Creating A Partnership To Serve Your Collective Community

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

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Full Transcript:

Michael: Welcome, Kamila Elliott, to the “Financial Advisor Success Podcast.”

Kamila: Thank you, Michael. Thank you for having me.

Michael: I really appreciate you coming out and joining us on the podcast today and talking, I think, about, to me, a lot of interesting themes of both pass through the industry. I know you’ve had, I think, at least a little bit of a unique one, relative to industry standards, having spent a lot of time in a large asset manager before ultimately going out to the independent channels. Most of us, historically kind of landed in, I use insurance sales or investment sales and a brokerage firm before building further in the industry. And you started a different kind of path.

You also have, I think, a very unique advisory firm today of what, to my knowledge at least, is the most Black CFPs at one boutique firm in the country, in an industry where most firms struggle to have one advisor who is not white. To have multiple advisors of diversity at a single firm is, unfortunately, such a very unique thing in the industry today.

And so, just to me, there’s this interesting intersection that I’m curious, if you see as well, of both having a uniquely diverse firm and having followed a little bit, at least what I would think of, as a nontraditional path in coming into the industry and growing into the industry to begin with. That I wonder if that’s reflective of some of the industry’s broader ongoing challenges in diversity of advisors and diversity of CFP professionals.

Kamila: I totally agree. I think my nontraditional background, Michael, has given me access to a really wide network of people. It created a very diverse community. So, when we’re looking to build this firm, I already had connections from people who were at larger firms, smaller firms, so we can be able to build what we have at Collective Wealth Partners.

Incorporating Assets Under Advisement In Holistic Planning Fees For A Younger Clientele [05:07]

Michael: So, I think, to get us started, just talk to us a little bit about your advisory firm, as you’ve said, Collective Wealth Partners. Tell us a bit about the firm as it exists today so we kind of understand the current picture of where you are and what you’re doing.

Kamila: Sure. Collective Wealth Partners is an SEC-registered RIA. We are headquartered in Atlanta, Georgia. But we do have advisors throughout the country. So, basically, how we got started, we have all been in the industry for pretty much over 10 years. The entire team, to your point, Michael, we all have experience at larger firms. So, one of my colleagues spent time at U.S. Trust, one spent time at Merrill Lynch, one even had some time at Lehman, right? So, we all collectively brought…

Michael: For a brief time perhaps, unfortunately.

Kamila: Yes. So, we all brought a big-firm perspective. And then, we all transitioned to smaller RIAs, even some worked at broker-dealers. So, we come with a really diverse perspective.

Our firm, we’re called Collective Wealth Partners because we all have different experiences and expertise and focus areas. And collectively, with this knowledge, we can serve our clients in the best way. We’re working to work with our clients in a very team approach.

So, we have someone that is an expert on healthcare benefits and how to pick the best employee benefits for your firm and loves to dig deep into that. We have someone that loves, QuickBooks and small business planning and reporting and how to make sure they’re utilizing all the best reports and analysis to look at profitability.

And then a lot of my clients, Michael, are tech clients. So, I have worked to increase my knowledge on equity compensation and RSUs and ISOs, and how to best serve them from an investment and a tax planning perspective. So, we brought all of this expertise together to work with communities that tend to be underserved but do have emerging wealth.

Michael: So, talk to us a little bit more about that. Who is the community that you’re ultimately trying to serve?

Kamila: Sure. Most of our clients are Black, East Asian, Latino. I would say 90% of our clients are of color. We also have a very large segment of our client population that’s LGBTQIA and understanding the values they have from an investment perspective and a planning perspective.

So, our book of clients is really different from most firms. Our age range is really between 30 and 50. So we definitely cater and serve more so to the HENRYs, the High Earners, Not Rich Yet, helping them earlier in their careers from a planning and investment perspective. And we help to grow with them as their career grows, as their wealth grows, and help them with asset retention and building more of that generational wealth that these communities, typically, were not privy to.

Michael: So, help us understand the business model then. Just what do you charge and how are you structuring this if you’re working mostly with younger clients? The industry now calls him HENRYs, so High Earners, Not Rich Yet, which usually means not necessarily sizable portfolios for assets under management. So, what does the business model look like? Are you still doing AUM work or is it a blended fee model or something different entirely?

Kamila: It is a blended. So, we are a fee-based firm. So, we charge assets under management. But the vast majority of our revenue, Michael, is through financial planning revenue. So, we charge a fee.

We have different models, but most of our clients, we charge one holistic fee. And it includes a financial plan. It includes investment advisory. We even, for many of our clients, include tax preparation as well into their fee. So, anything that they have financial in nature, taxes, investments, help with their retirement accounts, health benefits, we cover under one holistic financial planning fee.

Michael: And what’s a typical fee? Or how do you determine what that fee is?

Kamila: Our typical fee… Because we believe in transparency, we actually have on our website, our typical fee for an individual is [$]4000 and for a married couple or partner couple is [$]6000. And then for business owners, we charge starting at [$]10,000 a year because we’re working not only on building their personal wealth, but we’re reviewing their business, looking at their business financials, business retirement plan, etc.

Michael: And then, so you said, for a lot of your clients, that’s a holistic fee of planning and advisory and even tax preparation in there as well. So, is that literally like everything bundled under one?

Kamila: Correct.

Michael: Meaning, tax prep is included. There’s no separate fee. Whatever their portfolio size is, that’s just covered under it. There’s no separate AUM fee for the portfolio?

Kamila: Correct, yes. So, if their assets are less than [$]400,000, we typically charge that financial planning of [$]4,000 and [$]6,000, but if they have assets north of [$]400,000, then we start to move to the AUM model.

Michael: Okay. And then how do you price on the AUM model?

Kamila: The highest we charge is 1.2. And then we have a tiered structure, 1%, 0.8%. So typically, most of our AUM clients, the fee is 1%.

Michael: Okay. And so, until I guess I can see the math, by the time you’re at $400,000, your first tier of AUM fees is right in that $4,000 to $6,000 range of where the planning fee was.

Kamila: Exactly.

Michael: So, does that mean it literally shifts? If I come to the firm with $500,000 or $600,000 and so, then I’m just going to be charged an AUM fee that may add up to be a little bit more than $4,000 to $6,000 at that point, but the planning fee goes away?

Kamila: Correct.

Michael: Or do they run in parallel like it’s planning fee plus AUM fee?

Kamila: At that point, the planning fee goes away. And so, the AUM is what covers your entire fee at Collective Wealth Partners.

Michael: Okay. But it sounds like, in practice, a very significant portion of your clients actually are not at the AUM threshold because you’re working with younger folks. So, planning fee ends out being the thing that dominates the offering and practice?

Kamila: Exactly. So, one of the things is we have a much higher assets under advisement than assets under management. Because, to your point, for many of our clients, most of their significant wealth is in employer plans, right?

So, if there are 401(k)s is at a Fidelity or Vanguard or T. Rowe, I’m providing investment recommendations and support, but we’re not managing it internally. So, we have to be a little bit more creative as to how do we structure compensation, knowing that we are providing advice, but the AUM isn’t really available.

