“5 Things To Look For When Hiring a Financial Planner or Financial Adviser”, with Dan Routh

An Interview With Tyler Gallagher

Advisors who operate independent of a large financial institution can shop the market for client’s and their financial plans. They aren’t a salesperson pushing one company’s life insurance product or a banker trying to upsell you on mortgages or proprietary investment products. Independent advisors are fiduciaries and must work in the client’s best interest.

As part of our series about what one should look for when hiring a financial planner or adviser, I had the pleasure of interviewing Dan Routh, CFP®. Dan Routh is a financial advisor with Old Peak Finance, a fee-only financial planning firm in Chapel Hill, NC. Dan is a CERTIFIED FINANCIAL PLANNER™ and primarily works with mid-late career physicians and veterinarians both locally and virtually. He has a bachelor’s degree in business and a minor in applied economics from Virginia Tech and has been in the financial services profession for ~8 years. Dan also co-hosts the Veterinarian Success Podcast, a personal finance podcast for veterinarians.

Thank you so much for doing this with us, Dan! Our readers would love to ‘get to know you’ a bit more. Can you tell us a story about what brought you to this specific career path?

I started as a marketing major in college at Virginia Tech. I wanted a job where I could interact with people and their businesses and get to know them, not just sit behind a computer crunching numbers. I decided to take a personal finance elective in my sophomore year and was instantly hooked. It was math that ‘made sense’ because it could be applied to everyday life. I then learned Virginia Tech had a Certified Financial Planner™ certification program in the business school and made the switch.

Like many people and even a lot of us in the personal finance industry, I didn’t grow up with a Wall Street Journal in one hand a calculator in the other. I wish I could sit here and say that my interest in financial planning started with a cute childhood story of checking stock prices in the newspaper with my dad or that I created a budget the day I got my first allowance money. I didn’t have a significant life event where I experienced the benefits of proper estate planning (or lack thereof) and my first experience investing with real money was my 401(k) at 22.

I still sit at a computer and crunch numbers, but also get to match that computer time with meeting people and hearing their stories.

Can you share a story about the most humorous mistake you made when you were first starting in the industry? Can you tell us what lesson or takeaway you learned from that?

It wasn’t so humorous at the time, but it is now looking back. Like many financial advisors, I had the unfortunate experience of getting my start in the profession at a big insurance company. It was posed as a top internship that I would spend my time doing financial planning. To my surprise, the summer was spent cold calling friends and family to get them to buy insurance products, not advise them on financial issues in a fiduciary capacity.

The mistake: Each day we were instructed to make our daily dials, to people on our list of prospects to try to sell life insurance. Well, I double dialed the same person in a row, who was a family friend. Thankfully they didn’t make a big deal of it and re-assured me they still weren’t interested.

I learned a lot that summer on what I don’t want in a career, but the two things that stuck with me the most are:

1.) Names on a list are real people and they should be thought of as such, not an advisor’s next commission.

2.) Fiduciary should be the standard in an advisory relationship and fees should reflect it: financial advisors should give advice, not sell products for commission.

Are you working on any exciting new projects now? How do you think that will help people?

I am! 2020 is a year I’m really trying to bring financial planning awareness to the veterinary medicine community. I am working to organize a pro-bono financial planning day for Triangle area veterinarians (Raleigh/Durham/Chapel Hill), where doctors will be able to sit down with Certified Financial Planners™, CPAs and financial coaches to discuss top of mind financial questions. We won’t be collecting information or trying to get business from these doctors afterwards, it is truly an education-based event to get an amazing profession on track financially.

After seeing my wife’s path through veterinary school and her first year in practice, it was clear that veterinarians aren’t given the proper tools financially to succeed. The veterinary medicine community struggles with many financial issues, but the most glaring is student loan and business-related debt. They leave school with physician-level student debt but with income prospects far lower. This has been cited as one of the contributing sources in the rise of suicide among veterinarians, who are 2.1 and 3.5 times more likely to die by suicide than the general population for men and women respectively. Suicide is a multi-faceted issue and money is only a part of it, but hopefully we can make an impact no matter how small.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Is there a takeaway or lesson that others can learn from that?

