it's harder to break a team out than it is to break an individual out. But it still becomes a risk for the business that, you know, the more dynamic your teams are, the harder it is for any one grouping of them to ever actually figure out how they might try to break away, leave and take clients because there's no fixed team thing for them to break away with in the first place.
The Firm’s Process For Making New Hires [44:04]
Stacy: Yeah. And, you know, I know that part of it is definitely me being paranoid, but sometimes being paranoid and just making sure that everything is okay is better than unfortunately having a situation. And I haven't really had to let go of many people. I've been very blessed in that aspect, partially because pretty much any person who comes on to work with us has to do a six-month internship. And out of the last eight interns, I've only hired two. That means the other six, you know, they could have been nice or they could have been not nice. They could have been great at their job or not so great. But we need the combination of both. And so finding that sweet spot of those ideal people is much easier when you've worked with them for six months-plus.
Michael: I'm fascinated by this. So anyone who comes on board has to do a six-month internship first? Just like your equivalent of a, you know, "We're hiring you on six-month probation?"
Stacy: So it's actually not even probation, it's just like six months internship. And so the way that our firm has grown is that we hire either, you know, out of college or maybe only a year after college, so pretty young folks that are excited to have this experience, and then give them as much education as we can through obviously, you know, paying for their CFP. We pay for them to get their Certified Divorce Financial Analyst designation. We'll have them, you know, go in and do...go to the conferences. They also go to FPA Residency. So we do everything we can to train them, and they grow up in our firm and become our more senior people. I've been able to do that with pretty much all of our staff except for Avani, who, you know, has been in the field for almost 20 years. I couldn't really ask her to do that.
Michael: I was going to say there is some alternative protocol if you're coming at them into a more senior position?
Stacy: Exactly. And then I have two people who are career changers. But those...out of all the people who work at the firm, those are the only three who didn't do an internship.
Michael: No, I know one of the concerns for a lot of advisors out there as well these days is just, it's hard hiring young people, you don't know if they're going to stick with the firm. It only gets more painful if you invest all this training and time and resources into them and then they leave the firm. You know, you seem to be hiring particularly young and straight out of college anyway. So is that not a concern for you? Is that just, "Hey, it's a cost of doing business, we move on, but we're going to muscle forward anyways?" Or how do you end out there when so many other firms seem to be very reluctant about the path that you've chosen?
Stacy: So when I look at it, there's two types of investments. There's the investment in your intern program and your interns itself, which no doubt there is, especially if it's only six months. And, you know, we've had some people decide to do it later, you know, stay later because they were so enjoying themselves and we ended up hiring them. But there definitely is an investment, but the biggest key I have found is to make sure that everything is documented so they know exactly what they need to do step by step so that yes, we're training them but, you know, now you have a manual to follow, right? So follow it. And that's part of the things we look at is, you know, making sure that you can actually follow directions. For newer, younger employees that are, you know, hired out of that internship program, it's very rare, and I'm knocking on wood, it's very rare for us to lose an employee, very rare. Both from a perspective of, you know, me having to let someone go to also someone leaving on their own volition or own will.
Michael: You've got six months into them with an internship, I would imagine most likely employee performance problems will have shown up in six months. You will know if this is likely to work or not.
Stacy: Yeah. I mean, as happily married as I've been with my husband 20 years, but it's kind of like dating. Like, you know, the first time you go on a date, they could seem great. Kind of like, you know, interviewing you. Even the second or third date, but trust me, six months of dating, by then you know.
Michael: Yeah, the facade comes off. We're comfortable with each other now. You get a pretty good sense of what this relationship is going to look like.
Stacy: Yeah. You know, and we do pay, we do pay for our interns. Not a huge amount but enough for them. And then we also make sure that they're having a good time. You know, so we just went on our winter ski, snowboard retreat up in Vermont. We do it every year. And, you know, of course, all of our interns came. And they had a ball. You know, they stayed up to 4 in the morning. And trust me, I could tell they had a ball because I went to bed at 10 and really couldn't sleep because they were having such a ball. So, you know, we try and make it a place where they really appreciated it and they're having fun. And, you know, the ones that we really want to stick around, you know, in some ways we're kind of wooing them as well.
Michael: And what do the interns do exactly? Like, do you let them in front of clients? Are they doing more of behind-the-scenes work? Like, what are you giving them to do that I guess both vets them for the firm's purposes and just presumably gets some stuff done so that, you know, the firm is profitable because you're paying interns to do you helpful work?
Stacy: So we have two interns at any one time, and one is marketing-focused because that's the route that they want to go, and then the other one will be, like, the finance team. And, you know, the marketing-focused person, you know, we have several events each month, all different kinds, from, you know, lunches with 5 other people to, you know, events with maybe 30 people, all different every month. So they're helping plan those things. They're helping monitor for, like, press hits of us being quoted and when does the article come out? They'll help us with writing articles for the press. They'll help us with all the birthday cards for clients. We follow up with cards. Anyone that we've met with that week will get a handwritten card or like a networking partner. So they are doing kind of like all that.
And then on the finance team, they are helping with creating what we call investment plans. So the second time we're meeting with a potential client, we're giving them a full analysis of all of their accounts down to the individual holdings and giving them very detailed recommendations. So your average expense ratio is X, your standard deviation is Y, the ratio of bonds to stocks is, you know, Z, and you have this percentage that's considered, you know, low quality, more junk bond status. So it's a real deep analysis.
And then also included in there is, you know, just smart things like you have no life insurance, you have, you know, only disability through your employer. You need to potentially look at refinancing your home to get a different mortgage rate. We need to pump up our 401(k) savings. So there's that piece there where we have templates for these actual...this investment plan analysis where they're going and doing the Morningstar analysis and doing the first swath at each of these things based on the detailed client notes that were taken during that first meeting with the client.
