The term “Capacity Crossroads” was coined by writer Michael Kitces, a well-known thought leader in the field of financial planning. It was designed to evoke the idea of the “two paths ahead” decision as writers such as Robert Frost have given attention to over the years, and addresses a decision a financial planning firm owner must make: To stop taking on new clients or to trim existing “smaller” clients to make room for “big clients,” or to grow the practice beyond themselves and scale the practice to serve more people than they can personally serve.
I personally began to notice the capacity issue back in 2020, where after transitioning to independence at the end of 2019 with approximately 75 households, by the end of 2020 I was serving 110. Long-term clients of the firm will recall when I invited Samantha to join the team at that time as the first associate financial planner in the practice, and began the process of developing her to take on the next “hundred clients” as it were. Over the next two years, we grew to serve about 150 households, but unfortunately, Samantha went on to new opportunities and the capacity issue once again arose.
In 2023, the beginning of the firm that exists today really began to take shape. Emily joined as an assistant wealth planner and began the learning process, and I once again shouldered responsibility for the full client roster as the only financial planner in the practice while Emily began the process of studying to become a financial planner. We made plans to bring on another associate planner in the summer of 2024 and an assistant to backfill Emily’s position as assistant so she could promote up toward the end of the summer. Plans changed a bit in the timing and process along the way, but today, we’re a team with one lead financial planner (myself), two associate planners (Daniel & Emily), and a planner assistant (Olivia). Despite the team we have today, the capacity crossroads keep lingering in the rear view mirror, not yet out of sight.
Today, I want to spend some time catching up both existing clients and those reading from outside the firm up on the state of the firm and where we’re going, and more importantly, to help set your expectations and those who you invite to join you as clients of the firm.
Vision of the Practice
While MY Wealth Planners’ has grown significantly, 5x-ing revenue over the past five years, and expanding from 75 clients to the 185 households and small businesses we serve today, none of this success is or has been about me (Dan). While it’s very typical in financial planning practices to spend 50% of the revenue on staff, 30% on overhead, and to keep 20% of the revenue as profit, that’s never been my way or intent for the practice. So permit me to let you in on the intent:
MY Wealth Planners is the financial planning equivalent to a teaching hospital. This means, along with becoming Longmont’s first fee-only CFP® Financial Planning firm and financial planning B Corp, that our mission is not profit-driven. Rather, profits of the firm are reinvested back into the firm to bring on and train more financial planners and to expand the capacity of our ability to serve the Longmont and surrounding community with high quality financial planning. This is an important mission because it is currently predicted that, because of the high average age of financial planners (which hovers in the high 50s today), it is expected that there will be a 100,000 shortfall of financial planners to serve the people of the United States by 2034. This, in short, means that financial planning will become more expensive and harder to obtain, even as demand for financial planning services has increased year over year, exacerbating wealth inequalities in our very own community.
To help fend off the steady decline of available financial planning services and to ensure that the positive impact financial planning makes on the lives of those who engage in it, we have committed ourselves to reinvesting the profitability of the practice into developing skilled financial planners in a manner unlike most other firms in our industry, which focus on the sale of investment and insurance products, or otherwise on minimizing services to their clients while maximizing revenue. By reinvesting our success into the firm itself, and developing the capacity and talents of our team, in turn, we will be better able to support our community.
How that Vision Comes to Fruition
This mission means that the structure of the practice, and my personal practice as a financial planner, has to shift to accommodate the growth of the practice. Unannounced last year, I stopped personally taking individual clients. While I had intended to stop earlier with Samantha’s development as a financial planner, the changing staff structure of the practice put the “lead planner” role back in my court in 2023, which we have steadily built and trained towards shifting back onto the team over the past two years. This has created a sometimes awkward dynamic, where many well-meaning clients and fans of the practice have referred their friends or family to us, only to have the uncomfortable question arise: “So do I get to work with you, Dan?”
The short answer is: “Yes, but.” And the “but” carries a great deal of weight here. Every financial planning client demands, on average, around 20-25 hours of service work per year, with some demanding substantially more either due to the complexity of their circumstances or one-off events that require additional work above and beyond our normal work for them. This means that at most, I can directly serve about 100 clients before reaching a limit in work-life balance. In the interest of being able to spread my talents across the needs of more people and in supporting the training and development of our associate planners now and those who will join the team in the future, I have quietly pared back the number of planning relationships I’m directly responsible for over the past year or so to ensure that I continue to have capacity to support more clients of the firm, albeit on a less direct basis.
You may have noticed that I am not in every single meeting the way I was in years past, or as a new client, might have asked explicitly or wondered whether I was going to be involved in your financial plan. The answer is yes, however, I do not take planning clients as the primary planner anymore. This is to ensure not only that Emily, Daniel, and future clients are continually supported going forward, but also to ensure that I’m able to maintain a reasonable degree of work-life balance in this mission. I learned a long time ago that, much as you might want to save the world by sacrificing yourself, the sacrifice you make will never save enough of the world to make it worth it. Thus, while the mission of being a teaching hospital for the development of future financial planners is very important to me, it will never come at the sacrifice of time more fairly spent with my family or on the rare and precious moments life itself brings. Part of being a financial planner is helping your clients live their best lives, but the challenge is also to ensure you don’t forget to do the same.
What Does This Mean For You?
If you’re an existing client, this is all one big FYI. If you work with Dan today, you’re going to keep working with Dan. If you’re working with Daniel or Emily, you will keep working with Daniel or Emily. You will continue to receive support and the planning expertise of every member of the team because it’s just as important that you receive excellent financial planning service as it is to us that every client presents a new learning opportunity for new team members.
If you’re not a client today but were thinking about it, know that while I won’t become your primary financial planner, you will always receive top-notch financial planning services from our team. Just as it wouldn’t be acceptable to let a patient suffer or die in a teaching hospital “as a learning experience,” it would be no less unacceptable for us to fail to provide you with the quality service and experience that you are paying for.
With this in mind, we do have to ask you all for a favor: If you are looking to become a client of the firm or are thinking about referring a friend, colleague, or family member to the firm, please be open to the idea of working with the whole team rather than specifically wanting to work with me. You will always receive the support and expertise that I can lend to your planning needs, but Daniel and Emily are great financial planners too, and I assure you, you will never be the worse for wear in working with them directly instead of having me across the table for you. You’d probably be embarrassed to know how much time we spend preparing for each client conversation and meeting to ensure that you have the best quality experience every time you log into the zoom meeting or come through our doors, and if we ever are failing to live up to your expectations, we can only ask that you tell us.
Thank you for being with us on this journey and supporting Longmont’s first fee-only financial planning practice. Thank you for supporting the growth and development of future financial planners, and the financial planning profession as a whole. We’re glad you’re here and a part of this great thing we do.