Practice Profile: Robert Zimberg of Financial Mountain, Inc.
By Bridget McCrea
Creating effective roadmaps
Robert Zimberg was just 16 years old when he completed his first stock trade. It didn’t take long for the youngster to get hooked on the feeling of making money in the financial markets, and soon he was trading stocks and covering calls on a regular basis.
“I started with Occidental Petroleum, and was covering calls every three months,” says Zimberg, president of Boulder, Coloradobased Financial Mountain, Inc. “The premiums were high, the stock never moved and I got a coupon every three months. It was a beautiful thing.”
Soon after, Zimberg tested the waters of the option market, which at the time was becoming more efficient, which wasn’t “anywhere near as rich” as the stock market was at the time. “You could get $3 for three months on whatever the next strike was on Occidental,” says Zimberg. “It produced pretty nice returns.”
While he was getting his feet wet in the stock market, Zimberg was also getting “real world” financial training at his job working for a liquor distributor. It was there that he started to learn the ropes of financial management from the company’s accountant. He also picked up and read a few books on financial planning, and decided on a career for himself.
“That’s how Financial Mountain was created,” says Zimberg, who partnered with the accountant to open his financial planning firm and in 1990 enrolled in and completed the CFP program. Zimberg started his company in 1987 and incorporated in 1991 as Financial Mountain Inc. He bought out his partner in 2004, although Pete Pittenger remains on Financial Mountain’s board.
While at a Charles Schwab national conference in 1994 Zimberg met a group of NAPFA board members and voiced his concerns over the time it took to become accepted as a NAPFA member (he had been waiting two years). “They were concerned, but I was accepted shortly after. This is no longer the case,” says Zimberg, who points out that “membership acceptance is now completed in a reasonable amount of time.”
Zimberg, who typically attends two to four NAPFA conferences annually, says the events have provided a wealth of information on running his practice and fueling his firm’s growth. “The willingness of NAPFA members to discuss the business process and tools is excellent,” he says. “Many members have specialties and are willing to share their knowledge. We greatly value the conferences and the conversations with other advisors.”
Since getting into financial planning, Zimberg has seen some significant changes in technology’s role in the process. “I remember doing spreadsheet planning on an Osborne computer, using VisiCalc and 5-1/4” floppy disks,” says Zimberg, laughing. Today, this NAPFA planner is maximizing the use of advanced technology at his 4-person firm, which is in the process of implementing a new customer relationship management (CRM) system.
“Our current CRM is outdated and unable to integrate with our portfolio management and financial planning software systems,” says Zimberg. “At the T3 conference in Dallas I looked at ProTracker, Junxture, Redtail, Salesforce and a few others.” From the time and money investment, Zimberg says he hopes to gain more process flow and an improved reminder system.
“Processes have gotten so much more complicated over the last 10 years,” Zimberg explains. “There used to be four steps to get a task completed, and now there are 20 or more.” Moving a small amount of money from one account to another for a single client, for example, requires multiple steps. “Our goal is to automate some or all of those processes with a CRM, and to gain significant efficiencies as a result.”
With his company is growth mode, Zimberg says improving processes has become particularly important. He credits the study group(The Gateway Group) that he founded with providing an added edge and additional knowledge to help the firm grow. The select group of 15 advisors meets twice a year (in May and October) to discuss the philosophies of Dr. Woody Brock and other notable speakers. “Nearly everyone in the group is a NAPFA member,” says Zimberg, who adds that the topic of focusat the upcoming meeting in May will be commercial real estate. “We focus on what’s going on in the environment, and how we can aid our clients in navigating those waters.”
With a stable of 120 clients, Financial Mountain caters to individuals and families that hail from a wide range of professions, lifestyles and socioeconomic backgrounds. Many new clients come to the firm with concerns about retirement, says Zimberg, which leads to discussions of the other areas of financial planning.
“We are comprehensive financial planners and for most new clients eventually complete and implement their comprehensive financial plan,” he explains. “We maximize the relationship with the client by being their personal Chief Financial Officer, and we strive to touch many areas of clients' lives beyond the normal financial planning engagements.”