Michael: Okay. Interesting. And again, this is kind of the point, like, you've got certain repeatable processes, certain things that you do over and over again for each client or each prospect and, like, that's the kind of thing. You make a manual, explain how it's done, give it to an intern, let them repeat that process.
Why The Firm Has Two Full-Time Employees And An Intern In Marketing [52:51]
Michael: And so you've also mentioned that you've got two marketing people, which I find is not common for advisory firms. You know, I think when you look at the industry benchmarking studies overall, the average advisory firm spends about 2% of its revenue on marketing. You've got two full-timers on marketing. So what are you doing exactly from a marketing end? Like, what are these people doing that you're finding is I guess working to the point you can justify the ROI of having two full-time marketing staff members?
Stacy: I know. It's interesting because whenever I look at the surveys and I try and match up with salary, you know, to kind of show them where they're at, I'm like, "Well, you don't exist very often, but when you do, this is what it looks like." So they do a lot of work. Our referrals for last year were a little over 250 referrals that came to us, and a good number, I'm just looking at the numbers, about...
Michael: That's a big number of referrals.
Stacy: It's a big number. It's a big number. Of those...it's actually 255, of them, they were able to have conversations and clarify that 132 are not ideal, 80 are ideal for us, and the other 43, we have yet to really be able to get that AUM number from them of whether or not they're going to be ideal. So that is a big part of what they're doing is they're going through with all of these referrals that come from many different places, you know, doing those pre-discovery calls so that when we're sitting in a meeting with a potential client, we're really proud. Because I think we only had one meeting in 2018 that actually was with a person that was not ideal. They actually had, you know, sitting down with the actual financial planning team. So they're really important because they are able to make sure that we're working...you know, spending our time with people who can actually really afford to work with us, which for us we have a minimum of $1 million.
Michael: Interesting. Because I feel like for most firms, like, it's the advisor, it's often the leader, the founder, like, whose job is to take all these prospects that come in and talk to them and interact with them and try to qualify them, and, you know, if they're qualified try to move them on through the funnel. And you specifically don't, it seems. Like, your marketing department is the screening process before they even get to talk to an advisor.
Stacy: Yes. Because, Michael, I can't be trusted. So, you know, to give you an idea. I spoke at a trusts and estates conference and they had a shelter there, and I walked home with a dog, a puppy. So my team knows that whoever I talk to, I'm going to say, "Sure, you have $2 to your name, come on. Come on in." So I realized that for me in particular, I can't talk to potential clients because I'll say yes to everyone. And while that sounds like, "Wow, that's a great thing," it's actually not. Because then it means that the teams are overworked, that everybody is stressed out, that we're not, you know, necessarily reaching our AUM goal of how much we want to bring in each month. And so we've realized the best thing to do is to cut me out of that process. It's also much more efficient with my time.
And it's a screening via phone. And Sunaina and Gabrielle, who are our two marketing people, do it. And, you know, they have a list of questions. And, you know, essentially, again, back to that operations manual of all the things they should ask. And it's really helpful because even if we're not a good fit, we can give them names of great financial planners who will be.
Michael: And out of curiosity, what kind of things are on this, like, set screening questionnaire that they use? Like, I'm going to presume it's a fairly just rigorous like, "Here are the things we cover and at the end, we decide whether you're a good fit to sit down for a first meeting with Stacy or one of our other lead advisors?"
Stacy: Typically, we put it in the perspective of, you know, we want to honor your time and make sure that we're a good fit for what you're looking for and that you're a good fit for the types of clients we work with. And often we'll go into the types of clients that we work with, which is pretty easy. You know, the majority of our clients are women who have gone through divorce, women whose husbands have passed away. And then that's the lion share of our clients, about 70%, and then the other 30% are happily married couples, but she will be involved in the finances. And often she's the one who's reaching out to us. And we also talk about, you know, what's not working right with your current financial advisor. If you were to hire that perfect financial advisor and talk to your girlfriend over Cosmos next year, what would you say that she did for you and how she made you feel?
Michael: I love that. Like, there's a famous question out there for prospecting that I think comes from Dan Sullivan of Strategic Coach. And it's something to the effect of like, if this relationship works well for you three years from now, like, what would you look back on to describe what worked that made it so beneficial? I love that you essentially have a version of this but targeted for your audience. What did you say your...if you're sitting down with your girlfriend over Cosmos a year and a half from now, what went well about this relationship that made it work for you?
Stacy: Yeah, it's using a way to not be intimidating, again, because so many people are frightened when they call. They're worried about being judged. This is something...for our clients, a lot of them are what we call phobics. It's a money personality that sounds exactly, you know, what it is, of, you know, not wanting to deal with their money but they're being forced to because they're now on their own. So we've been told by women who admitted they'd rather be getting a root canal than, you know, coming to visit us for that first time because they were so frightened.
Michael: Right. Because they're either afraid of money in general or they're afraid of feeling judged?
Stacy: Yeah. I think both. I think both. You know, I liken it to, you know, imagine, and I know you fly a lot, you know, you jump on a plane and as you're going past the cockpit, which is, as you remember, you know, always on your left, and the pilot, he says to you, "You know, Michael, I'm not feeling well, do you mind taking over on this flight? I hear you fly a lot." You know, you would think he was absolutely crazy. But this is what we're telling women to do. You've never, you know, learned how to fly a plane, but here we are, we're asking women to make really smart decisions about money, typically a nest egg that is going to have to last them for the rest of their life, this lump sum they're getting from their divorce or a lump sum because their husbands passed away or inheritance or whatever that story is, it's extremely frightening.
And I think in particular, I talk about how this is the worst market for divorced women than we've seen in almost a decade. And the reason why I say that is not the returns, I say that from the unbelievable volatility. Talk about someone being frightened and then you have a market like, you know, we saw in 2018, yeah, she's pretty nervous. She's pretty nervous and has a lot of reason to be nervous.
