#FASuccess Ep 097: Transitioning From Financial Coach to Financial Planner Serving Underserved Communities With Phuong Luong

What You’ll Learn In This Podcast Episode

• The difference between wealth and income. [12:58]
• Why what she does for her clients is so helpful. [23:07]
• The reason she only does her meetings via video conference. [24:14]
• What Phuong does for clients across the income spectrum [26:58]
• The number one goal that she hears from her clients. [28:47]
• The three major categories of her business. [33:42]
• How Phuong distinguishes financial planning from financial coaching and counseling. [37:02]
• Phuong’s unique pathway into financial planning. [46:56]
• The racial challenges around wealth-building. [59:53]
• Where her clients come from. [1:09:47]
• How her technology tools give her more confidence to stick to her pricing. [1:17:50]
• What we can do to improve diversity in financial planning.  [1:28:28]

Resources Featured In This Episode:

Full Transcript:

Michael: Welcome, everyone. Welcome to the 97th episode of the "Financial Advisor Success" podcast. My guest on today's podcast is Phuong Luong. Phuong is the founder of Just Wealth, an independent RIA specifically focused on working with younger clients in their 20s, 30s, and 40s who are still in the wealth building phase of their careers, and with whom Phuong meets entirely virtually using video conferencing tools, even though most of her clients are actually in the Boston area where she's located as well. What's unique about Phuong, though, is not just her virtual practice, but that she comes from a background of doing financial coaching and counseling, and as a result, more than half her practice is working with clients who are below the median household income in Massachusetts, about $75,000 a year, for whom she charges an ongoing monthly retainer fee of 1.5% of their monthly income.

In this episode, we talk in depth about what it's like doing financial planning for lower and middle-income families. Why they really are willing to pay for financial planning advice despite being of limited means, how the focus typically is not actually on budgeting and household cash flow planning, but on building up their balance sheet instead, and why until those clients build up their personal balance sheet, it's necessary to understand the community balance sheet of local programs and resources to help.

We also talk about the progression from financial education to financial coaching to financial counseling to financial planning. The differences in each of those terms, not just in regards to the income or affluence of the clients being served, but the mindset of the educator or coach or counselor or advisor working with the client, and the appeal for someone with a financial coaching background like Phuong to come into the financial planning world in the first place.

And be certain to listen to the end, where Phuong talks about the challenging ways that stereotypes about race and low-income individuals can become blocking points to giving them effective advice. How many of the financial challenges of working with people of color in her community can be traced back to institutional and government policies from decades ago that still have lasting effects in the compounding of income and wealth inequality, which in turn may be both limiting the reach of financial planning to minority communities, and our ability as a profession to attract people of color to become financial planners in the first place.

And so with that introduction, I hope you enjoy this episode of the "Financial Advisor Success" podcast with Phuong Luong.

Welcome, Phuong Luong, to the "Financial Advisor Success" podcast.

Phuong: Michael, thank you so much for having me. I'm excited to be here.

Michael: I'm looking forward to this episode because you come to the podcast and this discussion I think from a very different perspective than a lot of other advisors. You know, we try to have a range of people on the podcast, different business models, different types, different stages of the business. You know, some that have been doing it for 10 and 20 and 30 years, and some that are still just a few years into their business. I know you come to this from the newer end, having just started a firm a year ago, but with a very different I think style and focus of who you're trying to work with and the background that you come to the industry with, which was in a world of coaching for non-profits for low-income families, which is not what a lot of financial advisors tend to start with as their pathway and entryway into the business. So I'm excited to talk about this journey and what it looks like for people that maybe come from a coaching world into an advisor world and working with different populations, and just how all of that is different.

So, as a starting point, why don't you just tell everyone about the advisory firm that you're building now? And, you know, you have this firm called Just Wealth. What does Just Wealth do and who do you do it for?

Phuong: So Just Wealth, it's a fee-only hourly financial planning practice. I work with low and moderate-income families and individuals. I also have two different models. So it's hourly, but it's also retainer. And I think what's unique about my practice is that the retainer model is income-based. So it's 1.5% of income, annual income, gross, and it's divided by 12. So they pay monthly. And I have a handful of clients in the retainer model, since I first started, and most of the clients that I see pay by the hour. And it's been going well so far. I've seen 52 clients since I started last year.

Michael: Okay. So I have a couple of questions there. First, you mentioned working with low and moderate-income families. So what does that mean in your world? Like, I know there are segments of our advisor population who are like, you know, "I work with low-income, less affluent people because, like, they only make $200,000 a year and have $300,000 of net worth. And, you know, I get them because they don't meet anybody else's minimum that's half a million dollars." What does your clientele look like when you're talking about low and moderate-income families?

Phuong: Half of my clients make $75,000 or less. That can be for a family or a couple with a child or an individual person. When it's an individual person, it's even less. So, my clients who have the lowest incomes, they're about $30,000 to $40,000, and that's about I would say 10% of them. And they're great. I love working with them. And usually if they're making below $75,000, they're pretty much...they're a good candidate for the retainer model, because we tend to do things where they need more help, more hand-holding, working through the basics together, the foundational aspects of the personal finance.

And so I think when I talk about low and moderate-income families, it's not just in terms of income, but it's also in assets. So a wealthy person, right, we know it's not just about how much you're making every year, but it's also about how much assets you have. And it's not just home but also investable assets. So the people I'm working with, they don't have a lot in terms of their investable assets, and so the retainer model, based on income, works really well for them.

Michael: So I feel like there's been a lot of discussion over the years that, you know, you just can't do financial planning for people below a certain income level because, like, the math just doesn't work. They just can't afford it. They can't afford to pay an advisor. So, like, what do we all have wrong if you're doing it for folks at these income levels and we have all said that they can't afford it or they won't pay? Like, what are we missing?

Phuong: So when I hear that argument, I hear it in two directions. So, one of them is that it's not a sustainable business model for the financial planner. And I can talk about a little bit because client work is not the only thing that I do in my business. So I'll talk about other things that I do for income for myself. But then the other side of that is will the client pay? Would they benefit from it? Those are two other issues. So question of, "Will they pay?" So what's really interesting is that before I started working with low-income families, people making less than maybe $40,000 for a family of two, usually single women actually in my clientele at that level, I used to have a pro bono link on my website. And over the last year... And I was thinking, you know, I would only focus on people with more moderate and higher incomes for the hourly and retainer, and for the low-income families, it would be pro bono. I had that link...

Michael: And so that would have been the balance.

Phuong: That would be the balance. Yeah.

Michael: It's like, "We'll have some people that are a little more affluent. They can pay the ticket. That puts enough food on the table for me as an advisor. Then I'll have a pro bono section and I can help some of the segments that can't afford my services, but I want to help." And just, you know, we can all balance our businesses that way as we wish.

Phuong: So I had the link on my website, and in the last year, only two people have actually clicked on it and signed up for a free consultation. So I hide you a free 30-minute strategy session with anyone who wants to learn about the business. And they both sounded really excited after the initial conversation, but neither of them ended up signing up for the financial planning. So I realized something, and I learned this in my work in non-profits, training non-profit professionals but also doing the work myself as a financial coach and counselor for several years is that even paying a nominal fee for something can make a difference in how much you value your own time and also how much they value my time. But most importantly to me, it's about how much they value their own time and making even a small investment in financial planning.

And I say small, I know it's relative, right? So, my clients who pay the least for the retainer, they're paying I would say around $40 to $48 a month. That's the lowest amount that I'm charging for retainer for some of my clients. They're showing up at the meetings. They're coming prepared. They're coming with questions. And I almost feel like it would have been a different relationship if it was pro bono. And so now I took that pro bono link off. And I do pro bono in other ways. I do volunteer at a women's center doing financial counseling, but I don't put on my website anymore.

And so they are paying for it, they're valuing it, and it's valuable for them. But in terms of being sustainable for someone's business, you know, that's still a tricky thing for me. I think if I was only doing that, working with that segment and only providing that service to low-income people... And you know what? I should also say that low income is relative as well, right? So I should say too that I... My business is in Boston. And so, for anyone knows Boston...

Michael: So at least, like, low-income dynamics is a little bit different than say a small town Midwest where your dollars go a little bit further than metropolitan Boston area.

