Sheryl Garrett

Sheryl Garrett

Founder, Garrett Planning Network Inc.

Financial planning organizations have tried for years to explain what advisers do to lawmakers and regulators to try to influence policy in Washington.

Last year, Sheryl Garrett elevated the profession to the commander in chief.

The founder of the Garrett Planning Network Inc. became a key advocate for a Labor Department rule that would raise investment advice standards for retirement accounts. In doing so, she popped up on the radar screen of President Barack Obama.

During a February 23, 2015, event at AARP to jumpstart the proposed rule, Mr. Obama cited Ms. Garrett in a nod to the importance of financial advisers acting in the best interests of their clients, which is at the heart of the DOL regulation.

Mr. Obama invited her to stand up and then said: “We’re proud of Sheryl, so I’m quoting you, Sheryl. Sheryl says, ‘The role of the financial adviser is one of the most important jobs. But there is a segment of the industry today that operates like the gunslingers of the Wild West. We don’t have the rules and regulations to protect those we’re supposed to be serving.’ Couldn’t have said it better myself, which is why I quoted you.”

The rare moment of presidential attention — for her and the industry — continues to resonate with Ms. Garrett.

“Having financial planning mentioned by a president is amazing,” she said. “It was surreal. It still is.”

Ms. Garrett was in the spotlight because she developed a business model for investment advice that demonstrated that it’s possible to serve the middle-income market and at the same time be profitable and put clients’ interests first.

While most of the industry clamors for high-net-worth clients, Ms. Garrett, 54, has built her practice on guiding investors who fall below the minimum asset levels commonly set by advisory firms. She and the 250 members of her network do so by charging by the hour for advice.

The example Ms. Garrett provided of investment advisers serving investors with modest assets was exactly the story that supporters of the rule needed to counter one of the most compelling financial industry criticisms of the DOL rule: that forcing advisers to be fiduciaries would make advice too expensive for the middle class.

“That was the argument that played with Democrats,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “Being able to provide examples to disprove that argument was crucial to keep legislative threats at bay, and Sheryl was the most prominent of the examples. She was the first to [provide advice for the middle market] in a large-scale, proven way.”

The politics of regulation was the last thing on Ms. Garrett’s mind when she came up with the idea of charging an hourly fee for advice. She developed the concept while camping in the Manistee National Forest in Michigan in 1997.

Ms. Garrett was not enamored of a common way of providing financial advice: charging a fee on a client’s assets under management.

“I was not feeling fulfilled,” she said.

As she sat among the trees in Michigan — alone with her thoughts, without a phone or electricity — she came up with a mission statement: “Help make competent, objective investment advice accessible to all people.”

She determined the best way to do that was to charge an hourly rate for financial planning, rather than to require a certain level of wealth from clients in order to serve them.

“Planning is a process, not a product,” Ms. Garrett said. “If we manage our time efficiently and we charge appropriately, we shouldn’t make less money by working for people who have less money. It seems very fair.”

Ms. Garrett opened her first hourly advice practice around 1998 and established the Garrett Planning Network in 2000. Today, its members serve about 25,000 clients.

Many of them are do-it-yourself investors who just want guidance from a professional rather than hands-on money management. Advisers in the network charge anywhere from $150 to $300 an hour.

Many doubted Ms. Garrett when she embarked on the hourly route — but not today.

“I project the future will see hourly as being the most common way financial planning advice is rendered,” she said. “I’ve gone from [being called] ‘idiot’ to ‘different,’ and that’s a giant progression.”

She now lives in Eureka Springs, Ark., with her spouse, Shawnda, and their daughter (who was convinced of the importance of her mom’s meeting with the president after Ms. Garrett compared him to the King of Arendelle, a central character in “Frozen.”)

The regulation she helped the Obama administration enact will withstand challenges in the legal system, on Capitol Hill and in the coming Trump administration, Ms. Garrett said. More importantly, the idea of advisers acting in the best interests of their clients will win in the marketplace.

“The regulators aren’t going to have to tell us to behave,” she said. “Clients will demand fiduciaries.”

– Mark Schoeff Jr.


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