by Carly Schulaka
Who: Dan Candura, CFP®
What: CFP® practitioner, renowned ethics trainer
What’s on his mind: “My advice for [sole practitioners] is to make sure that they look for opportunities to collaborate. Don’t isolate yourselves. Go to conferences. Join study groups. Make sure to recognize your own limits and not be afraid to involve others in helping your clients.”
Podcast: Listen to our podcast with Candura at FPAJournal.org
For years, Dan Candura, CFP®, has been the planning profession’s go-to ethics trainer. In late 2014, Candura found himself in his own ethical dilemma: diagnosed with stage 4 cancer, he faced the tough decision of whether to tell clients and prospects about his health condition. He used the CFP Board’s Code of Ethics principle of fairness to guide his decision.
“For me, fairness means treating other people the way you’d want to be treated,” Candura said. “I knew that I would want to know, before starting a relationship with someone, whether they had a serious health condition that might impact the relationship at some point. So I decided I needed to tell them.”
Those conversations were by no means easy, but Candura would soon face a tougher challenge—creating a meaningful succession plan. In some ways, that has been more difficult than the cancer treatment, particularly as a sole practitioner, according to Candura.
A former schoolteacher who has been a planner since 1982 and a CFP® professional since 1987, Candura has found success as a sole practitioner. And it is arguably his success as a planner combined with the skills and passion for relating learning concepts to everyday experiences that makes Candura’s ethics trainings so well received.
The Journal recently spoke with Candura about what he learned as a career-changer, his advice for sole practitioners, and his hope for the future of the profession: that one day a wider array of people across the United States benefit from the services of a financial planner.
1. As a former schoolteacher, how did your experience outside the financial planning profession help you succeed as a planner?
Being a schoolteacher was great preparation for a number of different reasons. Both positions involve a great deal of trust. People entrust their children to you as a schoolteacher to treat them well and help them learn and so forth. And when I started doing financial planning, people trusted their financial futures to me, so trust is an important part of both careers.
I think teachers make good financial planners because they communicate complex ideas in simple ways. Teachers need to be self-directed. As a financial adviser, you need to be self-directed, too. You need to manage your time. You need to figure out how you’re going to do things, when you’re going to do them, how to introduce them, and how much time to spend on them—that’s all very self-directed, and that’s a very important trait for being a successful financial adviser.
There is more: as a schoolteacher you have to place the interests of your students ahead of your own. As a financial adviser, you need to place the interests of your clients first. And both careers involve the sincere desire to help people be better in the future.
2. You have built and maintained a successful practice as a solo planner. What advice do you have for other solo practitioners, or those aspiring to become one?
It can be rewarding, without a doubt, because you’re in control of everything yourself, but it can also be very lonely.
There’s a great book called The Wisdom of Teams [ by Jon R. Katzenbach and Douglas K. Smith] that talks about the benefits of collaborating with other people and getting other points of view. Unfortunately, as a solo practitioner, you can lose sight of that. You don’t have the advantage of being able to bounce things around to other people. Sometimes as a solo practitioner you don’t know what you don’t know.
You’re not seeing where your weaknesses lie, or where there may be errors, or where you may be approaching a problem from the wrong direction. And therefore, you may tend to continue doing things in a way that isn’t the most efficient or the most effective. But, if you work with a group, folks tend to collaborate and say well, wait a minute, I did it this way, and it was faster—that sort of thing.
So my advice for people is to make sure that they look for opportunities to collaborate. Don’t isolate yourselves. Go to conferences. Join study groups. Make sure to recognize your own limits and not be afraid to involve others in helping your clients.
3. You’ve been a CFP® practitioner since 1987. How has the profession changed since then, and where would you like to see it in another five or 10 years?
Even before I became a CFP® professional, I was practicing financial planning. The organization that recruited me was at the forefront of providing clients with the benefits of a multidisciplinary approach—an approach that involved multiple investment options as well as looking at their protection needs, cash flow, and helping people accomplish their goals.
Back in the early ’80s, financial planning was very much in its infancy. It was a concept that really needed a great deal of explanation to people. That has changed. People are much more accepting of financial planning now as a real discipline and not just a sales strategy.
Today there’s more research on it; it’s much more accepted academically; there are even degree programs in financial planning—none of which existed when I started.
When I think about the future, I wonder how we get to be a true profession if we only serve wealthy people. We need to be serving more Americans than just the people at the top of the income spectrum, that top 2 percent or 5 percent of people who have the wealth to hire us and product needs for us to implement. I’d like to see the financial planning profession move so that a wider array of people across the United States benefit from the services of a financial planner.
4. Through your planning firm, PennyTree Advisers, you provide forensic services. Tell us more about this service and how it benefits clients.
There are a couple of different client groups it benefits. I don’t get a lot of calls from individual clients for forensic services, but on those occasions, it’s usually somebody wanting to get a second opinion. It’s like you or I might go to a second physician and ask her to take a look at your test results and see if she recommends the same treatment.
