You, too, can use Cheryl Holland's practice idea.

Providing financial planning services for middle-income clients has become a hot topic and an even hotter market during the last few years. Thanks to a handful of trailblazers like Sheryl Garrett, founder of the Overland Park, Kan.-based firm Garrett Planning Network Inc., the advisory profession has learned that a business model exists from which to serve these clients. Going on 200 planners have joined the Garrett Planning Network, with new members signing up every week.

The interesting thing about middle market planning, from a practice management standpoint, is that no one thought it could be done profitably. Most of the profession-on the independent RIA side, at least-believed that an advisor had to target semi-affluent or wealthier clients to make any real money in this business. Now we know that's not the case. For advisors, there are more choices as to what market they can target and, therefore, more alternatives for developing the style of practice that will best complement their desired lifestyle.

If you've already created a successful practice aimed at affluent clients, there's probably not much incentive to serve the middle market. But it's easy to forget that you do this on many occasions anyway, whether you want to or not. Clients make referrals, and they're not always to affluent prospects. Instead, they entreat you to work with their sons, their daughters, or their relatives or their friends, and so often these folks don't meet your minimums. Yet, you don't want to offend your client (nor cause her to think she should no longer make any referrals to you), so you accept these referrals, sometimes against your better judgment.

One school of thought says you should think about hiring an individual whose sole job is to serve these clients, but that's not always cost-effective because you may not be able to keep that person employed full time. Instead, thought Cheryl Holland, owner of Abacus Planning Group Inc. in Columbia, S.C., why not create an independent contractor relationship with an existing middle-market planner? She did, it's working, and it's not that hard for you to do the same thing.

Having started Abacus six years ago after an eight-year stint partnering with another advisor, Holland has grown her firm to 11 employees including herself: three for office management, operations, marketing and client service; three on her investment team, which consists of a CFA, a new CFP and another individual taking the CFA courses and acting as her portfolio administrator; three on her financial planning team (CFPs or CFPs-to-be), and one person who's a jack of all trades.

With this employee base, she provides comprehensive, fee-only financial planning and investment management services to owners of closely held businesses or individuals with portfolios of $1.5 million and up. The firm charges first-year fees of $5,000 to $25,000, while ongoing clients pay annual planning fees plus 60 basis points-a percentage that graduates downward on multi-million-dollar portfolios-for investment management services. These are clearly not middle-market clients.

Holland was plagued by a sporadic but steady stream of sub-optimal prospects coming through her door until she contacted Ed Powell, a local Garrett Planning Network devotee, to see if he could help. What evolved from that point forward was a unique working relationship. "I had referred clients to Ed prior to the arrangement we have now," says Holland, but that wasn't always ideal because clients wanted Abacus to serve those they referred. With barely three years in the planning business, Powell was an unknown quantity compared with Holland and her higher profile in the community.

The answer? Holland invited Powell to work in her office, and much of their relationship now takes place on a bartering basis. "Ed works with my clients' children in exchange for the space and other services we provide him," explains Holland. Other services might include Powell's use of the Abacus conference room when he meets with his own clients. Says Holland, "Ed spends perhaps five hours a month serving our clients, so I'm saving 60 hours per year of my own time and now I never have to talk to prospects who would be unprofitable for us."

The personal side of this relationship seems to work as well as the business side. "Ed fits in well with the culture of our firm," says Holland, "and although we don't see eye to eye on everything, I like that he's committed to his own decision-making process."

But that's not all there is to it. There are some interesting nuances to consider. For example, when Holland gets in a prospect data form, or her intake person is talking on the phone with a prospect, she tells them that they will review the prospect's circumstances and decide whether he should work with Holland or Powell. Such calls might come from one of Holland's neighbors, or perhaps a member of her church,"someone to whom I can't say no," explains Holland.

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