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Fairhaven Wealth – a 3 year retrospective, and thoughts about the future

29 May 2020

I recently celebrated Fairhaven Wealth’s third birthday. I’ve been reflecting on the past of the business, and its future. In this article I’m going to share some of my thoughts.

The early days

I founded Fairhaven Wealth in 2017. My first day working on the business coincided with my son’s first day at primary school.

When I started out, I was aware that I was trying something new.

The fact that other businesses didn’t do what I wanted to do was arguably a “red flag” that it wasn’t an especially lucrative business model.

But as I explained in a profile in Asset Magazine at the time, I had a scratch I needed to itch.

I wasn’t aware of anyone who had implemented the same business model and advice process. I had a hypothesis. Rather than speculate about whether it would work, I wanted to test it out in real life. It was possible to debate the matter in good faith with informed and well-meaning people. But I wanted to test my hypothesis empirically.

One thing I was confident about was that I would be able to provide clients with a good service. In previous roles I’d reviewed thousands of financial advice files prepared by hundreds of advisers. I’d spoken with dozens of advisers in-depth about their business and advice processes.

I’m not a confident person by nature, but I had confidence informed by knowledge and experience. I had strong opinions about what constitutes good advice, and aspects of a business model and advice process that are correlated with good advice.

I was less sure that I would (a) be able to attract clients and (b) do so in a profitable way. I’m not a natural marketer or salesman.

First clients

I was fortunate enough to have some early clients who contacted me. One or two of these people were from personal contacts. The majority of them found me online, and were encouraged to contact me thanks to my blog (which had some content, but was very different to this blog as it is today. Fun facts: early iterations of this blog were titled “The Invisible World” and “Don’t Quote Me On It”).

To begin with, I was feeling my way in terms of scoping my services and pricing for my services. I didn’t have a set fee: I scoped the services to each client and charged a fee for that client that I thought was appropriate and would be acceptable to them.

I also started from scratch in terms of templates and documentation. I had access to many different resources but I wanted everything to be my own. The first few clients took a lot of work in terms of preparing long reports from scratch.

(When I look back at the reports, they were okay — and I’d say, good from the standards of what I had seen. But I feel like my reports are a lot better now than they used to be. I guess that’s evolution at work.)

The feedback was positive. From the start people were prepared to write testimonials and recommend my services to family members.

It’s funny to think what might have happened if I’d had a negative client experience near the start. Fortunately, that didn’t happen, and still hasn’t happened.

The $879 days

Within a few months, I settled on a fixed fee for a fairly standard scope of services. I charged $879 including GST.

Clients seemed to like the simplicity and certainty of knowing what they would be paying. I liked the simplicity and certainty. At minimum, it meant that I didn’t need to live by a timesheet.

Some clients took a lot more time to work with than others. You win some; you lose some.

During this period I tried a few things. For example, I offered a $299 Financial WOF service. It ended up being very time-consuming and feeling too risky. I gave it up.

I also entertained the idea of focusing on intellectual property – for example, creating online courses. I prepared an online course on insurance – Plan B & Beyond and a short CPD-related course for potential referrers (Financial Advice for Lawyers).

The crowd went… mild. Maybe the courses weren’t as good as they could have been. But I’ve become a bit gun shy about going down that route. In retrospect, I think I learnt the wrong lessons from that experience. I think I didn’t approach or market these courses in the right way. To be continued.

Moving from “starvation” to “indigestion”

The first six months of running the business were relatively slow. That was fine; I had various things to occupy myself with, including publishing my first two books(!), and a couple of unrelated contract-based projects.

Since then, I’ve been suffering “indigestion” rather than “starvation”.

There came a point where I’d been too busy for too long. My wife and I spent a weekend in Melbourne, and it gave me the opportunity to step back and think about what the future held.

I doubled my fees, from $879 to $1,800. After a while I increased my fees from $1,800 to $1,980.