Phuong: Exactly. I think median income here is high $60,000 for a single person.

Michael: For a single person.

Phuong: Yeah, I believe so.

Michael: So, you know, $70-something or $80-something-thousand for a family probably in the area there.

Phuong: Yes. And the majority of people in Boston do not earn that much but they're making it somehow. And I saw their balance sheets. I saw their cash flow statements because I helped them make them when I was at the non-profit and still. So they're doing it, right? But they want to be secure. They want to be stable. They want to feel less stressed, right? So I do that, too. I want to demystify the financial system for them.

And part of that is, you know, I mentioned the balance sheet. I think what I do for my clients is really helpful is that I'm not teaching them how to manage money. And I think that's another misconception that people have about people of low income or of people who are poor, right? Let's say that. Or people who are in debt, that they don't know the basics. That they don't know how to do a budget. Oh, my clients know their budget. I would say that my clients with lower incomes know more...usually, they know exactly how much they're spending and in what category. Even before we start tracking it and using all the different tools, aggregate their spending, they have a much clear idea and a better estimate of what they're spending compared to my clients with higher incomes.

Michael: Yeah, it's something that I didn't fully appreciate until I did a couple of pieces of pro bono work many years ago. And just, I don't know, I feel like there's this media per se pervade perception, or at least that's how I feel like I see it. That, you know, a lot of people struggle with their finances because they can't budget effectively and they can't get a hold of where the cash flow is going. And so, it just all kind of blows through their household. And certainly, we see that as advisors. I mean, you know, we've had clients who are doctors making $400,000 a year living paycheck to paycheck and can't figure out where the money goes.

So I've certainly seen that. But when the dollars really get scarce, like subsistence-level scarce, people are actually pretty darn aware of where every single dollar goes. Because you have to because you are managing every dollar going through the household just trying to make ends meet. And that there's a much better understanding of where the dollars are going, it's just figuring out how to navigate the system. Like, they may know where their dollars are going, but that doesn't mean they understand all the dynamics of building credit and how 401(k)s work and, you know, sort of the, we'll call them the more complex dynamics of the financial system that you don't necessarily just know because you track where your cash goes.

Phuong: I think you're exactly right. You're exactly right. You know, and this is not to say that people of low income, that all of them are...you know, they're tracking their expenses or they're living within their means. People are living outside of their means at all income levels, like you mentioned, but the difference is, for low-income people and moderate-income people, especially nowadays with the cost of housing, the cost of education, the wage stagnation that has happened in this country over the last 20, 30 years, things are so tight for families' households budgets. So tight.

The Difference Between Wealth And Income [12:58]

And what I see for the families that I work with and individuals that I work with is when cash flow isn't going to make...if their cash flow isn't balancing at the end of the month. That if they have wealth, right? Even just savings, even just savings in the bank, if they have wealth they can get through it. They can get through it this month and maybe save up next month and build it up. But if you don't have wealth, that it gets tough, and that's when the debt comes in. So wealth and income are two very, very different things.

You know, when I work with my families, I think the value that I bring and the value that non-profit professionals that I train bring is that we are helping people with their cash flow, understanding income, understanding credit debt, how to manage it, and ways to manage it better. Because, like you said, there's very little slack. There's very little room for error. So little room. There's a lot of risk management that needs to happen for these families. But the value that we can bring for them, that a professional can bring to these families is the balance sheet. Because if you don't have individual wealth or family wealth or community wealth, right? So there's also research that shows that if you're poor, if you have less wealth, you're more likely to know other people with less wealth, right? And so it tends to...let's say a community thing, right? If you come from a poor low-income community or a family, you're more likely to be friends with and be connected with other people who also don't have wealth, right?

Michael: So just wherever we are, our natural networks, at least early on, tend to be the people who are around us in similar situations because we live in whatever neighborhood we live in, which tends to be people who are of some similar socioeconomic means, so you just end out bending your formative years with people who are similar to you.

Phuong: Yes. And what we'll also get to talk about later Michael is that sometimes it's not so natural that that happens. Sometimes that is a forced policy that it's happened. And we'll talk about that. But the balance sheet is so important. Because if you don't have individual wealth, if your family doesn't have wealth, if your community doesn't have wealth then what do you need to rely on? You need to rely on the community balance sheet or the "system" that people call it, right? As a professional, I have to know what is available through the local housing agency, through city hall. What resources are available for my families so that I can connect to them?

Michael: Because when you literally have no other wealth accumulation or assets, you just, as you said, when you get to the end of the month and the numbers don't work, like, there's just literally nothing else to go back on. If you don't have access to credit and you don't have a savings account to draw on and you don't have a home equity loan you can tap, just short-term hiccups quickly become catastrophic problems.

Phuong: Exactly. Exactly. And, you know, there's different grant programs available for families who are close to homelessness or in transition from homelessness. There are for some homebuyer programs. There are different financial coaching and counseling programs that provide a financial stipend as well.

Michael: And so that becomes part of your work? Like, literally just being up to speed on all these different I guess local programs as far as, you know, a lot of these are local, so, like, you would know Boston programs because that's where your clientele are?

Phuong: Yep. Yes. Exactly. And I try as much as possible because at the beginning of my work I realized it's very inefficient to be looking at all these hyperlocal programs. And that's why the work is so tedious sometimes as a non-profit professional. I started this work in 2013, working at the non-profit part-time while I was still teaching, not sure if I wanted to make the jump. I'll tell you that maybe...there are a handful of programs that I relied on that were great and did a really good service for my clients that no longer exist because they ran out of funding. Usually, that's the case. They run out of funding. Not that there isn't a need.

Michael: So I feel like there's somewhere out there for someone whose...like an enterprising entrepreneur listening, there's a business opportunity here of just literally coalescing all of these different local and regional programs into central places that stay updated so that people know what they can access so that advisors working with them know what they can access?

Phuong: Yes, I love that. I love it, Michael. You know, you're thinking about, "What's the business opportunity here?" No, that's great, and I love that.

Michael: You know, I'm an entrepreneur to the core. Like just, you know, you see gaps and you fill them. Like, those are business opportunities.

Phuong: We need people like you. We need people like you doing that. So there is a website called auntbertha.com. And so if anyone listening here was looking for resources nationally, you can enter your zip code and you can categorize by health, by food, by housing. You can find it. The issue is, so it's a great start and I've used it before, but then what you have to do is you have to dig in to each of those individual programs because each of them have their own eligibility requirements. And so, just like any good financial planner, I have to vet the referral to make sure that it fits for my client before I refer them. I need to do research on it. I need to understand, first of all, are they available, right? So if I'm going to refer an accountant or estate planning lawyer to one my clients, I have to make a connection first and say, "Are you taking on clients?" And explain the situation and see if it's a good fit.

So I do that, and more often than not, you know, either there's a waiting list or there's a requirement to take a financial education workshop or they have to live in this zip code or this neighborhood, or they have to have been...or make below this amount, not this amount. It's very specific. But I understand why. Because there's a limited funding.

Michael: I'll admit, this is one of the things that hit home for me. That I actually...you know, early in my advisor world, I tried to get involved in a lot of pro bono programs. You know, we did a few through our local FPA chapter, and just, you know, I had a lot of excitement to do it. And I'll admit, like, I do less of them now, very little of it directly because I just discovered in this same conversation that you're talking about, like, you know, I can work with clients that are a little bit lower than who we usually work with. I know how to handle their problems. I know how to help them. But when you get far enough down the income and net worth scale, I just don't...I don't know these programs. I don't know what's out there, and I don't particularly have the time to learn it for a one-off client unless it's just unusual situation. I say, "All right, I'm going to help this person whatever it takes." And, you know, those come up from time to time.

But, like, I was sort of thrown off that when you get far enough out of the usual realm that we work in as, I'll call it, like, traditional financial advisors, I mean, there's still a lot of need for financial advice and help, but it is so different than anything that gets taught in the CFP program. Just the stuff you need to know, the resources you need to be aware of just suddenly looks very, very different.