Michael: Now, in practice, does that further filter into the fee schedule structure? Do you charge an AUA fee on all the assets that are being advised upon? Or if they crossed the threshold into the AUM side, the AUM is still solely like the actual M, like the discretionary managed M part?

Kamila: Exactly. One of the things that is a little bit different for our firm, for many of our clients, we are their first advisor they’ve ever had. Perhaps the first person in their family to ever have a financial advisor. And so, one of the things we wanted to make is make the fees very easy to understand.

Because we do say, “I know that some people do a percentage of income and a percentage of net worth. And that’s how they charge their clients.” But we didn’t want to have too many, I would say, fee calculations. We wanted to make it very easy for them to understand very…it doesn’t require to use an Excel spreadsheet, pretty much, right? You can pretty much easily figure it out.

We talked about it, but we wanted to keep it easier. Because we didn’t want the calculation of the fee or the lack of understanding to be an impediment. We want to make sure that people didn’t have hesitation in working with our firm.

And it is something new for many people to pay for advice, right? I think we’re used to paying for a CPA. We’re used to paying for a personal trainer. But for many communities of color, more specifically, paying for advice is very, very new. And we wanted to keep the fee calculation very, very simple.

Michael: Interesting. So, it sounds like it’s almost a conscious… I don’t want to frame this the wrong way. Some people would say, “Look, if you’re advising all of these assets that are held away, but you’re doing all this advising work, you should charge an AUA fee.” You’re “leaving money on the table,” if you’re not expanding your fee to capture all the areas that you’re advising.

And it sounds like your framework just comes out a little bit differently of saying, “Look, we’re going to have a minimum fee. I know this reasonably covers the time it takes to do all the stuff we’re doing for the client. And so that will be enough to cover whatever it is. I don’t need to separately charge for AUA. And it just gets really simple and straightforward. It’s $4,000 for an individual. It’s $6,000 for a couple. And at the point you’re managing $400,000 or more with us, you’ll have an advisory fee that will offset that planning fee.”

Kamila: Exactly. Even for me and my prior firm and some of my clients who moved over with me is that we’re seeing that transition happen, right? That they leave an employer. They take the 401(k) with them. Then now we invest it and we switched them from that financial planning fee to the AUM fee.

And this next gen, this new generation, these Millennials – and I’m close to Millennial, Michael, not quite in Gen Z – they’re very transient with employment, right? So, it isn’t the old model of you’re waiting until 15 years to get that 401(k). It’s probably three to four years at this point. And so, with us as their trusted advisor, we do have a belief that we will be able to pool those assets over or under, in-house, once they do you make that shift.

Michael: Okay. And so, how many clients are AUM or AUA…? I don’t know how you measure or think about the firm. Just how many clients and what’s the asset base there at this point?

Kamila: Right now, so our calculation, with the advisors that are here now, our AUM is about [$]25 million. When the other advisor joins, it will probably be around 35 [million dollars]. If you think about assets under advisement in terms of employer plans, to your earlier question, we’re probably close to [$]60 million. We do have, right now, in terms of households, we have about 175 households.

Michael: Okay. And this, I guess, in practice, how does revenue break down for you between AUM fees and planning fees?

Kamila: Right now, about a third is AUM fees and about two thirds are planning fees.

How Collective Wealth Partners Onboards Clients And Builds Financial Plans [16:39]

Michael: So then help us understand, what do you do for the financial planning fee that you charge or just particularly for people that don’t have assets yet? Say, effectively, they’re going to pay their planning fees from income, from their bank account. That’s a not small financial planning fee to pay, particularly when the majority of the clients you’re working with have not had an advisor before, have not paid an advisor before.

And I think you’d even say, “Maybe the first person in their family to ever have an advisor.” So it’s not like someone else in their family is saying, “Oh, yeah, it’s time for you get an advisor because you’re doing really well.” There is no model for them in their family and life experience to ever have an advisor and pay thousands of dollars to a financial advisor. So, I guess I’m wondering, just what do you do for this planning fee, upfront and ongoing, to be able to explain and demonstrate the value?

Kamila: Sure. So, I’ll take you through the initial onboarding process and then the planning that we do throughout the year. So, our first meeting, we spend at least an hour or maybe two hours just going over their goals, their short-term goals, intermediate-term goals, long-term goals, and getting that cemented.

For many of our clients, too, I think it’s important to share that they are probably one of the more successful people in their family. And so, when there’s financial needs in their family, people tend to come to them. So, we talk a lot about financial support to family members. Many of their parents don’t have long-term care insurance or don’t have significant investments, so we spend a lot of time talking about, “What is the expectation of supporting your parents? And how is that part of your plan?” So, we think very broad.

For every single client, we do a budget. We always say it’s not what you earn, it’s what you keep. And we go through the needs, wants, and savings allocations. We then find opportunities to how they can save more. If they do have student loan debt, how they can pay it down more quickly. And then, for every client, we do a full financial plan and an executive summary.

From a corporate perspective, we look at the plan or look at their financial position from a strengths, weaknesses, opportunities and threats perspective. And then we outline the next steps that we’re going to do over the next 12 months on how we’re going to address them.

So, for many of them, there are some basic components that are not in there. So, many of them, some of them have small kids and they don’t have life insurance. We primarily do term insurance, just so you know, Michael. I always tell Geoff Brown from NAPFA, “I sell term insurance.” I do believe families, young families, should have that. Many of them…

Michael: And meaning, your licensed insurance agents are actually doing the term insurance internally?

Kamila: Yeah. So, we work with a third party to help us with the applications and process, but we do primarily offer term insurance, like term insurance and long-term care insurance, depending upon the age. But those are the primarily the insurances that we offer at our firm.

Michael: And who are you working with just to help make that happen when you’re an RIA structure?

Kamila: I work with FIG Marketing out of North Carolina. And I work with our team, and they help us through the process and the applications and support to get our clients the insurance that they need.

Michael: And so, I want to go further in the planning process. But I do feel compelled to ask here. Obviously, not news, there’s a lot of discussion in the industry these days around fee-based, fee-only, participating insurance commissions or not. We’d just love to hear more, how do you think about that industry debate and divide when you obviously made a conscious decision to say, “We do want to write the insurance and participate in the compensation for that.”? So just help us understand more of what you guys were thinking about in going through and making that decision.

Kamila: Yeah. I think it was more so, Michael, initially, there wasn’t an inclination to do insurance and to outsource it. But initially, when I did outsource insurance and they got to an insurance professional, they would then begin to cross-sell products that were not suitable for my clients.

And then I had to back away from that. I was like, “Well, no, you don’t need whole life. You’re not even contributing the max to your retirement plan. You don’t really need a whole life policy. Let’s talk about cash value and how cash value accumulates.” And I felt like I was back-ending myself when I would say, “Oh, talk to this insurance company.” And they would sometimes not always position the right product for them.

And so, I will say, Michael, it was more of intentional from a control perspective, right? So, I know a 20-year term is what you need. One of the things I do, Michael, I don’t even ask what the commission is. I really don’t care. I’m getting it for my clients for what’s best for them. Right? I just had a 20-year term policy for someone who was 42. And it’s like $200 a year is their premium. So, for me, I’m not getting a lot of compensation for it.