I’ve done more forensic work for attorneys who are either representing a client who has a question about the advice they received from an adviser, or an attorney for an adviser who’s being challenged on the advice given to a client. I’ve been involved in trying to identify whether the advice the person received was appropriate and of sufficient quality to be followed and implemented.
The forensic side of the business is relatively small. It involves reconstructing what was available at the time, tracing out the information that was provided by both parties, and then identifying what quality of advice was delivered to the client in that situation.
It’s always easier to look back and say, well, knowing what happened in 2008, who would have done that? But you have to go back and review what the situation was in say 2006. What information did people have? What were the goals that were stated? It can be fascinating work to study it and decide, based on what was going on at the time, it made sense. Perhaps it didn’t turn out the way the client wanted it to, but often, we can’t control that. Sometimes you find it was appropriate; and sometimes not.
5. You also provide educational seminars to the workplace market. How did you get into the workplace market, and what advice do you have for other planners looking to do the same?
I started working in the workplace market with IDS. One of the initiatives on the corporate level was to provide financial planning in a workplace environment. They needed experienced planners who had strong presentation skills to go out and do seminars for employee groups across the country. At the time, the financial advisers worked on a compensation scheme that paid them only when they implemented products. They were asking us to leave our regular area, and present seminars for people, and never implement any of those client relationships.
They needed people who were willing to do this work without any chance of adding clients, soley for a speaking fee and expenses. I enjoy teaching, and my presentation skills were strong, so I was one of the advisers selected.
I formed PennyTree with the idea of focusing on providing workplace financial planning, because as we talked about earlier, one of my strong passions is that everyone can benefit from financial planning. But not everyone needs a finanical product. Not everyone can afford the hourly rate most advisers have to charge. Not everyone has financial issues that can be solved by buying an insurance policy or a mutual fund or an ETF or the kinds of products on which most of our compensation is based.
My belief is that employers, or groups of employers, or employee associations like unions could be the venue to deliver that service. They could hire unbiased, objective, Certified Financial PlannerTM professionals who know the employee issues, understand the benefit program, and would be available at no charge to talk to their employees.
That could help employees with issues that aren’t solved with products—things like debt management and cash flow and saving for college and managing a budget, and those kinds of things. Most workplace financial planning today focuses on 401(k) or 403(b) plans and is really around helping workers understand investment choices, not real financial planning concepts.
While there is workplace financial planning offered as an executive benefit, those men and women can afford to hire the very best financial planners in our profession. And they do. It’s the people who work on the loading dock, and the people who are in the manufacturing facilities who really need good, unbiased, honest advice but don’t know where to find it, or when they do find it, they often can’t afford it. So PennyTree was designed to do that.
Everybody who hears this story tells me this is a great idea and that it is certainly the way it ought to be. Unfortunately, it never gained traction because employers are struggling with the cost of employee benefits, particularly because of health care. Not enough employees are even aware of the benefits of financial planning to demand it in the workplace. It’s a concept whose time, I think, will come, but probably not through PennyTree.
6. You conduct virtual and live ethics trainings for planners all across the country. How do you help planning professionals meet their ethics requirements without boring them to death?
I take advantage of the fact that much of the training in the past has been so bad and boring that it’s easy to look good. At a recent program, the person introducting me actually said, “This is Dan. He’s not as bad as all those other guys.”
Some presenters forget that adult learners require a very different approach. For adults to learn, concepts must be relatable to their everyday experiences. It has to be something that they can internalize; otherwise we tune out and stop paying much attention. It also can’t be another PowerPoint deck crowded with words and sappy teamwork photos.
I seek to engage them with situations that they recognize. I think the advantage I have is my experience in a financial planning practice for many, many years combined with a strong understanding of CFP Boards’ Standards of Professional Conduct. I can bring those two together, particularly through the use of things like case studies.
Audiences enjoy looking at situations and analyzing what rules might apply and where the pitfalls are. Attention spans now tend to be relatively short; we must be able to interact, we need to make it interesting, we need to make it entertaining. I’ve done ethics training as a game show.
I use humor a lot. I try to get people to look at things from a different angle than they might normally. I started using interactive voting a couple of years ago. At an ethics presentation, people hesitate to speak out, because nobody wants to be the person with the incorrect ethical answer. People tend to do a lot of looking around to see which way the crowd is moving and then they tend to vote with the crowd. By using a system where they vote on their smartphones or tablets, they can vote completely anonymously and honestly. It’s not uncommon for the answer that most of the audience chooses to actually be the wrong answer.
7. What’s your take on the Department of Labor’s pending “redraft” of its fiduciary rule? As we await its release, what implications do you see for planners? What about for consumers?
Several different groups are looking at a fiduciary standard—the Department of Labor being one. They’re probably closest to coming out with something, but it’s hard to comment on it until we see exactly what the language is and what kind of guidance it provides. My guess is it’s going to take even longer to interpret it.
I don’t let it affect me very much, because as a CFP® professional, I have a definition of a fiduciary already.