Phuong: I agree. I agree. But I will say a lot of times new financial planners or people who're working in non-profits ask me, "Oh, you have the Certified Financial Planner designation, is that something you'd recommend?" And I, more often than not, recommend it still. Because I feel like it's provided me the rigor and the discipline to provide a focused financial planning service to anybody that walks in my door. So to analyze the situation before I provide any recommendations. To analyze the data. To really gather all the data first. That is a discipline that's important to know, no matter what population you work with.

Michael: That core process, right, of just establishing the scope of a relationship and then gathering data and analyzing and making recommendations, presenting recommendations and implementing them and monitoring them, like, that's the core steps of the planning process. Like, that applies no matter what. I mean, the particular things you gather data on, analyze, and recommend may be different, but, like, learning the rigor of a process around planning, again, it still makes sense, but just, like, then I get to the topic list of the things I learned about how to do the recommending, like, "Oh, I'm in a different realm now of problems that need help, but, like, this is not the stuff I got taught on."

Phuong: So I had to do a lot of that learning on my own and learning through clients, learning with clients. Some of the programs that I know now, clients have told me about them. But it's also I had to go out, have meetings. Just like any financial planner who's building a referral network for professionals whom they can refer their clients, that's what I had to do. I'd have these meetings. I would go to make presentations to talk to other non-profits about what we were doing, the type of service we were providing, how can we provide value to their clients? It was all a non-profit setting but it was very similar. But you're right, I had to bring in a lot of new knowledge. I really did.

Michael: So when you get this client that's like, you know, they make $40,000 a year, you're going to charge 1.5% of income, which is 600 bucks a year or about $50 a month, which you'd said is kind of where that lower end comes in for you. So what are you doing for this client, like, month-to-month or through the year? I mean, are you meeting with them monthly? Are you meeting with them quarterly? Like, what do you do in this kind of engagement?

Why What Phuong Does For Her Clients Is So Helpful [23:07]

Phuong: Absolutely. So I'm still figuring my model, but what I just said was, "You know what? It's unlimited, unlimited service. Email me. Call me. We'll have video conferences." And for the handful of clients that I have now in that segment, they're doing that. So we've met monthly for the first three or four months, and that's what just naturally turned out to be, and then we didn't meet...I think, like, there was like maybe one or two months that they might have skipped in the middle, but they still emailed. And I'm still doing work for them outside of it. So things that I'm doing are creating the balance sheet, looking at the cash flow. Looking at cash flow every single month, or every time we meet, we update the cash flow statement. I review their credit reports to see if there are any errors.

So there's one client in my mind that I just met with her last week. There was a debt that she hadn't realized was there. She thought that her student loan consolidation had gone through and that this Perkins loan was consolidated, and it turned out it wasn't. Yeah, so we had to deal with that. And we called the servicer in the middle of the appointment.

Michael: So like, "Hey, we've got an error with this, like, let's just literally call it right now. We're going to get this done right here. No homework. We're going to do it."

The Reason Phuong Only Does Her Meetings Via Video Conference [24:14]

Phuong: Nope. Exactly. And this is something I've learned, that there's so little slack in terms of income, but also very little slack in terms of time. They don't have time for this, right? And so what I found is that that's...and that's how I actually describe my work with the clients I meet with. During the strategy session, I say, "We can get things done during the session as much as you want," right? And I only see clients through video conference. I tried the in-person thing, but I've actually found that I'm much more productive, and together me and the client are much more efficient with our time. We can share our screens. We can get things done in the moment. And it's more difficult to do that when you're in a new setting and they're face to face. Yeah.

Michael: You're only meeting via video conference. So that actually becomes part of the time efficiency for the clients that you're working with. That it's video meetings, they hop in, you do what you've got to do for however long it takes, and then you're done. I mean, does that mean the meetings end out, like, longer because they're flexible? Does that mean they end out shorter because you just kind of talk through the things you've got to talk through and then everybody is done and they go on their way?

Phuong: Yeah. So what I found is meetings, I try to keep it to an hour. Sometimes they go a little longer, especially if we're making a phone call or being put on hold. And also the clients that I'm thinking about, they don't have a laptop. One doesn't have a laptop, and one does not have a reliable laptop.

Michael: So this is more commonly, like, smartphone video conference than laptop, desktop necessarily?

Phuong: It's a mix between laptop, tablet, or smartphone. I use RightCapital for my financial planning platform. And after the meeting, I always type up all the tasks. So I tell a client, "I'm taking notes. I'm going to put tasks for you." And sometimes I write the tasks in the middle of the session. And that's the follow-up. And I include homework for myself and homework for them. And at the beginning of every session, we go through that again.

Michael: And you just track all that with them, like, right in the RightCapital portal?

Phuong: Yes. Yes. And I have my own set of notes as well that I keep outside just with the other things we're learning in the moment that I don't want to include in the tasks.

Michael: And then what are you using to do all the video conferencing itself, particularly since you have to be very, like, smartphone and laptop and desktop-friendly?

Phuong: I use Zoom. I found that it has least lag, really simple to use. My clients have enjoyed it.

Michael: Okay. Okay. Interesting. So can you just walk us through a little bit more of, like, just what do you do for these clients? Like, what do you do on an ongoing basis? If you're, like, taking someone on that's new, what are the first few meetings covering? What are you delving into?

What Phuong Does For Clients Across The Income Spectrum [26:58]

Phuong: Sure. So I'll talk about what I do for typical clients throughout the income spectrum. And so the process is very similar for all of them. So during the strategy session, I ask people what their goals are. And that helps me prepare for the session, initiate how to talk about the different goals, but then I talk about it again.

And I know that some...I've learned this before when I've gone to conferences, and even from your podcast, Michael, that some financial planners do a longer life planning session or they might talk about goals for two hours or three hours. My clients, when they work with me, I want to be really cognizant of their time. And they're fee-sensitive. And so I encourage them before the session to really think about their goals by talking about it during the strategy session. And I say, "We're going to have a longer conversation about this. And I'm going to talk about it in terms of short-term, medium-term, and long-term, right? Short-term is 1 to 5 years, medium-term, 5 to 10, long-term, 10-plus. And I'm going to lead you through that conversation, but do some more thinking on this."

And it depends. Some clients already know exactly what they want to talk about. What they want to achieve. And that's awesome, too. But for others, I give them a heads-up, "I want you to think about this." And I love it when they come prepared because then we can get to spend a little less time on that. But it's important for me to know what they want to accomplish and when because it helps me timeline.

Michael: And what kinds of goals do you get? I mean, I feel like in our, I don't know, call it our traditional advisor world, we have a lot of, you know, "I want to accumulate for retirement." Maybe I've got some kids that are going off to college at some point. Like, our goals tend to be fairly long-term. Like, maybe a little bit of ultra-short-term blocking and tackling. Like, you know, I've got to change jobs and I'm hoping to retire in 30 years. And, like, then there's not necessarily all that much else in between. Like, what do goal conversations look like with the clientele that you're working with?

The Number One Goal Phuong Hears From Her Clients [28:47]

Phuong: Sure. So the number one goal that I hear from my clients is, "I want to buy my first home."

Michael: Okay. And so that's kind of a combination of saving for down payment and getting credit score to the point that we can get a mortgage?

Phuong: Exactly. And if they're eligible in terms of income, it's figuring out what kind of programs are available for them in terms of first-time homebuyer programs. Figuring out what kind of home they want. And also understanding what the cost of homeownership really are. And so when we do the cash flow and we figure out what they are spending now, where they're living, usually they're renting. And I should also say that most of my clients are in their 20s, 30s, and 40s. I have a handful who are close to retirement, in their 50s and 60s as well, but most of my clients are...

Michael: Okay. So you're skewing lower end of the income spectrum but younger and hopefully upwardly mobile.

Phuong: Exactly.

Michael: Okay.

Phuong: You know, so we do the cash flow, what they're spending now, and then we figure out, "Okay, so this is how much you're spending now, where you are renting, what will it look like when you are a homeowner?" And we map it out. We look at some homes. I ask them to bring some homes that they're interested in, and we do the math. And I'm a homeowner myself, and so I can walk them through the different costs and what they are, and through the process. So not just in the home purchasing side of things, but the homeownership side: the maintenance side, the repair side, insurance, condo fees, all that stuff. And for some of my clients, all that vocabulary is very new to them. Because I should also say that many of my clients, their families might not have owned a home before.

