The Importance of Having a Story

Despite having launched my firm only in May of this year, the journey into firm ownership started several years ago, with a memorable conversation with Michael Kitces, as he drove the Jersey Turnpike. (“I knew him when!...he was already wildly successful.”)

I had only just entered the profession when I got the opportunity to buy a solo practice from an older advisor. I was part way through a Masters in Financial Planning program and had no experience in the profession other than my weekly 18 hours with this advisor.

The decision to sign the contract was looming, and I was tied up inside. It seemed like a great opportunity for a newbie such as myself. On the other hand, I was so uncomfortable with the prospect. In part because the wanna-be-retired advisor invested in a way I couldn’t understand, couldn’t support, and couldn’t replicate: a process she herself described as “seat of the pants.”

When I conveyed this discomfort to Michael, he said something I’ve remembered ever since: You have to be able to tell a story about your investing.

In this case, the advisor had told her clients an active management, stock-picking story. And they’d believed it. It would therefore be exceedingly hard for me to start telling a passive management, fund-only story.

I didn’t buy the practice.

And 6 years, 1 child, a cross-country trip, and a stay-at-home husband later, I have my own firm, and I’m investing my way. In fact, I’m doing everything my way.

I’ve got some stories to tell.

My Stories

The notion of a story has been powerful for me. Call it whatever you want, but it encapsulates why I do everything I do in my business. And it gives me confidence when talking with, well, just about anyone. Here are a few of my stories. Oh, yes, I’ve got more….

Why do I serve my clients like I do? I serve women in tech. What’s the story there? Women in tech, much like women in finance, are underrepresented at technical and leadership levels and are underpaid. I can offer the best cash flow management, tax-efficient investing, and retirement projections in the world, but if she’s not negotiating a higher salary, getting adequate stock compensation, or the promotion and title she deserves, she’ll be worse off financially.

Therefore, in my practice, I am trying to cultivate a larger network of professionals that my clients might need to succeed professionally (and by extension financially). Career coaches, negotiation experts, patent lawyers, recruiters, engineering managers, leadership coaches...the list does go on. I spend a lot of my time cultivating those relationships, which have nothing to do with the kind of financial planning we’re taught or read about, but will help my clients’ finances just as much as my financial expertise.

Why do I invest the way I do? My story: Academic and empirical studies have already proven the way to maximize our chances of better investment returns: own the market(s) at low cost. Therefore, I believe the value I can provide my clients lies in two things: using an understanding of their entire financial picture to craft an investment portfolio, and, more importantly, encouraging smart investor behavior.

So how, then, do I approach investments? Well, first of all, I don’t do just investments; you have to having a financial planning relationship with me if you want me to manage your money. Secondly, I use simple portfolios of very few funds that I rarely touch. You want Socially Responsible Investing? You want stock picking? I don’t begrudge you that, but you’ll have to go elsewhere.

Why do I charge the way I do? I use a retainer model, as do most (all?) XYPN members. It’s not novel for you, but I often explain to clients that it’s like the world’s only good buffet. At buffets you spend a fixed price and then you overeat. Over-consuming steam-table food is a bad idea. But frequent “consumption” of financial guidance from me is a good idea, and the fixed monthly retainer encourages you to do just that.

When it comes to investing, I charge less for investment management than industry average (I max out at 50 bps), in part because it’s on top of a planning fee, and in part because I don’t actually do that much with your investments and I want to align the fees I charge with the value I provide.

Why did I choose to start my own firm in the first place? I share many of the reasons espoused by XYPN members who founded their own firms (wanted to do things my way, local employment prospects suck, etc.). But my story has another part: I grew up with a tenured-professor father and a federal-government-employee mother. I have not a drop of entrepreneurial blood in me. But now I have two little girls. And I want to show them that a woman can be The Boss, can take the risk, can work her a** off and have all the benefits redound to her, can be not only unafraid of money but in control of it. For me, that unfolding story is life affirming.

Sticking To My Stories

I’ve had prospective clients, or their proxies, ask if I could provide a slightly different service (just annual check-ins), or a lower price point (mine simply is too high for some people; I get that), or a different style of investing (socially responsible investing is a popular choice). I’ve been surprised by how easy it is for me to say “no” to all of these requests.

I’m not a jerk about it; I just explain that I provide financial planning and investment management this way because I’ve thought through it, and I think it’s the most effective way for me to help my clients. I am happy to refer you to another advisor who works differently, but this is how I work, and why.

Having that story in my back pocket makes that explanation easy, and people respect it. Some of them choose to work with me, and some gratefully accept referrals to other planners.

The only people who work with me have been persuaded by my story.

What’s your story?

About the Author

Meg Bartelt is the President of Flow Financial Planning, LLC, a fee-only virtual firm that provides financial guidance and support to working mothers in high tech. Learn more on her website and on her blog