Michael: Yeah, the money is not in term insurance for young people. If you’ve ever been an insurance agent, that’s not where the money is.

Kamila: Exactly. So, insurance is not really a meaningful financial contribution to our firm. But it was more of the control to make sure they’re getting the right insurance that they need.

Michael: And so just relative to working with an insurance company or working with other agents and insurance companies and having them try to cross-sell things that you aren’t necessarily a fan of them cross-selling, just how is it different with FIG? How does FIG work? And what makes that structure different for you?

Kamila: Well, FIG is more back-office support. They don’t really interface or position products to the client. So, once me and the client identify the right insurance product, they do the back-end processing to get the application, to get it approved, to issue. They’re not speaking to the client. They’re not part of the sales process, I should say. They’re more, once we’ve identified the right product, they support on the back end.

Michael: Okay. And I guess I’ve got to ask, do the questions ever come up with clients around commissions versus fees? Does the dynamic of not being able to say your fee-only ever become a concern for you guys?

Kamila: No. Because all are lead advisors or CFP professionals, we lead with more fiduciaries. And we do what’s in the best interest of you, not for us. And I’m very transparent with my clients that, “This is an insurance product. I do receive a commission.” I don’t even know what the commission is because I don’t even ask. So, I don’t want the conflict, Michael, right? But I tell them I’ll receive a small percentage based upon the sale of this insurance product.

And because, to your point, 95% of what I do is term, that compensation is very minimal. And they tend not to have any issues. I think the issue would be more if we were selling whole life, IULs, right, where that commission structure is much more substantial. And that could potentially pose more of a conflict for us.

Michael: So, take me back to the planning process again. You said, so, the first meeting is kind of an hour or two going over goals. I guess I’m just wondering, can you talk more about what is setting goals mean in the context of your clients and the folks that you’re working with?

The traditional industry view is there’s education goals for kids and there’s retirement goals. I guess, I’m just wondering, for clients you’re working with and the age you’re working with, is that still the primary focus of setting goals as you’re going through a goal-setting meeting? Or is it different?

Kamila: It’s different. I think that this generation, one of the things a lot of them are planning for is sabbaticals. They say, “In 10 years, I want to be able to take off work for 6 months, how can I do that? I want to transition. I don’t want to be in corporate America forever. At some point, I want to be a consultant. How do we plan for that?”

A lot of them like to retire early and have second careers and say, “I’m doing this now because I make a lot of money. But I don’t want to do this forever. This is my passion. And how do I save enough money by the time I’m 45 or 50? So, my second career and my last 10 to 15 years is doing what I love.” So, it’s very…

Michael: I’m curious, I just got to ask like, “I want to retire and have a second career doing what I love,” feels not retiree-y. Do we need a different word for this?

Kamila: It is. This funny though. I was at the FPA retreat earlier this year, and this was, I forget the gentleman’s name, but he’s a PhD and he was talking about the notion of retirement is very different than it used to be, right? It isn’t, “I’m 65. And now I’m going to just hang out and play golf and play tennis all day,” right?

There was a desire that we should call it something else. It’s like my next career or my transitioning phase. But many of them do not want hard stop retirement. They want to keep their minds active, their bodies active, and have a much different view of what… I’m doing air quotes, now, Michael, “what retirement looks like.”

So, a lot of our planning is how do you plan for that next phase, right? We have clients who make $300,000, $400,000 a year. They do well. Well, how much do you need to save to be able to stop at 50, and then perhaps be an art teacher and still live the same lifestyle that you’re living now, right? Same kind of home, same vacations, but we’re saving enough for you to maintain that next phase for 10 to 15 years, potentially, before you fully retire. So, a lot of our planning is much different.

And a lot of it, too, is we have individuals who are being really proactive with planning for their parents. Many of their parents, I’ll say, Michael, they don’t have any retirement assets. They live on Social Security. And they’re walking into it with eyes wide open. They’re like, “I’m going to probably need to financially support my parents at some point. So, I need to not only plan for my second phase or my retirement, but how do I help support my parents, too?”

So, we have clients where actually the children, Michael, are looking to get long-term care policies. Or if they can’t, if it’s too cost prohibitive, how do they save and think about putting money away to really help their parents in retirement?

Michael: So, meaning, the children aren’t buying long-term care insurance policy themselves. They’re buying long term care insurance on mom and dad because they’re hoping that it’ll be cheaper than otherwise paying for mom and dad’s care because it’s coming at them either way?

Kamila: Exactly. Exactly.

Michael: So out of curiosity, what planning software or tools are you using to do this? Because most traditional planning software, I don’t exactly think of as, “Here’s a great tool to plan for a 6-month sabbatical, 10 years from now.”

Kamila: We use RightCapital, but you have to be very creative. So, if you look at the goals, it isn’t the traditional goal of education for children and retirement. We have six to seven simultaneous goals happening in their plan. And we have cashflow events happening in their plan. So, it’s a much different planning technique than what is traditional.

Michael: And then, you said every single client, you go through a budgeting process as well. So, I know for, well, I would say, for a lot of clients and also for a lot of advisors, budgeting, it can be a bad word unto itself. So, what does that budgeting process look like for you? How do you do this?

Kamila: So, we actually do an Excel spreadsheet. I am happy that RightCapital has that new budgeting interface. But it’s not as specific as we’d like it to be. But we use an Excel spreadsheet, and we go through everyone’s budget. And what we typically do is, what we say is that a budget is a representation of your values. What you spend your money on is what you value.

So, there are certain things, like your mortgage, your rent, right, those are requirements. But we dig deeper into the spending of eating out, traveling, clothing, entertainment. Because for many people, this is new wealth, right? And new wealth, and they want to gather things or gather a lot of experiences, which is great. But they can be impediments to building wealth, right?

And so, we spend some time, and we help them prioritize, and we ask them, “What brings you joy?” And what brings you joy should be where you spend your money from a budgeting perspective outside of your basic necessities and needs. And we walk them through that process.

Michael: So, I guess, help me understand, what’s in the spreadsheet that you can’t do in RightCapital? Just what is it from a tools end that’s driving you to build your own spreadsheet?

Kamila: So, there was the miscellaneous budget. And obviously the section that is a catch-all. But we break out savings by emergency savings, long-term savings, additional retirement savings. We add-in things like financial support for parents, financial support for others in their family if they have to provide. So there are different lines that we have there that are not typically in RightCapital.

Michael: And so, are you going through an exercise, then, of tracking and monitoring whether their spending meets their budget? Or is this mostly from a more prospective planning, and just to help figure out where they want to be more intentional about their spending?

Kamila: Where to be more intentional about their spending and then finding additional opportunities to save. And then, for a lot of them, too, what we’ve seen is there’s a lot of autopilot happening, where they have subscriptions or they’re making purchases, and they don’t realize what’s happening because they work very demanding professional careers. And we’ll sit and go through and say, “Do you know why do you have eight streaming services? What’s happening here?”

Michael: And not necessarily a problem with eight streaming services, but I know how many hours you work. You can’t even have the time to actually be watching eight streaming services.

