Real Money, Real Experts

From the Ground Up: Starting a Private Practice and Navigating State Registrations

• AFCPE® • Season 1 • Episode 15

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This week, Real Money, Real Experts welcomes Andrea Clark and Adrienne Ross, who are both owners of private practices, as well as members of the U.S. military community.

Co-hosts Rebecca Wiggins and Dr. Mary Bell Carlson talk to Andrea and Adrienne about their complementary certifications, the complicated distinction between investment education and advice, registering as an RIA, and other important questions around compliance. Both Andrea and Adrienne offer a wealth of information for those interested in starting a private practice.

 

Show Notes:
00:52 Intro Adrienne and Andrea
05:43 Creating a support system
08:52 Working with the military community
10:28 Compliance and registering as an RIA
15:00 Education versus advice
19:16 State by state registration requirements
29:50 What Andrea & Adrienne wish they knew
36:00 Your Two Cents
38:00 Final notes about registrations


Contact Your Regulator: https://www.nasaa.org/contact-your-regulator/
Series 65 Study Guide: https://www.nasaa.org/exams/study-guides/series-65-study-guide/
https://www.finra.org/registration-exams-ce/qualification-exams/series65
Starting a business: https://www.kitces.com/blog/financial-coaching-what-it-is-and-how-to-become-one/
Registering a firm: https://www.kitces.com/blog/registered-investment-adviser-requirements-series-65-exam-timing/XYPN:  https://www.xyplanningnetwork.com
MFAA:  http://militaryfinancialadvisors.org
Table Financial Planning: https://thetablefinancialplanning.com/
Clear Insight Financial Planning: https://mycifp.com/
Garrett Planning Network: https://www.garrettplanningnetwork.com/

AFCPE Membership: https://www.afcpe.org/membership/

Want to get involved with AFCPE®?
Here are a few places to start: Become a Member, Sign up for an Essentials Course, or Get AFC Certified today!

Want to support the podcast? We love partnering with organizations that share our mission and values. Download our media kit.

Intro:

Welcome to Real Money, Real Experts, a podcast where leading financial counseling and coaching experts share their stories, their challenges, and their advice for helping people manage money in the real world. I'm your host, Rebecca Wiggins, Executive Director of the Association for Financial Counseling and Planning Education®or AFCPE®. And I'm your cohost, Dr. Mary Bell Carlson. I'm an Accredited Financial Counselor®, or AFC®, and the CEO of Chief Financial Mom. Every episode, we're taking a deep dive into the topic, fix the personal finance professionals care about: helping clients, building community and your professional growth. Welcome everyone to the Real Money, Real Experts podcast. I'm Rebecca. This is Mary. Thanks for taking the time to join us today.

Rebecca Wiggins:

Today on the show we're talking with Adrienne Ross and Andrea Clark. Adrienne is a military spouse with over 20 years in the Marine Corps, where she found her passion to pursue a financial planning career. She holds the AFC®, FFC®, along with the CFP™and ChFC®. Adrienne is the founder and owner of Clear Insight Financial Planning. Andrea is also a military spouse with 26 years in the Air Force. And 10 of those as a Military Financial Counselor. Andrea is the founder of Table Financial Planning, a fee-only comprehensive financial planning firm. She also holds her CFP™and AFC®designations. I'm really interested in getting their perspectives today on not only their experience with building private practice, but more importantly, this issue about compliance and registration that's come up a little bit. So welcome both of you to the podcast today.

Mary Bell Carlson:

Okay. Both of you have interesting backgrounds with multiple credentials across the financial spectrum, as well as your military background. Adrienne, let's start with you. I'd love to hear what brought you to the field of finance and specifically to the financial counseling industry.

Adrienne Ross:

I came to financial counseling from a kind of winding path. My story is similar to many military spouses. I actually started out- my first degree out of college, I was an occupational therapy assistant, and then we promptly moved out of the United states and that kind of went up in the air. And in the meantime, my husband was deploying all the time and I was left trying to figure out what to do with our money. And I realized how much I did not know. And I started trying to learn as much as I could. And one thing led to another and I got the Military Spouse, Financial Counselor Fellowship, and pursued that, finished that and that Accredited Financial Counselor®designation was my first certification. And I loved it. I had some time working with military families in an Army community service center and thought, wow, this is amazing work to do. The next thing I did was the FFC®designation. So, Financial Fitness Coach®and really enjoyed and thought the deeper conversations were useful. So I just kept going with pursuing additional designations. It was one of those things where the more I learned, the more I realized I needed to learn. And so I just continued and have been on this path ever since.