Michael: Well, and I love that, again, your screening process is essentially, "If I talk to her and she's nervous, I'm going to want to help her even when I shouldn't, so I'm not going to do the calls myself.."
How Stacy Utilizes Coaching For Herself And Her Firm [1:00:48]
Stacy: Yeah. I've learned, and actually, everyone has gotten better about having conversations. And I know when a conversation is coming is because someone walks in my office and then they close the door. Then I know, "Okay, I've done something wrong, what am I in trouble for now?" And I kind of rack my brain like, "What did I do? Who did I take on? What did I commit to that I shouldn't have?" And that's part of...it's part of knowing yourself and knowing your strengths and knowing what you need to work on. And, you know, I will tell you that I've not done it alone. I hire coaches. I'm actually working with two different coaches right now. Tracy Beckes, and we're actually going to be meeting tonight. I meet with once a month to help me, you know, essentially get out of my own way and stop, you know, dealing with trying to be part of, you know, every single process and part of the firm.
And then I also hired Diane MacPhee to help my team. And so she actually meets with my team as well separately. So she'll meet with, you know, one finance team, you know, maybe Davon and Shweta together, and then, you know, each of the other two, and then she meets with the marketing people separately to be another support for them. And it allows us as a group to make the firm better and to deal with the growing pains that come along with a firm that originally the founder, me, was in every single client meeting with every single client every single time. And how do you make that transition in a way that's good for your clients but that also empowers the team and make sure that they have credibility that they need in front of the clients? So, it's been really exciting, but I definitely...throughout this whole process, there's no way that I could have done it alone. There's just no way.
Michael: It's interesting that you are not only working with a coach yourself but that you have a coach for the team members. Like, that's something you pay for, the business pays for just to bring in coaching for team members as well?
Stacy: We do. And part of the reason is that I want to make sure that each of our staff members has every tool possible to be successful. And I know I don't have all those tools. You know, I'm learning just along with them about how you run a firm that's growing as quickly as we are and, you know, managing all that. And part of it also is for me, it allows me to kind of step away and have confidence because I know that I'm not just jumping my staff in a pool with a big weight on their leg asking them to tread water. Instead, I'm saying, "Okay, here's some floaties, you can jump in the deep end. And you've got floaties, though, you're going to be okay. You've got someone there."
You know, those difficult conversations of, you know, "Are you going to lose me $250,000 every quarter?" You know, being able to respond to those types of concerns from a client. What do you say? How do you say it? Now, all those different pieces, you know, "Why isn't Stacy in my meeting?" You know, how do we talk about that? You know, I don't want them to think I'm in Costa Rica, you know, and never away, but, you know, that I'm also here, and how do you find that balance? So, again, just empowering the team and giving them the support they need to really thrive and, you know, become their own.
How They Find Ideal Clients [1:04:51]
Michael: Interesting. So I want to come back for a moment around the marketing discussion again. You know, you've mentioned that you had, you know, this flow of referrals last year, 80 were ideal. How do you define ideal clients? Is it just those metrics like, you know, divorced women, widowed women, has at least $1 million of investable assets? Like, is that the criteria?
Stacy: That's number one, yes, and then there's also the personality. So we had a woman call who...actually, interesting enough, the one that was interested in working with a woman. After talking with her, we actually said, "You know, you should become a CFP. You really should."
Michael: You don't need us. You need to be one of us.
Stacy: Exactly. I tell you, Michael, it was such...I mean, we had so much fun in that meeting. And she's so excited about this stuff and smart. I mean, just really unbelievable woman, and she's so not an ideal client for us, right? You know, she loves doing all of her investing. She really likes it. And, you know, she's good. So for her, it was kind of like, "You know what? Hey, you're looking for your next profession, you found it. You found it." So we sent her, after our meeting, all the, you know, "Go here for the CFP." And she's also looking at the Financial Therapy Association, which is kind of who she's thinking about, you know, from the more emotional perspective and particularly working with women. So, you know, there's that piece too of, "Are we an ideal client for you? You know, are you an ideal client for us and, you know, are going to get a lot of value from us?"
So some people will come to us also that we'll screen out that really just care about investment management. And we know that they're not going to be with us. They're going to be essentially renting us, they're not going to be buying us. People who are buying us are people who are all in that want wealth management, so that's investment management, but all of that other really important value-add of the financial planning piece.
The Firm’s Onboarding Process For Clients [1:07:02]
Michael: And so can you talk to us a little bit more about what that process is? Like, for the client who does meet your minimums and the rest, like, they're an ideal client and you decide to work with them, like, what do you do for clients, right? I find we all tend to say we do this financial planning, wealth management thing, but we don't quite all do it the same way. So, like, what does the process look like for you? If I'm coming on board and I've said like, "Okay, I'm signing up with Francis Financial," I've agreed to come on board, like, what comes next? What happens for me over the next couple of weeks and months?
Stacy: So that next, that second meeting when they receive the investment plan, looking at all their investments and kind of our recommendations, and also kind of the template of financial planning of these things. You know, we think these are some of the things that we definitely should be looking at. That is our launching off point where we're going to start to write their financial plan, and we're going to start to really look at what is the ideal portfolio for them, and look at things a little differently. That financial plan helps inform us how they need to be invested. Because it could be that she is conservative, but based on her plan, she needs to have more equities than, you know, we originally had thought. So we look at things in conjunction. So we're typically trying to deliver the financial plan in that next meeting along with, "This is the investment allocation that's going to be essentially the engine to get you and to make that financial plan work."
We don't do taxes, but, you know, we, of course, are looking at the tax piece. We're working very closely with the CPA. We're also reviewing all of their property and casualty insurance. Of course, looking at life insurance and disability.
