In My Experience: Ric Edelman
As told to Emma Johnson
AdvisorMax.com
Barron's ranks Ric Edelman as No. 15 in its top financial advisors list--and the highest ranking independent advisor. The Washington, D.C.-area entrepreneur considers himself somewhat of an industry pariah, having very publicly removed himself from the Financial Planning Association over the organization's designation requirements. But public is what Edelman does very well. Over the past 20 years, he has built a media empire in conjunction with his financial planning firm, with weekly radio and TV shows, print and online newsletters, and his sixth financial planning book on the way.
When my wife Jean and I started our business in 1986, I had been writing for the financial trade press, and she was in consumer economics. These were the days of tax shelter deals, and there was an incredible amount of money being made by syndicators and sponsors of investment products. But the actual investors were loosing money left and right and it was an abdominal situation-all brought about by a lack of understanding and education.
At the time there was Money magazine and Louis Rukeyser-that was about it for consumer financial information. The only other outlets were stock brokers and insurance agents. Right from the start, our goal was to educate and inform people. On the business side of things, we had a very concrete goal: I wanted to net $3,000 per month.
We decided to serve a particular area and need, and that was college planning. No one else was talking about it at the time. I made calls to elementary schools PTAs and offered to do seminars on college planning. At the time no one could understand why I was talking to them-their kids were 8 and 10 years old. They told us to go the high schools.
Soon, though, people caught on. I must have done hundreds of college planning seminars in the D.C. area. It was a very long, slow process to do business that way. It takes months to schedule these events, and parents are typically younger and not making a lot of money. But we didn't care. When you have knowledge and skills and others are in need of, you have obligation to provide it. Doctors should not turn people away just because they don't have money.
Eventually, I became well-known in the education world, and was soon asked to speak on a radio show. That led to me hosting a weekly program on WMAL-AM630 in the D.C. area, as well as a TV show. I've also been on Oprah five times and been quoted in every major publication-including on the front page of the Wall Street Journal and in an Enquirer article on finance-not many financial advisors can say that! Because of my communications background, I know how to speak in sound bites, and I understand that media is an entertainment vehicle first and an education tool second.
But all this press happened organically; I didn't set out to have a media business. I was named best radio talk show host in Washington, among other awards, but not because the show is about me or about trying to build my business. It's a financial education program and it's all about people and their lives.
It's the same as when I was giving education planning talks at elementary schools-I let it be known that we were available for additional advice, but I left it at that. I believe anything more heavy-handed will be seen for the sales pitch that it is. Consumers aren't stupid. They know an infomercial when they see one. A lot of financial planner say 'Yeah, I really enjoy educating people,' but then they set a $500,000 minimum. I find that really repugnant. It's a disingenuous message and consumers see through it.
With all our media and pro bono work, our client base is really broad. We have dot-com millionaires and people who are low-income, and every demographic and psychographic there is. Yet our client satisfaction rates are off the charts and client turnover is almost non existent.
And we're huge, we have 110 people working for us now. The key is having a high assistant-broker ratio. We have seven support staff for every financial planner-at the wire houses that ratio is reversed. We also do all kinds of fun stuff for our staff. In addition to the regular benefits, we have half-day Fridays in the summer, events like ice cream feasts, crazy sock day and trips to corn-field mazes. We also offer four week paid sabbaticals for people who have been here six years, and a Rolex on 10th anniversaries.
Most financial planners are not good business people. They might be skilled financial planners, but they struggle to sustain client satisfaction because there's very little training in that area. It's no different than doctors and accountants and other professions. People ask me how they can do what I've done, and I don't recommend taking this very broad media approach. The market is very different today from when I started. Financial planning is evolving as an industry and it's getting more and more narrow. I have one surgeon client who specializes in thumbs. You can't get more specific than that. We as an industry are moving in a similarly specialized direction.
Planners should focus their services and avoid courting the mass media, because then you get a whole gamut of clients. It makes more sense to become an expert, build your brand, and become coveted for your expertise. It's the Mayo Clinic approach to business.
I will say that of all my awards and accolades-including be inducted in the Financial Advisor Hall of Fame-the one I'm most proud of is the Ernst and Young Washington D.C. Entrepreneur of the Year Award in 2001. My father was a successful tournament promoter and entrepreneur. My older brother went into business with my dad and my younger brother is an academic, and I'm the only one who went out on my own like our father. I was runner-up for six years before winning that award. On that sixth year they gave me a Susan Lucci award, complete with a Susan Lucci doll. I finally won the following year.
I tell young advisors: there is no such thing as succeeding a little bit. You have to be prepared to commit the time and money needed to do it right. A lot of advisors refuse to grow because they say they can't afford it, but I can't spend enough money. When advisors do higher staff, they pay the absolute smallest amount possible-and the resulting turnover is very disruptive and can cost you clients. I make sure my staff cannot make higher salaries elsewhere. The more we give away, the more we get back.
© AdvisorMax/Emma Johnson