Shannon McLay, the CEO and founder of coaching advisory Financial Gym, is celebrating the Securities and Exchange Commission’s greenlight of an affiliated RIA that she expects will prove her model of engaging clients the rest of the financial industry ignores is more than viable.

“Financial Gym is close to profitability,” she said of her Briarcliff Manor, N.Y.-headquartered firm, which has based its business on serving clients regardless of their wealth level through a monthly subscription fee, with an emphasis on coaching and education. “The RIA business is going to bring us there and beyond.”  

For a former Merrill Lynch advisor who has followed her own drumbeat for a decade, the culmination of her efforts to date, which include touching the lives of almost 15,000 clients, in her own RIA is more than satisfying. It’s vindicating, she said.       

McLay, 45, grew up on Long Island, N.Y., in what she describes as a blue-collar family in a blue-collar town.

“There are so many TikToks where people ask, ‘Why did my parents teach me a work ethic and not give me generational wealth?’ I get that,” she said. “I’d say I grew up knowing there was no generational wealth, except that I didn’t even know what that was.”

Instead, McLay says she grew up with a mother who balanced three jobs and raising five children. She herself started working at 14, covering the 6 a.m. to 2 p.m. weekend shift at a bagel store, then fulltime over the summer.

By the time she arrived at Wake Forest University, she knew her future.

“I knew I was going to be a business major. Why? Because my brother told me if I was a business major, I could make money without doing extra schooling. I could get an M.B.A., but I didn’t need to, not like a lawyer or a doctor,” she recalled. “And I thought that’s what I wanted to do. I wanted to make the most money with the least amount of work.”

Out of college, McLay joined the high-grade capital markets desk at Bank of America in Charlotte, without being 100% sure what that all meant, she said, but she learned on the job.

Besides the job itself, McLay said she hit the jackpot when her very first manager was big on mentoring.

“I was so lucky. He really wanted to be a teacher, so he’d let us listen in on calls and show us the bigger picture,” she said. “That was a great experience, and I consider myself a mentor for everybody with me because of that experience.”

Although McLay moved on to institutional fixed income sales in 2000 and then to a hedge fund in 2007, she kept in touch with her BofA colleagues. In 2010, she returned to Bank of America to help with the Merrill Lynch acquisition, specifically integrating the institutional side of Bank of America with the financial advisors at Merrill.

“I knew it wasn’t the be-all-and-end-all job I was looking for, but I felt like it was where I should go next,” she said. And it proved to be instrumental in her career trajectory, as this is when she “became woke to the advisory space.”

“Here I am, working with the best of the best, and the consumer side is much more personal and intimate that the corporate side that I had been on. It was just a much better fit,” McLay said. “So I became a Merrill advisor.”

The Merrill Model
While McLay loved the training program and helping clients, one facet of the business model she said was taught was never to focus on anyone unless they had at least $250,000 in investible assets. In fact, she was told to screen her calls to make sure she didn’t take an initial meeting unless the client had those assets, she said.

“At the time I was, like, ‘I don’t feel comfortable asking somebody how much then have in their bank account before we have coffee,'” McLay said. “I decided I was going to say yes to every meeting, and I did.”

She told her network to get the word out: Shannon McLay was a financial advisor and financial planner for anyone who wanted to talk to her.

One of her first meetings was with a woman, assets unknown. Over coffee, her story unfolded, McLay said. She had $250,000 in student loans and made $50,000 a year.

“She didn’t make the six figures her private law school told her she would make. She said, ‘I feel unlovable. Why would anyone want to marry me with all this debt?’” McLay said, adding that she felt somewhat helpless at the time. “I wasn’t sure what to do. The Merrill wealth management tool was going to make her feel really depressed because she had negative worth.”

But she wanted to help, so McLay said she started seeing this client on the side from time to time, giving her small goals and moving her forward when it was reached. And then she got another side client, and another.

“I did that for four or five months, and it really felt like a dirty little secret,” she said. “I told people I was the worst financial advisor ever because I loved my clients who were pro bono, who wouldn’t qualify to have another advisor work with them.”

That’s when she had her “aha moment.” At Merrill Lynch, she was meeting with wealthy clients who bemoaned a 3% drop in the stock market, and in response McLay would spend an hour “making them feel better about being a little less rich.”

But that week she met with a pro bono client and gave her a rudimentary plan very similar to how advisors at the Financial Gym still do it: a Word document with bullet points.

“Here’s how much you need to save, here’s how you handle the credit card debt, here’s what you do with student loans,” she said. “And at the end of it she said, ‘You know you’re saving my life, right?’ And then it literally all came to me like it was a lightning bolt.”

If someone wants to get physically healthy, they go to a gym, McLay reasoned. But what about people who want to get financially healthy? Well, they can go to a gym, too.