I think there have been a few but the most identifiable is when I clearly defined (to myself) who my ideal client is and why. I had been in an advisory role at a firm working with clients that I was told to work with, not ones that I was passionate about serving. The clients themselves, mostly retirees, were great people and it was interesting work, but I felt I could have more of an impact working with people who were still trying to grow their wealth, not just preserve it. When my wife finished veterinary school and we decided to move back to the east coast, I found a firm that focuses on working age clients (30s-40s-50s). I am now finally able to speak from a point of experience, rather than just reading about my recommendations in a textbook and I think I am a better advisor because of it.

I think there is a period at the start of your career, maybe the first 3–5 years, that advisors should be trying to get experience in working with many different types of clients. You learn how to become an effective financial planner, but also what you do and don’t like about various client profiles. Then as you advance in your career, you can really narrow that focus.

What three pieces of advice would you give to your colleagues in the finance field to thrive and avoid burnout? Can you give a story or example?

1. Find or start a study/mastermind group. A year ago, I joined up with two other financial planners in similar stages of their career to start a study group to talk all things financial planning. We have a Skype call every two weeks, alternating between open agenda “vent” sessions and more structured development meetings. We talk through our struggles, successes, career progression, financial topics and even a book club (2019 was Thinking Fast and Slow by Daniel Kahneman). We are all also in similar stages personally, so we can discuss life/work balance as well.
2. Work when you’re motivated, not just 9–5 Monday-Friday. Much of a financial planner’s work can be done outside of traditional work hours, aside from trading and money movements. I’ve found I am to able draft our financial plans most efficiently early in the morning and late at night. My daytime is often filled with emails or top of mind interruptions. By getting these plans done during odd hours, I can spend time during the normal workday meeting with clients, working on our firm’s website and various marketing efforts.
3. Work with clients that you enjoy working with, both personally and professionally. Don’t be afraid to say no to clients who aren’t a good fit for you or your firm. This will save you time and future headaches. Don’t take on retirement age clients if you’re focusing on busy professionals. Don’t work with doctors if you don’t have experience with student loan analysis. There are many examples of this.

Ok. Thank you for all of that. Let’s now move to the core focus of our interview. As an “finance insider”, you know much more about the finance industry than most consumers. If your loved one wanted to hire a financial advisor (not you :-)), which 5 things would you advise them to find out about before committing? Can you give an example or story for each?

1. Certified Financial Planner™ — Unfortunately there is no minimum standard to become a financial advisor. Unlike legal or tax, which have the Juris Doctor and Certified Public Accountant, the financial profession has yet to adopt an entry requirement outside of a securities exam that can be studied for and passed in a few weekends. Being a CFP® doesn’t deem you as perfect, but it does demonstrate at least a fundamental understanding of financial planning topics: investing, risk and insurance, estate planning, tax, retirement, and education planning. CFP®’s are also required to be a fiduciary, meaning they must work in the client’s best interests.
2. Independent — Advisors who operate independent of a large financial institution can shop the market for client’s and their financial plans. They aren’t a salesperson pushing one company’s life insurance product or a banker trying to upsell you on mortgages or proprietary investment products. Independent advisors are fiduciaries and must work in the client’s best interest. Example: A client receives an inheritance and is interested in paying off their mortgage. Their advisor (not independent) is employed at the bank that holds the mortgage and their investment accounts. If the client pays off the mortgage, the bank loses fees collected on interest income from the mortgage product and they also lose the ability to collect investment fees on the money that paid off the debt. This is a significant conflict of interest that would otherwise be eliminated by working with an independent advisor.
3. Fee-Only (Fiduciary 100% of the time) — This refers to how the advisor’s firm is paid by its clients. Fee-only means the advisor is working in the client’s best interest and is paid for their advice, not a product they sell. This applies to both the recommendation and the implementation stage of the relationship. The consumer can be confident the advisor’s recommendation has not been influenced by how they are paid. Example: Your advisor is a CFP® and works for a large wirehouse bank. They made recommendations based on the fiduciary standard that you should invest your money in a S&P 500 mutual fund. Nothing wrong with that. The issue that (may) pop up is during the implementation of that recommendation. The advisor can tell you to purchase Fund A or Fund B. Both hold the same 500 stocks, but Fund A is owned by their employer and Fund B is a 3rd party product. More often they will instruct you to buy Fund A, because they may get shared revenue or perks by promoting their branded products vs a 3rd party. Not to mention Fund B tends to be much cheaper. Insert huge conflict of interest.
4. Experience with people in your situation — The saying that you can’t be all things to all people. The same should apply to your financial advisor. If you’re a doctor, what percentage of the advisor’s business is working with doctors? If you’re a business owner, does the advisor have extensive tax knowledge and experience quarterbacking relationships with other members of your team like your attorney and CPA? Everyone deserves to work with a specialist in their financial life.
5. Fees — This is referring to the cost of services provided by the advisor and their firm. Do they separate financial planning and investment management costs? Are they lumped together in an assets-under-management fee? Do they have a minimum asset or income requirement? Warren Buffet had a famous saying “price is what you pay, value is what you get”. You shouldn’t look for the cheapest advisor out there, but cost should be a factor when comparing service offerings.