Mary Bell Carlson:

That's great. It's amazing. When you start to find something that you love, how you can just continue to grow. And I think that with the designations that you have, I appreciate and want to hear from both of you too, about how they compliment each other as well, because, I think that it shows a real sign that you didn't just stop at one, but that you're continuing that education.

Adrienne Ross:

I do believe they absolutely compliment each other. Andrea and I have had a chance to talk with a few other AFC®/CFP™designees, and we all seem to say the same things, similar things about just how important both sides of the process are. Just the planning process, but also that deeper conversation process and how they go hand in hand and support each other. But then also, you know, big vision, financial planning, plus the, I think of it as the nuts and bolts of just using your money on a day-to-day basis, they totally compliment each other.

Mary Bell Carlson:

Andrea, same question for you. What brought you to the field of finance and the financial counseling industry?

Andrea Clark:

Similar story to Adrienne's as a military spouse. I was an engineer by training and in those days there was no such thing as virtual part-time work for engineers. As we moved about the military vagabond lifestyle, I started teaching math at community colleges and learned that people wanted to pay attention in math class when you talked about their money. And eventually I ended up applying for and receiving the FINRA Fellowship to become a financial counselor and worked for many years as a Military Financial Counselor. And along the way, I met Adrienne who was already pursuing the CFP™and talked me into the same thing. And yeah, we're both just really happy to have all those tools in our toolbox. We feel like we had more to offer the military families that we cared so much about. And we definitely talk all the time about how that AFC®credentials makes us unique in the CFP™world. I just feel like it has enabled me to build better relationships with my clients because we've learned to ask different questions. It's not all focused on, you know, the accounts that your money is in. It's more focused on what you want your money to do for you.

Mary Bell Carlson:

So I'd love to know how you both met and how you've helped each other build your business.

Andrea Clark:

Well, social media, of course. Isn't that how everybody meets these days, online? We were both military spouses and part of the military spouse, financial counselor Facebook group. And through that, we started realizing we had a lot in common with how we saw our professional lives, where they were going. And at some point I think Adrienne mentioned in the forum that she was doing a scholarship through the American College to pursue her CFP™and ChFC®designation, and I asked her a question. That was a fateful, private conversation message that I sent and look where we are now.

Adrienne Ross:

That's right. And I remember we had a phone call and it, you know, social media can be a little bit strange because you'll have a lot of conversations with people, but you've never actually met them. And then Andrea and I also have had very similar life experiences. And so that first phone call, it was like, we were just connecting after not seeing each other for, you know, a number of years. And it just kind of went from there. We leapfrogged along. So I finished a designation, she finished a designation. She took the 65, I took the 65. She joined XY I joined XY. So there were a few moves between different states and some retirements and things along the way. But yeah, so that was kind of how we met, just by reaching out, really to ask each other for support.

Mary Bell Carlson:

And it sounds like because of that, you've really helped each other and built the businesses you've individually wanted to build, because you've created your own network in a way.

Andrea Clark:

We just think about how we want to serve our clients in a very different way. And we're really excited to see the industry evolving in that way. And yeah, so we give each other support when we feel like we're crazy and about to lose it and'why did I ever start this?' And then, you know, you have that client household that comes along and we also call each other then too, and say,'Oh, I got to tell you this story.' And you know, those positive interactions that make you want to keep doing it, to be something different in the financial services industry.

Adrienne Ross:

And I think it's useful too, because having your own business can be really lonely when you're not in a big firm, right? And so having somebody else that you can call and talk to about different situations or clients, or, you know,'Hey, I'm working on this project for the business, what do you think?' It's really helpful. So in a way, you know, we're kind of replacing those other activities that you would have with a bigger firm for each other.

Mary Bell Carlson:

You know, both of you, I think it's so interesting that you've come from a military background specifically. And I get this question quite a bit about,'I'd love to work with the military.' Sometimes it's from people who have little to no experience. They've taken the test or they haven't received their experience requirement. How do you break into that field if you're not already a part of the community?