And we're fee-only, so we essentially, you know, outsource to people we really like and trust. One of our biggest referrals is to estate planners. I would say, you know, two out of three people that come to us need to update their estate plan, especially because their husband has passed away or, you know, they've just gotten a divorce. So we try and, you know, include all of those different pieces. Of course, college planning, you know, retirement planning, the things that you think of. But what we do find is that tackling each one of these pieces, we have to do it over time because it's too intimidating. It's too much.
So we use Tamarac for our CRM, where we're essentially programming it to have all those different tasks for that client so we don't forget them. And then we're also using eMoney for the actual financial plan delivery that we use. And we also use the portal and the website, where the client can go on and see all their assets there at the same time.
Michael: Okay. So what does this kind of planning meeting process look like or how does it play out? Like, I'm just sort of thinking from the beginning. So there's a, I'm interested in the firm, I contact you, there's a screening call with marketing to figure out whether we're going to move forward, I qualify as an ideal client, so it works out, we're going to move forward. You've got an initial discovery meeting where you start getting to know the client. You've got a second meeting where you present this investment plan analysis of just, I guess not so much, "Here's what we recommend," but just, "Here's literally where your investments stand today." Obviously, you can identify any concerns or weak points or bad performers or high-cost stuff or whatever it is. Then, like, the next meeting you start presenting the plan or pieces of the plan as we're now, like, three meetings into the process?
Stacy: Yeah, we're trying to get that plan going as quickly as possible. The positive is that we have a huge amount of the data for the financial plan. Because that discovery meeting, we have the same questions that everyone asks. And we've memorized them, so it doesn't, you know, look like it's canned. But, you know, we know where every single dollar is. We have all the information on how much life insurance they have. So we have a lot of data already. And, you know, we may need a little bit more. We may need to, you know, get their monthly spending for the financial plan. And a lot of times we'll actually do what's called a lifestyle analysis. We do this quite often for our divorce cases where we'll actually go through a year's worth of their credit cards and their checking account and actually piece it together for them because a lot of clients aren't really quite sure. You know, and we may need to actually ask for statements for the property and casualty and their life insurance. But I would say the vast majority of information we already have before we're drafting that financial plan for the third meeting.
Michael: Okay. Interesting. I like that lifestyle analysis, just like a deep dive into the past year of, "Where has your cash gone so we can just get a handle on where your cash is going in the future?"
Stacy: Yes. Typically, you know, people think of forensics to do that work, but we do it very often for our divorce cases because we're filling out what's called a statement of net worth. That statement of net worth, of course, includes the assets of the marriage, but it also includes every single dollar spent. And you have to be correct because otherwise, the calculation for child support, for maintenance, other states call it alimony, you don't know what you need until you really look at your expenses. So we're doing that very often.
And we found that for our ongoing planning clients, you know, a lot of them, you know, happily married couples don't know how much they're spending. In fact, the, you know, couple that came in, you know, I said, "Well, do you have an idea of how much you're spending?" They're like, "I think $100,000 a month, but we're not sure." You know, and it might be $100,000 but, you know, that round number tells me they have no clue. Because if someone is filling out your budget form and everything ends in a zero or a five, I mean, that's like a, you know, blank, you know, neon lights because they have no clue what they're spending.
Michael: Yeah. So you'd said that, you know, planning is often overwhelming for clients to try to do it all at once, particularly for, I guess, a lot of the women you're working with where there's a transition underway, a death, a divorce or something where, like, really there's a lot in motion. How many meetings does your planning process typically stretch out to be? Like, do you try to break it up and just say like, "First plan presentation part is just your retirement stuff and then the second is your estate and then the third is your tax and the fourth is your insurance?" Like, you just break it up that way or how do you otherwise try to stretch it out or reduce it to bite-sized pieces?
Stacy: So we deliver it all at once, but the way that we do it is in the front of every financial plan before all the, like, gobbledygook and charts, we have what's called an action plan. And Paul, one of our associates, brought back from residency this idea. And it's typically two or three pages, and it's broken up with really beautiful pictures. And sometimes we'll even use pictures of their children like next to their college planning, and maybe their actual house next to, you know, real estate. And in a few bullets, it says, "For life insurance, we need to do X, for disability, we need to do Y, for estate planning, we need to do A, B, and C." And it's a really nice kind of like, "Here's the bullet points of this entire financial plan in, you know, normal wording. No charts, no graphs, really nice pictures formatted very nicely so that you can literally read this." Or if you're a person who might, you know, be more of an engineering background or really interested, we can do this and dive into every single chart and graph.
Michael: Here's your 2-page plan and your 54-page appendix for the engineer.
Stacy: Exactly. And I will tell you, Michael, it was tough because I got a lot of self-esteem out of those 50-page plans because it should be good, right? It's so nice and long.
Michael: I did all this work. Look at all the work I did. Oh, look at all my work.
Stacy: Yeah. So, I mean, again, that's one of the great things is like, if you can step out of your way and say, "Okay, well, let's try this," and this is completely new, never done anything like it, and, you know, the clients really love it. They really love it. And then we just say, "Okay, let's focus on, you know, you guys just got divorced, well, you'll need an estate plan. That's going to be probably a more important thing. Let's put that in the front because right now your beneficiaries are still your ex-husband. All right, so let's work on that." And then we'll kind of figure it out based on where they're at with that next step. It might be for the next quarter.
How Francis Financial Charges For Their Services [1:16:21]
Michael: And so what is the business model around all of this for you? Like, are you...do you charge planning fees? Do you charge AUM fees since you do have an asset minimum? Like, is it a blend? What's the business model for doing all this work for clients?