Kamila: Exactly, exactly. So, we sit through, and we walk through that budget. And we begin to help prioritize or identify things that they may not even know they’re spending money on. So, we’ll have them pull their statements or things like that, so we can help formulate what their real budget is now versus what that budget should be.

Michael: And then, does that get revisited in future years, like they have to pull out their dollars again and see where it went? Or do you use technology to see where it went? I guess I’m just trying to understand, is there an ongoing budget-tracking process, budgeted versus actuals? Or this is primarily an intentionality exercise at the beginning of the planning process?

Kamila: It’s intentionality, but also it formulates our savings goals and our debt-pay-down goals. So, we know if you’re meeting your budget, if you’re paying down your debt at the amount that we agreed upon, or you’re saving at the amount we agreed upon. So, if we say, “Based upon your budget, you should be saving $3,000 a month. If you’re not saving $3,000 a month, what happened?”

Because we’re all about automating savings, automating debt pay down. And so, we have transparency, as you know, through RightCapital and the links to see, are your balances decreasing? So, are your savings or investment accounts increasing? And so that is our check that we do.

And then, one thing I’ll mention is that we also do, I’m not sure if it’s nontraditional, Michael, I don’t know what all advisors do. But we even help our clients when they buy their homes. We’ll research mortgage companies or look at rates. We’ll help them refinance and say, “Should you refinance to a 30? Or should you go to a 15?” Maybe not as much now that rates are, I think, at 6.18?

Michael: Back when you could refinance…

Kamila: Exactly. But I will say, we probably refinanced or helped over 30% of our clients last year refinance their mortgages. We connected them to a broker. We made sure it happened. We stayed on top of them, made sure they did it. Because, again, these are busy professionals. So sometimes you have to stay in front of them to say, “Hey, the refinance rate is 2.75, we think you should do this now. We don’t want this window to pass us.”

We even help our clients when they negotiate and get new jobs. So, they’ll come to us with their offer letter and say, “What do you think?” And one thing is, we have a lot of clients who work in tech or similar industries. We know what the compensation is.

So, we’ll say, “Oh, you know what? Based upon others I’ve seen at this company, perhaps you should ask for more equity. Let’s talk about that.” So, something that is more nontraditional, but we help them negotiate. One of my clients, I’ve paid for my fee already three times because we helped her negotiate higher compensation at her new firm.

Michael: So, take me back now to just the planning process part. So, first meeting is going over goals and setting your short, intermediate, long-term goals. What’s next from the process? And I guess what’s the next meeting or what comes after the first meeting before you get to the second meeting?

Kamila: Yeah. So first is goals. The second is budgeting. The third is when we start to draft the financial plan, where we’ll talk through, “Here’s how much you need to save to be able to retire at this age.” We’ll also, during the budgeting, we’ll gather their investment statements, asset allocation, things like that. And then we begin to formulate what their target investment allocation is, their targeted spending.

They may say, “We want to retire at 50 or I will say transition at 50.” We may say, “That’s probably not feasible, maybe it’s 55.” So, we do all of that in the initial plan. And then once we deliver the initial plan, which is typically in the third meeting, we then begin to work on some of those action items. So, if it’s a young family, we’ll say, “You don’t have an estate plan enforced, you don’t have a power of attorney, or there was no trust or will.”

One of the first things we’ll do is we’ll work with our network of estate attorneys and begin to get that in motion or we’ll look and see, do they have estate planning as a service under legal benefits through their employer? And we’ll walk through them with that.

If they don’t have insurance, and they are young family, more specifically, we’ll help them procure that. If they have too much cash on hand, and it’s not properly allocated, they’re aggressive or they’re too conservative, we’ll begin to modify their investment allocations.

And so, typically, in the first year, we’re meeting with our clients at least six to seven times in that first year. And then, typically, we’ll then move to probably every quarter as we work through it. And then what the goal is to meet with them about two to three times a year after that.

Michael: And when you queue up and deliver a plan in the third meeting, what’s a financial plan for you? What are you delivering versus, I don’t know, showing on RightCapital on the screen versus doing or following up with afterwards? What’s the plan for you in that plan delivery meeting?

Kamila: I like RightCapital, but it’s a very big, large plan. And most clients don’t have the time to read through it. So, we do an executive summary that we layer on. And the executive summary…

Michael: Meaning, you print a RightCapital output, but then attach your own executive summary to the front of it.

Kamila: Correct. Yes. And so, we’ll highlight the key aspects of the plan. So there are, of course, things that you do pull out of RightCapital. Everyone gets the retirement projection or the investment allocation. But then we’ll highlight certain things that we think that need the highest level of attention. And we’ll talk through that in the executive summary.

Michael: Okay. And then, what is the ongoing look like for you?

Kamila: The ongoing is making sure they’re meeting their progress in terms of debt pay down or savings, making sure their allocations are meeting their needs. But one of the things that I had this vision of, “Oh, once you do this, it’s kind of you’re just kind of coasting along.

But, as I mentioned, one thing about this generation, Michael, is that they’re very transient. Right? So, there’s always something happening. They got a new job or they are moving or buying a new house or something is happening with them.

Or last year, a lot of companies changed their executive compensation and their vesting or cliff. So, then it was going back and rerunning analysis of, “Now, you have more equity compensation coming your way, and how are we going to best allocate that?” So there tends to be a lot of things happening with them that we’re always staying engaged.

And of course, one of the things too, is that because we also are adding value, because we do taxes for many of our clients, we spend a lot of time. We use Holistiplan. So, we spent a lot of time doing tax planning and tax analysis and scenarios and tax preparation. Because when you do have equity compensation, it does make tax planning a little bit more critical than with a regular salary or bonus structure. And so, we have a lot of key touch points along the way.

How Kamila Explains Financial Planning Value To Clients [38:54]

Michael: And so, for clients that you’re working with, where, as you’d said earlier, this may be their first time hiring a financial advisor, may be first time anyone in their family has hired a financial advisor, I’m really curious to hear more of, just how do you explain the value of financial planning? How do you explain the value of your services in a $4,000 to $6,000 fee? What does that conversation look like with a prospect where you’re trying to explain for the first time why they would pay an advisor all this money when they’ve never hired an advisor before and nobody in the family has ever hired an advisor before?

Kamila: So, we use a lot of analogies, right? This sounds so cliché, Michael, but why do people hire personal trainers? Why do people hire nutritionists, right? You know what you need to do to lose weight, work out more, eat healthier, eat less, right? It’s pretty straightforward. But why do personal trainers just exist? Because we need accountability. We need someone that is going to help continue to motivate and coach us along.

And we say that you are in a very demanding, lucrative career. You need to focus your time on building your career and earning the wealth. And we’re here to help make sure that that wealth is going to the best place for you and your family.

And you don’t have the time to look at the markets or look at, potentially, “Should I refinance now or refinance later?” We’re a team of individuals that have the expertise to do that. So, when you go home from work, you can focus on relaxing with your family and your time and then we do all the financial aspects and planning for you.

Michael: I like that. So, any other analogies or other scenarios or ways that come up on how you explain that?