Adrienne Ross:

One of the ways that you can break in is through volunteering at your local family readiness center, whether it's with the Air Force, the Army, the Navy, or the Marine Corps. So that's one option, is just to simply go and serve as a volunteer. I've done, and I know Andrea has too, like through the years, we've done countless, countless hours of free service. As we were getting our credentials, as you know, we were just hanging out in the food court and somebody came along and we started a conversation, you name it. Right. So I think that volunteering is a good way to get started. And there are ways if you really want to work in that side of things to serve on, there are contracts where people can work with the military directly too. So there's always direct employment options.

Andrea Clark:

Right? There are several DOD contracts that employ AFC®s, but you do have to get your hours. I see those conversations in the community forums quite a bit. And I know like for my hours, I worked at an H&R block in a military community, and I learned a lot. They have specific military focused tax classes. So that was one of the ways I got a lot of hours. And I learned a lot about military family, financial life. It's interesting when somebody comes in to get their taxes done, you say,'okay, so tell me about your household.' Some days you learn a lot more than you think you will.

Rebecca Wiggins:

Okay. So I want to shift gears just a bit and focus a little bit on last year's Symposium, where both of you presented a breakout session that focused on, of course, building a private practice, but also this compliance issue. And I'm wondering if we can get your advice on what financial professionals should consider, and when they need to get registered as defined by the SEC and/or their state. So how about Adrienne, if you want to jump into that and then we can go from there.

Adrienne Ross:

I think a good place to start is by talking a little bit about the Investment Advisors Act of 1940 and why that is both a good thing, but also kind of the root of some of the confusion right now, because it was written specifically to investment advice, but it's been applied to the evolution of the profession, right? So we've gone from a situation where it was just investment advisors, selling mutual funds or stocks, or other types of products into a situation where this now includes financial planning, financial counseling, And yes, even though we don't necessarily always want to admit it, financial coaching. So really understanding the investment advisors act of 1940 is your first, most important step and understanding what they mean- being the regulators- mean by who is an investment advisor.

Andrea Clark:

Right? So the Act talks about how an investment advisor is defined as someone who, for compensation, engages in the business of advising others on investments. And there's a lot of gray area around, you know, well okay, for compensation. Well, for instance, on these DOD contracts we've worked on, we're paid by the DOD, but we're giving advice to the service member. We're doing counseling and coaching and such. And so that person isn't actually paying us, but it is a paid position, there's compensation happening. And the client does see you as being in the business of talking about finances.

Adrienne Ross:

I think too, that it's important to look at the regulations as being inclusive and expansive. It's not as if they are written and interpreted to be excluding things they're written and interpreted to capture as many activities as possible, right? So it's kind of written to protect the public and to protect our clients, to make sure that people who are giving advice are doing so according to the rules, regulations, and laws.

Andrea Clark:

There are specific exceptions to the investment advisors act for certain professions, such as lawyers, engineers, and accountants. They very often give incidental advice. So those professions are covered by the act to be able to do what they do. They are going to end up talking about money sometimes. There's also the exception for the press. We all know those financial gurus out there that talk a lot about money. The difference between the press and an individual is that the press is not giving advice to a specific person. They're addressing a broad general idea.

Mary Bell Carlson:

Andrea, let me clarify something too, with you. You had mentioned that there's DOD like working under a DOD contract. So DOD is paying you, not the specific service member, but it's just the opposite. When you're in private practice, you're actually being paid by that individual. Is there a difference there, in according to who actually pays you of, if you should be registered or not?

Andrea Clark:

According to the Investment Advisors Act, it doesn't matter who pays you, it's that you're in the business as a financial professional, you're being paid for the professional service that you were providing. So there's an economic benefit happening and it doesn't matter who's paying the bill. It can even be pro bono work. So FPA, for instance, does a really great job of organizing pro bono community events where CFP™s will come and work for the day, but you're still held to the Investment Advisors Act and the compliance and the regulation that goes along with the conversations you're having with those people.

Mary Bell Carlson:

I've also heard people say too, that it's only education and not advice. Can you help us understand the difference between education and advice?

Adrienne Ross:

Everybody so wants this to be true. And it, everybody seems to so want this to apply to themselves. But the problem is that it goes back to whether or not you're holding out, or in the business of something, right? So the education exemption applies if you are in the business of being an educator, meaning that you are a teacher. It's not that someone who is in the business of giving out financial education, information, planning, coaching, counseling, whatever you want to call it, financial advice, claiming the education exemption. It's therefore educators, meaning you need to be employed by a school. You have to be a teacher. So, what I hear often and what I think Andrea hears often too, is coaches and counselors will say, well, all I do is education. I'm just educating about their 401k, or I'm just educating about how they should use a Roth IRA. Well, that's not what that exemption covers.

