Two CPAs spill the beans on how they are growing their advisory firm.

Planners Mike McCabe and Bob Westrick were on the move in the final days of summer-literally. "We're in jeans right now, packing up boxes. We're gutting our existing office space," says Westrick, McCabe's co-principal at WNA Investment Programs Inc., in Chicago's western suburb of Hinsdale. The crates' destination: the second story of the building that's been home to the fee-only RIA for a decade. That's where the principals and their staff of three will camp for the duration of the facelift. "Our average client today is more affluent than our average client ten years ago," Westrick says, "so we want our offices to be more comfortable for them, as well as better reflect the success we've achieved."
WNA's accomplishments include Westrick being named to Worth magazine's list of Top 100 wealth advisors this year. McCabe points to the firm's client-attrition rate-just 2% to 3% over its 13-year history. Meanwhile, client referrals have been the primary catalyst for growth that created the shop's second senior planner position this past spring. By the autumnal equinox, WNA was closing in on its year-end goal of managing $130 million, roughly half of which is qualified money.
McCabe and Westrick were certified public accountants before they knew each other and before each became a certified financial planner. Yet they don't consider themselves accountants, and theirs is not the typical bean-counter-gone-planner story.
Westrick, 47, hasn't done accounting in forever, although he started work life at a then-Big Eight CPA firm. But he jumped to the corporate finance department of the American Hospital Association, and by the time he had earned an M.B.A. from heady University of Chicago, where modern portfolio theory struck a chord with him, the fate of his accounting career was sealed.
McCabe, 45, got his CPA right out of college, too, and eventually became a Certified Pension Consultant, a credential put to use at a third-party administrator he became involved with during the 1980s and eventually co-owned. That led him to his future business partner. Westrick had a planning firm that was working on a 401(k) case; McCabe's TPA was brought in on a recommendation from a common professional acquaintance. The two got on so well, they decided to launch a fee-only advisory. The name chosen, WNA Investment Programs, combined and continued the predecessor organizations' brands. "If you go into business with someone who is competent and trustworthy, everything else can be worked out," Westrick says.

How They Do It
On paper, what McCabe and Westrick say makes WNA hum-its people, processes, service and technology-is pretty straightforward. The key, of course, is in the execution, starting with hiring and retaining exceptional staff.

The efficient office manager, Sue Bolt, possesses a most pleasant phone voice and regularly wins praise from clients, such as this recent comment to Westrick from a new seven-figure, out-of-state account: "She is a wonderful face on your company." Mary Beth McLean is an associate portfolio manager, as the senior planners are called, who joined in 2002 with 20 years of bank experience, the last five in the private-client group. The new hire, Joe Feldmann, holds both a CFP and a CPA. "We wanted a CPA because they tend to be more analytical, quantitative, disciplined and anal, like us. They just make good research people," Westrick says.

The process utilized to recruit for the position reveals much about the principals' business savvy. They placed an ad on, along with a detailed job description intended to ward off the quasiqualified. It was McCabe's idea to require that applicants mail in their resume, rather than permit electronic delivery with a nonchalant click of the mouse. "That keeps you from getting a lot of resumes you'd rather not see," he says.
A much softer touch guides client gathering. During the free initial consultation with a prospect, "We listen," McCabe says. "We try to understand what's brought them to us and if it was a bad experience elsewhere, what went wrong. We don't try to sell-we're both fairly mild-mannered-we just try to get people to where they want to be."

WNA doesn't target a particular client type, although "our ideal is an abdicator, someone who is willing to listen to us and heed our advice," McCabe says. A long-term perspective is also vital. "People who chase the flavor of the month don't work well with us, and we tell them that. We're successful enough that we don't need every prospect," he says.

Those who come aboard can pay as much as $1,500 for portfolio design and implementation. The process begins with a series of intensive fact-finding sessions with the client, attended by both the principal handling the case and one of the senior planners. Hours of portfolio modeling follow, resulting in a portfolio design recommendation, which serves as the touchstone to money management-the ultimate focus of client relationships at WNA. One hundred basis points are charged on the first $500,000 managed (the firm's minimum), sliding in stages to 50 basis points above $2 million.

What about financial planning? Frequently the fact-finding marathon reveals other needs, and WNA offers, for a separate fee, what might best be described as modular financial planning.

"We focus on just the top two or three areas that can really improve their situation," Westrick says, citing retirement planning, estate planning, and insurance as the most common. "We used to do comprehensive plans, but it overwhelmed folks. They would go into paralysis and do nothing."
For Westrick and McCabe, the best way to manage risk is to build the right portfolio for the client, provide education about its potential benefits and risks and make sure it stays on track. "Investors get hurt when they sell in bad times. We design portfolios so that clients will stick with them," Westrick says.
Their first step is understanding the client's true appetite for risk, even if he doesn't. "During a fact-finding meeting, someone might say he's aggressive but when you look at the investments he already has, they really aren't," Westrick says. "You can learn a lot by examining current holdings."

Behavioral finance also is incorporated. Studies have shown that investors are more unhappy with a loss of x percent than they are happy with a gain of the same percentage. "What does that tell you about portfolio design?" McCabe asks. "That it's better to protect the downside than to try to shoot the lights out. We think protection of principal is a big deal."
When the recommended portfolio design is presented to the client, a key part of the discussion revolves around a graph produced by SunGard AllocationMaster illustrating the range of expected returns that a client could experience over various timeframes. "We spend a lot of time focussing on the worst-case scenario. We want the client to understand that market downturns will happen and therefore an investor must be willing to stay the course," McCabe says. Putting volatility in context helps clients develop the fortitude to tough it out in disappointing markets.
When it comes to selecting funds, style consistency is a must. "Studies have found that style consistency is a strong indicator of future good performance relative to peers," Westrick notes. Typically, only managers with at least five years of experience in their current style are considered. Other qualities scrutinized include performance consistency, the fund's potential capital gains exposure and access to fund management.

Service Standards
    Quality service creates happy clients, McCabe and Westrick firmly believe. One step they've taken is tailoring the amount of contact to the client's wishes, data that's easily tracked by Junxure, their client relationship management software.
Strict standards for service have been set, too. During business hours, all in-coming calls are answered-nothing rolls to voicemail. "When people call about their finances, they are concerned and want to talk to a person, not a recording. That may not always be best from a time-management standpoint, but it is good service," McCabe says.

Clients can always access near-real-time account information in a secure, encrypted area of WNA's Web site, Performance numbers, asset allocation and much more are refreshed by 10 a.m. each Monday when data reflecting the previous week's close is uploaded from Portfolio Center (formerly Centerpiece), the portfolio management software. WNA's current site was built in 2005 with the help of Schwab, its primary custodian, which makes the uploading process "a lot easier," Westrick says.

Like other small shops, leveraging technology is a primary business challenge for WNA. Migrating to Junxure 18 months ago improved communications between employees, among other things. Looking ahead, the new conference room will be outfitted with wireless technology and a plasma screen on the wall, to facilitate client presentations and for in-house education, such as watching Webcasts.
Coming next: imaging of client documents such as tax and estate documents, so they can be placed on the Web site for easy access by clients. "We're always trying to develop new service capabilities," Westrick says. Indeed, maintaining superior service while WNA grows is another major challenge he and McCabe know they face as successful independent advisors. "But that's one reason we hired another planner," Westrick says, "and why we're renovating our offices."