Kamila: That’s pretty much it. One of the things that I am seeing is that there is a model where people are obtaining coaches. I’m not sure if you’ve seen this, Michael. I’ve seen more and more people hire business coaches or motivational coaches. People are spending a lot of money on that.

And so, I think people are realizing that you can’t do everything yourself. I think this generation, more particularly, is they’re highly motivated, but they also believe in self-care and taking time off and enjoying life. And so we’re here to say that our job is to make sure you can do that. Just as you hire a business coach, or a fitness trainer, or something like that, we’re also part of your team. And we’re part of your self-care. And that typically works.

But, to your point, everyone doesn’t say yes immediately. I had a prospect I had a year ago. And to your point, Michael, he heard the fee and he balked. And he said, “I can do this myself.” And I talked to him on Monday, and he was like, “I didn’t do anything myself last year.” He’s like, “Nothing you talked about happened.” I was like, “Okay.” He’s like, “I’m back. I think I will pay the fee because I’m not doing this myself. I thought I could do it, but I couldn’t do it.”

Michael: Very cool. So, a year later, he came back.

Kamila: Yes.

Michael: So, is there anything else that’s different around serving communities of color? I think you’d said earlier, nearly 90% of your clients are people of color. And so, I guess, I’m just wondering is there something else different around serving communities of color, either in what you do and how you’re explaining planning, or just why it is that you are working with and attracting a clientele that’s 90% people of color?

Kamila: Yeah. One of the things I talk about is, there is a difference in working with communities of color. And I call it cultural competency, right? Where there are certain things in different cultures that are expectations financially or how they think about planning.

So, one of the examples I give is many of our clients are Black, right? And my family, Michael came from Augusta, Georgia, Baptist. And tithing is a big part of our community. And I remember I was talking to a white advisor, and he had a Black client come to him, and they were not saving what they should have been saving for retirement. And his first recommendation was to reduce their charitable giving to church.

Michael, knowing what I know about our culture, that cannot be your lean in, right? Tithing is something that’s very rooted for many households. It is considered to be a necessity. It isn’t a want.

And so, when you’re talking to certain communities, I talked about tithing. I talked about understanding their value, and I walked them through how we could rearrange the tithing in a different way, but still meet the need, but not get rid of tithing altogether. So, it’s certain things like that, that we understand the culture to know how to broach what can be a very sensitive topic from a planning perspective. But not, I would say, turn them off in our recommendations or how we present to them.

Michael: Are there other examples like this, for other folks who are listening, who maybe aren’t familiar with some of the differences in cultural competencies? Are there other examples you can give us in just differences between the community you serve and how advisors maybe traditionally show up in the context of, “Well, you could just say for more for retirement by donating less and tithing less.”? “No, that’s not going to fly in this community.”

Kamila: Another one is group association. So, a lot of my clients are members of sororities and fraternities. And so, there’s a budget just for that, Michael, going into another different line, right?

Many Black sororities and fraternities, it’s not just something you do in undergrad. It’s a lifelong commitment, right? They continue to pay dues to sororities and fraternities. They fundraise. They travel. That is part of the community and that relationship.

And so, for us, again, from a planning perspective, I’m not going to say, “You can’t go to the Delta Sigma Theta convention in Atlanta,” that was here last year, right. But we talk about making compromises. “So perhaps if this is really important to you, we take away another vacation.” But we don’t go there and pull back because it’s something that is very rooted in our community.

How Collective Wealth Partners Was Founded [45:27]

Michael: So, help us understand now how your firm came together, your partners came together. Because, as mentioned at the beginning, you have an entire team of Black CFP professionals of which there are, unfortunately, not a lot in the country. Very, very few firms that have multiple Black CFPs who have come together to formulate a firm. So, would love to hear more of just the creation story and journey of how did the firm come together? How do all of you come together to formulate a firm?

Kamila: Yeah, I’ll start from the beginning. I actually did a panel discussion in 2019 or ’20, I can’t recall. And I had the opportunity, it was a panel for Black CFP women, to talk about planning. And on that panel with me was my partner Shardea Ages. And we began talking after the panel conversation. She was in Atlanta. At the time, I was in Charlotte. And we actually became friends. And we stayed in touch and she was part of my network.

And when I moved to Atlanta, in 2020, we spent more time together and connected, and we talked about the kind of firm that we wanted to work at. We weren’t necessarily happy with the structures of the firms where we were currently residing. And so, we talked, and Shardea brought in her colleague, Emma Foulkes, again, a CFP professional residing in Atlanta. And then I brought in my colleague, Brian McKinney. We worked together at my prior firm. And we also had conversations about… “Our last firm, it wasn’t what we desired in terms of how we were serving clients and how decisions were being made.”

So, we decided to say, you know what? We do think it’s time to make that move into transition to something where we had a little bit more control over. And we just slowly built together, Michael, because we just were part of our networks.

We also have another advisor who will be joining on board later this year, but once we all decided that there was a common theme that we all, we’re not happy where we were, we wanted something a little bit different. And I think at this point, too, we all had been in the RIA space for a couple of years, right? We knew a little bit more about how things work. And we know the downside of a failed partnership or a failed agreement. So, we came to this a little bit more with more intention than we did previously.

So last year, starting in the fall, we would spend Saturday afternoons on phone calls with each other talking about things, like what kind of firm that we want, what is our investment philosophy, what fees do we want to charge, who should our target demographic be? And even more importantly, Michael, why we’re even doing this? Right?

One of the things we all came to the conclusion is we could all go to bigger firms and make more money, right? Why are we doing this as an RIA? Why are we putting this sacrifice together and building? And we even brought in an outside consultant to even facilitate some of these conversations to make sure we all were aligned with the same vision and mission of the organization.

And having that and knowing the why behind why we’re here has made this partnership just so much more meaningful. We are much more collaborative as a team. And because we got the foundation right in the beginning. So, before we left our respective firms and came together in February and March of this year, we were all aligned months prior.

Michael: So, I’m fascinated by this of just hammering out some of these details. So, I guess I’ve got a few questions. So, one, just can you talk to us a little bit more of what were the areas that you wanted to cover and that you were talking through? I think you said a few of target demographic we’re going to pursue, fees we’re going to charge, so our philosophy of investments and planning and what we’re offering to clients. So, what else was on the, “Hey, we got to talk about this before we get going?”

Kamila: Yeah, sure. We talked about how we will make decisions. We talked about equity. Each of us did come together with different books of business, some larger, some smaller, but it was more of a result of more recency in the RIA space. So those who have been in the RIA space longer had bigger books, which makes sense, those were fairly new.

But we all came with 10, 15 years of experience in this profession. We all came with our CFP designations. We all came in with wonderful, well-established networks. So, we decided that just because you came in with a book that wasn’t of size, it does not mean we think you should have less equity. We just handle the book with an asset purchase agreement, right? And that’s how we’re going to resolve it.

But we think, all of us, equally, have a lot of contribution that we can provide to this firm. And particularly, as you know, Michael, when you’re starting off, you’re not just an advisor, right? There’s someone who has to be the liaison with compliance and our compliance consultant. There’s someone who has to work with marketing and determining our tech stack. So, we used your documents, Michael. So, thank you for that.