I think most people think that financial advisors are for very wealthy people. This is likely not actually true. Can you explain who would most benefit from hiring a financial advisor and why? Can you give an example?

A good financial advisor helps their clients simplify complex situations and/or free up their time so they can spend time doing things they love. At our firm, we call it Real Financial Planning. Regardless of income or wealth, I think anyone that needs money help or additional financial education can find benefits in working with a financial advisor, whether it’s on an ongoing or hourly basis. Gone are the days where you need millions of dollars to work with a skilled advisor. There are advisors building advice-based businesses working with public-school teachers, nurses and other professions that aren’t typically seen as wealthy, but still come with a great deal of complication. Age is also a factor, as one could argue that early-mid career consumers have the same, if not more planning obstacles to tackle than someone in their late 50s mostly asking about retirement planning.

Take a young professional who is 3–5 years out of school and just getting settled in their career. They probably have student loans to plan for, questions about renting vs buying a home (and where to save for that down payment), how to balance short term money goals with long term. They are getting married, starting families and moving to the suburbs. They also are likely to have a negative net worth, and that’s okay! An advisor would help them through these decisions, to lay out the groundwork and good habits for what will hopefully become a financially secure life.

Transition that same individual to their late 30s and 40s, they are raising children, some of which maybe be applying to college and navigating the FAFSA and financial aid/scholarship world. They are changing jobs, getting raises and questioning how to maximize their peak earning years which are coming up fast. They are starting to save real money and want to know how to grow it but also enjoy life today. This is typically when people first consider meeting with a financial advisor. This group was typically too small to get fiduciary advice, until the last few years with the growth of young fiduciary advisors entering the profession, wanting to work with clients in their same stage of life. They can now pay for advice-only, eliminating the need for working with a salesperson at a large insurance company.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

John Burns, CFP® (Founder and CEO of Exencial Wealth Advisors), my boss and mentor at my previous firm was integral in my progression as a financial advisor. I was in the process of leaving another job when I applied to an operations role at his firm. They had just filled the role and weren’t hiring currently for advisors or planners. I got an email a week later saying I had an interview with the CEO. John took a chance on me, for a position they had never hired for (associate advisor) and basically created a career track out of nowhere.

The real reason I am grateful for John is his willingness to include me and other young planners in client decision making early in our careers. I was in a client meeting on my first day and building financial plans my first week. I progressed to working with more complex clients, obtained my CFP® designation, and after a few years was leading relationships with ultra-high net worth client families ($25M+). He had way of elevating young advisors in the eyes of the client, to be viewed as experts since we were coming right out of certification and continuing education, knowing the technical aspects of financial planning like the back of our hands. This made clients trust me as a skilled advisor, not as a 20-something with less than 10 years’ experience and no gray hair. It was an invaluable experience and will continue to pay dividends in my career.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I would make personal finance a core education requirement, just like math, science or history. I don’t mean investing. I mean the basics — budgeting and cash flow management, basic income tax, credit: what is it and why it is important, etc. I think there needs to be more free information available to consumers and I think the earlier we can introduce good habits, the better. There pockets of this type of initiative around the country, but it would be very impactful if it spread to every high school or college.

How can our readers follow you on social media?

Twitter: @DanRouthCFP

Facebook: Dan Routh — Financial Planning for Doctor Families

LinkedIn: www.linkedin.com/in/routhdaniel

Thank you so much for joining us. This was very inspirational.