I agonised over these increases. I wrote an article on the topic when I increased to $1,800. I shared some of my thoughts with subscribers to my mailing list when I increased fees to $1,980.

These fees have increased again, to $3,000. I talk about this later in this article.

Some observations

Doubling my fees was an excellent decision

Two factors vindicated my decision to raise fees:

  • My fear that it might take the oxygen out of the business was unfounded. Demand for my services didn’t reduce. It has meant that I can operate the business at a level of profitability that isn’t super-lucrative, but is at least profitable and provides me with income somewhere above the minimum wage. That wasn’t really happening when I was charging $879.
  • It gave me the time and space to spend more time with clients and working on the reports I provided to them.

On that last point, I want to stress that I stand by all of the advice I’ve given and the reports that I’ve written, including my earlier reports.

Having said this, when I read my earlier reports I’m astonished by how “simple” they are.

In all of my reports, I include an “About you” section and a “What you want to achieve” section. When I started, these sections were often only half a page long (and sometimes shorter). Now, each section usually stretches for at least three pages. I’ve had clients where the “What you want to achieve” section alone stretched for more than six pages.

I’ve had some clients wonder whether I go overboard with my reports. I’m sensitive to this.

However, I’ve noticed that the more time I spend on my reports, and these sections in particular, the more likely clients are to implement my advice. The more detail I include in my reports, the greater the level of rapport I have with clients when we meet for our final meeting(s). The more likely they are to write a testimonial. The more likely they are to recommend my services to friends and family members.

At the end of the day, I want to provide advice that people will implement. And I want people to be happy with my services. The more personalised I make my reports, the more likely this seems to be. It takes more time, but it’s more satisfying, and in line with the type of service I want to provide.

Increasing fees has had some downsides

One issue is that it has changed the type of clients who work with me.

I’m now working almost exclusively with clients who have a fair amount of money. If not, they’re positioned to have a fair amount of money in the future.

I’m not seeing anything like a representative sample of Kiwis.

This weighs on me. One of my goals with starting Fairhaven Wealth was to service clients who have traditionally been underserved. This doesn’t describe the majority of my clients. I’m still working on how to address this.

Testimonials and referrals

I have a lot of clients who have written testimonials. (39 at this point.) Many of these people have referred loved ones or asked me to review their plans.

Not everyone provides a testimonial. That’s fine, and when I ask for a testimonial, I stress there is no pressure, obligation, or expectation whatsoever. On that note, the majority of my referrals and client reviews come from clients who haven’t provided testimonials! Weird!

Correlations

The people who typically engage me have a unique “Venn diagram” of characteristics.

I have a disproportionate number of clients who want or own Teslas. Quite a few of my clients like the idea of passive homes. I have a disproportionate number of couples/clients where the female partner is older than the male partner. My clients tend to be more left-leaning politically than the general population. They tend to be smarter than the average bear.

The vast majority of my clients are very agreeable.

When people ask me what type of clients I work with, my answer is that they don’t tend to fit within a certain demographic. All of my clients seem to satisfy three criteria:

(1) they are switched on,

(2) they are engaged with their finances, and

(3) they are nice.

I’m very conscious that not all people are like this. I feel incredibly grateful.

Whoa

Another aspect is that I find that I help clients to make enormous decisions. I’ve had quite a few people say I’ve changed their lives.

Clients often come to me for advice about what to do with their investments. But what they often get is a different perspective on their life. Some clients have realised that they can afford to stay living in the house they love but thought they couldn’t afford. Some have decided to take some professional risks, such as career changes. Some have helped out loved ones in ways they hadn’t considered to that point. Many clients talk about having an additional sense of comfort and contentedness in their lives, borne from the financial confidence they get from the process.

I spoke to some clients yesterday, and they referred to the report I prepared over a year ago for them as their “bible”.

I don’t take this lightly. Because of this, I feel that all of my advice deserves the time and consideration necessary to help them make these decisions.

