Women go nontraditional with new advisory practices

Industry pioneers employ multifaceted approaches to bring financial planning to the masses

Nov 21, 2016 @ 5:42 pm

By Greg Iacurci

To hear Carol Craigie and Catalina Franco-Cicero describe their business model, you'd think they were running some kind of physical fitness center rather than a financial planning shop.

Their customers need an “energy minimum,” rather than an asset minimum. New clients start out with a “spring training” program to help focus their financial goals and strategy. “Action classes” focus clients on a specific monthly financial topic and “coaches” help ensure they remain on pace to meet their targets.

(More: Meet the 2016 Women to Watch)

Perhaps it's not a surprise, then, that their advisory practice, founded in September 2015, is called Fiscal Fitness Clubs of America, which the duo refer to as the “Weight Watchers of money,” given the emphasis on education, coaching and peer support for which that program is known.

“We're a personal gym for your finances,” said Ms. Craigie, the managing partner and chief compliance officer. “One of our overriding beliefs is it should be fun.”

Ms. Craigie, a psychologist prior to beginning her career in financial planning, and Ms. Franco-Cicero, a former physical education teacher, are pioneering a business approach to bringing financial planning to the masses at a low cost.

Fiscal Fitness Clubs of America is just one of several fledgling, nontraditional financial advisory businesses started by women within the past couple of years.

“Women identify their passions, identify their strengths and leverage them into target markets and niches they want to work with,” said Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network.

ACCESS TO LESS-AFFLUENT

A common thread among these nontraditional financial advisory firms is the use of models that grant access to younger, less-affluent investors.

“I became frustrated with the fact that the people who could really benefit from financial planning advice the most have difficulty getting access to it,” said Ms. Craigie, a former director of financial planning at both Wells Fargo and JPMorgan Chase.

(More: Demand for female advisers eventually will come from female clients)

Anjali Jariwala, the 33-year-old founder of FIT Advisors, falls into a similar camp. While working as an adviser in Chicago, Ms. Jariwala became interested in working with clients who were more her age group, but had difficulty finding an RIA with an investment minimum of less than $250,000 in assets.

So she started her own firm, a virtual, fee-only financial planning practice that prices based on a hybrid fee-AUM model. She charges a flat $7,500 for clients with less than $1 million in assets, and an additional 50-basis-point fee for clients with assets above the $1 million mark. She provides financial and tax planning as well as investment management.

Ms. Jariwala, who began her career at a Big Four accounting firm and now lives in California, launched FIT Advisors a year and a half ago and has garnered $5 million in client assets.

“You just have to come up with a fee structure that makes sense, and the old way of doing fees isn't conducive to Gen X and Gen Y clients,” she said.

“If you want to serve younger investors, who don't have account balances to manage, the AUM model is literally impossible to do,” said Michael Kitces, partner at Pinnacle Advisory Group and co-founder of the XY Planning Network, the mission of which is to promote financial planning under these sorts of nontraditional business models.

CLIENTS TO 'GROW WITH'

Ms. Jariwala, who recently had a child and purchased her first home with her husband, specializes in physicians and business owners, with her ideal clients being midcareer professionals in their late 30s through their late 40s.

(More: Women-owned advisory firms outperform their peers)

“It's really nice to serve a group where I can grow with them,” she said.

Linden Cornett, the founder of Seagrass Financial, launched her firm earlier this year as “sort of an experiment.”

It happens to be an experiment that's proven wildly successful. Since January, when Ms. Cornett opened up shop, she has garnered $21 million in assets under management.

“I have been able to grow more quickly than I want to at this point,” said Ms. Cornett, a 40-year-old computer science and mathematics double major who still works part-time for Intel as a software architect.

Based in Portland, Ore., she plans to cap her practice at roughly 25 to 30 households, and may not take new clients for the next four to five months.

Ms. Cornett counts herself among the naysayers of the traditional AUM model. She uses a graduated payment system under which a client with $500,000 in total portfolio value pays a flat $3,000 per year, bumping up to $4,000 per year for a client with $1 million and $6,000 per year for a $2 million portfolio, for example.

“I think the fact I have this sort of business model has attracted clients that need help but were maybe unwilling to pay for it,” Ms. Cornett said.

In that same vein, customers pay $59 per month to belong to Fiscal Fitness Clubs of America. Ms. Craigie and Ms. Franco-Cicero reach their client base mainly through the workplace, and employers can push the cost lower by subsidizing their employees.

(More: The time is ripe for female advisers looking for a change)

Their multifaceted approach uses online modules, a personal coach available by email and during designated “coaching hours,” and biweekly in-person (or web conferenced) “club” meetings for groups of eight to 10 clients. The groups, facilitated by a coach, allow for discussion of new financial topics, check-ins on weekly progress toward a goal and peer support.

“If you have to do something boring and you do it with your best friend, it's a lot less boring,” Ms. Craigie said.

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