“I could see it so clearly. Advisors would be trainers. They’d wear jeans and T-shirts. It’s like H&R Block, but fun and cool,” she says. “I couldn’t stop thinking about it. That was in February 2013, and I left Merrill Lynch in July of that year to start building.”

The Financial Gym Model
With $100,000 seed investment from a former boss at Merrill Lynch who believed in her vision, McLay says she hard-launched Financial Gym in 2015.

“We’ve now worked with clients in all 50 states. We’ve worked with close to 15,000 people at the Gym. Our clients have been as young as 17 and as old as 75,” she said. “The lesson we’ve learned over the last 10 years is just how taboo money is and how emotional it is for some people. These are barriers that prevent them from unlocking wealth and reaching their financial goals.

“And a lot of that stuff has nothing to do with what your asset allocation is. That’s my view.”

In some ways, the Financial Gym works like any gym. Some clients come and stay for a few months or a year, and other stay for 10 years or more. They can pay by the month.

“Just like learning any new thing or making any kind of life change, it’s really hard in the beginning,” she said. “In the first three months, only half of our clients are hitting their goals because it’s a new process. By six months, 75% are hitting their goals. And by a year, it’s 90%.”

The advisors are called trainers, and “BFFs”—best financial friends. Right now there are about 15 of them, and on average they’ve been there more than two years, McLay said. Their qualifications are different than advisors at traditional advisory firms, she said, and McLay prioritizes hires who are compassionate, empathetic and have an interest in money and personal finance.

That humanity is key, she said, because she has found many people experience high levels of shame around how well, or poorly, they’ve managed their financial life.

“We call our first session Financially Naked, because we understand that clients might be sharing a lot of information with us that they’ve never shared before. They’re going to strip naked financial in front of us, and we’re fully clothed,” McLay said. “We want them to feel comfortable and not ashamed. We don’t care what they look like financially. We care about where they want to go.”

What she’s not overly concerned with is how much knowledge the applicant has, as that facet of the job can be taught.

“I learned what an ETF was for the first time when I became a Merrill financial advisor. All advisory programs have training programs, and we have our own,” she said. “Our program is called Trainer Academy, and it’s a three-week intensive followed by a 90-day training process.”

Clients meet with their BFF every quarter, or more often if needed. They set up automated systems for either saving or paying down debt, or both. And then they’re given a list of tasks to complete in 30, 60 or 90 days, such as rolling over a 401(k) or consolidating credit card debt.

“Most people want to avoid it. But the process of doing it makes a difference, like going to the gym. The more you do it, the more comfortable you get,” she said.

In 2020, Shannon thought the business would close, because 90% of its revenue came from the monthly subscription fees—$75 for individuals and $100 for couples—that clients can cancel within 30 days.

“What happened was we retained 80% of our clients. We had clients losing their jobs. They had to file for unemployment, and figure out how they should budget on unemployment,” she says. “Others kept their jobs but needed to decide if they should keep contributing to their 401(k) or stop. They kept our service because they needed someone to talk to.”

That Financial Gym’s clients found the coaching invaluable is no surprise to James Lay, founder and CEO of Digital Growth Institute, financial services influencer and avid follower of McLay and Financial Gym over the years. Financial services has needed to integrate coaching into the product mix for some time, he said, but there hasn’t been much progress.

“It has been very slow for leaders to hear and receive this message. There’s been a tremendous about of progress made on financial education, financial literacy,” he said. “But just because you give someone education and they can increase their knowledge and awareness doesn’t necessarily change the behavior, right?”

Lay says he’s been impressed how Financial Gym’s coaching cadences—an annual strategy session, supported by quarterly health checks, reinforced with monthly coaching checks—are getting financial results.

“To me this this is the future of financial services. It’s about integration of a coach experience to inspire positive, transformational behavior,” he said. “When Shannon told me she had applied for the RIA license, I thought this is truly an exponential opportunity, not just for the organization but for the people that they’re helping.”

Lead up to the RIA
Until now, the relationship between Financial Gym and its clients has been one of coaching, not investing.

But with the January launch of FG Advisors as a registered investment advisor, McLay has opened up a new, and potentially very lucrative, source of revenue.

“Now if clients want to come in and get coached, that’s great. If they want talk to us about the investment management side, also great,” she said. “We tell our clients we don’t care how they invest their money, whether they go through a robo advisor, work with an outside advisor, or do it themselves. We just want our clients investing because that’s a core part of financial wellness.”

But with some Financial Gym clients amassing anywhere from $250,000 to $3 million because of the coaching, having an affiliated RIA made total sense.

“They’ve been working with us, trust us, and have asked us to manage it for them,” she says, adding that she and an outside consultant developed a handful of core portfolio models of different allocations to suit these clients. “Now we can.”