Michael: Oh, fantastic!

Kamila: Right. There’s someone who has to primarily focus on building out the investment models and working with our investment providers and liaising on to make sure we have all the information we need. So, we knew that each of us would play multiple roles in the beginning of this firm and making sure that everyone was valued for that.

Michael: So, I want to make sure I understand the structure of how you brought this together because I think it’s really interesting. So it sounds like the end goal was, “If four of us are coming together as the primary leaders and partners of the firm, we want to own it evenly. And we want to be 25% partners each. And so then, we have to figure out who needs to buy in or sell in pieces of their book if someone had a bigger, smaller client base than the others, so that you can all feel that you’re equal and building something together from this point forward.”

Kamila: Exactly.

Michael: So if someone… I guess, I don’t know what the math is, but someone’s coming to the table with a $15 million client base, and someone’s coming to the table with a $5 million client base, the 5 [million dollar] person needs to buy [$]5 million from the 15 [million dollar] person so that you’re effectively 10 [million dollars]. And there’s, essentially, a partial internal sale transaction. So that you have the equivalent financial stakes going forward?

Kamila: That’s correct, yes.

Michael: And so, who puts that together? Did you hire an outside lawyer to draft agreements and an outside firm to do the valuation and figure out what the deal and an outside bank to finance it? How did you actually make that happen?

Kamila: Yeah. So, we’re working with an attorney. Actually, my RIA lawyer out of Alpharetta, Georgia. And they work through our agreements. We’re waiting to do the asset purchase agreement until the fifth person comes on board, but we have to get the structure slowly being built out. Because we want each person to have the same valuation date for all partners coming on board. They’re working on the operating agreement, the buy-sell agreement. So, we engage an attorney for those documents.

Michael: Okay. And then, how do you value this?

Michael: That’s where we got help from them. And also, one thing, I’m not sure if I mentioned this, Michael, but part of my role with the CFP Board, I’ve had the pleasure to meet with very successful RIAs, owners and founders. And I’ve talked to them and said, “How did you value? What sheets did you use? What tools did you use?” So, we’ve been able to utilize that to properly value our books of business.

Michael: So, what did you end up using? Did you take industry standard valuation multiples and apply them? Did you get a referral to a particular firm that do a valuation process for you?

Kamila: Yeah, so luckily, I won’t disclose, but we have someone who, and they’re career-valued firms and said, “Hey, you guys are small enough. You don’t need this huge firm to come in and pay them this money to do it.” And so, he actually shared with us the spreadsheets and the target multipliers for us to utilize.

Michael: Okay. So, you got a spreadsheet from him, just to dial in the number a little bit more accurately. So at least everybody feels like they’re getting a fair shaped number. And then how does this get financed?

Kamila: So, we’re financing it from business cash flow. So we can’t pay it all upfront, but we’re going to pay it over per year. So, it’ll be paid out of cash flow over a certain term. Yeah.

Michael: And how long are you planning to stretch out the term?

Kamila: We hope to have it done within four years.

Michael: Okay. Very cool. Very cool. And so the idea and goal really is, we want to come together because the four of us for a quarter each, I guess, is going to end up being the five of you, when your fifth person adds in for 1/5 each. And the internal asset purchase was how you got comfortable with, “We’re bringing different books to the table, but we want to be equal building together going forward.”

Kamila: Exactly. Yeah, we wanted to have that one firm approach. And so, we thought the…just so isn’t my book, your book. I think the asset purchase agreement will resolve that. And so we can start collectively together with a new firm once that document is cemented.

Michael: And so then talk to us about, you said you used a facilitator. So I guess I’m wondering, well, first, just who was that, if you’re willing to share? And why? Where did that come from, especially if you were… It sounds like otherwise feeling like everybody was getting along really well and it was going really well. So, who is the facilitator? And why did you have a facilitator?

Kamila: It was someone in our network, one of our partners, their spouse actually is a facilitator. That’s what they do professionally.

Michael: Okay. Fantastic.

Kamila: So, it was very easy. And I know him well. He’s a wonderful guy. Clinton Ages is his name. And he was able to talk through and pause and ask questions. And we had visuals and we walked through the exercise together.

But it was really important to have that there because he was able to intervene and bring us back on focus. Sometimes, when you’re working collectively together, you can easily go in tangents or going on rabbit holes. And it was really important for someone to come in and lift us up and make sure that we’re addressing the key questions and the key priorities for the partnership. So, it was immensely helpful.

And one of the things, even my colleague, Liz Miller, she runs a firm, Summit out of New Jersey. And when I told her, “Liz, I’m going to start a new firm.” And to your point, Michael, she said, “You need a coach and you need a facilitator.”

And she’s like, “That’s one thing that it is worth the money. Because if you don’t have someone that’s going to ask the hard questions, if you don’t have someone that’s going to push you, you’re just delaying the inevitable. You’re going to avoid it. And then by the time that issue arises, it has festered. There’s emotions tied. And it’s going to be hard to resolve.” And so, her recommendation to me was, “You need to have someone to be there to facilitate these conversations. And just make sure you have the really hard discussions upfront.”

Michael: So, what were the hard discussions for you?

Kamila: The hard discussions were, what about joining the firm, what do you specifically want from this firm, and what control do you need? And I think that was an important question.

There are certain people that need to have control over all aspects of an organization or certain parts, but you had to be real with yourself of, what are the things that you really care about and don’t care about, and you’re willing to delegate the decision making to someone else on the team? The other question was, what is success and what does success mean financially and client-wise for the firm?

It’s easy to articulate financials. But what does success mean for our clients and what experience we want them to have? And making sure that we were all on board.

I had never been asked that question before, Michael. So, I was like, “Oh, that’s a good question,” right? So those are some of the things that were brought to the table. And also, just getting the vision and mission and getting, what are the outcomes? And then why are we here?

And we had to be really honest about how did we get here. There are five people who are pretty successful in terms of our time in the profession and the books that we’ve been able to build, but why are we here and what’s keeping us here? And what can keep me at this firm? And I don’t think I’ve ever really been asked that question before, like, “What can we do to keep you here? And why are you doing this every day?”

And I think knowing the why for your partners is immensely important. They should know my why. And I need to know their why, too.

Kamila’s Journey Toward Launching Her Own RIA [59:02]

Michael: I like knowing the why for your partners is immensely important. So share with us a little bit more of your journey through the industry. You’ve mentioned you are a CFP professional, you have 10-plus years of experience, as did your partners coming to the table as well. So, share with us a little bit more how you got started in the industry and what the journey has been to get to this point where you were launching a firm with four partners and going through these wonderfully facilitated conversations. Where did it begin?

Kamila: Sure. So, I actually, I went to college at Penn State. I had dreams of grandeur. My goal of being a public relations executive when I was in college. But I took a part-time job working at PNC Bank. And that’s when I was first exposed to this profession.

And I interned where I had the opportunity to work with the advisor in the branch and learned a little bit more about what he did. And so that’s what really piqued my interest in the profession. And so, being from Philadelphia, I decided to take a role at Vanguard. I started in…

Michael: Good local firm if you’ve got to get started in financial services.