It’s an enormous privilege. But it’s also a big responsibility.

Different worlds

One of my favourite blogs is Slate Star Codex by Scott Alexander. An article that resonates with my experience is titled “Different worlds”.

The crux of Alexander’s article is that people can have very different experiences of life. Even if they are with similar people, in similar situations, they can elicit very different responses and outcomes.

I love my youngest brother, for instance. But he is enormously different from me. Time and again, we step into the same situation and have an entirely different experience.

The same seems to be the case with my experience providing financial advice.

I’m pretty involved in the financial advice profession and regularly chat with other advisers. For whatever reason, I seem to have better experiences than many of my peers. I can’t put it down to anything in particular. But I’ve been very fortunate with my experiences.

(I have the same experience with blogging. I compare notes with other bloggers and the type of engagement they have with their readers is entirely different from my experience. This is despite the fact there is probably considerable overlap regarding our readership. I’m not saying that my experience is better: just that it’s different, and my experience is a good fit for me.)

The downside with the Fairhaven Wealth business model

I’ve been aware of these downsides from the get-go. However, three years in I’m as mindful of them as ever.

I’m not really building an “asset”. I don’t have a business or “book” of clients I can sell to someone else. (Maybe I’m naive or too ideological, but nor do I want to think of clients — people — that way.)

This business is entirely reliant on me. If something happened to me, it would stop.

There is also a risk aspect: with ongoing service arrangements, it’s easier to identify and correct any errors (not that I try to make any!), including errors coming from a lack of knowledge. I’m also mindful that people’s memories, perceptions, and opinions change. It’s easier to manage these things if we have a formal, ongoing relationship. (This is one reason I stress to clients that I would love to hear from them, and don’t charge for short conversations etc. It’s also valuable and rewarding in its own right.)

I’ve decided: no employees for the foreseeable future

For the foreseeable future, I’m not going to employ anyone.

If you work with Fairhaven Wealth, you’ll be working with me.

I value being the master of my destiny too much.

I have committed to spending more on software and equipment that will help me to get more out of my time.

I may engage people as contractors for specific tasks. But I am not going to be an employer.

(Although I’m open to, and will likely suggest, JVs with others. These will be for very specific, discrete projects.)

“Success”

Last year I wrote an article explaining that success is personal. I used the article as an opportunity to navel-gaze and think out loud about my own definition of success as it relates to Fairhaven Wealth.

The thinking that goes behind an article doesn’t stop after I hit “publish”.

One thing I’ve been reflecting on is how “success” needs to factor many vectors, including how you want to feel.

As in, what do you want your dominant emotions to be during the course of an ordinary day? What can you do to structure your life so you can feel this way?

Over the last year or more, my main sensation is one of feeling rushed and starved for time. I constantly feel like I’m letting clients wait too long for me to prepare draft reports.

I haven’t had a complaint yet, and clients seem more than happy with my service, but it weighs on me a lot.

(For reference: I keep a record of the length of time it takes me to go from detailed meeting to sending a draft report. At the time of writing, for the last thirteen reports I’ve sent out, the time difference (in days) has been: 52, 48, 31, 29, 29, 47, 38, 47, 43, 42, 39, 35, and 36. Seeing that in writing makes me feel terrible!)

It seems like I do a decent job of managing client expectations, or perhaps I have very understanding clients. Perhaps when they see their report they appreciate why it has taken so long.

I want to be getting reports to clients within 4 weeks maximum. I work strictly on a first-in-first-out basis, so if I’m candid, there are times where it is over a month before I start working on a report.

I don’t want to feel like I’m not meeting my own standards.

One of the primary sources of unhappiness while I was working in most professional services positions was that I was tied to the clock. Every six minutes counted. I hated that feeling.

One thing I especially disliked was that it discouraged going down rabbit holes.  The truth of the matter is, I think rabbit-holes are necessary. I think they should be embraced.

