It’s an obvious but important point—an astronomical level of assets under advisement achieved in a super-compressed time period places top value on every minute of every day. It’s something to which ambitious 401k advisors can relate, but also means “in-transit” between appointments is Jania Stout’s only time to talk.
Naturally curious about how she scaled so far so fast, we’ll take it.
True to form for a top achiever, Stout, managing director and co-founder of Fiduciary Plan Advisors—more on the name in a minute—immediately threw a curve; it’s the second time she’s reached the $3 billion asset mark, although the first time took five years (slacker).
“We got a little bit better at it,” she laughed while darting in and out of suburban D.C. traffic. “I’m fortunate enough that I’ve gotten to hit the reset button a number of times. It gives me the opportunity to reinvent myself and to be who I really want to be.”
And incorporate lessons learned, specifically about the types of clients with whom she wants to work and the true value of her services.
Stout rightly notes that newer advisors typically take on anyone, grateful for the business and even more so for the self-esteem and validation that accompanies a client engagement. The downside, of course, is the fees that are often undercut for less-than-ideal individuals.
While counterintuitive for hardworking advisors scrambling to attract assets, it’s a temptation to resist for anyone who wants to get where she is. Yes, difficult for those worried about overhead, but deep breaths and strategic thinking make it exponentially more efficient, a quality over quantity play.
Therefore, proper pricing is critically important.
“Other advisors might look at our service model and wonder why our profit margins are so low,” she explains. “It’s because of the amount of resources dedicated to every client. We’re involved with everything they might need and do.”
The reasoning makes sense, which is her almost 100 percent retention. The cost of acquiring and onboarding a new client (versus properly serving and pleasing those you have) is by now widely known.
Yet biz dev endeavors too often distract, positioning competitors for prime picks sometimes before advisors even know what happened, something Stout and her team have a laser-like focus to avoid.
“No one is leaving out the back door. We could have higher profitability, but then lose more clients, which wouldn’t make sense.”
Especially since so much time, energy and emotion (as well as money) are spent on the onboarding process and its immediate aftermath. Plan-sponsor relationships typically smooth as they mature, so why inadvertently sabotage what’s so difficult to achieve right at the moment it gets easier? To rebuild requires an anxiety-inducing pipeline of new prospects from which to market.
“The first few years of a client engagement are the toughest. You’re getting them set and looking to understand their culture.
You might be cleaning up issues from their previous advisor or provider relationship of which you had no part. You might be doing RFPs for a new recordkeeper relationship for the sponsor or creating fund menus or education and financial wellness strategies. Why do all that only to replace it with someone new?”
Those tempted to dismiss it as eye-rollingly obvious should know that almost a third of 401k plan sponsors “are unhappy with their advisors” and ripe for the picking, according to Fidelity.
The firm’s Annual Plan Sponsor Attitudes survey finds a majority of plan sponsors are satisfied with their plan advisors, yet a record number were actively looking to switch their plan advisors in 2017 (38 percent, up from 30 percent the year before).
“We are a 12-person team with only two advisors engaged in business development. So, the other 10 of us are doing day-to-day client work, which I think is unique.”
Taking a (Large) Leap
An alumnus of large recordkeepers and 401k providers beginning with ADP, Stout always had the backing of big brand names.
“I would go out and bring clients on to the ADP platform. I then moved to Fidelity and I can’t think of a bigger brand name in investment and 401k than that. After that, I moved to a large regional firm in Maryland, where companies in the general geographical area knew who they were.”
Striking out on her own three years ago meant that for the first time in her career, clients were hiring “Jania,” one reason she’s so client-service focused.
“I’ll tell ya, it was really scary. That fear of rejection was intense because I had nothing else to fall back on. Before it could always be, ‘Well, they didn’t want Fidelity or ADP, and I’m simply a representative of their brand.’ Now, if they don’t want to do business, it’s because they don’t want Jania.”
Scary and exhausting, since she and her team had already built a $3 billion book-of business, which (due to a non-compete and other issues she won’t—or can’t—discuss) she had to completely walk away from.
“I grew tremendously from that and I’m so much stronger three years later. What I learned is that I truly am worthy and valuable to my clients.”
And there’s the freedom that comes with having to start over, since she could replicate and improve upon her techniques and build the business exactly as she’d like.
“I left with a few other people, so a small team but no clients, which was really a blessing in disguise. It allowed us to take the time, free of distraction, to redesign it all—from our onboarding to the way we
communicated with clients to our education strategies.”
At the old firm, certain tasks needed to be performed, but the business grew quickly and $3 billion in assets with a smaller average client-size meant more plan sponsors to service, and “we didn’t have time to think about the tasks, we just did what it took at the time to survive.”
“Every new client was benchmarked and a plan-design review was performed, and everyone shared in those responsibilities. At the new firm, we could consider our strengths and how to best highlight them and then went for it. We had control of the budget and took time to think about and develop a customized CRM to assist with those tasks. A consultant came in and reviewed our process and the tool was built around it.”
She and the team were able to (once again) rapidly grow because of a concentration on the appropriate market size, which was larger than the previous firm.
“We don’t prospect to companies under $20 million, and my average client is now closer to $100 million, although as a firm it’s between $40 million and $70 million. Before, our average client was probably $15 million.”
Larger clients also mean larger HR departments, with dedicated resources with which Stout can engage.
“We’re able to work with companies that care about the same things that we care about. It’s a really good fit for companies that care about participants. I know that sounds cliché [it doesn’t, sadly], but there are definitely employers who would tell us to perform financial wellness and it was something they wanted, but not between the hours of 9:00 and 5:00. We don’t have to deal with that anymore and can work with those that really want to engage.”
And about the firm’s name—Fiduciary Plan Advisors. It’s serendipitous with all that’s recently happened, but was it deliberate?
“My philosophy is and always has been to tell plan sponsor clients and prospects what we do. The firm could be called something really nice, like Blooming Tree Advisors, but you wouldn’t really know what that is. I said, ‘Let’s just go with fiduciary plan advisors.’”
Having achieved the level of success she has, is there anything holding her back at the moment, a particularly vexing challenge with which she’s grappling?
“We walked out [of the old firm] with essentially zero assets and three people, and now it’s 13 people and $3 billion, so I’m really fortunate to have the right people with me,” she hedges.
The positive attitude is appreciated, but we press for something (anything) that might be a concern, and she finally relents.
“The thing that keeps me up at night is the ongoing and evergreen issue of employee and participant engagement. The focus of the 401k and larger financial world at the moment is financial wellness. There is
so much that I want to do in this area, but to educate and communicate the right way costs a lot of money. It’s very labor-intensive in terms of wanting to do more for a client.”
Meaning they want financial wellness and they want engaged participants, yet they don’t necessarily want to pay more for it.
“So, my challenge, and that of the industry, is to figure out how to deliver quality financial wellness strategies without raising costs too much that really, therefore, prices it out of the market. Technology is the obvious way to do it, and we do in fact offer virtual advice, so you’ll see more of that from us in the future.”
She closes on a point of pride (as if she didn’t have enough to be proud about already).
She’s an ex-college athlete, has taken various leadership positions in industry organizations like the National Association of Plan Advisors, and is also a single mom to two daughters.
“My oldest is a plebe at the United States Military Academy at West Point. My younger daughter, who is in high school, has her sights set on West Point as well. To raise strong daughters that believe in doing something with that much meaning is something that I think describes who I am as well.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.