In my last post I described my goal for this blog – teaching independent financial advisors how to run better businesses and live better lives. Why should you listen to me?
Despite the fact that I can’t network, don’t do seminars, don’t cold call, don’t do mailings and don’t come from a wealthy family or have lots of wealthy friends and acquaintances – all of the things that historically were paths to success for financial advisors – my business is profitable and growing quickly.
I started my business Yardley Wealth Management, LLC in February of 2006 with no clients and had only about 12 by the end of the first year. It took until almost the end of my 3rd year in business (January of 2009) for my income to meet the cash flow needs of our family. So I was no overnight success story either.
Since that time I have figured out what works for me. Parts or all of it might work for you too.
So let’s get to the success part. I manage north of $50M in client assets now for about 80 families split into about 90 distinct households. The 5 year Compound Annual Growth Rate of my firm’s revenues and my income were over 30% as of 12/31/2012 and this year is turning out better than average and in terms of AUM, I am a couple of million dollars above my end-of-year projections. So the top line numbers are growing very rapidly, especially for a person like me who can’t or won’t do the things most advisors do to bring in business.
My business expenses have averaged about 20% of my revenues and of course many of those dollars go towards things that also help me.
So that means that my business is very profitable for a financial advisory firm. You can compare all of those numbers with research published by Cerulli, Moss Adam, the Financial Planning Association and others. For the time I have had my advisory firm, it is very profitable and growing fast.
As I wrote in my last post, I am fee-only. That means I never receive commissions. My only revenues are from fees paid by clients. For the clients’ accounts I manage mentioned above that works out to about 1% per year because some people are above the breakpoints. I also do some financial planning engagements every year for some clients in which I tell them exactly what I think they should do in the form of a 4-to-7 page Action Plan and they pay me a fee for those services. If you have worked as a financial advisor or can do a little math and make some estimates, you can have a pretty rough guess at what my income will be this year. It will likely be significantly higher again next year. Maybe not 30% higher again, but maybe.
So I’m probably stressed all of the time, right? Yelling into my cell phone and standing on my desk telling people to “buy” or “sell.” Um, no.
I eat dinner with my family every night. I coach one daughter in soccer and see most of the games and events of the other two. I spend a lot of time with my wife. (I think she still likes me.) I also work out enough that I took the Clydesdale Division (men over 200 lbs.) in a 71 mile triathlon a few years ago. Ok, I was the only Clydesdale to finish that particular triathlon, but you can imagine how much you would need to exercise to sign up for and finish an event like that.
Don’t mistake what I am saying. I work plenty hard and have put in a lot of time, but I’ve learned to manage the business and it revolves around my life, not the other way around.
In future posts I will share exactly what I do.