Sometimes, I need to spend hours considering something for a client that never ends up in the report or in our discussions. I need to have the space and freedom to do that.

At the very least, I want to have the freedom to go down intellectual rabbit holes. Most of them might be a waste of time. But some of them won’t, and that will make all the difference.

Ultimately, I want to feel in control of my time. Instead of feeling rushed and busy and apologetic I want to feel like I’m making a difference, and enjoying the work that I’m doing – which I genuinely love, notwithstanding this underlying cloud of guilt and busy-ness.

I want to connect with what clients are actually saying about my services.

I also want to have more time, and cognitive and emotional bandwidth, to dedicate to the important things in my life, like health, my family, and my friendships. I don’t feel like they received the necessary attention in 2018 or 2019.

If I need to take steps that mean I work with fewer clients and earn less income in total, so be it. At the very least, I’ll be more responsive to those clients, and I’ll probably be more present while I’m working with them.

That’s my success. It’s my business, and I want to make decisions that are aligned with my vision of success.

What next

I’ve formalised review services for existing clients

I’ve finally formalised my review service(s) for existing clients. Basically, I offer clients a fixed fee review service at two levels: a WOF service for $500 and a more comprehensive service for $1,000.

(These fees may rise in the future. This is something I’m a little anxious about. There will be clients who will find that my review service will be more expensive than their initial service. I guess I’ll find out how that pans out. Having said this, I’m also going to offer a lower option – “buy me a coffee”/free/ex gratia for a short catch-up conversation short of definitive advice.)

Fees have increased again

Fees for my standard advice service have increased from 1,980 to $3,000 including GST.

I’ve introduced a new, lower-fee (but less comprehensive) “INSIGHT” service

For a limited time only (or longer, if it works well), I’m offering a new, more affordable service. I’m calling it Fairhaven Welath’s INSIGHT service.

Basically, it involves a detailed conversation (3-4 hours+) with clients about their financial situation, and how it fits within the broader context of their life. It doesn’t involve the provision of any financial advice. The key is to provide insight, and to get people thinking about their finances in a different way.

More information about the service is here. Currently, I am charging a fixed fee of $500 including GST with a “5-star rating” guarantee (so you only pay $500 if you think it’s a 5-star service, $400 if it’s a 4-star service, etc).

I’ll continue investigating ways to deliver content in interesting, useful, and engaging ways

I want to work on more scalable projects – where my time isn’t focused on just one client but can benefit lots of people, without being tied directly to my time. I’ve got a few ideas.

At the moment I’m in the “let a thousand flowers bloom” phase. To be continued…

I will be working on other, unrelated projects

I have a few other projects in the works that are unrelated to Fairhaven Wealth and this blog.

Truth be told, some of them may end up being much more lucrative than the work I’m doing here. Some of them are/will be rewarding in other ways. As time goes on, I may mention these on the blog and to mailing list subscribers.

A final note: thank you, Chrissy – and Christchurch Orthodontics

I want to say a final thank you to my wife, Chrissy.

More than anyone else, Chrissy has made Fairhaven Wealth possible. Without her encouragement and support, I wouldn’t have set up on my own.

I’ll also confess: to date, Fairhaven Wealth hasn’t been especially profitable from a financial perspective, especially when you calculate the opportunity costs of my time.

If you’ve engaged Fairhaven Wealth, it’s safe to say that Chrissy’s income has subsidised your services. Chrissy is a specialist orthodontist at Christchurch Orthodontics. She operates with the same level of skill and integrity and warmth as me. (In fact she’s better than me in almost every respect: I’m punching waaaaaaaaaaay above my weight.) So if you’re in Christchurch, and you or a family member needs an orthodontist, I encourage you to seek her out. (Another fun fact: I created the new Christchurch Ortho website.)

Thanks!


Tags

Fairhaven Wealth, fees, retrospective


About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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