Rebecca Wiggins:

Would you guys be willing to do a little bit of your role play the examples and things that you did in the symposium session last year, just to give our listeners an example of some of those conversations with clients?

Andrea Clark:

Sure. That'd be great. I guess I could start out with one of my favorites. A client comes in and has enough room in their budget now that they are able to start saving more and they know that a good goal is saving for retirement. And the question is, what do I need to know about the 401k versus an IRA versus, you know, some of these other options out there. And, just making those distinctions in advising a client to save into a 401k through their employer instead of an IRA, is investment advice, because it is distinguishing between two choices that are investments, Adrienne, what's one of your favorites.

Adrienne Ross:

One of my favorites is the good old standard question.'Should I pay off my mortgage or other debts before I start investing in my 401k?' And the second that you start to answer that question, you're giving out advice because you are advising the client about how they should or should not put their money into an investment account such as their 401k. And we don't often think about that because a lot of times we say,'Oh, well, I just help people pay off their debt. And therefore that's not giving advice. And so I don't need to be registered.' But the second you start making decisions between paying off debt or taking advantage of their employer retirement plan, or putting money into an IRA, now you've crossed over into giving investment advice.

Andrea Clark:

Or, you know, people who have done a really great job of saving. They have a great big savings account at the bank, and they are really unhappy with the interest rates that we currently get in a savings account. We all know how abismal that is now. So they're asking for your advice,'where can I put this that is still a safe investment or a safe account where I'm not going to lose money.' A lot of times a counselor or a coach will say,'Oh, you know, you could put it into CDs or you could put it into a money market account, and it'll still be very conservative and safe, but you'll have a little bit of return on that pile of money while it sits there.' And you decide what its purpose is going to be in your life. That again is investment advice. You've crossed that line into an investment product.

Mary Bell Carlson:

Andrea, that really is as simple as someone saying, or you telling them as a counselor,'Hey, you need to save.' And they ask how, and then you start getting specific about the vehicle, correct?

Andrea Clark:

Yes, yes. Any time you're making a distinction on that vehicle of where they should put the money it is investment advice.

Mary Bell Carlson:

And it really depends too on where you live and if you need to get registered in that state because from my understanding, all registration is really determined, ost registration I would say is really determined at the state level and those state definitions vary from state to state. Can you guys tell us a little bit more about that, of how to get registered and why compliance is different in every state?

Andrea Clark:

As far as getting registered. A lot of people think it's involved with the SEC in some way, but you are not required to be registered with the SEC until you manage$110 million in assets. So with that being said, it's clear that people who mainly want to practice as a financial counselor or financial coach are never going to be looking at SEC registration. They are going to be registering with their state and the states have a wildly different standards for what they expect of you to remain compliant. The minimum thing that you have to do, no matter which state you get registered in, is you have to pass the FINRA series 65 test. I'm not gonna lie. It's not easy. A lot of what's on it is content that is not covered in the AFC®course of study or a financial coaching course of study. So what would be new material for a lot of people, maybe not foreign, but it really gets into the details. And it's not an easy test to pass. There are a lot of self study courses out there. The Series 65 is for those of us who are independent and do not sell anybody's products, we simply are in the business of giving advice.

Mary Bell Carlson:

Andrea, is that true too, iff you are only, say only an investment advisor. So if you have a fiduciary obligation, do you still have to pass the FINRA, or is it more on the RAA side?

Andrea Clark:

Well, to be registered with the state and have an RIA, you have to pass the test as a minimum. If you already hold the CFP™designation that can be substituted for the series 65. And then once you've passed that test to be registered with your state, you do have to create an RIA a Registered Investment Advisory firm. And then you, as the individual, are registered under that firm as the investment advisor. It doesn't at any point mean you have to sell any products. So if you want to be sure that someone you're working with as a consumer is a fiduciary and a fee only, you want to look for that series 65. That means that they are not working under a broker dealer or an insurance company or something to that effect. And getting registered can be a little bit tricky as Adrienne knows in the state of Washington. So, I registered first in the state of Kansas and you register in the state that you have your main business presence in. So I was living in Kansas, got registered in Kansas. It was a pretty long process. It took me about two and a half months, and it was upwards of 80 pages of documentation. I had to create, to give them a picture of who I was and what my business was going to do for people. But it happened without too much trauma. We then moved to Arizona. So now my business sits in Arizona and I needed to be registered here. And it was the wild wild west here. It took about two weeks. The securities office called me after I submitted my three or four pages of documentation that they required. They walked me through some of the wording and things that I needed to change. And the next week I got my authorization in the mail that I was ready to go in the state of Arizona. So it can just be very different from state to state. Adrienne lives in the mother of them all, the state of Washington. I'm going to let her talk about that a little bit.