Kamila: Exactly. I took an entry-level role, Michael. I was working in participant services, talking to 401(k) clients and got my Series 6 and 63. And I thoroughly enjoyed it. I loved learning about it, the industry.

And then, from there, I just continued to move up. I became a team leader in our call center. I then decided to make a switch. So, I worked institutional asset management. I worked with nonprofits. So, universities, hospitals, and nonprofits in the southeast region on behalf of Vanguard. My book of business was about $3 billion in assets. And it was a great time, bad time looking at that time, but great time looking back. I was in that role during 2008 when the financial crisis happened.

Michael: I was just going to say, what made it bad? But yeah, that would make a bad. Managing, handling institutional dollars during the financial crisis that would be unpleasant.

Kamila: Yeah. There were some long nights where… There was one client that we had, Michael, in my book, that their only liquidity was at Vanguard. Because they used their operating reserves for some other asset class that we won’t talk about.

But so, I learned a lot about risk and asset correlations and more proper operating assets, investment management. Also, you probably remember at the time, asset correlation went to zero, right? It’s a point for many institutions. So, it helped me build that framework of, how do you build portfolios, and how do you structure them to mitigate some of that risk going forward?

And because of that expertise in investment management, Vanguard offered me an opportunity to move to Charlotte and work in the ultra-high-net-worth segment. So, Vanguard clients that have $20 million or more in investable assets, I would work with them in reviewing their portfolios, estate planning, trust planning, and working with our team. I was basically the quarterback in a team of individuals who would support me and our clients. It was then that I obtained my CFP designation.

One thing I will say Vanguard prides itself on supporting the designation and the experience it adds to professionals. And so, I did that. And I learned a lot about how ultra-high-net-worth clients, how they earn their wealth, how they maintain their wealth, how they pass on their wealth. It was very enlightening for me.

But a lot of my experience there led me to where I am now, Michael, because I probably met with hundreds of families in that role. I would travel across the country. I was a road warrior. Because, as you know, Vanguard has more office locations. There’s no walk-in center. So, I would hop on the plane. I would have lunch, have dinner, and meet with clients in their office and talk about their investment portfolios, etc.

But in the entire time I was in that role, Michael, I did not meet with one Black client. And I was in that role for probably, it was over three years, maybe three and a half years. And so that disturbed me, right? Why doesn’t anyone look like me? It was easy to find Kamila at a client event.

And so that’s when I started to think a little bit more forward about how can I help solve this, right? I have all this knowledge. I think I had five licenses at that point and my CFP designation. At some point, I want to help communities that look more like me be in these rooms.

And so, I was very intentional in my next few steps and roles that I took. I led a sales team that sold personal advisor services at Vanguard. And then, I left Vanguard and spent a very short stint at Dimensional Fund Advisors in their Charlotte office.

I chose Dimensional because, as you know, probably many of your listeners know, that they’re really known for their mutual funds and products but also for practice management. They work with very successful financial advisors on things like building models and client messaging. So, I had a wonderful opportunity to sit and work and see very successful financial advisors and how they built their practice.

And then in 2019, I left Dimensional. I started working for LPL first, with a broker, with a firm, Rutledge Wealth Partners, which is an LPL-affiliated firm. You probably know this, Michael. I was very green. LPL is great, but if you don’t have a book of business, some of the fee structure can be a little bit cost prohibitive if you’re building your book.

So, I decided to switch and move to the RIA route where I can build my book a little bit more quickly, cost a little bit lower. And as you mentioned…

Michael: For you, just outright building from scratch was actually cheaper in the RIA environment.

Kamila: Yes, it is. Definitely, definitely.

Michael: Which I think is interesting. I feel like the perception from a lot is broker-dealers give you all this infrastructure that you can use. You don’t have to build it. It’s more expensive if you want to go out on your own and hang your own shingle. So, what was different in your experience?

Kamila: It was different. They have monthly fees that you pay. And then to work, typically, with a broker-dealer, the split is much different. You take less of your compensation. So, with your monthly maintenance and then with the split, sometimes the compensation isn’t what it should be.

And so, I think they’re a great organization. But I think, I’ve talked with them about that. But I think it’s great for someone who’s a little bit like… I think if I were to go there now, I would have a much different experience. Now that I have a book. And it would be probably less expensive in some ways now that I have more recurring revenue. But for someone starting out, it was very, very challenging.

Michael: Because you’re paying monthly platform fees and technology access fees and such, if you’re building your own from scratch as an RIA, literally only have to buy the exact things that you need to buy, which is less expensive.

Kamila: Exactly. And the other thing that I knew long term that I did want to eventually support clients in getting into more alternative investments, things like private equity, which is known to have more values-based investing and startups and things like that. And of course, as you know, with a broker-dealer, you can’t do that. It’s considered to be selling away.

And so, I said, “If there’s ever a time for me to make a switch, I should probably do it now. Before I have a bigger book. It’s just more cumbersome to do so and to make that shift.” So, I worked with an RIA based out of DC for a couple of years. That’s where I really built up my book. But I left them.

And in February of this year, I decided that I wanted to build a practice that was a little bit more focused on communities of color, that was more holistic in nature. And so that’s when we started Collective Wealth Partners in February.

The Surprises Kamila Encountered On Her Journey [1:07:23]

Michael: Cool, very cool. So what surprised you the most about building your own advisory business?

Kamila: How hard you would work. I will say the sales process was a little bit different in me bringing in aggregating clients. In my impression, I thought it will be a little easier than what it was.

One of the things that I didn’t realize is that it’s hardest to get your first 10 clients, or I will say 20 clients. But then once you work with individuals, and they have a good experience with you, then the referral starts rolling in. And then the sales process becomes much easier because they have a recommendation from a trusted source. But getting my first 10 to 20 was immensely challenging, but I did it.

The second is just the administrative aspects of it. And I can clearly see now why we have groups like your firm and XYPN and the networks, because just understanding compliance is huge. Understanding all the technology and the interactions is huge.

And then just keeping up with the profession, right, you really have to be a student of this industry to be really successful, because things are just constantly changing. There’s always a new asset class that some wants to talk about. There’s always something new.

And so, it’s great but it consumes a little bit more time than I initially anticipated of being, number one, a great businessperson, just managing the functions of a business and just even to your point, like managing QuickBooks and payroll and bank accounts and credit and then managing clients and prospecting and doing development. Also, creating a network where you can identify and bring on new talent, right. And I have calls with all types of younger or new to the profession or aspiring CFP professionals. So, I had to think about building a talent pipeline, too.

Just all those things I didn’t understand properly, initially, just the multitude of work that it requires really build a successful practice and a practice that can live on without you. And I think that’s definitely a goal of mine and our firm is that we hope it’s a practice that will continue to grow. And that we’ll have a legacy for us and our families.

The Low Point On Kamila’s Journey [1:10:00]

Michael: So, what was the low point for you on this journey?

Kamila: The low point on this journey is, at a time, when I was with my prior firm. It was feeling that I was working extremely hard, working hard to support our clients, working hard to build a brand. And I would say not being compensated or recognized for it.

