Financial advisers embrace virtual offices

More advisers are coming to the realization that they no longer need regular face-to-face office meetings with clients and can work remotely from wherever they want

May 12, 2018 @ 6:00 am

By Jeff Benjamin

Priorities: Amy Hubble had to move her practice when she was accepted into a Ph.D. program.
+ Zoom
Priorities: Amy Hubble had to move her practice when she was accepted into a Ph.D. program.

Less than a year after starting her financial planning practice in Oklahoma City in 2015, Amy Hubble was faced with a dilemma. She had been accepted to the University of Georgia to work on her doctorate in financial planning and consumer economics. But the school was 1,000 miles away, and if she decided to pursue her Ph.D., she would have to move. But that would mean giving up her practice and abandoning her clients just as she was getting started.

Ms. Hubble's solution? A virtual practice.

Two years later, her solution seems to be working. Thanks to technology and a willingness by her clients not to expect frequent face-to-face meetings, the 33-year-old Ms. Hubble has been able to pursue her graduate education while maintaining her financial planning practice.

Ms. Hubble was forced into a virtual practice, but other financial advisers are choosing the option for a variety of reasons. In some cases, advisers find that their clients prefer to stay in touch via email, phone calls or video conferencing rather than fighting traffic to get to an adviser's office for one-on-one meetings. In other cases, advisers have set up virtual offices to accommodate a lifestyle that allows them to travel more or live in remote areas. And some do it just because it's cheaper — saving on rent and all the other costs that come with maintaining a brick-and-mortar office.

→ Read sidebar: Living where you want to
→ Read sidebar: Embracing tech to connect
→ Read sidebar: Saving a bundle without the office rent

In his research on advisory firms, Anand Sekhar, vice president for practice management and consulting at Fidelity Clearing & Custody Solutions, found that as firms continue to adapt to technology that allows for screen sharing, video conferencing and digital signatures, more advisers are realizing they don't need a permanent, physical office to work with clients the way they once did.

"The No. 1 expense at an advisory firm is compensation, and the No. 2 expense is rent," said Mr. Sekhar.

Video software

According to the 2017 InvestmentNews Adviser Technology Study, more than 64% of firms are already using enterprise video conferencing software to communicate internally or with clients, and a third of firms are using video chat software.

"Some of the advisers we consult with are often snowbirds that spend their winters in places like Florida, so the whole concept of a virtual office has always been there," Mr. Sekhar said. "I just think, with technology it's easier to do than ever before."

Daniel Andrews founded Well-Rounded Success, a virtual advisory practice two years ago after spending five years in the independent broker-dealer space. He has some clients he's never met face to face.

"All of my meetings are done over video conference calls," he said. "Nobody wants to spend an hour in traffic to go to a financial planning meeting where they're going to be told to spend less money."

Michael Kitces, a partner and director of wealth management at Pinnacle Advisory Group and co-founder of the XY Planning Network, cited consumer appetite among the top three reasons behind the increase in virtual offices.

Fidelity's 2016 Investor Insights study found that 44% of younger investors and 21% of older investors would change financial advisers if they weren't using technology to enhance their services.

"Some clients simply prefer to work with advisers virtually because it's easier for the client," he said.

With that in mind, the XY Planning Network requires advisers to make virtual meetings an option for clients.

The other top reasons behind virtual offices, according to Mr. Kitces, are reduced costs and the ability to specialize your practice.

"Historically, most advisers were generalists and not specialists because it was risky to specialize when you would worry about whether there were enough clients in the local area to be served if you specialized," he said. "But with the rise of virtual planning, you can have a deeper niche, with greater specialization, because you can work with clients anywhere in the country who have the need that you specialize in solving."

Lifestyle practice

Most virtual firms are relatively small lifestyle practices, either by necessity or design.

DeDe Jones, managing director of Innovative Financial, might not even be in the business today if she hadn't made the decision in 2003 to launch a virtual practice that enabled her to stay home with her 10-year-old twins.

"I knew I wasn't going to be big enough to justify a traditional brick-and-mortar space, but I had to figure out how to be the mom that's there for my kids, and also start this company," she said.

Ms. Jones, who thought she might eventually outgrow the virtual office, now has two employees and pays an outside company to provide a professional mailing address, phone service and meeting space when needed.

"Some clients might think it feels fly-by-night, but I tell them it makes a ton of business sense," she said. "It has worked beautifully for us, especially as technology has advanced. We do a lot of video conferencing."

Some larger firms are starting to see the light.

At Corbett Road, a $400 million traditional brick-and-mortar advisory firm, senior wealth manager Matthew Gaffey describes the business as a "combination of virtual and brick-and-mortar."

"You have the ability to do everything remotely," he said, citing one recent example of a new client who lives 15 minutes from the advisory firm but never came to the office during the entire sign-up process.

"It used to be you needed a handshake and a contract to do business," Mr. Gaffey said. "But clients are clearly getting more comfortable working with an adviser remotely."

Not everyone is on board.

Veteran adviser Tim Holsworth doesn't think his clients have much of an appetite for video conferencing or other forms of digital interaction.

"If you wanted to have a video conference with me right now, that would be a problem," said Mr. Holsworth, president of AHP Financial Services.

'Personal process'

"I don't think anything replaces looking at somebody face to face and seeing their expressions and body language," he said. "Financial planning is really a personal process, and I don't know how you do that without meeting with people in person."