Adrienne Ross:

Our experiences, I think really highlight the differences that the state you live in makes. So as Andrea went through her registration process, I was going through my registration process and I actually started the work in February and didn't get registered until August. So it was definitely a long kind of involved back and forth process that I had to learn my way through. And I think that Washington is a good example of why people really need to check in with their state and understand that this whole conversation around who has to register is really evolving. So some states have expanded their definition of who has to register, and use things like'any like terms.' So for example, I can give you part of Washington's code and they say basically that anyone who's not a federal covered advisor has to register if they hold out as a financial planner, investment counselor'or other similar term as may be specified in rules, adopted by the director.' So they're giving themselves a big giant door way where they can just capture any kind of combination of terms, which should give people pause to stop and think for a second. Right? So it's not just investment advice, that's the standard for registration in Washington. It's what are you holding yourself out as, and what do the clients think that you're doing? So in another part of the code specifically talks out any combination of terms that imply to the general public, that you are giving investment advice or financial planning services. And I think that's another really important distinction there too is because now they're wrapping in financial planning services and try to draw a hard, fast line between financial planning and financial counseling. There's so much overlap, right? You can't distinguish the two. So it really does come down to your state and what your state has constructed in their rules and regulations for definitions of things. And really the bottom line is you're really just safer to register.

Mary Bell Carlson:

And let me ask a distinction too. You both mentioned that you need to register in the state, you do primary business, but can it also be dependent on where your clients are as well? So for example, Texas and Louisiana, or other states that require a specific number of clients, what are your thoughts on that?

Andrea Clark:

I'm currently registered in Arizona, Kansas, Texas. And I'm about to have to register in Virginia because once you reach five clients in a state, then you need to do what they call notice filing. So it is not the same kind of process as that initial registration in your home state, but you do have to make that other state aware that you have passed that threshold of clients in their state, and Texas, like you mentioned, is a one and done. So once you have a single client in the state of Texas, you do have to notice file there, fill out their paperwork, and of course pay the fees. And so Texas is like that. And I think what's tricky for those of us who come from a military background who have clients who are associated with the military, it's important to know where your client claims their state residency. I'm finding this on two different spectrums with military families who I work with. A lot of them claim Texas because of that, no state income tax. So there's that. But then also I work with a lot of snowbirds being in Arizona and they go back and forth. They have a residence in two states and it's very likely that they could claim a different state for their main state of residency. And that is where you need to be aware of the filing requirements when you reach that threshold of going on client number six.

Adrienne Ross:

I would add that it's really important as you bring on new clients, if they're outside of your state, and it's the first time you have a new client outside of your state, that you just need to check in with that state to make sure that you understand what their diminimus is. Is it one like Texas, or is it five? Five is the most common, but you know, there are those exceptions out there. So it's just, again, you have to go back to the state and, and check in with them to see what their requirements are.

Andrea Clark:

The states don't want to be bad guys. One of the problems the states have is that the way it's always been done in the past was on a commission-based platform. And now we have all of these financial professionals operating in this fee-only space where the only compensation they're receiving is directly from the client. It's not based on a regulated product anymore, and a commission that you might receive. So the states are trying to figure out their own workload in how they have oversight on all these different compensation models now and how they're going to deal with all these new service models. And they're seeing this rise of the fee-only coach and counselor and financial planner who doesn't manage any assets. So it's making it tricky for the state and they really are there to support you in your business and protect the consumer. They, they really have everyone's best interests in mind. It's always worth making a call. At one point I had to call the state of Kentucky about some questions I had and for the most part, maybe not state of Washington, but every state I've ever talked to the people are so happy to get the phone call and have the conversation because they really just want to keep everything on an even keel and make sure it's going along in a way that protects the consumer and helps you as the business owner to do things the right way.