Stacy: It's really straightforward and really easy. So during the divorce process, we work hourly. And similar to like a lawyer, so we have, you know, $175 for an analyst, I think we're at, like, $275 for associate, and then myself and Avani are $475 per hour. And we have $5,000 minimum for any divorce engagement.
Any client that comes on for divorce work, we explain that it's a two-step process that we will work with you through the divorce process, but we work with our clients then afterwards in an AUM model. We don't require them to sign a contract for AUM at that time. It's not really appropriate. We're just working with that one person. And 99% of our cases, we're working with the woman and we're advocating for her. Let's say, you know, the divorce is final then we would talk to her about ongoing assets under management work. Our conversion ratio from hourly divorce work to ongoing AUM is about 95%, which is very good.
Michael: Yes, indeed.
Stacy: And, you know, she then signs a contract with us for AUM. There's no additional planning fees, but that's part of what we do. She's actually in some ways an easier client because we've already done her financial plan 10 different ways for her divorce case.
Michael: And she knows you well. Like, you're well past the "let's get to know each other and figure out if we like each other" stage because you've already been immersed in her divorce planning at this point.
Stacy: Exactly. We know her extremely well and we know her assets very well. And so then our step is then to transfer all the assets, subject to the settlement agreement, which can be more complicated than sometimes you expect, and then actually help her ongoing. And we charge 1.25% up to $3 million. We do have some other clients that are legacy clients that are actually at a higher 1.5%. So instead of a separate planning fee which we did charge about four or five years ago, we put that away because we found some clients not willing to pay that planning fee, and they of all our clients needed that help the most. So we made it non-negotiable, everybody has a financial plan and, you know, has this, you know, AUM chart, you know, as far as they drop down from $3 million, $3 million goes to $1 million and comes on down eventually.
Michael: Interesting. So rather than having an AUM fee plus a planning fee and then have clients start saying like, "Well, I know I need help with the portfolio but, like, I don't know if I need this planning stuff," which usually means they do but they're least self-aware that they need the help, like, you just bundled it all together at 1.25%.
Stacy: Exactly. Exactly. Yeah, we just bundled it together to make it simpler and easier. And that's where, you know, there are some people that don't want the financial planning piece. Again, they're not going to be the right clients for us. They're not going to be happy with us because we're going to force them to do the financial plan. And then there's going to be some clients who only want the financial planning and don't want the investment management. And, you know, that's okay, but we're probably not the right fit for them either.
Michael: And so, I'm just curious, in this world where there's so much discussion these days of like a benchmark fee for advisors is 1%, the proverbial 1%, like, how do you look at charging 1.25% in a 1% world? Do you get client questions about it? Do you worry about it from a pricing perspective?
Stacy: You know, it's interesting because we used to be 1.5%. So I feel very reasonable right now versus what we used to do. And it's interesting because it's very rare that we get pushback on our fee, but remember that the people who are hiring us are hiring us because we serve them. And what I mean by that is we are the firm for a woman who is thinking about or going through divorce or after a divorce. We really are working night and day to get that message out there. And so when she's doing her research, there are really not that many CDFAs, Certified Divorce Financial Analysts, who have worked on hundreds of cases. Most CDFAs maybe they've worked on maybe a dozen.
Michael: And many don't even have the CDFA designation.
Stacy: Exactly, many of them don't. So, you know, we've worked really hard to be well known in this area through press, through the awards we receive, by...you know, if there's not a matrimonial attorney that I know in New York, I'm going to try and get to know them. And so we now know hundreds of matrimonial attorneys here in New York. And we make sure that we're supporting them. And, you know, most importantly, we're also referring out to them. One of the best ways for someone to get to work with you is to refer to them first.
And that's something that...you know, part of the reason why we want women also to reach out to us, just because she's interested in getting more financially savvy. Maybe she isn't sure if she wants to get a divorce, but she wants to know, "What should I know and how should I get money smart?" She is actually our preferred client because she hasn't hired any of those professionals yet. And so if she does decide that, for whatever reason, she does want to move forward with her separation or divorce then we're really blessed because we can help her choose the perfect matrimonial attorney for her case, the right therapist, the right forensic if needed, you know, whoever those people might be.
Michael: Well, and this to me is the fascinating thing about having these kinds of specializations. You know, regular listeners to the podcast know that, you know, we talk a lot about the value of niches and specializations, but to me, you make, like, the really essential point that, you know, when you truly have differentiation, because sometimes niche or specialization, when the question of, you know, fees or, "Is my fee reasonable," comes up, like, the next natural response is like, "Well, compared to who else that has this level of expertise and problems for people exactly like you? Like, who are you going to compare me to?"
Which is sort of the point, right? When you get specialized enough, like, fee comparisons are what happen when clients view us interchangeably. You know, "Why should I choose you Mr. or Mrs. Financial Advisor over any other financial advisor?" Which just says like, they don't even know how to distinguish us. So, you know, when you can't distinguish something, well, of course, the only thing you tend to go to is, well, if it's an equal service, well, I'll just take the one that's cheapest because there's no other way to distinguish it. It's still why, like, it's an embarrassment to me that if you look at most "find an advisor" platforms out there, like, the primary way we get searched is by zip code.
Stacy: Yeah. Wow. Talk about feeling like a number.
Michael: You know, like, our most differentiating factor to consumers is the zip code in which our office is located. Well, yeah, that creates a lot of pricing challenges because now your only competition as well is anybody else cheaper in the same zip code. That's how we get shopped. Whereas, you know, in a business like yours, like, sure, if you want to go to the other CDFA who has 500 cases that they've worked through and can price shop us, knock yourself out. Good luck finding that person.
Michael: And you're not comparable. And when you're not comparable, obviously, you still have to give value for what you do, but now you actually get to have the conversation like, "Here's all the things we do, is this valuable for the fee that we charge?" You're not in a price shopping comparison because you literally can't be compared because you're too unique and special in what you do for your clients, for your ideal clients.