Michael: Okay. They may literally be first-time homeowners in the family.

Phuong: Yes. And I am as well. I'm a first-time homeowner in my family. And so I had to learn all this. And so I love teaching it because my career started as a teacher. I used to be a math teacher and special ed teacher. And so I've taught workshops on this. You know, I'm very happy spending that time explaining these different terms, because I know that my clients, because they're fee-sensitive. And also sometimes they feel nervous about asking these questions, that I might be the only person that they know who to go to. Because if you are low- and moderate-income person, and we haven't really talked about race very much yet in the conversation, but it has to do with it too because rates of homeownership amongst people of color in the U.S. are at a much lower level than white people in this country. And so it's just a reality.

Michael: If you've literally never owned a home and never known anyone who owns their own home, things that we relatively take for granted, I think, about just dynamics and decisions and trade-offs of homeownership, like, that really is a foreign world when you don't know anybody who's ever been able to buy their own home.

Phuong: Yes. Yes. And so I always encourage my clients as well to take a first-time homebuyers course because you can learn a lot from that. And non-profits offer it, city halls offer it, housing agencies offer it. And you learn about cash flow, budgeting. You learn about the inspection process, purchase and sales. They walk you through that process through an eight-hour course. And you have to take that course to be eligible for first-time homebuyer benefits and programs, like down payment assistance or special mortgages. And so, even if they don't qualify, I say try to, you know, sit in to at least one of those classes because I think it's really helpful to take a course like that. And you can also take it through private means. There are companies that offer those types of courses as well.

Michael: So what is your vision for this from a business model perspective? Like, you know, it's an interesting thing to me that, so on the one end, like, you're working with clients that are much, much lower income and affluence than I think what most of us tend to work with in the advisor world, but at the end of the day, like, you know, $600 per client, you know, if someone is making $80,000 a year at 1.5%, you're charging them $1,200 a year. Like, those are lower numbers than a lot of advisory firms work with, but, like, 100 clients doing that is $100,000 a year of revenue. Like, that's not an impossibly unmanageable number to build a business around. You may not be as high income as some folks that work with very affluent individuals, like, no big surprise, if you want to move up the income scale tends to be more earning potential, but not the reason why we all do it, as long as you can put enough food on your table.

So, like, is that your vision? That you want to get to a, you know, 50 or 100 retainer clients that get to a number that's good enough that it makes it work for you? Do you envision going to a higher number? Do you envision other parts to your business model? Like, what are you trying to build towards? As you're now a year into this, you've got on with 50 clients. I guess I'm going to assume some have been retainer-based, some did hourly work. Like, where are you envisioning this goes?

The Three Major Categories Of Phuong’s Business [33:42]

Phuong: Michael, that's a great question, and I am still trying to figure that out. But I'll tell you where it is now. So the client work is a third of my business. So my work actually falls into three major categories. And we haven't talked about the other two yet. So I also am an online tutor for the BU Financial Planning Program. So I get a nice foundational income, part-time income from that.

Michael: For their online CFP program.

Phuong: Yes. So I tutor them online through email if students are taking exams, going through the program, asking questions, technical questions. I like it because I can be a teacher. I can put my teacher hat back on again. And it forces me to review the curriculum that I haven't used in five years really like in a consistent basis because it's so different from the clients that I've seen in the last several years.

Michael: Right, keeps the rest of that CFP topic list fresh when you're teaching.

Phuong: Because it comes back. It does come back. Every once in a while it comes back. You know, and we were talking mostly about my clients with low income, but the majority of my clients are making $75,000 or more. The highest income clients I have is a couple making $300,000 in annual income.

Michael: And it's the same, like, 1.5% of gross income up and down the line?

Phuong: So my retainer now is...the lowest retainer fee is $42, it's around $40, and the highest retainer fee is $217. That's monthly. And I'm working with all of them, right, on a consistent basis. So that's that. So client work, online tutor, and then I also continue to train and teach non-profit professionals throughout Boston. And I've gone to other states to do that as well. So the financial coaching...

Michael: And teaching them in what? Oh, sorry, in financial coaching?

Phuong: Yeah, yeah. So the financial coaching and counseling world is, since when I started, and I'm not saying I was at the forefront, but when I started, it definitely wasn't as big as it is now. And it's growing fast. Different organizations, government institutions but also non-profits, schools even, they're bringing more financial counselors and coaches to work with their families and their clients because they're realizing that financial literacy is so important. But I think on the flip side of that, the reason it's so important is because of those societal shifts that we've been seeing and that I mentioned before. Income inequality, wealth inequality is at an all-time high.

Michael: So I want to come back to that in a moment, but I do want to ask, just, you've sort of made this implicit distinction that you are teaching those folks that are doing coaching and counseling as part of your work, kind of one of your one-third pies, but you're putting yourself in the financial planner category. So how do you distinguish financial planning from this financial coaching and counseling work? Because I know for at least some people, the way they actually distinguish it is essentially the target clientele. Like, more affluent folks it's financial planning, less affluent folks it's coaching and counseling. But you're well down below median income so this isn't just an income distinction anymore. Like, how do you separate the categories or view them differently?

How Phuong Distinguishes Financial Planning From Financial Coaching And Counseling [37:02]

Phuong: Yeah. Michael, that's a great question. This has been the driving question of my career as a financial planner. I have thought a lot about this, and all the trainings that I do with non-profits, with organizations starts off with explaining the distinction. And so let's start with financial education. That's what people know. That's what people think of when they think of financial literacy, personal finance. Financial education to me is more of a workshop setting, where the educator, the teacher has decided what they're going to say and what they're going to teach, and they go do it. And sometimes there might be questions from the audience, but the curriculum has been defined.

Then you go to financial counseling. Financial counseling is... Actually, I'm going to start with financial coaching. Financial coaching is a little bit different. Financial coaching is one-on-one. It's not a workshop setting. Usually, it's one-on-one, right? Typically. Some financial coaches do group financial coaching. I've never done that, but it can be really valuable, depending on the client. Financial coaching, one-on-one and it's client-driven. So we haven't decided what we're going to talk about. I've been on financial coach trainings where financial coaches don't come with any materials to the meeting with the client, and they go, "What do you want to talk about today? What do you need?" And the main mantra of a financial coach is that the client is creative, resourceful, and whole. They are coming up with the solutions to their questions and to their problems.

Michael: And so the role of the coach is just help nudge them along on that journey?

Phuong: Yeah, yeah. You're asking powerful questions. You're asking them, "What resources do you have that can help you with this? What resources do you know about that can help you with this? I might know of a resource or I know a resource, may I provide it to you? Or may I share it with you that might work?" So you're asking permission. You're asking permission all the time because the client needs to be in control. And part of why they're coming to you is because they don't feel in control. It's like a very meta thing happening because...

Michael: Because you're just like, you're constantly trying to instill in them a sense of their own financial control over their lives.

Phuong: Exactly. Exactly.

Michael: Because if you don't feel in control then you don't do the things to help yourself if you literally don't think you can help yourself in the first place.

Phuong: And it's a fine line because then we get to financial counseling. And financial counseling, the financial counselor typically has more of a technical understanding of the topics themselves. And so when I've seen financial counseling come in for low-income families, it's typically around the credit and debt, very technical topics. Because a lot of rules, a lot of regulations. The credit report can be a monster to read and understand, especially for someone who has damaged credit. The collections and judgments.

Michael: Interesting. So, you know, I mean, for other professions or outsiders, the image, I think, or at least I'll speak for myself, the image I conjure up on I think of counseling is frankly not necessarily on the technical end, you know, the easiest go-to is sort of a psychologist giving you counseling through whatever personal issues that you're working through. In this context, though, like, counseling takes on more of a technical knowledge bent. It's coaching with a little bit more like, "Okay, we actually have got to go in-depth into some of these really technical issues." Like, all the things you've got to do to fix a very broken credit report, which is a really messy technical process.

Phuong: Yeah. And actually, Michael, so it's not so different from what you just said. Because I think the mindset for the financial counselor is that the client has a problem and you're here to help them fix it. And that's the same for a mental counselor, a psychiatrist. But that's very different from the mentality of a coach. So the difference between financial education and financial counseling and financial coaching is less so on the client end and more so on the mindset and the practices of the practitioner.

