(gentle tones) - [Announcer] Envista is pleased to support Working Capital.

Switch to empowered, switch to Envista.

Learn more at envistacu.com.

- [Narrator] GO Topeka's Entrepreneurial and Minority Business Development is proud to support Working Capital.

We share the vision to assist local entrepreneurs with growing their business.

- [Announcer] Additional funding is provided by the Friends of KTWU.

- Good evening, and welcome to another episode of Working Capital.

On this show, we introduce you to people and take you to places that promote the entrepreneurial spirit.

In today's show, we visit with some entrepreneurs in the financial services sector, and although we've had bankers, venture capitalists and other business investors on the show, today is the first time talking with entrepreneurs who help individuals to grow their personal wealth.

We'll find out how these entrepreneurs got into the business of advising you about wealth creation.

Stay with us.

It's all about business, and this is Working Capital.

(upbeat music) Hello there, and welcome to Working Capital.

I'm Eugene Williams, your host.

As we all hopefully live a much longer and fruitful life, we're finding that there is a definite cost to long life.

How you manage your earnings and your expenditures will probably make a big difference in how you live your later life, but your earnings and your expenses also make a big difference to you now.

As the laws change and you've progressed through the life cycle, you may find that a little financial counseling and a little advice along the way can be very helpful to you.

Clayton Wealth Partners is our guest today.

Let's take a look.

(upbeat music) I'm sure most of you watching have wondered about the interesting aspects of financial planning.

Clayton Wealth Partners is Topeka's oldest fee-only financial planning and investment management firm, and we are happy to have the founders on the show today.

Welcome Debra, welcome Randy.

You know, before I get too deep into the interview, I want to remind Randy of something that he may not even recall.

When we were talking about doing this show over six, well, I'm gonna say seven or eight years ago because we're in our sixth season now.

You were one of the people that I brought in and we sat in the conference room and we talked about entrepreneurship and everything, and how I was thinking about doing a show like this.

Do you remember that?

- I do remember that, actually.

- That was kind of a fun conversation.

And so you're kind of one of the founding members of this show as well.

Let's talk about you two.

As entrepreneurs, as a husband and wife team owning your business and stuff, tell me about how you kind of got started.

Tell me about you two.

- The financial planning business 40 years ago was a lot different than it is today in some ways, and I'll tell you how it's similar a little bit later, but 40 years ago, 45 years ago, it really was just a method to sell stuff, to sell mutual funds, to sell life insurance, to sell all that stuff you get these free mailers all the time now, and it wasn't really a profession.

It developed into a profession with you need a college degree and you really should have a certified financial planning designation, but that took time.

What led us and led me in that direction and Debra later joined was when it's this, when it's a pure sale profession, every day you gotta wake up and figure out who you're gonna sell something to.

In some ways that's not a profession like a lawyer or a doctor or something like that.

So early on, we knew that education was important so we needed to get the CFP designation, and also early on, it became apparent that one, I'm not a very good salesman.

Two, if you're on the other end of this, if you're the client, well, you don't want to be sold something and you don't want, you don't need this annuity, you don't need this life insurance, all the other stuff.

It's really give me advice.

Tell me how I'm gonna reach that goal.

So very early on, we made the decision to become fee-only, which, what does that mean?

It means we don't make commissions.

We don't have insurance licenses.

We don't have securities licenses.

What we sell is we manage assets and some time.

- Wow.

- And it was a lot of work to get those licenses to begin with because that was the norm.

That was the standard at that point in time.

Everyone had those kinds of FINRA licenses so you could sell mutual funds and get the commissions, or you could sell other things and get the commission.

So once we decided to go fee-only, those had to be taken off the table.

That source of income, gone.

- I was one of the first CFPs in the country, at least in the first hundred, and we assumed that when we went fee-only that it was just a matter of time that the rest of the industry would go in that direction also, because it's a better model for individuals.

What surprises me even today, that there aren't other firms like us.

There are, but the vast majority is still, you're getting your free dinner invitations and you're getting this and that.

I assume it was just because it's hard to give up the commissions, the hunt.

- I did not expect this answer.

I expected this really big bold, you know, hey, I had this great vision, this is wonderful thing.

- Well, it was bold and it was a vision.

It was just doing business, a very traditional business.

Brokers have been around for hundreds of years, but this is a different way of doing it that I guess is relatively bold.

We didn't feel like it at the time per se, 'cause we kind of worked our way into it, like ooh, this could be scary.

- How long have you guys been in business now?

- It's an interesting question.

We've been incorporated over 30 years, but really started about 40 years ago.

- I want to dig into a whole bunch of stuff.

Now you got me really thinking, Randy.

Let me go to break real quick, okay?

It's time for a break.

Stay with us as we learn more about the business of financial planning.

We'll be right back.

This is Working Capital.

Welcome back.

Debra and Randy Clayton are the founders of Clayton Wealth Partners and are here with us today.

So Randy, you've already given me a huge surprise with your first couple of answers that I asked, so let's talk about how Debra got involved in Clayton Wealth Partners, how you got involved in the firm.

