Fred Hubler gets a little worked up when speaking about his business and the future of the financial advisory services industry, with good reason.

Hubler said he has thrived in the business and he wants others to follow in his path to success. He has seen his firm, Valley Forge, Pa.-based Creative Capital Wealth Management Group, double in the past three years and the average net worth of his clients is at least 10 times more.

“So, we have brought on more and bigger clients in the last two years than probably all 15 years before, and that’s remarkable,” said Hubler, who has been in business for 18 years. He added that at one point back in the day he had $50 million under management and now he has a client worth $50 million.

And all because Hubler or Mr. Retainer, as he refers to himself on his website, shifted his practice to a retainer-based advisory firm where clients get advice and are not obligated to move money to the firm or buy products. “The real interesting thing is I use to, like everyone else, give away advice hoping someone would bring money over to us to manage, hoping they would buy a product from us,’’ Hubler said.

It was three years ago while smoking a cigar that the idea of charging for advice hit Hubler. He said he was in pretense mode looking at himself as a six-figure executive with a seven-figure 401(k). “And I thought to myself, where would I go for financial advice because all my money would be in my 401(k) … I would have all the other things in life but I would have a job instead of running my own, and I realized that for executives and business owners, they really are not able to have someone who will give them good advice who doesn’t have an AUM requirement or a product that is able to be purchased.’’

“These people have high net worth but not a lot of investable assets, and I am right in Vanguard’s backyard so I am never going to be bigger or cheaper, so we went where they weren’t,” Hubler explained.

He took the idea to his executives and entrepreneur clients, and they immediately saw the value, he said. From there, referrals grew with the help of his circle of lawyers and CPAs. “And for new clients, that’s exactly what they wanted,” Hubler said.

Retainer-based model, Hubler explained, is focused on what he terms Milestone Clarification Process. “Basically, if someone hires us, we have an executive path and an entrepreneurial path and we walk them through modules that look at everything that someone in that position should be reviewed,” he said, explaining that a third party looks at all the legal matter and a financial planner is involved building out a portal for the client.

“Some of these people don’t know where some of their stuff is at because they are so busy building and so busy managing the stuff they have built so they have no real dashboard,” Hubler said.
    
Once the clients get a snapshot of where their money is located, the information is put online in one place for them so that they are able to get in on their iPhone and access it wherever they are. 

Hubler said in almost every case, the executives and entrepreneurs are big accredited investors, who interestingly enough have very little, if any, accredited investments. “They have their own business, their own real estate but they have no private equity. They have no private debt. They have none of the other asset classes that I would assume that someone worth, $11 million or $50 million would have,” Hubler said.

“So, we can add a lot of value by giving them advice with regards to where the money is at and also finding things which their money should be in that they have no prior knowledge of,” he added.

In one instance, Hubler suggested to a couple who are clients that instead of buying stocks and bonds, they should buy real estate in the town where their kids attend college and rent out the rooms and teach them responsibility. This way, the couple will have a non-correlated asset when the kids graduate.

In another example, when a client who owns several fast-food restaurants sought advice on how to invest $500,000, Hubler suggested that he uses it to update his restaurant with a flat screen. “He’s done that before and he gets a 28% return on his investment,” Hubler said, explaining that if he wasn’t a retainer-based advisor, “my job would have been to find the best $500,000 thing I could put the money in for him, and there is nothing I feel comfortable in that would have given him a 28% return.”

“But being retainer-base, I can look at it from a bigger … kind of like a 50,000-foot level saying if you upgrade your restaurants, you are going to get a better return and not have to add more money in the market,” Hubler said, adding that it’s that kind of honest and agnostic advice why clients engage the firm for more than a year.

The firm charges clients between $5,000 and $20,000 for one year based on the complexity of their financial situation. If a client wants to continue working with him for a second and third year, the fee may not be as much as the first because the firm has already done the upfront work of building the client’s portal, he said.

Hubler, who now has clients in 11 states, said his is one of the only practices that focuses on retainer-based wealth management. And he doesn’t understand why, especially since he believes the industry is five years away from Siri going on your phone and saying, “Based on your retirement and your risk, the market is down, push this button and you can get more S&P Index.”

“You don’t need an advisor to do that. It’s all numbers. So I think asset management is having a sea compression, but we are not really adding value to the end user because they can do his themselves,” Hubler said, adding that we used to need a stockbroker to explain what a ticker was and to buy it. But a 12-year-old today can explain that because it’s all out there on your phone. “So, the information is no longer what’s valuable, it’s how you use it.”

Huber said when he attends conferences and everyone in the room is an advisor, “and they get to me and I say I run a retainer-based advising firm, the conference at some level becomes about me,” he said, explaining that people would follow him to the bathroom wanting to know how he does what he does.

“I think that the real interesting thing is, I use to, like everyone else give away the advice, hoping someone brings money over to manage, hoping they buy a product from us. But three years ago when we made the change, I said, 'Why are we giving away advice?' Why don’t we charge for advice and then be very open and agnostic on where they put the money? So we could have money at Vanguard and not charge any money for the clients to have it there.”

Hubler said he created the Retainer-based Academy as a side job “to help other financial planners, advisors and wealth strategists change the game.”

The academy, Hubler explained, is based on online courses that focus on how to run a financial practice. It includes modules on personal productivity and self-management, building the right team, and implementing solution sets and processes. Each module includes trick, tips and technologies to build the lifestyle business of your dreams.

Hubler said there are three kinds of advisors who would benefit from the course: The new person who doesn’t know how to be competitive because they don’t have a lot of experience; the guy in the middle who has been in the business for five to 10 years and making some money but is losing business because he is not competitive or getting bigger clients; and the firm that has grown in AUM and they realize that AUM is a dinosaur waiting for a meteorite.

“Being retainer-based helps you be legitimately different in a way that the clients want you to be. It’s advice entrepreneurs and executives can trust, no strings attached,” Hubler said.