About 20 years ago Carolyn McClanahan was a doctor asking about her boyfriend.
“In 1996 my present-day husband, who was my boyfriend at the time, inherited money from his parents that I helped him invest,” she says. “We invested and thought we were brilliant because we did well – but of course everyone did well from the mid-1990s to 2000s.”
The question arose in 2000, after these boom years of growth markets.
“He was an engineer and he didn’t want to be an engineer again. He wanted to be a photographer and athletics trainer, ”she says. “And I’m like, ‘Well, I don’t really want to take care of you financially, so we have to figure out if this money is enough for you to forgo your big income. “
McClanahan recalls trying to find a financial planner who could help them answer this question – only to learn that “they were all salespeople.”
“They didn’t do any financial planning; it was about investing, and they just wanted to take over our portfolio and charge a lot of money just to run a portfolio. And I’m like, ‘That’s not what we’re looking for.’ ‘
The journey to answer her own question would lead Jacksonville, Florida-based McClanahan not only to make a brutal career transition, but also to transform her voice into one of the most dynamic and urgent in the wealth management industry. .
Back to school
When she told a friend who worked on Wall Street about her situation, the friend suggested that she find a CFP certificate or take classes on her own. McClanahan took him back between his medical duties.
“I went back to school for fun and fell in love with it,” she says. “I was an emergency physician, so it was easy, because you work shifts.”
After starting her studies in 2000, she opened her own store in 2004 and quit her job as an emergency physician a year later.
In 2007, with her own fresh experience in mind, she switched to a lump sum model. (The hourly model was forbidden: “I talk too much and I don’t want clients to have a clock in their head.”)
“I just wanted to make sure that the value people are paying for was in line with their fees,” she says.
McClanahan says the fixed fee accomplishes this much better than the AUM fee. “By charging for the work you do – which is comprehensive planning, of which investment management is a part – it changes that conversation from investment performance to client values and goals. “
She reports that her pricing model has a huge effect on how her business operates. “As we charge a fixed fee, the revenues are very stable. We review fees with customers every two years. For example, in 2020 five clients had major positive changes in their lives that would require a lot more work (selling businesses, opening new businesses and other initiatives) and they happily accepted our increased fees.
Today, its six-employee RIA, Life Planning Partners, manages $ 259 million on behalf of approximately 90 families, generating approximately $ 1.3 million in revenue.
“If someone looked at those numbers, they’d say ‘Meh… not that exciting! “Says McClanahan.” But our goal is very different from that of most financial planning firms. Growing a great business has never been our goal.
“Our heritage is teaching other advisors how to provide comprehensive planning and investment management for a lump sum. In addition, our team supports my other activities of educating other consulting firms and the public about the intersections of health and personal finance. ‘
It should come as no surprise that McClahanan’s unusual career path gives him access to unique perspectives in the world of financial planning.
To begin with, she is exceptionally qualified to influence “the path of professionalization”. What does she think of the long conversation about raising the “financial planner” to a profession such as “lawyer”, “accountant” or, more specifically, “doctor?” “
“For me, being a doctor is actually pretty close to being a financial planner – except you’re taking care of people’s money, rather than their health,” she says.
McClanahan gives the example of a customer who comes up with a question. If someone wants to know if they’re ready for retirement, “you look at all of their data, then you assess them. “This is what you do now, but here is how it does and does not correspond to what you really want. And then the plan is where you find it: “Here’s what you need to do. And then you help them implement it. It’s like being a doctor.
But while the broad outlines may be similar, the elements of the jobs are obviously very different.
“In medicine, and especially in emergency medicine, I never asked people for money,” says McClanahan. “When you intubate someone to save their life, you never say, ‘Hey, this is going to cost you $ 2,000.’ “
As an advocate for the professionalization of financial planning, she says the shift to hourly or flat-rate fees is a “big step” in the right direction, especially if it is a step forward in commissions. . However, she says that it is around the other aspect, “the standardization of training”, that the town planning profession “still has a long way to go”.
Even after the rigors of medical school, doctors still have to do residencies before they can practice. Not only does financial planning not have the same accrediting bodies, but over the past decade the CFP board has reduced and even relaxed its experience requirements for future certifiers.
“In financial planning, there should be a three-year residency,” McClanahan says. Ideally, “you don’t become board certified until you have a certain number of years under your belt with a dedicated training program that has a separate curriculum.”
“We need better standardization – and better customer due diligence.
Beyond the wallet
McClanahan did not enter the planning profession with the intention of applying his medical knowledge in the field. But when she started working with clients, she quickly realized that her experience was remarkably relevant.
“If you have someone who is 150 pounds overweight and has diabetes and smokes, you are going to plan very differently for that person than for the healthy marathon runner whose family lived to be. 90 years old, ”she says. “So it’s important that counselors consider health when helping people plan their lives. “
She also found that she was able to give more comprehensive advice to people struggling with the disease than other counselors might have.
“When you see a client who has just been diagnosed with cancer or ALS or a serious illness that will really change their life, by having at least a basic understanding of their disease, you can help them plan to more thoughtful way – so that it’s not wasting a ton of money that they shouldn’t have to pay for health care.
Yet while McClanahan’s experience obviously gives her a head start, especially in financial planning for ill health, illness or death, she says counselors don’t need medical degrees. to give more holistic advice.
“The first problem that counselors face is that a lot of them are just uncomfortable talking about health,” she says. “But if you look at all the surveys of the worries of retired clients, the costs of health care are huge. So you don’t need to be a doctor, but you need to know how to communicate. You have to say, “How do you take care of your health? And you have to understand what their illnesses are. Because it varies. As it stands, counselors plan as if everyone is healthy and will live to be 100, and that’s just not the right way to go.
McClanahan takes it upon herself to teach these lessons to counselors through her columns for popular publications, her frequent appearances at industry conferences and even an upcoming book.
And as for the question that started this whole journey, the answer turned out to be “yes”.
Her husband ended up coaching track and field sports – high school pole vault, for 10 years – and became a photographer. ‘Finally, he got sick of the [student athletes’] parents, so he stopped coaching, ”she says.
“Now he’s a photographer. And he makes our life run so that I can go and do all these other things.