I only do financial planning, and always as a fiduciary, which means I always act in utmost good faith in the best interest of my client. If you’re always acting in the best interest of your client, and you’re doing it the very best way you can, chances of running afoul of some bureaucratic regulation is probably pretty slim. And until it’s there, you really can’t deal with it.
The “F” word is so disconcerting for many in the profession. We spend a lot of time worrying about the effects on us and not worrying about the effects of not having a fiduciary standard for our clients. As a profession—and I think FPA has done a good job here—we need to take the lead and say clients deserve a fiduciary standard.
8. In all your experience delivering ethics training to planning professionals, is there a specific learning objective that seems particularly challenging for planners?
They’re all somewhat challenging, but where I see most advisers having difficulty is with what the implications are for doing the right thing for the client when that might mean stepping back from the relationship. That’s difficult, because we work so hard to build our client relationships and find prospective clients and convert them into clients. These become long-lasting and trusted relationships. We have a hard time recognizing when we aren’t the best person to continue to serve this client.
In situations like divorce, or when a client’s needs exceed our capabilities, or clients who don’t follow our advice but still want to continue the relationship, it’s very hard for advisers to see that maybe they need to let go.
If clients aren’t going to follow what we offer as our best advice, do we back up to our less-than-best advice? Should they be paying me for advice that they don’t take? We can blame some on ego and some as fear of change. Some of us believe that we are the only people who can do this at the level we do it. In reality, there are lots of very good advisers who can work with clients. It is so important that the right clients get with the right advisers.
9. With your cancer diagnosis in late 2014, you faced your own ethical dilemma concerning whether to inform your clients, and if so, which ones. How did you work through that?
Cancer changes the way you look at everything. It changes the way you look at yourself, changes the way you look at your family, your friends, your job, the work you do; it’s all pervasive.
For me, it meant first determining how best to fight the disease while acknowledging that the cancer had already spread. With stage 4 cancer, that makes the final outcome rather predictable. Even with radiation and other treatment, eventually the cancer will show up in other places. I don’t know when. I don’t know where. I don’t know how long it’ll take. I’ve got this uncertainty, but I know the end game.
As a CFP® professional, I place the interests of my clients ahead of my own. I first thought about new clients that I was in the process of bringing on at the time I received my diagnosis. Should I take on new clients? When they ask whether or not they can set up a first meeting, or a what a long-term relationship would look like, what do I say? I made a determination that it had to be their choice. People could decide on their own whether they wanted to work with me or continue to work with me, but only if they knew the facts.
If I tell new, prospective clients what the situation is and they still want to work with me and I’m still able to work, then everything’s fine. When I thought about that, I said, well now, I have all these existing clients who I am working with who didn’t know about this. How do I keep them in the dark? They should be given the same choice as other people.
The fourth principle in CFP Board’s Code of Ethics is “fairness,” and it governs all of the disclosure and conflict of interest rules. For me, fairness means treating other people the way you’d want to be treated. I knew that I would want to know, before starting a relationship with someone, whether they had a serious health condition that might impact the relationship at some point. So I decided I needed to tell them.
I told all my clients and I keep them informed about it. If I was not a CFP® professional, I’m not sure I would have reached the same conclusion.
This doesn’t mean that everyone would do that or for all conditions. I have cancer, but I also have diabetes. I’ve had diabetes for 15 years now. My diabetes doesn’t interfere with my practice the same way. I don’t inform clients about my diabetes unless my insulin pump starts singing during the middle of a meeting. Stage 4 cancer, on the other hand, is a very different thing. I know I manage my diabetes very well. I’m not sure if the cancer will be managed as effectively.
10. Also in late 2014, you shared with your clients that you were focusing on developing a meaningful succession plan. Many planners struggle to do this. Tell us about your succession planning process.
In some ways, this has been harder than the cancer treatment, particularly as a sole practitioner. Succession planning and continuity planning in general are very complicated things to do, and very emotion-laden tasks. A lot of different factors have to be considered. For me, the most important part was to make sure that my clients are well served; if anything happened, they were going to be taken care of. Unfortunately, a lot of the training around this focuses more on getting the right value for your practice and making sure you find the right buyer.
I’m finding it very, very difficult to find a single individual who can meet all of my clients’ needs and put together an agreement. I’ve done a number of meetings with potential people, and although I may feel good about them, they feel less good about the challenge of taking on my practice. There are capacity issues to start, and my compensation structure is very unique since I don’t work under an AUM structure.
I’m beginning to believe that the solution isn’t a single individual to take my practice, but maybe multiple individuals from whom my clients might choose. Maybe my real task is to identify people I endorse that my clients may select. When I’m ready to close up shop, I allow them to make the choice for themselves. This approach obviously fails to monetize the practice, but does the right thing for the client.
Carly Schulaka is editor of the Journal. Contact her HERE.
Attend Dan Candura’s ethics training for CFP® professionals during FPA’s Annual Conference—BE Boston, Sept. 26–28. Candura will deliver an ethics course on Monday, September 28. For more information on the BE Boston schedule, see pages 44–45 of this issue of the Journal or visit FPA-BE.org.