We have added the new service of college aid and funding planning which is a much more in-depth method of analyzing a client’s situation to find funds to pay for their college expense. Robert Zimberg has enrolled in the CCPS (Certified College Planning Specialists) program through the NICCP (National Institute of Certified College Planners) to gain the skill, knowledge and tools to provide this service. We are finding that college funding is a major concern for our clients in this economic climate.
For example, the firm helps with the debt side of the balance sheet by analyzing debt and advising clients on how to achieve lower payments and work towards debt elimination, if necessary. It also works with mortgage lenders and banks to achieve those goals. “We aid in financing and consultation for large purchases for our clients, including assistance in buying vehicles,” says Zimberg. “Cars are a major purchase where many consumers pay too much because they don’t realize the power of a proper negotiation.”
With about $50 million under management, Financial Mountain’s primary investment vehicle is mutual funds. At times – and for a small number of clients – Zimberg uses some equities and options. Depending on the individual's needs, he will either purchase bonds directly or purchase mutual funds with the proper bond allocation.
“We are not buy-and-pray advisors. We’re dynamic and tactical asset allocators,” says Zimberg. “This process has benefitted our clients by having increased levels of cash and low-volatility assets during the current market decline.” To offset the downturn, Zimberg says his company lightened the risk in clients' portfolios both early last year and during the decline. He provides a market and economic analysis for our clients on a quarterly basis, and is “on the phone 12+ hours a day discussing our clients' concerns.”
Zimberg sees his high-touch approach to financial planning as a major competitive advantage for 2009 and beyond, namely because investors have become disenchanted with their current advisors and the stock market as a whole. Unlike many firms that are struggling right now, Financial Mountain is “growing faster than ever,” and on track to double in size (both in clients and assets under management) over the next 12 to 18 months.
“We’re excited about the potential growth of the business,” says Zimberg, who by 2014 sees himself living in Hawaii (where he already owns a second home) and working fewer hours than he is now. “That’s kind of the joke around here, but with the way our firm is growing, you never know if I’ll be spending a good part of my day on the beach just five years from now.”
SIDEBAR:
Financial Mountain, Inc., At a Glance
Location: Boulder, CO
Web site:
Year founded: 1987
Number of staff: 4
Number of clients: 120
Amount of money managed: $50 million
Description of typical clients: A wide range of professions, lifestyles and socioeconomic backgrounds.
Typical client needs: Comprehensive financial planning
- Favorite financial planning web site: ;
- Favorite non-financial planning web site: If only we had any time for non-work related web sites!
Piece of advice to fellow NAPFA members: “We feel that current NAPFA advisors need to focus on the things that separate us from every other advisor. Clients need to understand that we are fiduciaries and will put their interests above all else. Clients also need to understand that many advisors push funds that will pay them a good commission, not what is best for the client's situation. NAPFA members are a different breed, and it is important for clients and potential clients to see the difference.”
SIDEBAR
Filling the Void
The current investment climate has thrown many planners and their clients into tailspins, wondering where the best options are and how to take advantage of them. Through it all, Zimberg says his investment policies have “worked well,” namely because financial planning in general is “more important than ever for every American.”
“Even those individuals who have recently completed a financial plan will need to update because of the radical changes that have occurred in nearly everyone's financial situation,” says Zimberg, who points out that while financial plans may not look as rosy as they once did, they will now be an effective tool in teaching the clients to live within their means.
“A comprehensive financial plan provides a roadmap to the clients,” says Zimberg. He adds that his practice’s assets are down “much less than the typical planners,” and currently total less than one-third of the major indices. Still, he says margin compression is a major concern for his firm right now.
“Revenue has decreased and costs continue to rise,” says Zimberg. In an effort to counteract this trend, he’s set his sights on bringing in new clients, many of whom have been burned by big brokerage houses and static allocations.
“We feel that now is a good time to teach people about fee-only advisors and the benefits of active management,” Zimberg explains. “People are looking for a different relationship with their advisors, leaving the door open for high-touch, fee-only advisories that specialize in customer service.”