And yet, even veteran advisers are starting to see the upside of virtual offices.

"I have a regular office, but I don't spend much time there," said Thomas Balcom, founder of 1650 Wealth Management.

"I've been in business for 20 years and have been working virtually for the past eight," he added. "As long as I have access to Wi-Fi, I can do my job, and the clients don't care where you are. They just want you to be responsive."

Chris Cortese is not a prototypical financial adviser working from a virtual office. In fact, he's not even a prototypical financial adviser.

Mr. Cortese, 51, was already retired from both the U.S. State Department and the Air Force Reserves when he started Logbook Financial Planning from Rockport, Me., in 2017.

"I started a virtual practice mostly because my wife and I wanted to live up here in the mid-coast of Maine," he said. "My clients are mostly based overseas and in the Washington, D.C., area, so by necessity we had to launch virtually."

Mr. Cortese learned the financial planning profession by taking online courses through New York University. He took the Certified Financial Planner exam in 2016.

With the first year running a virtual office under his belt, Mr. Cortese said both he and his 24 clients are settling in just fine.

"I traveled down to D.C. in March for some in-person meetings, and I'll probably continue to go down there twice a year or so," he said. "The whole thing is about your technology; everything has to be seamless, from having calls directed to your cell phone to using digital signature platforms."

It's also key to ensure clients are comfortable with the virtual experience, he added.

"Once they're comfortable with it, they really like it, especially when they realize they don't have to get in the car and get stuck in traffic to come and meet with me," he said. "The clients don't have to be super tech savvy, they just have to be willing to upload documents and use technology. I wouldn't consider myself a tech wiz, but I understand technology."

To help build out his business serving military and government employees, Mr. Cortese advertises in foreign service journals. And, in the event a client finds his or her way up to the mid-coast of Maine, he said he would more than welcome the visit.

"There's an on-site studio out back to hold meetings," he said.

"In my last job, I had 40 people working for me, and it was busy all the time," he said. "Now I have a lot less interaction with colleagues, and that part is a little tricky."

For former accountant and tax specialist Rebecca Conner, a virtual financial planning business is a crucial part of living on an island.

Based on Bainbridge Island, Wash., a ferry boat ride west of Seattle, the 32-year-old Ms. Conner said operating a virtual office is largely about embracing technology.

"With a virtual office, you are really opening yourself up to trying new technologies and staying on the cutting edge," she said.

Phone calls with clients are rare, she said. Most communication involves screen sharing and video conferencing, with most of her client interaction conducted through Google Hangouts.

SeedSafe Financial, which launched in 2016, has 35 clients, most of whom are from out of the area.

Acknowledging "the risk of choosing an adviser who is not local," Ms. Conner strives to fill the in-person void with as much digital communication as possible, including sending video messages to clients.

Like a lot of advisers working from virtual offices, Ms. Conner admits the isolation is the biggest, and sometimes the only, downside to maintaining a more traditional brick-and-mortar practice.

"I don't think my clients really care that I have a virtual office, but I like to meet with local clients in person because it gets lonely in the home office by yourself," she said. "Maybe one day a week I'll go into Seattle and meet a client, and those meetings are usually at the client's office or a coffee meeting."

Although some might argue that a virtual office could be a turnoff to potential clients, Ms. Conner believes it works to her advantage as an entrepreneur.

"I don't think the virtual aspect is preventing me from getting any clients; a lot of my clients came to me because of the virtual access," she said. "Most of my clients are in their 30s and 40s, so if they move to another city, they already know what to expect in terms of working with me and communicating with me."

For Vincent Barbera, the decision to transition two years ago from a traditional brick-and-mortar office into a virtual practice was driven by economics.

"We're in the Philadelphia suburbs, where nice office space is about $30 a square foot, but my [virtual] office is Starbucks, and that saves me a load of money," said Mr. Barbera, managing partner of Newbridge Wealth Management, an advisory firm serving 70 clients.

He estimates he is saving $3,000 per month in rent and an additional $1,000 per month on basic office-related expenses. When you throw in the $30,000 it would cost to have a receptionist, he figures the annual savings comes to about $78,000.

Mr. Barbera, 41, manages his practice by paying $350 a month to Regus, a company that provides virtual-office services from telephone receptionists to temporary conference rooms.

"It's becoming much more tolerable to go this route," he said. "And from the client's perspective, they just see the office I'm in when they come to visit."

When clients come in for a meeting, which Mr. Barbera said is becoming rarer, they often see other Regus users walking the halls and "ask if all those people work for me."

"The clients don't know at first that it's virtual, but I explain that having a virtual office allows me to save money and be more flexible with my fees," he said. "You have to be careful because clients don't want to hear you've been working at Starbucks all day."

Mr. Barbera said he and his business partner, Christopher Wiegand, each have home offices and rent some "class-B-minus office space, where I wouldn't take clients."

Mr. Barbera, who started his career at The Vanguard Group in 2002 where he worked his way up to asset-management services, launched his advisory firm four years ago and rented office space for the first two years.

Mr. Barbera doesn't expect to go back to a brick-and-mortar office anytime soon, but he admits "there is something about having your company name on the door, and your own space."

"My partner is in another location, so we're not working together every day," he added. "There is some appeal to going to the same place for work every day."


What do you think?

View comments

Recommended next


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print