Rebecca Wiggins:

That's really helpful. And I appreciate all of the information you guys are providing in this, because I think as you said, there's so much nuance to it. And it might take a little bit of legwork, but it is so important. And I appreciate you making those distinctions for our professionals. I want to shift gears just a bit and talk a little bit about building your private practices, because this is such a growing area of interest for AFCPE®professionals in particular. And so I'm just curious what you've learned along the way that maybe you wish you had known when you were getting started, that might help somebody else on their journey.

Adrienne Ross:

I wish there was a manual for registration and compliance. I wish there was a book that steps you through at all. I definitely wish that there had been more resources and guidance for that process because I had no idea what I was, what I needed to do. I didn't know all the documentation, all the processes, the procedures, any of it. And so it really was learning my way through all of it. And like I said, it took from February to August. So that whole time I was just researching and talking to people and trying to figure out how to be compliant with what was required for Washington. So I would wish for a document that stepped me through that process.

Andrea Clark:

Yeah, same here. It was just such a mystery how to even get started. And I know Adrienne, maybe that's something we need to do start working on that document. Actually Adrienne and I both chose to go the route of joining the XY Planning Network who does have a whole compliance department that helps you get the ball rolling and do that initial registration with templates for the documentation you need. It doesn't mean that that fit our business even through the first year, but they helped us take that first step in getting registered and knowing what it meant to be compliant. The big thing is that ADV, that is the document you have to file with your state, that you upload through the FINRA from Gateway Portal. You'll become very familiar with that if you go the route of registering with your state.

Adrienne Ross:

Other things that I wish I'd known when I first got started. I would have gone and taken the Series 65 sooner before I waited until I was close to finishing the CFP™designation, because I thought that I needed to, but you don't. So you can take the series 65 without having the CFP™designation. I don't know why I thought I couldn't, but that was my impression. And so I took that. And once you take that, then you can start working on building your business, even if you're not fully ready to launch, or even if you haven't completed, you know, all the designations that you're pursuing. But it's good to get started because it does take a little while to learn everything that you need to do.

Andrea Clark:

I was talking to Jen Hemphill, who is also another AFC®who has started her own private practice. And I thought she said something really wise to me. It was about a year or two ago. She said, you start out and it's like this giant funnel. And there's all the things that you don't know when you feel like you're drowning in it, but over time- and she said about five years, I think Adrienne and I would both agree with her- it's going to take about five years before I feel like I have narrowed everything down and found the niche for my business. And you do just have to go through a process of being overwhelmed of having to learn all the things. And it's not, you, you're not doing anything wrong. It's just a natural part of this process of figuring out your own path through this financial services industry and how you want to work with people to live their best financial lives.

Mary Bell Carlson:

Yeah. And there's definitely networks out there that can help you. There's groups within AFCPE®s like yourselves with private practice experience that could help guide you through. I definitely think it's important to find your own niche, but I definitely want others to know that there are people out there to help and groups completely set up like XY Planning that you mentioned before is completely set up to help you register. So it's kind of got the manual and they can coach you through and help guide you as you go through these various stages in your business.

Andrea Clark:

Yeah. Don't reinvent the wheel, reach out to those organizations that are already out there doing some of this work.

Adrienne Ross:

Absolutely. And if you find yourself, if you wake up one day and you find yourself in a state that is very strict and has lots of nuanced regulations and rules, you can actually hire somebody who's specific to your state to be a compliance consultant. Sometimes it's the best choice, right? And again, it comes down to your state. Andrea had an easy time registering in Arizona. I will admit that I was kind of jealous many times along the way.

Mary Bell Carlson:

Well, Adrienne and I think you live in a state too, that has shown, I think sometimes people get under the false assumption that the states are not going to look at them or their small business, because they're so small that why would they even look at them? But you live in a state that historically has looked very carefully at financial coaches, at financial counselors and other professions outside of even financial planning and has very much regulated them or find them or other things. So I think you make a great point surrounding that.