Stacy: It's exactly that. And there's two pieces to think about. I mean, also, we chose a niche that, you know, women, compared to men, are less interested in hiring out a financial advisor based on their fee. So studies have shown that. Men are more likely to look at the fee. So we know that. But the second thing, and, you know, it took me a while, it took me a while to, you know, essentially come out as, you know, we're for divorced women. That's scary because you have the fear that you're saying no to the rest of the population. And what's beautiful and what continues to teach me every day is the number of happily married couples that still give us a call. And so it's really powerful that just because you're saying yes to a niche, in no way does it mean that you're saying no to something else.
Michael: Well, there'll be a subset of clients that still say just, "I like what you do and I respect it and I'd like to work with you too." And I guess you get to make the choice like, "Okay, I guess I'll take you too," or, "No, actually, we have limited resources and can only serve so many clients. Like, we're just focused on our ideal clients in this niche." Which ultimately you may do because they're more profitable and they'll refer you more because they're already in your niche.
I mean, I know a number of advisors that get to a point where they just usually, not early on, but at some point, they say like, "I don't even want clients outside of my niche. Because, like, a client outside of my niche, like, yeah, they'll pay me the dollars, whatever my fee is, but a client inside my niche will pay me the fee, is an opportunity for me to refer to other professionals in the niche, which enhances my cross-referral relationships and is more likely to refer me to other people in the niche because they already have this problem. They talk to their friends who have problems like them. And just like, you know, a client is a client, but a client of my niche is worth three to five clients in the long run, so why would I even fill one of my slots with a non-niche client?"
Stacy: Exactly. We're not quite there yet. Because what's interesting, what I have found, again, 70% of my clients are women gone through divorce or her husband has passed away, but 30% of happily married couples, and I say happily because our divorce rate is really, really non-existent, which is really nice to have. For my team, it's important for them to have a balance. For me, you know, I think because I've been doing this work in divorce for so long, I got my CDFA in, I think it was 2004, I've been able to learn how not to take this work home, and I also have been able to identify which cases I'm going to have a problem with. And I know if there's any cases where there's child abuse, I really don't want that case because it's going to be very hard for me. And I've just learned that over the years.
Michael: Just emotionally.
Stacy: Yeah, I have children, and, you know, it's just, I haven't developed those skills to be able to compartmentalize that. And I know that about myself. I also know about my team is that the divorce work is unbelievably powerful and life-changing, but it also takes a huge amount out of you. And so it's really nice for them to have a meeting with a happily married couple where, you know, they end up, you know, giggling and laughing. You know, it's really important to have that balance. So when you're dealing with a niche with I think as much trauma as this, it can be nice to have, you know, the couple who is excited because, you know, they just had a grandchild and they're taking a, you know, three-week trip to Nepal, which is really cool.
Michael: So out of curiosity then, like, so you said almost 95% of the clients that you do divorce work for end out moving on to becoming full-fledged, you know, wealth management AUM clients on an ongoing basis. If we look out from the other way, though, like, how many of your ongoing clients came from the divorce end or like they paid you for divorce and then they came on board? Is that most of the firm's growth or is that still just one channel of how the firm grows?
Stacy: It's one channel. Our divorce work over the last five years has really ramped up. And so right now we're working on about 40 matrimonial cases. That's the most number of active cases that we've worked on. And, you know, if I go back to, you know, 5 years ago, you know, that number might be like 15 active cases.
Michael: So as the word gets out, the compounding begins.
Stacy: And the other piece too is that now, you know, a matrimonial case can be taken by me, it can be taken by my colleagues. Because over, you know, this last decade, I have worked so hard to give them opportunities, to get their CDFA, to learn this stuff, because I realized that there was a capacity issue. And if I can be the only one to do this work, that's a big problem. And so now we have several really unbelievable divorce experts that I would feel very comfortable, you know, them getting on the stand, you know, if needed in front of a judge. They are, you know, just as competent as I am. Maybe I'm a little bit more because I like to tell myself that. I like to tell people that there has to be some value-add of me being here every day.
Michael: You have a little head start, right? A little more experience...
Stacy: I feel like a little head start. So now, I mean, the capacity of what we can do now is nowhere near the capacity of, you know, what we had before. And, you know, we look at it as, it's a great way to, you know, really get to grow the firm in a meaningful way of really making a difference at someone's pretty much lowest of their life. A relationship that we create is a bond. You know, our retention rate among clients is about 98%. I'd love for it to be a little more, but, you know, it's a good number. And I think one of the reasons why it is a good number is that we're very careful, number one, to take on the right clients, and that we've got this really amazing bond.
So again, about 30% of our clients are couples that obviously didn't come through the divorce process, but the other 70%, you know, whether they reached out to us after their divorce or were actually, you know, before their divorce. Sometimes women will come to us five years before they're ready to make that move, but somehow are related to that. And we have some clients that, you know, are single women that just reach out to us, and that's fine too. You know, the challenges that women face are really similar, particularly if, you know, they're on their own.
What Stacy Wishes She Had Done Differently [1:32:51]
Michael: So out curiosity now, as you look back your, you know, 15-plus years into the business and running your firm, like, is there anything looking back that you wish you'd done differently in the pathway about how you built and grew to get to where you are?
Stacy: You know, I have to say I wish that I had been confident enough in my decision to really go all in, particularly working with women and divorce sooner. I wish that I had the confidence for that.
Michael: Because, as you said, like, you're seeing the compounding now of this growing value of referrals and people that are engaging you, but, like, if that compounding started 15 years ago, it would just be further along now?