- Well, it was a more multifaceted step process than what Randy went through.

I was an English teacher for seven years here in Topeka, and there's a lot of really great teachers out there.

I think I was maybe, okay/good.

It just wasn't a good fit for me personally, so I was looking at all the types of alternatives that there would be for me, and I was really interested in the financial planning.

I knew it was a new business, a new profession.

I had a father who was particularly interested in that, but he was working with farmers.

So I started researching it a little bit more, decided I was gonna have to have an English degree.

I really didn't have very much in the way of economics and all the other core courses that you would expect, so I went back to Washburn and picked up classes and met Randy, and he offered for me to work part-time in the office because I was particularly interested in the investing piece of what was going on.

That's really where I started, was on the investing piece.

And so the English teacher turned to business, and there we go.

I was a little later getting my CFP than he was, but we both have our CFPs.

- Her dad was a CFP and her brother is a CFP.

- And we have a son who's a CFP.

- There is some genetic, something in the water.

- Now you told me during the break, you said that Randy was the number 76.

- Don't quote her on that, in the top hundred.

- As a profession, as it begins to materialize and everything, you were one of the early visionaries, I'll say, that began to see what the possibilities might be.

- Yeah, I would never call myself a visionary, but I appreciate the thought.

It's really more, if I was my client, what would I expect of me, what would I want of me?

And that's always sort of guided us and directed us, what's best for the client.

Hypothetically, 40 years ago, the average commission rate on something was eight and a half percent, so imagine every dollar you invested, eight and a half percent came off and went to a broker or a financial planner or something like that.

Today in our office, it's seven tenths of a percent, but that's much better for the client.

It's much cheaper for the client, does that make sense?

The more the client makes in theory, the more you'll make.

I appreciate the visionary thing, but it really is where's the marketplace headed.

- [Debra] Where should it be headed?

- Where should it be headed?

- Do you guys consider yourself a family business?

What are your thoughts on that?

- I don't think so.

- We are founders and partners, and it's one where the dividing line isn't as clear as perhaps it is for other people.

We go home and we may still be talking about what happened that day, but the way we're structured in our physical office makes that possible that I focus on the investments and that end of the office, that space was mine.

He focused on the financial planning and he had staff that worked directly with him.

So at the end of the day we could very easily say, who did you see today, what did you do today?

Because there was enough of each of us doing our own thing.

- Enough division there.

- Yeah, enough division that we were comfortable with each other in the same office.

- Okay, that's nice to hear.

- And our offices were pretty far apart too, so that was helpful.

- Not originally.

- You said earlier, we've got about 30 seconds in this segment left, but you said earlier that you guys employ about 20% of the CFPs that are in this area.

Tell me about that and why that's so important.

- Well one, CFP means you've passed the test.

It is a basic level of knowledge.

Two, as you can tell by my white hair, I'm getting older and Debra's sorta getting older.

We needed another, more generations of people.

The biggest mistake entrepreneurs make is try to do it all themselves.

One of the best decisions we ever made was hiring smart people, hiring them early, versus you burn out.

That could be another segment another time.

- We still have plenty of time in the show, so we'll delve into that a little bit more.

I'm gonna go to another break, okay?

It's time for another short break.

When we return, we'll talk more with Debra and Randy about the business of wealth creation.

You're watching Working Capital.

Welcome back.

We are learning about the business of financial planning.

Let's talk about what it takes to start an enterprise like this, and I know earlier you were saying that years and years and years ago, as a profession, it was just kind of materializing and stuff.

But it has to be a lot to get something like this going and to keep it going.

- If I was gonna advise other entrepreneurs, the first thing I'd tell them is you've got to live way, way, way below your means, because it's not like there's a steady paycheck and it's not like you're gonna get this every month and federal and state taxes are gonna be withheld.

So you have to have a very, sounds terrible, a pretty low standard of living because your income's not gonna be consistent.

It's gonna be variable.

That's probably the biggest cause of entrepreneurial failures, is being undercapitalized of some sort.

Now for the record, we never borrowed a dime in this business.

- Oh, nice to hear.

- If we needed to make payroll and we didn't have the money, it came out of our pocket.

- What are some of the things that your customers are most interested in receiving from you from a service perspective?

- First, our customers tend to be better educated than the general population because they looked for us, they found us somewhere because we're not doing direct mail and all that stuff.

They're normally looking for a fee-only advisor, but most of the world doesn't know the difference.

Oh, I want a fee-based advisor.

Well, that's not quite the same, or I want this or that.

So our customers tend to be a little better educated on finances than the general population.

- And when they came to us, they were generally professionals.

In some cases, their company was offering a buyout and they wanted to know if they could take it, would the money, if they took it, last the rest of their lives, and that's a big question, especially if you're in your fifties and this may be the last piece of money you ever earn.

So those were the kinds of questions that the professional people were bringing in.

We have worked more with individuals than we have with small businesses, but they have a different set of issues.

Our focus has really been more on individuals.

- The firm today has 12, 15 institutional clients.

They're not foundations, they're not for profits, because they have boards.

Investment committees tend to know where to look to find the right advisor, but most of ours are individuals.