Michael: So, like, the coach, "I'm here to empower my clients to have more control." The counselor, "I'm just kind of here to actually help you fix a problem. Like, ask me some questions, I'll lay some knowledge on you."

Phuong: Yes. And usually, there's a sense of urgency. Usually, there's more urgency. You know, and the clients aren't coming in saying, "Hi, I need a financial counselor now." They don't know this terminology, right? So I show this. And that's why I usually have to have a chart up when I'm training people on this, right? So the fact that you're following this verbally is amazing because this is technical, really complicated stuff. So you're following along really well.

When the client comes in, I've had to wear all three hats in one client session. You're moving between them. Now, you can decide, "Oh, this whole session I'm only going to be a financial coach," or, "This whole session I'm only going to be a financial educator now, doing my workshop." And there's a place and time for that. But when a client is coming in and they're coming with an urgent problem, for example, let's say a client is coming in with a collection notice, a collection is when a debt goes into default because it hasn't been paid for several months and then you're getting sued. You're getting a notice that you will be sued if you don't pay this debt or reconcile it in some way. And the court date might be two days from now because they didn't get any of the other notices.

Michael: Right. So this is very like, "I have a serious problem in the next 48 hours. I literally don't know what to do. Like, help."

Phuong: Right. Exactly. So at that moment, am I going to say, "What resources do you have to help you with this problem?" I might start that way, but then if they say no, I'm going to put on my counselor hat and say, "Have you heard of these resources? Here they are." And I would hope I would have some ready for them. And if not, we would look through it together. And so I'm easing between coach/counselor. And then I might say, "Do you know what a collection is?" Actually, I should start with that, "Do you know what this letter is?" And if they don't, and usually not, or if they've been through this before then they definitely do and they're teaching me what this letter means, then I can be a financial educator and do a mini-lesson on what this letter means, and hopefully to calm them down. So with knowledge, comes power. And if you can know how to control the situation and understand what the letter in front of you is telling you of what your rights are and what your actions need to be to reconcile it, you're more ready, able to receive the coaching or the counseling.

Michael: And then how do you distinguish financial planning and what you're doing now from these three tiers of education, coaching?

Phuong: Oh, yeah. So as you can see, it has nothing to do with the client income, because I've had clients who have high income and have had collections because they didn't pay attention to their credit report. The difference between the three that I just described and financial planning is the timeline, the time horizon. With financial planning, and I'm not saying this is the standard or the definition, this is just how I view what I do. Financial planning, you're with them and you're building a long-term relationship. It's not time-limited. I'm saying, "I'm going to be with you and I want to build a long-term relationship with you as your financial planner. And I'm going to be here with you for the next decade, 20 years, 30 years, 40 years, as long as you need." And we're planning with that mindset as well.

Michael: Interesting. Interesting way to frame it. So the coaching has a relationship dynamic, but it's more short-term. We're going to try to get you to a certain point and then you'll, call it, graduate, maybe not the right word. But, like, you'll graduate. You'll get to the point you're done. If you've got a more proximal short-term issue, financial counselors are available to work through this urgent issue. You know, we like to talk about I think financial planning as, it's a relationship, it's a long-term relationship, but it sounds like that is, I mean, very literally how you're defining the difference around planning and the rest, which I guess then speaks to your business model of like, "This is why we do them as ongoing monthly retainers, because this is meant to be a long-term relationship." And that's the expectation you want to set from, "If you've got an urgent thing you need some help, like, I'll bill you hourly or you can go to a financial counselor. If you want an ongoing relationship support, like, that's what we do here at Just Wealth. That's what the financial planning is."

Phuong: Exactly. And what I love about the retainer model is that my clients contact me before a big decision. Oh my gosh, that's huge to me. You know, so I can counsel them or coach them or actually do some financial planning with them ahead of time and look through and say, "Well, can you afford that house? Let's see. You know, let's see what it looks like for your balance sheet and let's see what it looks like for your cash flow. And would you get into debt again in that case if this happen? If you bought it?" I can show them the numbers and talk them through.

Michael: And that's specifically a benefit that you get around retainer models as opposed to hourly models. Like, we can price it similarly, but we sort of know what happens. If it's by the hour, I only call you when I have a problem. That's, you know, worth the hourly charge. When I'm on the retainer, right, the mentality just shifts like, "Well, damn, I'm already paying you. I'm getting my money's worth. We're calling Phuong before we do anything."

Phuong: And I love that. I love that because it's less of a headache for them later on if they go through the decision and then you have to help them clean it up. It makes my job easier and it makes their life easier. And I tell them if it's no longer working for them, you know, we can pause it. We can start a new relationship later on. And I think, you know, I haven't ended a retainer relationship yet actually, but I have a few clients that might be ready to. And actually, use the word "graduated." Some organizations use that word, right? There's actually like a 6-month, or a 12-month or a 5-year graduation period. So it's not a wrong word to use. But I say, you know, they might be ready to just move into the hourly. And so I'll be honest with them about that when that happens.

Phuong’s Unique Pathway Into Financial Planning [46:56]

Michael: So share with us the pathway about how you got to this point. Like, you know, you mentioned earlier you started out as a math teacher. So I can kind of see the theme here, right? Like, you were a math teacher, then you were doing financial coaching, now you're doing financial planning. Like, I get the numbers theme. I can see this moving through. But, you know, math teacher to financial counseling is certainly a massive leap. Financial counseling, the financial planning, is actually a huge leap. You know, there's a huge world I know out there of financial coaches and counselors, and as you said, it's been growing lately, but I still see very little overlap between them, aside from maybe organizations like AFCPE that's, you know, doing a little bit to start bringing those communities together. So can you share with us just, like, what this pathway was? How you go from math teacher to making a leap in the counseling and then a financial counselor and making a leap into coaching?

Phuong: Absolutely. So what I should say now is that now I'm the financial planner. I call myself a financial planner, not a financial coach. Because it is its own discipline. And I'm not certified as a coach. I know many talented financial coaches that take their job very seriously, so I want to be careful to mention the distinction that I am a financial planner. But I use coaching practices in my work as well. Yes, I agree with you, it does seem like a big jump from being a math teacher to a financial planner, but let me just say that I have been a personal finance nerd my whole life.

Michael: All right. So that's really the common kind of numbers and finance theme throughout.

Phuong: Yes.

Michael: Okay.

Phuong: Yes. And it was born out of I think just a natural interest. You know, I always wanted to be the banker of Monopoly whenever I played with my sisters. But also, there was a lot of financial stress in my family, and I wanted to understand it, and I wanted to control it in some way by educating myself. And I had to read up a lot on personal finance. So my parents actually didn't have a credit card until I graduated grad school. And so I was in my 20s by the time they had their own credit card for the first time.

So that was a thing that I had to learn about. And I think the process of having to learn about it and process all the information that is out there, it made me realize, you know...actually, I shouldn't say it made me realize, it helped...thinking about that helps me remember what my clients might be feeling or experiencing, because maybe they didn't have the privilege or luck to realize an innate interest in personal finance at a young age. As an adult, when you're experiencing all of this information at once and you have to make the decision in the moment and you have a child, or if you have a student loan bill coming at you and you don't know how to understand what this is telling you, it can be really, really, really stressful.

And so what I say...the way I characterize what I do is it's not...I'm not helping...you know, I'm helpful to my clients, but I'm not saying I'm teaching them how to manage their money, but it's more about I'm clearing barriers. And one of the main barriers is time. And so what I can do is help distill the information in a way that is clear, actionable, and also trustworthy. Because I don't work off commissions. I'm fee-only. I'm independent. And I'll tell you if we're not a good fit. And I think having that teacher background is helpful because like, "Oh, she was a teacher. You know, teachers are nice. Teachers are helpful."

I'll tell you that the transition emotionally from becoming a teacher to going into financial planning and financial counseling and coaching, all that, the emotional side was one of the hardest things for me. Because when you're a teacher, you have a built-in trust with anyone you're working with. Because it's just public education is an institution. Although, you know, there are problems with it and it needs to be...you know, it needs to be changed and...

Michael: Yeah, but we just have a fundamental trust for teachers, right? Like, there's just certain profession, you know, firefighters, nurses, teachers, like, they're just kind of up there and just you meet one, you trust them. They're all good. Just trust them.