Stacy: I know. And I did hourly work first, only hourly, and then in late 2008 we started to take on assets under management, you know, and [inaudible 01:33:53] to grow. So last year we grew of new AUM, just gross dollars in almost $6 million a month. And this year, because I'm an overachiever, we're going to shoot for $10 million a month. And knock on wood, you know, we've been hitting that. Now, granted, we're in the beginning of the year but...
Michael: And how big is the AUM base for the firm overall?
Stacy: So we're about $280 million. So you can see that, you know, the real growth has been the last couple of years.
Michael: Yeah. You know, if you did $6 million a month last year, like, you added over $70 million plus $10 million more. Like, you've added $80 million to the $280 million in the 12 past months after having been doing it for 15 years.
Stacy: Yes. Now, also, last year was a down year. We have emerging markets and we have developed international. So we've got that, I mean, unfortunately, but...
Michael: Yes, the market decline is pulling us back.
Stacy: Yeah, I know.
Michael: It is one of those like, you're now growing more in the past year or two than you did in, like, the first three or five years combined kind of scenario?
Stacy: Exactly. Exactly. So, you know, we've really had some pretty unbelievable growth. So last year we brought about $65 million, 2017, $45 million, 2016, $29 million. So you can just see, you know, that progression. That's the, you know, new AUM without any, you know, market movement on it, just, like, strict dollars.
Michael: And you attribute that to this, like, the word is getting out about the specialization and just more ideal clients in your niche are getting referred to you or finding their way to you?
Stacy: Essentially, in 2015 I got my big girl pants on and was able to do that and really start that message in true earnest and, you know, fear the fear and do it anyway. And, you know, I'm super excited about where we're going to go. I'm not sure where that's...you know, I'm thinking this year we'll...you know, my goal is to increase that. I mean, if we brought on $100 million this year, I'd be tickled pink, we'll have to see, but, you know, we're going to do absolutely everything we can. And the nice piece is that, you know, with only 45 clients per team, we have a huge amount of capacity in the sense that, you know, no one is sitting and twiddling their thumbs, of course not, but as we, you know, have more efficiencies and, you know, our technology and everything, you know, those teams should be able to get up to 80 clients.
What Surprised Stacy The Most About Building A Business [1:36:42]
Michael: What surprised you the most about building a business and just going from, "It's Stacy," to, "Oh my gosh, there's, like, 10 people around here and they have all this interaction with clients? Like, what surprised you the most about that journey?
Stacy: How hard it was going to be on me letting go. And that's why, you know, I'm really good at identifying what I'm good at and what I'm not, and again, as we talked about, talking to potential clients, I'm not, right? So just don't even put me near them. This has been one of the best things I've ever done of turning the practice into a business. And it needs to be done because, you know, I truly believe if I love my clients then, you know, having a firm being dependent on me, but if I hit the proverbial blast and they're going to, you know, feel pain and have less of a stellar service then I don't, you know, care for them enough.
But it's been really...I'll tell you, it's been hard. It's been hard. But what gives me confidence is that I know that the people who work here are unbelievable. We have just I think one of the best teams, and we have support. And I'm not proud. I'm not going to say that this is all new. This is definitely the team, it's a village, and it's also hiring coaches along the way. I've probably worked with eight different coaches since I started the firm and each one I learned from. You know, so it's been the best thing in the world, but it's also been, you know, a lot of work and a lot of growing, a lot of personal growing too.
Michael: Yeah, it took me a long time just in, I don't know, my own business world to sort of appreciate. I'd always heard the saying of like, you know, try to hire people around you who are, you know, smarter and better at things than you are. It makes the business more valuable. And like, yeah, yeah, I get it. I, you know, hire smart people and good things then happen for the business.
But, like, the secondary effect I've seen from particularly a lot of advisors, because, like, we build these businesses around ourselves and it's so hard to let go is that kind of one of the cool side effects about hiring people around you that you really think are that good and that unbelievable, like, it finally gets a little bit easier to let go of stuff when you can really internalize like, "They're actually better at this thing than I am." Like, it's not a just, "Oh, do I want to let it go to save my time or leverage my business or whatever it is?" Like, "No, I actually hired someone who's better than me at this, so, like, I need to let them do it because they're better than me at this." And it's, I don't know, I found that oddly empowering for figuring out how to actually let go of things when you can just recognize like, "Oh, I've actually hired someone who's better at this than me, why am I still doing it?"
Stacy: Exactly. You know, the biggest boost of your confidence, of getting out of the way is knowing that you have people who do great work, who do great work. And I feel really blessed. You know, my role, as it's kind of shifting, is a role more of, you know, continue the business development, continuing just, you know, overseeing, making sure that it's the best work that could possibly be produced.
But also that third role that is becoming even more and more important is making sure that, you know, the team is happy. That they're, you know, happy and healthy. So, you know, we keep on adding more things in. We do monthly massages. You know, one week we'll have a trainer, the next week we have yoga. You know, we have all these things coming in because I'm realizing so much of the firm being successful is having people who love their job. Because if they love their job, they're going to do phenomenal work and go above and beyond for the clients. So it's this wonderful, like, trickle-down domino effect. You know, I keep on thinking about maybe calling myself the chief happiness officer around the firm. That's kind of an odd title, but, you know, so much is, you know, making sure that the people love their job and come to work and, you know, realize that they really are cared for.
Michael: And I've got to ask as well, you know, you mentioned earlier that you have a 13-year-old and a 10-year-old. And so I can kind of do the math here. You had kids, like, pretty early in the business when you were still trying to get everything going. So I'm just wondering, like, how do you balance motherhood and starting family life on top of, "I'm also trying to, not even grow this business, I'm trying to grow these two businesses." Because like, Savvy Ladies and Francis Financial, oh, and here are two children to deal with.
