Advisor Spotlight Series #7 - Sandi Martin & Julia Chung

Advisor Spotlight Series #7 - Sandi Martin & Julia Chung

After a one week hiatus, we are returning once again to Spring Financial Planning. Two weeks ago we had our first glimpse into the firm when I took the time to speak with Darryl Brown. For those who missed that post, Darryl is the Director of Portfolio Strategies and in our interview together we discussed topics such as the steps in an investment consultation, what it means to be advice-only and the importance of a personalized IPS statement. 

For this week’s advisor spotlight series, I am joined by Julia Chung, CEO, CFP, and Sandi Martin, COO, CFP. Julia and Sandi are the two partners in Spring Financial Planning. Julia specializes in retirement planning, private/family business, and cross-border planning while Sandi specializes in planning for young families, investment policies and also retirement planning. It was my first time interviewing two people at once, but Sandi and Julia quickly made me feel comfortable. It was obvious from the start that both Julia and Sandi are full of energy, quick to help and quite simply a joy to speak with. 

In our conversation, we talked about their transition away from from other firms and forming Spring Planning, as well as the benefits of working remotely, an AUM vs advice-only structure, and the fee structure of an advice-only model. We cover some of the same topics as Darryl’s interview but each response provides it’s own unique insight.

Tanner - “How about we start by each of you describing a bit about what your path looked like from early in your career until now with Spring Financial Planning.”

Sandi -  “I originally started out in banking, but to be honest I kind of ended up there in the first place by accident. After nearly a decade working as a banker, I realized that I could either do a great job for the bank, or I could do a great job for the client, but that I usually was not able to do both. I finally made the very hard decision to step away from banking and start my own independent, advice-only firm called Spring Planning. It’s so hard to step away into the unknown when you know that in the beginning you will be making less money than had you stayed with the status-quo. It wasn’t until a bit later when I merged with Julia.”

Julia - “I originally started out working at a brokerage and did a lot of work with private family clients. However, I was actually only getting compensated for my work on insurance related products. I remember speaking with one of the accountants at the firm and listening to them tell me how the work I was doing was great, but that they were quite surprised that I was only getting paid for the very small insurance asepct of it. Eventually, I ended up partnering with this accountant and we went out finding people who would pay me for all parts of the plan. Ultimately, I was providing advice-only financial plans to their group of clients.”

Tanner - “I previously asked this same question to Darryl, but how would you distinguish between fee-only and advice-only?”

Julia - “We originally were using the term fee-only, however we quickly realized that there is no regulation around the wording other advisors use. There were many AUM advisors who were calling themselves fee-only just because they charge a fee and do not get a commission for selling certain products. On the other hand, we were calling ourselves fee-only because we were getting paid for advice and not a percentage of assets.”

Tanner - “I guess this then leads into the question of what is the distinction between the traditional AUM model and what you are doing with advice-only?”

Julia - “At a high level, AUM (assets under management) advisors are different because they take a fee for managing assets. At the end of the day, there is a lot more to being a financial planner than simply investment management.”

Sandi - “Financial planning really has around six main aspects to it. The financial plan has to be comprehensive across all of these sections for it to really work. It is important to integrate factors from clients’ real estate portfolio, estate plans, corporations etc. When most clients go out and seek knowledge they kind of expect to receive specialized advice on all aspects of a plan. Yet, a breadth of knowledge across all disciplines is rare for a financial planner. 

When an advisor chooses to operate under the AUM model it provides no indication to clients that what they’re doing is in-depth financial planning. For these advisors, a lot of things just end up getting thrown into one big calculation. At the end of the day, people will ultimately work on the things which they get paid to do. AUM advisors receive money based on the amount of assets under management and to them it is a waste of their resources to spend 20 hours on a financial plan. By no means are AUM advisors ‘bad’ people or untrustworthy, they simply focus on managing assets. Advice-only shows that building comprehensive financial plans is all that we do”.

Tanner - “Because the advice-only model is relatively unique, do you find that you get to serve a more diverse range of clients with regards to the stage of life they are in such as young families rather than simply folks in retirement?”

Sandi - “What’s fantastic about our model is that since we have no minimum asset threshold we are able to service many different types of people who can pay for a one-off service. There are kinds of plans which I really deeply enjoy doing such as for people just starting out in their careers, newly incorporated people, or ones with kids and perhaps in middle-age.”

Tanner - “How do you establish your pricing in an advice-only model? I am imagining that you may have a flat fee, but at the same time I know that each client may have very different needs?”

Julia - “It all begins with a discovery meeting where we will ask them many questions about their financial and life history. In this meeting, we are quickly able to figure out whether they have big, hard, and challenging characteristics which would add to the cost of our minimum falt fee, or if it is more of a standard financial plan which would fall under our standard rate.”

Sandi - “As Julia said, it really is going to come down to what are the components of the prospective plan and how much is it going to cost to prepare a plan for each of those components. Aside from the initial plan, we want to be able to offer continuity with care. Our original fee is actually paid out in chunks over the first full year and then that does not necessarily mean we will never speak to the client again. Many clients want continued care in the form of coaching and we can offer that through semi-annually or annual meetings. Also, we do actually offer a retainer for clients who want lots of direction. 

From a business perspective this is great recurring revenue for our model. I think many advisors view advice-only planners as receiving one flat fee but then missing out on any recurring revenue; this simply isn’t true. The advice-only model should prove to many advisors that this is still actually profitable.”

Julia - “Personally managed investments are a relatively new concept in the industry now that everyone is in the deaccumulation stage. Many people now see money being the client rather than the client themselves.”

*Spring fees: 

Cash Flow Plans = Personal: $1,800, Personal + Business = $2,500

Comprehensive Plans = $4,000 - $7,000

Advanced Plans = $6,000 - $20,000

Portfolio Strategies = $800 - $4,000*

Tanner - “How do you operate remotely? Have you noticed many changes to your business since COVID?”

Julia - “At Spring we actually have clients from coast-to-coast and work virtually very easily. The work we are doing does not require people to be in the same physical space. The people we bring onto our team are hired based on what they can bring to the table and not where they live. For example, I live in BC, Sandi is in Gravenhurst, Ontario and Darryl is in Toronto. 

Prior to COVID, some people were nervous about virtual service and we would do all of our discovery over the phone, but then would also sometimes visit in person if the location allowed. Nearly everytime the client would quickly realize that the in-person visit was not necessary.”

Sandi - “To be honest, COVID hasn’t made things very different for us and we are likely to just stay the course. People are now just more trained to virtual interaction. There are certain times in the year where we are always busier such as in Spetmeber with the start of the school year, or January for the new year, and then sometimes in May around Tax season.”

Tanner - “As a final question to wrap things up, what would you say to someone considering a professional financial plan and where do most of your clients come from?”

Julia - “We find a lot of clients coming to us with a financial plan they have created themselves and just telling us that they need someone to conduct a quick review of it for them. Obviously this isn’t exactly how it works and then we are able slowly educate them through the comprehensive process. At the same time, we get many clients coming to us asking for us to ‘fix’ a financial plan another advisor has given them, or to provide an update to their existing plan.”

Sandi - “A financial plan truly is a worthwhile expense. A client may be spending x amount of dollars up front, but over their lifetime will be saving tens or even hundreds of thousands of dollars as a result. A financial plan is like sushi; one area where you don’t want to cheap out.”

Thanks to both Sandi and Julia for taing the time to speak with me and share a little bit about their business. Feel free to reach out to them at the contact button below. Please contact me if you, or anyone you know, would like to be featured in an upcoming RiskMetrics blog post.

Contact Julia & Sandi

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