Phuong: Yeah, exactly. And so I had to really change my mindset about what it meant for me to be a financial...in financial services, I should say. And actually, I remember having a friend, one of my really good friends. You know, she grew up in a low-income background like me, and she was distrusting. When I told her I was moving into this field, she said, "Oh, so you're giving up on your students and your families." And it stuck with me, right?

And, of course, we're still really good friends, but it stuck with me because I think, and I mention this too in case other people listening have this, right? Because when you have your community and they have an expectation of you in some way and you change their mind of who you are and what you do, if I wasn't so sure that what I was doing was going to be helpful to parents and children, that working in financial services rather than education was where I could provide the most help and change and systemic change, I should say, for the families that I care about and work with, I wouldn't have gone. But if I wasn't sure, I might have... Actually, I did question. When she said that I said, "Oh my gosh, like, what am I doing?" And like, "You're just here for the money." There's nothing wrong with that, but that's just not what she expected of me at that time.

And since then, now that she's seen how I have structured my practice to maintain the values that I built while I was still a teacher, she said, "I get it now." Yeah, it was one of the biggest compliments I've ever got in my life. Two years ago when I told her that I was thinking about starting this practice, she said, "Okay. Okay." And when I told her who I want to work with, what I want to do, she said, "Okay, I get it now. Yep. You're still you."

Michael: So did you go to the financial counseling side and leave the teacher realm with this vision that you were eventually going to end out as a financial planner and it was a pathway or did you just want to leave teaching and go to financial counseling and then later you found out there's this whole other financial planning thing that looks different than financial counseling and coaching?

Phuong: I found financial planning first before I went into financial counseling. I started my CFP studies while I was still teaching. So I did the online program at BU. And I did that while I was teaching full time. Last year of teaching I was taking the program, studying for the CFP exam, working part-time for the non-profit, and teaching full-time. It was a busy year. But I didn't have kids, right? I don't have kids. I was just responsible for myself. I had all the time. I don't think I'll ever have that much time again actually, honestly, in my life.

Michael: So you kind of had this mastermind plan of, "I want to go from teaching to eventually be a financial planner." So what led you on this path? Like, most people who decide that they want to come into financial planning, you know, they hopefully get their CFP education stuff done first. It's usually what I recommend. And then, like, you go try to get a job at an RIA or an independent broker-dealer if it's doing planning, or, like, maybe you go to a big firm and spend a couple years there and then decide what to do. But, like, most people that want to come into financial planning, like, there are pathways into financial planning. You took a different pathway, knowing you wanted to get here. So, like, walk us through that journey or, like, what was going through your head to pick that path.

Phuong: So I wanted to be a teacher for a really long time. So I think even in high school, that was the first time I had the idea, "I think I want to be a teacher." Because I was terribly shy, and especially, not my close friends, but in large groups, teaching in front of...doing public speaking was really, really hard for me. I remember in elementary school I would run out of the room, hide in the bathroom for hours because I was so nervous. And then the teacher would have to find me and say, "Are you okay?" So it's tough. It was really tough.

But I noticed something around high school that whenever I was assigned a presentation, I would just shine. And I realized it was because of the preparation, the preparation and also being able to teach someone a topic that I am really confident about and that will be a value to them. Well, it just shifted my mindset of thinking, "Okay, this is actually really fun." And I actually got really good...I remember reading, like, a report card or something. Reading it before I gave it to my parents, of course, right? That's what we do. And the teacher wrote, you know, one of the comments, a teacher changed my life. And I should find them and thank them because it changed my life. And they said, you know, "Phuong tends to be shy in class, but when she is in front of the classroom and is doing a presentation, she's incredible." So it was like, "What?" Like, I'd never heard that before. And, "Okay, okay, this is cool. I like this."

And so I was thinking of becoming a teacher. Luckily, the college I went to had a teacher education program, so I graduated with my teaching certification in elementary education. And I also did a lot of curriculum design, developing workshops for parents as well. So, like, just anything related to teaching. So teachers do a lot more than just be in the classroom, right? We're administrators. We're engaged with professionals because we have to work with families. We're event planners. We're curriculum designers. We're lesson planners. We're also not just event planners with families but day-to-day. I had to manage four different math sections in my last year, each at different levels. And as a special educator, I had to differentiate amongst different students depending on their learning profile. It was a lot, a lot of work.

And I was having a crisis toward the end of my teaching career thinking, "What impact am I having on my students? Because I'm working really, really hard, just like my colleagues are." But I saw year after year that the students who tend to be low income and predominantly people of color fell behind year after year. And I wasn't teaching the same...I taught at different school districts throughout New England, but the longest time I was in one school district was four years. And there was a shift in the school system, and I started in the elementary side working with fifth and sixth grade. But then in the middle of my teaching career, it was a stroke of luck. The school changed to a middle school model, so they moved me to the middle school so I could be in the same...so I was in the same school as the students that moved up. So I followed.

Michael: So, like, you ended out following your students longer than you otherwise would have staying in the elementary system.

Phuong: Exactly. And I saw the progression, and I could maintain relationships with parents. And I saw that divide between test scores and grades widen year after year. And I said, "What is happening? They're working so hard. Their parents are focused. They're good parents, of course." You know, and I'm not saying there's such a thing as a bad parent, but they're focused. They're invested.

Michael: They're engaged. They're trying.

Phuong: They're engaged and it's still a huge struggle day-to-day. And it wasn't getting better. Actually, it was getting worse. The gap was getting worse between white students, people of color, low-income students. And I want to say, too, I don't think it was just a race thing. I think race is a huge part, plays a huge part in it, but it was also class. The intersection of race and class is inseparable in this country because of the way economic oppression and wealth blocks have been put in place on people of color. But there's a huge class thing, right?

And so when people say, and even the teachers at school were...I remember we had a staff meeting about this, and a principal at the time was a black man, and it was one of the first times that I've ever really talked about race issues at work. And I didn't know how to talk about race before I became a teacher. And I think I should have learned how to. I think that should have been a huge part of my curriculum as a teacher because I was confronted with it, bam, smack in my face my first day, and I wasn't prepared. And I had to learn very quickly how to get prepared.

And we had a discussion of the whole school, and I remember one of the teachers said...after an hour of discussion, one of the teachers said, "Actually, I don't think race is an issue. I think it's about class. I think it's only about class now." And it was an uncomfortable silence because there were a lot of teachers of color in the room. Not a lot actually. There were a handful. There were more than...usually I am the only teacher of color in a school, but at that level, in the middle school, there were maybe out of 40 we had 5 teachers of color. And the principal was the man of color, so he's very comfortable talking about this. It was uncomfortable. I forget how he responded, but I still hear that. I still hear that, "Oh, it's only a class issue."

The Racial Challenges Around Wealth-Building [59:53]

But the thing is, if you don't know the financial history, then you do only think it's a class issue. You see people who are living in poverty or people who are low income not doing so well. And there are people in poverty or low income across race, but when you look at the history and how systems, laws, policies have been put in place that have targeted people of color, you can't deny that it's linked.

Michael: So this gets back to, like, our troubled history of the past of limiting lending programs to minority communities, which then limits homeownership and then limits transfer of wealth and just kind of propagates down? Like, the legacy of that overhang of stuff that we did decades ago, that's still with us?

Phuong: Yes. Absolutely. Decades ago, centuries ago, there's such a long history. And the thing is, and even a friend of mine, when I explain this to them recently and they said, "Yeah, but Phuong, that was..." Like when I explained redlining to them, so what you described Michael is redlining, right? When our government did not lend to people of color. The low-interest rate, 30-year mortgage, the subdivisions, not subdivisions but the suburban housing that was built, that house thousands, thousands, thousands of people now, where people are continually building wealth from, that whole wealth-building event in our nation's history kept out people of color. I think that the number is $1.2 trillion or $2.1 trillion that was lent out, only 2% of that was lent out to people of color.

Michael: I'm trying to remember. This was, like, post-World War II era when we were doing all the building. So they just said like, whatever the agency was, "We're going to do a bunch of..." Okay. So FHA goes out and says, you know, "We're going to support American homeownership. We're going to do all this lending. We're going to lend into certain communities and zip codes and not others." And then we go back later and look, and, like, what do you know? Ninety-eight percent of the districts were white.