Stacy: Yep. So it's kind of what I alluded to before. It was not easy. My son's maternity leave, I was back at work in three days, and my daughter was better, it was three weeks. But I have sacrificed a huge amount. And I make a very conscious decision now that my family comes first, and the team here knows that. So we have 4 weeks' vacation, I will tell you, I probably take 12 weeks. I take a half day on Mondays as well as a half day on Fridays to pick them up from school. It's something that's really important for me because I completely missed out on them being little kids. And, you know, I kind of think, "Do I regret it?" Of course, I do, but in some ways, I feel like I couldn't have a charity that has worked with 20,000 women. I wouldn't be where I'm at today. And I feel really blessed that now that they're more conscious adults, not adults but young adults. My son thinks he's an adult. And we went to Disney, so he's like, "They call me an adult." And I'm like, "Well, guess what? It's so they can charge more for you. You're not an adult, but okay."
But, you know, I feel really lucky. I feel really blessed that...and I won't call it a balance, but my kids, I'm at every single important thing in their life, whether it's during the day or it's not. And I just, you know, mold my job around it like Silly Putty. And so I'm up at 5:00 at the very latest, walking in and doing a couple of, you know, hour's work before they wake up. And it's been an unbelievable blessing to have a team that's there no matter what I'm doing, to essentially run the firm, but also to have a type of career which, well, I think this is, like, the best career for women, that can, you know, mold around like Silly Putty around the life that you want to have. You know, so I feel really, really, really blessed.
Michael: So as you look back, what was the low point on the journey for you?
Stacy: Definitely three-day maternity leave and back at work with my son. That was the hardest time in my life because I was breastfeeding. And I also made a really big mistake in that I didn't ask for help. So, you know, I'd be working all day and then I'd be up at night with him. And there were, you know, very large swathes of time that I actually...I don't remember. I was so sleep-deprived. You know, it was definitely, definitely my lowest. And it's also what kicked me in the butt to say, "Okay, this solo entrepreneur thing, I have to become financially successful because I have to hire an executive director for Savvy Ladies and I have to hire staff. Because at that time, I only had an intern. That's all I had. I couldn't afford anything more.
So every time I got more money for, you know, another staff member, I hired them and just kept on doing that until finally, I'm at the point where, you know, I'm financially compensated the way I should be. But there were many years where my nanny really made more money than I did. And it was really hard, but I knew that I was doing the right thing and that eventually, eventually, I could grow the firm fast enough to pay myself the way that I need to be paid, and more importantly, have the ability to take time off and, you know, really mold my career to my life.
Michael: It is an interesting dynamic that often those low points, as painful as they are, become the, like, kick in the backside motivator we finally need to say like, "No, I just really have to do this differently going forward. This isn't going to work for me for the rest of my life."
Stacy: Yeah. And you look back on that and you learn a lot. And, you know, particularly when you have, you know, small little people in your life that you missed, it becomes an, you know, unbelievable motivator.
Stacy’s Plans For The Future [1:46:42]
Michael: So what comes next for you, for Francis Financial, for Savvy Ladies?
Stacy: So much. We are having an absolute, absolute ball. We are having so much fun. Definitely, towards the end of the year, we're going to start hiring again. We're not going to do anything right now, but we're going to hire more for the Francis Financial team. I'm spending more and more time helping Savvy Ladies and loving that, especially as we expand our helpline to supporting women for, you know, a full six-month coaching program and support through that, which I'm just...that's like a dream come true. And, you know, I'm continuing to, you know...I trained for Half Ironman, so I'm doing another one. We're big Steelers, so I'm spending a lot of time doing that. Skiing, snowboarding.
So, you know, having fun. I have to say having fun. And, you know, my biggest predictor of if I'm spending my time on the right things is if at any time I start to not have fun, it's really helpful because then I take a step back and say, "Okay, what's going on? Where am I spending my time that I'm really not enjoying or maybe I'm working too much?" Or, you know, whatever it might be. But the having fun factor has been a big predictor of, you know, how I took my role and change my job here.
Michael: Very cool. So as we wrap up, this is a podcast about success, and one of the things that always comes up is just that the word "success" means different things to different people. And so you've built all these successful businesses and nonprofits around you and the advisory firm and Savvy Ladies, but I'm wondering for you personally at this point, how do you define success for yourself?
Stacy: That's such a hard question because there's so many different facets. And I'm obviously a person who has a pretty high standard for themselves. For me, I really was put on this earth to change the financial situation of how we as women think about money, talk about money, relate to money. And we've got to wisen up. And that's important for, you know, obviously the people you look around, but, you know, it's also really important, you know, for my daughter, and it's really important for my son to understand that and for women. So it's a big uphill battle, and it's a battle that we talk about has so many other implications in areas that we many times don't even think about.
But, you know, imagine a world where everyone, regardless of gender, of age, of socio-economic background, had their credit cards paid off, a beautiful emergency fund, fully stocked 401(k), and a home, a roof over their head that they own, you know, what kind of world would we live in? It would be a pretty unbelievable world. And so that's what my goal is. And you know it's important for men and women, but as we've seen, study over study, us ladies, we need to get with the program pretty soon. And unfortunately, we haven't necessarily. There's a lot more work we have to do.
Michael: Well, amen, I'm glad you've still got plenty of time to keep doing more of that work, and, as you put at the beginning, paying it forward for your grandmother.
Stacy: Well, thank. I will be here doing this work until probably I get to meet her up in heaven. And the good news is is that I think she'd be really proud, and, you know, we're making a big difference. And so, you know, what I have to say to, you know, people, sometimes those really bad stories in our life can be the fuel that keep you going, and that sometimes those bad stories really spur good things out there too.
Michael: Yeah, indeed, they do. Well, thank you, Stacy Francis, for joining us on the "Financial Advisor Success" podcast.
Stacy: Thank you, Michael. You're my hero. I so enjoy the podcast.
Michael: Thank you so much.