And particularly as someone that I tell my clients to advocate for themselves at work, right? Advocate for them building wealth in their workplace or in their business. And I’m coaching them on this. And then to see that the exact opposite was happening to me. Right?

I felt I had to quickly, not quickly, but decidedly make a next step, that I have to practice what I preach. And change is uncomfortable. I’m sure, Michael, you heard, no one likes transitioning a book from one firm to another firm.

Michael: No.

Kamila: And we bring 70-some clients…

Michael: No one wants to repaper.

Kamila: It was a really tough process. And it was during tax season. It was just very arduous, but I had to do it because it was best for me. I had to realize what’s best for me is best for my clients, right? For me to be the best advisor to them, I have to feel good. I have to feel supported. And I have to make sure that there’s a firm that has all the structural things in place to support them and their wealth. So that was definitely, I would say, a low point.

Michael: So out of curiosity, was there a particular moment or thing or events that got you to the point of saying, “We’re not going to be able to figure how to make this work, I just have to leave and change.”

So, I know advisors that are out there that feel they’re in roles where they may not be fully compensated or fully recognized for the contributions they’re making for the firm. And I think a lot of us, I know it, I recognize it, haven’t managed to change my situation yet. Because change is scary and uncomfortable. And no one likes to repaper and all the all the things that you just said.

So, I guess I’m just wondering, what was it that led you to say, “I’m going to make a change. Action is going to happen. Change is uncomfortable, but it’s going to occur.”? What got you over that line?

Kamila: I would say it’s when my prior firm, when they weren’t listening. I feel like… Mike, I’m not sure if you’re… Well, people who are married or have significant others, they typically say, “You know it’s over when you stop arguing.” Not because there is no conflict or tension. It’s just you don’t want to even exert the energy to even have a conversation.

And so, to me, when there were attempts to resolve or have a conversation about something, and it got to the point where you’re not even speaking about it meant that, “You know what? It’s just time for us to part ways.”

Michael: So, it’s the recognition, when you stop arguing, you don’t even want to take the time or effort anymore, it means you’ve given up on it. And if you’ve given up on it, you’re not coming back from that.

Kamila: Exactly, right. I have clients, I’m sure many advisors do as well, who’ve gone through a divorce. And that’s usually the telltale sign is when the communication ends, that’s when that partnership dissolves.

At least if you’re arguing or talking, you’re fighting, but you’re fighting for it. But once you just stop talking, you know it’s over. And so, I felt that if there wasn’t even a communication about how we can resolve it and there were no new ideas presented, it was like Groundhog Day, like same thing. And that’s not going to work. That’s not going to work. You can’t present the same idea five times and think it’s going to change that it had to be a timely one.

But also, one thing, I will share this with you and particularly for a lot of women, I’ll say is that, sometimes, even now, Michael, I have impostor syndrome, right? Am I really helping my clients? Am I really what I think I am?

And I remember one of my first clients, I was sitting in their living room because I was nervous about moving. And a client said to me, “You need to start your own firm.”

Michael: So, it was a client who said it to you.

Kamila: A client said it to me. It’s like, “Here are all the things you’ve done for me and my family. I don’t know why you’re hesitating.” And for a client to tell you that, for a client to be like, “Why are you still there? You need to start your own thing. I feel like you’ve outgrown that.” That’s a pretty damning statement, Michael, right?

Michael: It was from a client. If the client is seeing it and the client means like, “Ooh.” It’s that obvious, isn’t it?

Kamila: It’s that obvious, yeah. And so, at that point, it was time to make that transition to that move. And no ill will. And I think the person is very smart. I wish him well.

But I think one of the things that you’ve talked about, Michael, is ensuring that your firm aligns with your values, aligns with your mission, and aligns with you in the best way you can serve clients and having ensured that you’re you are setting yourself up for success in how do you build and how you orient your firm.

The Advice Kamila Would Give Her Former Self And BIPOC Advisors [1:15:24]

Michael: So, looking back over the past 15-plus years of the journey, what do you know now that you wish you could go back and tell you, when you were early days at Vanguard still getting going with your career?

Kamila: I wish I would have told myself to take more risk. I was very fearful of change. And at times, I got comfortable. And I wish I could tell Kamila 15 years ago or 10 years ago that risk is part of your growth, fear is part of your growth, and it’ll make you a better person, it will make you a better professional to take chances on yourself and your career.

Michael: And so, what advice would you give younger or newer advisors trying to come into the industry and be a planner today? And I’m thinking in particular of maybe BIPOC advisors looking to come into the industry that just continue to have even more struggles and getting started in finding a pathway. So what would be your guidance to BIPOC advisors trying to find their way into the industry and get started?

Kamila: One of the things I will say for BIPOC advisors is you’re not going to know it all. But one of the things I think is important is to do a roadmap of where you are in terms of your knowledge or expertise, in terms of planning, in terms of sales, in terms of process orientation, investments in technology. Highlight your strengths and your opportunities. And don’t be afraid to have a more circuitous career in how you develop your skills and how you improve upon yourself.

I’m a huge advocate that everything in life is not linear, right? You don’t always have to go up. You can go left and go right. And sometimes taking a step back or standing still a little bit longer to build out your investment acumen, to build out your technology acumen, to build out how you can better work with clients and building a more firm sales process is immensely important.

I know many people have dreams of entrepreneurship and want to own their own firm. But I’ve seen people who’ve rushed too quickly and didn’t have all the elements in place to be very successful or even leadership, right? I will say one thing, too, Michael, is when you run an advisory firm, you’re a leader. And how do you develop leadership skills before you start?

And so, I would say, take an assessment of that. And then don’t be afraid to work with another RIA and learn those things, or work with a big firm like Vanguard or Fidelity, just to garner that and make yourself more well-rounded. And then launch your RIA or launch your own firm with a broker-dealer.

Your career isn’t linear. And it’s hard for us as BIPOC advisors, right? Our community is small, our wealth is lower. So, it takes oftentimes very exceptional skills to be successful. And what can you do to help build that?

What Success Means To Kamila [1:18:36]

Michael: So, as we wrap up, this is a podcast about success, and one of the themes that always comes up is just the word success means very different things to different people. So, I think you lived firsthand going through with your partners and the facilitator, like the why and everybody’s definition of success. And so, as you’re now building out this successful business and have a vision for where the business goes, I’m just wondering, how do you define success for yourself at this point?

Kamila: Right now, I’m at an age or part of my career where success is how I support and nurture others. Success is leaving a legacy of individuals that, I can say, I’ve supported them in their career goals and our financial goals. And I’m a contributing factor to who they are or where they are now.

The moments where I get the most excited, Michael, and happiest are when people share that something we’ve done together – a conversation, coaching, working with them – has helped them be successful and reach their goals. And for me, at this point, I have so many things that I want, right? I don’t have an Aston Martin yet. But other than that, everything I want, I have. And to me, it’s really about building a legacy and building a legacy for others and their success.

Michael: Awesome. I love it. I love it. Well, thank you so much, Kamila, for sharing this and hopefully inspiring some others with this conversation on the “Financial Advisor Success Podcast.”

Kamila: Great. Thank you for having me, Michael.

Michael: Absolutely. Thank you.