Phuong: Yeah. Yeah. And people of color were forced into predatory lending schemes because they still wanted to own a home. They wanted a piece of that American Dream. They lost a lot of wealth that way. Or they weren't able to build wealth. You know, so my friend said to me, "Phuong, that was..." Because that happened between the '30s and the '60s, right? Until it was outlawed.

Michael: So this is 50 to 80 years ago?

Phuong: Yeah. And my friend said, you know, "That was so long ago." And I said, "Exactly." So imagine how much compounding interest that is. How much wealth was lost during all those years.

Michael: It strikes me in that, you know, one of the challenges I've had around financial planning, and, you know, we talk a lot about, well, I was going to say diversity but lack of diversity in financial planning. You know, you look at CFP Board metrics and, you know, well, I think the entire category of not white is less than 10%. And, you know, there's been a lot of the discussion like, "How do we change diversity and financial planning so financial planners look more like the general American population?" Which is still majority white but not 93% or whatever the percentage is for CFP certificants.

And I'll admit, the question that started coming up for me recently just looking at some of these dynamics is that, when so much of what we advise on is wealth, wealth building, homeownership, inheritances, retirement accounts and all of these pieces, that, you know, wealth is not evenly distributed racially, unfortunately. And so if we as financial planners have tended towards upper income, upper wealth levels, we end out with clients that are not very well racially diversified. And that, you know, in the planning world, we don't look like the average American in terms of racial diversity, but I kind of worry that we do actually look like the average client we work with. Just sort of an awkward reality because of some of these racial challenges around wealth building history in the past. But we do kind of look like the people we work with.

Phuong: I think it's all that. And on another level, I also think people of color, so I am Vietnamese American, I'm also Chinese American, I think people of color sometimes have a sense that the system is not built for us. Or I should also say that poor people sometimes feel this too. People of color and poor white people will say that, "The system was not built for us." And in turn, we are not welcomed into the system. And sometimes explicitly we have not been. And so with that, sometimes people of color are making an intentional choice not to become financial planners because of that long history of just exclusion, absolute exclusion. That's all it is. I can't use another word for it.

Michael: Well, and I guess as well, pieces like the experience you had with your friends, that if in your community the financial system is viewed as not something that's welcoming to your community and "not for us," if you decide to become a financial planner, you have to overcome the perception that you're betraying your community?

Phuong: Yes. In some ways yes. That was really tricky for me to contend with when I first started this. And the reason that I went into it, you know, the reason I really did say, "Okay, I'm going to make this switch" is because when I realized...when I started doing the CFP program, I started learning so many things that I had not known before. The way you can use financial planning to create financial security for yourself and your family. And I thought, "This is incredible information. I need to share this with others, but I also need to find a way to distill it because it's still very technical. And so, you know, how do I put my teacher hat on and translate this into people I work with who might not have the financial background that I have?"

And I also felt like, "Wow." Okay, so there are three things that I learned, right? So I learned how powerful this information can be for the individuals and families, but I also learned how powerful just knowing how the system works is. And that it's not just your fault that you're not wealthy. Because there are systems in place, there are tools in place that you have not had access to in other generations and sometimes just still don't. That you don't have access to that exists for other people. So in a way, it's very powerful because it depersonalizes your situation. And that's something that I talk to my clients about, too. I never blame them for what situation they're in. I never ever want to give them a sense that I'm judging them because I am not. I understand the context of my clients' lives. And so a flipside of understanding the programs that are available for them and the resources that are available for them is I understand how hard it is to get something done when you're not in the financial mainstream. So those two things, right? And that's on the client side.

But what I also realized is that, and this took a few years in, right, because I was learning it for myself. And this is where I am now. I feel like the knowledge that I have from working with structural issues as a teacher and also in the non-profit, if more financial planners knew the history that we were just talking about, Michael, and that you were even describing, about the housing, if more financial planners knew that, we could change those systems and we could make sure they don't happen again. And that these divides, this racial, wealth divides, and also it's not just racial divides, around this country, people are not able to build wealth in a fair way. It's not just across racial lines. But people of color are more at risk of it in the past and present, but it affects everybody. It affects white people as well. That if more financial planners knew this, because we know the financial system so well, how powerful it would be if we also understood the financial history and how to more comfortably talk about race. So that's what made me think, "This is something that I can make a career out of." And I enjoy it.

Michael: So that was what drew you towards saying, "I want to become a financial planner. I want to work in this space."

Phuong: I almost felt like I could make a bigger difference in my children's lives as a financial planner than I could be as a teacher in the classroom, because I enjoy working with parents. I enjoy working with adults. And if I can create less financial stress for a family, that is going to cause positive ripple effects into that child's life. Because I saw the effects of what financial stress can do to a child's performance in school. And it's not even just...you know, the example people use is, "Oh, if they'd had breakfast or not." But actually, financial stress can be very insidious. It can affect a child's mood. It can affect their focus. It can affect whether or not they've had a good night sleep. And children know. Children know when a parent is struggling financially or stressed out.

Some of the best moments for me as a financial coach when I worked at a non-profit was when a parent would come in stressed out, pile of letters, not even opened, in front of me and pop it on my table and say, "Let's go through this together." And we make piles, and we read what they are. And I help explain them, and I say, "This is what you need to respond to now. This one we can wait next week." And they'll leave the office, and we talk, and they're calmer. They're laughing. They're smiling. And I'm like, "Okay, this is what it's all about. Because you're going to go home and you're going to be a better parent to your kids." And sometimes some of my first clients were actually parents of the students that I taught. It was amazing.

Where Phuong’s Clients Come From [1:09:47]

Michael: I was going to ask, like, where do the clients come from? How are clients finding you as you're building this practice in a very different model, or at least a different kind of target clientele focus than most others?

Phuong: Right now I get a lot of clients from...so a third of my clients are coming from the CFP website, so letsmakeaplan.org. I think that's the website. They're finding me through that. Yeah. And then they're also finding me through NAPFA, National Association of Personal Financial Advisors, through that database.

Michael: I feel like...you know, I know a lot of advisors that get clients through NAPFA's website. You know, they've long had a pretty active presence publicly and driven clients. I don't know a lot who are getting clients through CFP Board and Let's Make a Plan? Like, is that unique to...? Like, is that something for you or, like, because of how you're listed, do you think, that you do hourly and most others don't or you do retainers on there and most others don't?

Phuong: That has to be it, Michael. And I'm wondering also because when I take a look at other planners that are on there, they look great, you know, similar information, but I think the main difference between me and others is that I have... there are two things. I have no minimum assets, and I say, I think it's commission free. So it's both, commission-free and no minimum assets. So that's a third. And then another third comes from other financial planners who are maybe busy or they work with clients with higher income levels.

Michael: They say like, "I don't actually know all of the Boston programs to help these clients, but I get that they need help, so go call Phuong, she can help you."

Phuong: Yeah. And I should say too that those programs have such stringent requirements that someone making $60,000 or $70,000 doesn't qualify for them either. So at that point, there's like that doughnut hole, right? Like, you make too much to be qualified for these assistance programs, but you don't make enough to go for these opportunities. So you're right in the middle.

Michael: Just to afford the cost of buying a house in Boston which is not in an inexpensive area, unless you want to go, you know, way, way, way outside the city and have horrifically long commutes to work anything near downtown.

Phuong: Yeah. Yeah. So they refer them over to me. And I'm happy to do it because I know how bad it is as a financial planner. Because we came into this business, we want to help people, and we don't like saying no. We don't like saying no and, "No, I can't help you and I don't know who can help you." So I'm available for them. And I'm happy to do it.

And then another third comes from word of mouth. And so the workshops that I teach, sometimes the non-profit professionals or the organizations where I'm working, so I also train for-profit companies as well, so not just non-profits, they will contact me and say, "Oh, can we actually meet for financial planning?" So that's really fun too because they got all the basics already from the workshop and so we can really dig in. And I feel like there's a compounding factor there because if I train them, they're working as a financial coach or counselor, so they'll continue to bring this information to their clients.

