How a retainer fee model helps drive growth and “phantom referrals,” with Abby Spaulding

Sometimes doing things differently can pay off. That’s been the case for Abby Spaulding of Continuum Planner Partners in Nashville, Tennessee. A financial advisor since 2008, the rising star founded the firm in 2015 and won the Nashville Business Journal's Power Leaders in Finance award in 2017.

One thing that makes Spaulding’s practice different is employing a retainer fee model rather than an asset management fee model. With a focus on businessowners who tend to have less to invest, she recognized a need in the marketplace. “When we would say, ‘Yeah, our clients just pay us a fee to give advice,’ we’d hear people perk up … ‘Really? I'm interested in that.’"

Planning is not a one-time event

“We believe that planning and finances are a living and breathing thing,” Spaulding says. “You never really get to say, ‘I did it. It's done. I finished it.’” People get raises or change jobs, marry or divorce, or face unexpected obstacles, like a global pandemic. As life changes, there is new financial territory to navigate.

Because of that, Spaulding says her business model is to get paid on an annual basis to do the planning. The firm puts a proposal together outlining the scope of the work from the start. “How our firm has it structured is that we charge an upfront annual fee. And then we quote the second-year fee right off the bat. So the client knows what they're getting into,” she says.  

Her clients, primarily businessowners and entrepreneurs, tend to have three characteristics: They have great cash flow, and they tend to have high net worth, but “they have no money,” Spaulding says. In other words, they are not sitting on sizable brokerage accounts needing to be managed. For this reason, they can get overlooked by other advisors.

Spaulding says her role is to think much more holistically. “We do a lot around goal planning. We do a lot around cash flow models. In my opinion, cash flow runs the show,” she says. “I don't care if you have a high net worth or a low net worth. Everybody's pretty much just worried about what their cash flow is and how they can afford their lifestyle.” In addition to traditional investment analysis, retirement planning, estate planning, education and college planning, her firm also focuses on debt reduction, financial independence and risk management strategies, including everything from health insurance to identity theft insurance.

While her team does offer investment management, they are just as happy to work with other clients’ advisors. “You are hiring us to be your architect,” is how Spaulding says she describes it to clients. “You need a plan. Right now, you have advisors, but you don't have a plan. And we need to take a couple steps back and say, ’What's your one-year, three-year and 30-year goals? And how are we building plans to get there?’”

Getting real about the cost of advice

Spaulding says she worried initially whether a retainer model would get pushback, but she rarely hears that from clients. “I think people want to pay for valued advice,” she says.

Instead, clients seem to find the full transparency approach to fees refreshing. After winning the business of a new client who had consulted with three other advisors, Spaulding asked the client what put her firm over the top. Two advisors had told the prospect to call back when she had more to invest, and the third said everything could be done for an annual fee that seemed suspiciously low. Based on the complexities of the client’s personal finances, Spaulding’s team recommended a full audit with a $10,000 price tag and estimated that ongoing work would total somewhere in the range of $30,000 to $40,000. “And they hired us,” she says.

How an epiphany helped her define her ideal client

Like many advisors, Spaulding had a slow start to success. “I was really on my own, trying to call on people and convince them to hire me as their financial advisor and getting very little traction,” she says. Between letting prospects walk all over her and underpricing her own work, “I had what I called an epiphany,” she says. She realized she needed to value her time.

“I didn't need everyone as a client. I needed to find people who just wanted to work with us as much as we wanted to work with them.”

Spaulding says this simple realization opened quite a few doors. The firm only works with people they want to work with, and those clients tend to bring in referrals who are like them.

What are phantom referrals, anyway?  

About 70% of Spaulding’s business comes from referrals — more specifically, a type the firm has dubbed phantom referrals. “We get referrals without asking,” Spaulding says. “I'm not doing the ‘Who do you know?’ They're coming to us and saying, ‘Hey, I gave your name to so-and-so.’”

She credits a high-touch service model. “We create touch points with our clients. We try to think about what is important to them.” Examples include sending baby gifts to the house to welcome a client’s new baby, or celebrating a final student loan payment. “Clients tend to have a big occasion in their life when they pay off the student loans. We like to send them a bottle of champagne,” she says. “It creates an opportunity for them to talk about us. And then we get phantom referrals.”

“The other 30% is an active marketing on my part to either put myself in the same room as people that I want to work with, or just straight calling on them. You know, when we got granular on who we wanted to work with, it got really easy to find them.”

“I am a big believer in being persistent, and not a pest,” she says. “I like to tell people that. I'm interested in you, I'd like to get to know you more, I'm going to be persistent in this pursuit. And I hope I don't cross the line into being a pest. But please tell me if I do. Otherwise, I'll follow up with you in six months and see if timing is better for us to meet then. But it is an active pursuit to try to meet those other 30%.”

Caring as a secret weapon

Spaulding’s advice to young advisors entering the profession: The biggest thing you need to convey to your clients is that you care. “You don't have to have a ton of experience to do that,” she says. “You know, it's that old phrase: People don't care how much you know, until they know how much care. I really think when we talk to clients about their livelihood, if you don't care about them, they're going to know it immediately.”