- This is not a real, I'm gonna say that this is probably not a business for the faint of heart.

I mean, you've got to know a lot of stuff in order to advise individuals and corporate entities.

- That's why, besides having CFPs, we have a lawyer.

We have a CFA, which is the highest investment management designation you can get, 'cause one person can't do it all.

In this business, you can't be a Jack of all trades, or at least you can't be good at all trades for the same reason.

That's why we separated investment from the financial planning advice or why we separated the institutional investing from the financial planning advice.

It's just cleaner.

- Is that the major challenge that you face, not being able to be, you know?

- Initially, you want to be in on every client appointment, you want to meet everybody.

You want to be closely involved with the decisions that they're gonna be making, because once people become clients, they may call us for, should I buy a new car or should I lease, should I get a mortgage or refinance?

It's a myriad of questions, and they are welcomed to call us for any of those kinds of questions.

So yeah, there is an expectation that you're gonna be very knowledgeable about a lot of things.

- Yeah, they expect you to be their dentist, they expect you to be their optometrist, all of those things.

- And to be the hand-holder when the market may be giving them some sleepless nights.

- We're gonna talk about all that stuff as we kind of go forward.

It's time for another short break, but there's a lot more to come.

We'll be right back.

Welcome back.

We have the founders of Clayton Wealth Partners with us, and we are talking about financial planning and wealth creation as a business.

There is so much stuff that we could talk about, but for those folks that are out there, let's talk about competition in your industry, because I'm sure that there are a lot of folks who are receiving all kinds of things in the mail and so forth and so on.

How do you compete?

What do you do?

- Well, one, we don't do a lot of things in the mail.

We don't do any direct mail.

You always hear me say the free dinners because I store those at home when they come in.

- Sometimes clients bring them to us and say, have you seen this one?

Occasionally they'll say I went to that one just to get the dinner, but here's the information they provided.

- We don't really think that much about competition.

We go to national events of fee-only advisors, and we sort of know where the trends are, but who's got the latest radio show or TV show or something, that really isn't, which is kind of nice 'cause we don't have to do that.

Ours is word of mouth referrals.

- There's referrals, but we are also very intentional about being involved in the community and supporting many local business, nonprofits, the things that are going on in the community, 'cause that is important to us.

- I'm glad you said that, because as individuals and as a couple, we hear your names a lot.

- Hopefully it's good.

- It is, it is, and it's always good, with the things that you do in the community.

Why do you do that in your business?

- It's always been I think something that we're both pretty passionate about.

When we moved our office space to a building downtown, 700 block, and renovated that old building, it was meaningful to downtown because there wasn't a lot of that going on at that point in time.

We thought it was important.

We wanted downtown to thrive, so that kind of started it at that point.

We'd always been involved in smaller scale things, but that brought exposure and a level of commitment that we were willing to take on.

- Is that something that you think all entrepreneurs, all business owners should have a sense of, community?

- I think they really should.

Now I will say that if you're just starting your business, that's harder to have that time to be on a board, to help do a gala or to help do other kind of big events, but I think it's very important and I think it does show who you are and what you value.

- If I look at the longest contributors to KTWU, there are a large number of small businesses that have been doing it for 20, 30 years.

You'll see the big corporations, but that shows that they're committed to this community and to the viewing area.

- In order to stay in business, just in general, very quickly, what are some of the things that you have to do in order to maintain your status in the business community?

How do you do that?

What do you do?

- I've probably said this many times, you hire very bright people, people smarter than you.

That's one thing.

Two, you do have to know where trends are going.

You have to figure that out and be committed in that particular direction.

I said one and two, so I'll let Debra come up with number three.

- I think the third is, especially in our businesses, it's probably that way across the board, but the building of relationships, because relationships are foundational to everything, especially when you're in situations where people are really telling you some things that they had no intentions of really telling you, but it helps us in terms of determining their future goals and how well they're gonna meet them.

You have to be trusted and you have to respect that information that they're giving you and that you respect their trust.

I think that relationship building is very important.

If you're in the retail business and someone comes in and buys something from you, perhaps that's a matter of loyalty that you're trying to build there, but we go to a deeper level.

I think having that trust is one of the things that we're most honored with.

There's a lot of people that have trusted us.

- That's a good note to end this interview on.

I really appreciate you guys coming in and talking with me.

This has been good.

- It was nice to see you again.

- Well, that's our show for now.

I'd like to thank Debra and Randy Clayton for being on today's show.

I'd also like to thank you for watching.

I've enjoyed today and I hope you have too, and as always, if you know of a unique business or unique management technique, we want to hear from you, so give us a call and drop us an email.

We look forward to seeing you next time.

It's all about business, and you've been watching Working Capital.

(upbeat music) - [Announcer] Envista is pleased to support Working Capital.

Switch to empowered, switch to Envista.

Learn more at envistacu.com.

- [Narrator] GO Topeka's Entrepreneurial and Minority Business Development is proud to support Working Capital.

We share the vision to assist local entrepreneurs with growing their business.

- [Announcer] Additional funding is provided by The Friends of KTWU.