In 2007, Rick Kahler lost five of his six employees within two months. Not only did that leave him short on administrative help in running his registered investment advisory practice in Rapid City, S.D., it also left him at a loss dealing with his office and portfolio management technology. “I realized I was largely held hostage to my staff,” Mr. Kahler said.
In retrospect, the minicrisis was a turning point. Mr. Kahler spent the next 18 months working weekends to learn his software and find inefficiencies in the way the firm operated.
“It was a silver lining to the dark cloud. We got lean and mean,” Mr. Kahler said.
Not only did he become more proficient in his use of technology, he added more — integrating smart phones and laptops, and building a presence on social-media networks. What's more, Mr. Kahler was able to make up for the five employees who left by replacing just two of them.
“We were using about 2% of our technology power. Now IT firms tell me we're using our technology far more heavily than other firms,” Mr. Kahler said.
The experience helped him build a far more efficient practice. Mr. Kahler said that his advisory business faced a bigger challenge in the run-up to the technology stock bubble.
Sometime in the mid-1990s, his practice started to change. It wasn't a sudden transformation and it wasn't by design, but it was definitely a change.
“When I started the business, we wrote big, comprehensive financial plans for our clients. Financial planning was what we did. But sometime in the early 1990s, we started to become more investment-oriented. And by the late 1990s, I realized we really weren't doing financial planning anymore,” he said. “I think it happened to a lot of financial advisers.”
Mr. Kahler, who started his firm in 1983, made a choice to refocus his practice on his clients' broader financial circumstances. But he decided he needed to do more than just financial planning. He needed to address the emotional underpinnings of what drove his clients' often irrational behavior.
“Irrationality drives the markets. Eighty percent of all money decisions are made emotionally,” Mr. Kahler said. “In the future, traditional financial planning won't be the most important thing we do for our clients. We'll be financial coaches and financial therapists. There's a lot for us to learn from the mental-health business.”
A “financial wellness practitioner” is the best label he can come with for the new role. “It involves a lot more than just drafting a financial plan,” said Mr. Kahler, adding that he has been surprised to discover that students he teaches in an online finance class are scared to death of the investment markets.
He is now experimenting with delivering services in a group setting.
Not all his clients are interested in the more holistic, “get in touch with your feelings” approach, so he doesn't push it on everyone. The key, he said, is listening to the clients, understanding what their goals are and clearly determining what services they want from him.
“We go with the clients' agenda. If they need estate planning, we go there. If they just want advice on investments, we do that too. We're now more nimble and flexible with our planning,” he said.
E-mail Andrew Osterland at [email protected].
