Integrating your values into your practice adds a different kind of value.
In spring 1988, I sat in a windowless conference
room in a hotel in Washington, D.C., with half a dozen financial
advisors at the first meeting of what was to become the Alpha Group, a
network of high-level planners. These men and women believed they
needed something more substantial than what they learned at the huge,
industry-wide conferences. Alpha, along with other networking groups,
laid the groundwork for the growth of professionalism in your business.
Kevin Hermening, owner of Hermening Financial Group in Wausau, Wis., says that he once felt envious of the generation of planners who came before him, the members of the Alpha Group and others who gave so much to the industry to set standards and to pave the way for his own generation.
Reminiscing about financial planning before and after Alpha, I decided to call Ross Levin, president of Accredited Investors in Minneapolis, one of the original members of Alpha Group, to check in. What's the hot news in the business today? Levin reports that the planners he knows are suffering from mid-life crisis. Although he has built a good practice, serves clients well and makes a nice income, Levin says he worries about internal growth vs. external sale of his company. And that he, like most planners in the same part of the growth cycle, is looking for meaning in life. "We're dissatisfied with just making clients richer."
He and his two partners feel an urge to integrate something larger into the lives of both clients and staff. The week after Thanksgiving, they took their staff to New Orleans to work with Habitat for Humanity. Levin frets, too, about his inability to control the size of his practice, and he worries that his strengths as an entrepreneur-following impulse, moving quickly, recovering quickly-are liabilities now that he leads a large staff. "You need to calibrate the business so that you're more entrepreneurial than corporate but not as entrepreneurial as you once were," he says. And you need to find a way to incorporate your values into your practice if you are to become both a whole person and a satisfied planner, Levin adds.
Integrating your values into your practice? What might that look like? I decided to check in with various planners to see how they make decisions to incorporate personal values into their practices, starting with Kevin Hermening, partly because he happens to be the same age as Levin-47. But Hermening came to planning by quite a different route. His practice is just over ten years old. Hermening did experience life-changing events as a teenager and young man that set him on course for developing strong values. Only later did he incorporate them into a financial planning practice.
Hermening grew up in "a normal middle class family on the south side of Milwaukee." After high school, he joined the U.S. Marine Corps "to travel the world and get my college education paid for." In 1979, he was a Marine guard at the American Embassy in Tehran when it was taken over by troops of the Ayatollah. Hermening became the youngest of the 52 American hostages held prisoner by Iran for 444 days. When Hermening returned to Milwaukee in 1981, "we got a very grand welcome and were heralded as heroes," he says.
Hermening finished off his active duty by giving speeches around the country about his experience and thanking Americans for remembering the hostages. He went to college to study journalism and then worked in television advertising. But he quickly became involved in politics and ran for U.S. Congress, got married and became involved in local politics and community service, such as serving on the school board. He has been married for 19 years and has two teenage daughters.
It took him a while to figure out how he would use the values he'd developed as a Marine and a hostage. Hermening became licensed to sell securities in 1989 but didn't "get serious about my career until 1995." In 1999, he became a certified financial planner. Today he has a staff of seven; he is the only planner. His practice serves more than 600 clients and manages $80 million in assets. One of his goals is to serve clients well and, in that way, help build the community. Another is to get involved, and get his staff involved, in community service. He also wants to build a practice to sell.
Knowing your strengths and weaknesses as a planner is a good starting place. Hermening says his strength is in "vision and big ideas" and his weaknesses are "follow-through, detail and compliance." So when adding staff, Hermening makes a big effort to hire people who excel in follow-through and compliance and detail. He uses a test by Kathy Kolbe (Kolbe.com) in Arizona, which is not a personality test but "a work fit test," he says.
Hermening travels a good deal and realizes he wouldn't have that freedom were it not for his staff, which handles all the details of running a financial planning business, such as setting up appointments, handling marketing and client files and operations management. He wants to compensate them well and give each staff member a chance to become a partner. Hermening takes his staff along to industry conferences. And a couple of years ago, he took his staff on a ten-day Caribbean cruise, stopping first in Miami to take an office tour with Deena Katz at Evensky & Katz.
Unlike many planners who drop clients when they no longer fit the profile of the firm, Hermening keeps them, driving across the state to make house calls several times a year. When I first caught up with him, he was driving through the Wisconsin Dells on his way back to Wausau from a client meeting. "They brought me to the dance," he says, " and I'm going to keep dancing with them."
Nor does Hermening court the superwealthy, in part because they don't do business with locals for reasons of confidentiality. Hermening has two offices, one in Wausau, the other in Green Bay. The average client 401(k) rollover in Wausau is $350,000; in Green Bay, $800,000. Wausau is a community of 150,000 where Hermening has "98% name recognition." He is not a fee-only advisor or a member of NAPFA because "we generate 20% of our revenue from small clients, who are better served by commissions than fees," he says.
Hermening is working with Mark Tibergien and Rebecca Pomering from Moss Adams in Seattle to build his practice into a business. "One of the reasons I hired Moss Adams is because I want to build a practice like a law firm model where my employees can become partners." He plans to do that by creating a partner track for licensed professionals who will help bring in clients, and also for unlicensed staff. "My unlicensed staff will have very clear guidelines on how to become a partner," he says.
For one thing, he will require each partner candidate to become involved in one nonchurch, nonpolitical, nonprofit group in the community. "You can help them become better people and make the community a better community," Hermening says. He realizes that not everyone in his office will choose to become a partner because some people "would rather be at home in the evenings rather than making calls in the Hope Pregnancy Center or giving speeches to eighth graders."
Hermening requires the same type of community service commitment from his two teenage daughters, both of whom are musicians. One was the "Wisconsin Idol" this year in the contest to become American Idol on the popular television show. Hermening and his daughters also perform in local musical theater, where Hermening recently played Mr. Darling, the father of Wendy and her brothers in Peter Pan.
Last spring, Hermening and his staff organized a client appreciation event. More than 350 clients attended, as well as 220 prospective clients and other members of the community. Mark Bowden, a journalist who wrote the top-selling book Black Hawk Down, about a 1993 battle in Mogadishu, Somalia, had written a second book, this one about the Iranian hostages, Guests of the Ayatollah. Hermening bought a copy of Bowden's 640-page book for each client. He arranged for Bowden to stop in Wausau on June 28 at the end of his 60-day book tour. Hermening and his staff hosted a wine and cheese reception and then adjourned into the Grand Theater, where Bowden talked about his new book and Hermening spoke briefly about his own experience in Iran. Then everyone had dessert.
Not surprisingly, Hermening got great press for this community event. Some time after the event, Hermening was talking with the opinion page editor of the local newspaper, telling the editor how happy he was to be referred to as a "CFP planner" rather than "Former Iran hostage Kevin Hermening." Hermening says that he has been "on a mission for 20 years to make the hostage story a sidebar."
"I would rather be known for what I did," he says, "than for what happened to me."
Mary Rowland has been a business and
personal finance journalist for 30 years, a half dozen of them as a
weekly columnist for the Sunday New York Times. She wrote a column
called "Practice Points" for Bloomberg Wealth Manager for six years.
She speaks regularly about money and values. Her six books include two
written for financial advisors: Best Practices and In Search of the