Adrienne Ross:

Even just recently in July, there was another incident where the securities division for Washington has brought a case against an unregistered investment advisor because they were holding out as what they considered a financial advisor or planner, and they weren't registered with the state. And we don't know yet what the outcome of that case will be, but they are going to impose an administrative fine and the costs of all the investigation that is going into it. So I'm afraid that that person is going to end up with a pretty hefty bill at the very least, and could have some potential criminal charges at the worst. Right? So it's a very, very real thing. And to, you know, try to just comfort yourself with this, the state won't look, that's not the case. They might be slow. They might not come looking for a while. They might not hear about you for, you know, a number of years, but then, you know, the risk is that you've got years worth of evidence that is out there about you operating illegally. So really your best course of action is just, just to understand the rules in your state and follow them.

Mary Bell Carlson:

And that leads us to our closing segment. At the end of each interview, we like to get our guests two cents biggest takeaways for our listeners. And Andrea, let's start with you on this. If you had one piece of advice to offer other financial professionals, what would it be?

Andrea Clark:

I would say that it would be clearly defining what you can and cannot offer your clients based on your state registration status. Because what we really want to do is offer clarity to our clients and help them find the right professional resources at the right time. And many people need counselors and coaches, and they also get to a point where they need something a little more than that when it comes to investing their money and growing it for the future. So it's just clearly defining that to help both you as the business owner, but also to help the clients that you want to serve know what they can expect from you and to help them find what they might need if it's something else.

Mary Bell Carlson:

Adrienne, if you had one piece of advice, what would yours be?

Speaker 3:

So I would say, do the work, you know, we ask our clients to do a lot of really hard work when they come to work with us and be mindful about their money and start planning and start adjusting. Maybe some of those habits that they've had, we're asking them to do with really, to do a lot of really hard work. And so for us, as you know, financial counselors, as financial planners, as financial coaches, I think we have to be equally willing to do the work ourselves. And in the case of having your own business, it means doing the hard work of building it the right way so that you really can help all those people that you want to reach.

Mary Bell Carlson:

Great. This has been really informative and I know that our listeners will benefit from it, and we hope that more people will come into the profession and continue to give great advice and also know what they need to do. And I think both of you from your experience and the time and the things you shared with us a day will help others build their practices out from the start. Thank you so much for being on the show today.

Adrienne Ross:

Thanks for having us.

Rebecca Wiggins:

Mary, what a great conversation today. I feel like we could have talked with them for a lot longer because there are so many nuances to this conversation and something that's really starting to come up more within our profession. And I just, I think it's important to mention that AFCPE®does not register financial counselors or coaches with the states on this registration issue, but we do recommend that you utilize a network like XYPN or Garrett Financial Planning to help you get registered and maintain your compliance requirements within the state that you reside. And I also want to note that having the AFC®does not allow you to not register or take the FINRA exam. As Andrea mentioned, it gives you the skills and credentials, of course, that you need to have the education and the information in order to see and work with clients, but you will need to continue on and make sure that you're meeting those compliance requirements in your state and the states where your clients are. So please check our show notes today. We're going to include a lot of resources and information, and we are planning on having many more discussions on this topic to help you on this journey. But this is just a really important topic. And we want to make sure that you, you feel supported and understand all of the intricacies of this compliance issue.

Mary Bell Carlson:

Absolutely. And I think they really encapsulated that and they both talked about how really, when you're an entrepreneur and you're starting your own business, it can be a very lonely road and you're not sure who to ask or who to go to or what to do. And I think that's the importance of joining a network or getting together and connected with like-minded individuals. But it's also super important that your like-minded individuals are leading you in the right path. And with that, you want to make sure that they understand and know, and that you understand and know, those requirements because we're really not trying to stop anyone from starting private practice. We're just trying to warn you of some of the key aspects and things you'll need to know before starting that. And I think one of the things that really stuck out to me is they had mentioned that you need to register before you get started, rather than start and figure it out later. And it was Adrienne that had mentioned a couple of issues in her state of financial planners that had started giving advice and then found out later that they weren't registered and they didn't meet their requirements. So what we're trying to say is, know this upfront, before you ever get started, and that way, you can avoid the scrutiny or the possibility of some consequence if you are already seeing clients. So start early in that business setup and not wait until you've already got a plethora of clients that you're having to kind of play catch up on. And potentially there could be some severe consequence of doing that ahead of time.

Rebecca Wiggins:

Yeah. And if you have questions or struggles, you know, there's certainly a lot of people who are doing this work like Adrienne and Andrea. So don't hesitate to reach out to us. We will put their information of course, in the show notes as well. So there's a lot of resources and individuals who can be helpful to you on this journey as well. And we hope that you'll take full advantage of that.

Outro:

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