And then just last week, I was in a car share. So I took a Uber. My friend got the Uber, I joined them. And I was talking about what I do, the workshop, systemic inequality, all that. And once I got out, the Uber driver said, "Can I have your card? I hope you don't mind, I was eavesdropping."

Michael: So you got a positive ROI on your Uber ride.

Phuong: Yeah. Yeah. So I had a strategy call with them today, this week, not today but this week, a few days ago. I'm meeting with them for our first session next week.

Michael: I love that story. And so you're talking to all of them, like, you know, when you have the conversation with the Uber driver, you're talking about this ongoing monthly model? Like, is that what you're presenting to them and talking about? Like, "Hey, you know, I charge 1.5% of your income. You pay it on a monthly basis and then I help you through all these different things," and they're good with it?

Phuong: So the model might change, but what I say during the strategy session is, "Everyone starts out on an hourly rate or hourly basis. So the first session is two hours. And if we need to do a follow-up, you can continue on the hourly or you can go into retainer. And the retainer is..." so forth.

Michael: And what is your hourly fee?

Phuong: My hourly fee is $175 an hour.

Michael: Okay. So does that effectively mean anybody who's going to work with you, like, it's $350 out of the gate for that first two-hour meeting? That's your, like, get started fee?

Phuong: Yes. And I also tell them that there's also...sometimes I have to prep, depending on their finances. And prep is at that same rate. And I'll let them know. Just when they send me their documents I say, "Okay, I'm going to have to prep for this." They're typically fine with that because it creates...we can actually get more done during the session if we can do that, if I can prep ahead of time. And I do that because sometimes there's very little prep that I need to do, especially if someone's finances are more simple and they don't have a ton of financial statements for me to look over, that it's just more of a conversation and planning and looking at the situation in the moment with them during that meeting, during that first meeting.

Michael: And even for people that are down at, you know, income levels under $75,000, you know, so you said that's still a big chunk of your clients. Like, I get why the one who earns $300,000 isn't going to blink twice at a $350 fee for the initial meeting, but are you able to hold that as you go down the income spectrum? Do you have to start modifying that when you get to your clients that are at the lower end of the income scale?

Phuong: So I have modified it. So mostly I don't. Usually, I don't. But for my clients who are single women making less than $50,000, I did not start them at the hourly rate. I said right off the bat, "We're going to do retainer if we work together."

Michael: Okay. So essentially taking away the upfront fee commitment, you know, simply pay the ongoing. So, you know, you'll still get paid over the span of a year or multiple years but just not with that initial upfront piece.

Phuong: Exactly. Yes. And that is usually because they've said, "I want to work with you, but I just don't have that much right now." And they're being honest with it. And I said, 'Then let's start with the retainer and let's do that."

Michael: I was going to say like, I feel like that's still a challenge point or maybe a perceived challenge point of working with people as we come down the income scale as just, can they even afford the upfront or the ongoing cost of it? You know, like when you get someone that says, "I've got these debt problems and I'm trying to work through them and someday I want to save enough money to have a house," and you say like, "Well, you know, for $350 I'll help you with that stuff." I feel like there's a perception, right or wrong, that the response would be like, "If I had the $350, I wouldn't be calling you."

Phuong: And sometimes too when I have that strategy session, there are some clients where I say, you know, "I think you'd be better served going here or with this person." And sometimes I actually refer to other financial planners, some financial planners that I've actually learned about through your podcast, Michael, and I refer clients over. And sometimes I have referred clients to free programs as well. And some have taken me up on it and said. "Oh, yeah, okay, I'll go with them instead. I'll check them out."

Michael: Counseling and coaching programs in the community, like, "Hey, just, I don't think I can help you best or I don't know if you can afford the way that I work with people, but here's another resource for you. You can go here and they will help you where you are."

Phuong: Yes. Yes. You know, and sometimes I'll say, "That really is the best thing for you." And sometimes I give people a choice, "You know, I know of this program. It's free. You can do this. I would do this. And if we work together, it'd be a retainer. You know, it's up to you. You can think about it. We can talk about it again on what's best." And sometimes they will go with the non-profit or I might not hear from them again, but I always hope I do, because I always want to know, you know, did they get the help they needed? But sometimes they go with me then on the retainer. But I leave it up to them. It's their choice. Because sometimes, actually sometimes people have gone the non-profit route, or they've gone on the pro bono route and sometimes it hasn't worked out for them.

How Technology Tools Give Phuong The Confidence To Stick To Her Pricing [1:17:50]

Michael: And they're all working with you virtually. Like, they get sent to your website or somehow, you know, someone refers them or a planner refers them or, you know, NAPFA or something. Let's Make a Plan refers them over to your website. And they're engaging you straight off the website to say, "I want to hire you. I want to work with you. Let's get going." And then all the work is virtual?

Phuong: Yeah. So usually it starts with that 30-minute call, just we're understanding each other. I have a script that I use. And that's something I learned from your podcast as well. I have a script that I typed out after doing a lot of...I've done so many of these, I realized, "I should just write it down so that I can focus on the client instead of thinking in the moment, remembering what I was supposed to say."

Michael: You just have, like, a series of typical questions that you'll ask and go through with them?

Phuong: Yeah. And so what I've had to do too, you know, because... So here's what I do. So I actually personalize the conversation a little bit. But what I do is, whenever a client schedules something, I use, I don't know how pronounced, but is it Zapier?

Michael: Yeah, Zapier. Yes.

Phuong: So Zapier. And with Zapier, they fill out the client form when they schedule. So it's all automated through a scheduling calendar. And I have questions that they have to fill out when they schedule. "What are your goals?" And I ask them and they type out their goals. "What's your name, phone number?" All that basic stuff. And from Zapier, Zapier brings it into RightCapital. Or actually no, it brings it into Wealthbox, which is my CRM, and then it brings it into a note that I have in Evernote. It brings it straight into that, right? So no client information or anything, it's just, like, basic, "What are your goals?" And their name.

Michael: And what scheduling software do you use?

Phuong: I use Acuity because it came with my Squarespace website.

Michael: Okay. So they schedule with you. I'm just trying to think through this sort of workflow. So they schedule with you a strategy session through your website using Acuity. You've got, like, a questionnaire in Acuity that asks them some of this background information about their goals. Answers to that then using Zapier get pushed into Wealthbox for your CRM, get pushed into Evernote. So you've got some notes before the first call comes along.

Phuong: Yes, in the template that I've created.

Michael: Okay. Okay.

Phuong: And then I go in there and the template is already created with the client's name or the prospect's name, the time of the meeting, the script that I have. And it has their name embedded throughout the script because it flowed in from the Acuity scheduling. And I only personalize one chunk of that. And their goals get populated. And I personalize the questions I'm going to ask them.

Michael: Oh, interesting. So some of these is sort of your, we'll call it your boilerplate? Like just, "Here's how we work and here's how we charge and here's the service that we provide," right? Like, we're going to say the same thing over and over again, so really just write this out and script it for ourselves. And then some questions that get into, you know, they said their big issue is saving for a home, so we're going to have to ask more stuff there. Or they said their big issue is a job change, so we're going to have to ask more stuff there. So that gets more personalized for them in this 30-minute call.

Phuong: Yes, absolutely. And I did this to save time. I did this also to build up my confidence. And I really appreciate your podcast with Diane MacPhee about confidence. I loved that conversation. I struggle with self-confidence, right? And so having that helps me stick to my guns, stick to my value. I don't have the urge to lower my rate in the moment or to quote a lower rate. And also, it forces me to have a fair conversation with everybody, right, whether or not they're low income still. And so it keeps me.

Michael: That's interesting. So part of the benefit of the script for you of how you're going to walk through your intro meeting is you actually have your fee written into your script? So, like, how you hold yourself accountable. You're not allowed to change the script. So this is what you say your fee is because you've got to read it for yourself. That's an interesting mechanism just to keep yourself from buckling because this is what we do, right? You quote a fee and they're like, "Well, can't I pay a different fee?" Like, "Where did that fee come from?" "Oh, I basically just made it up because I said it's what I need to charge." Like, it's hard in the moment, unless you've got a script and you're not allowed to deviate from because you made that for yourself.

Phuong: Yes. And I also put in, because some people will ask, "Do you ever meet in person?" And I've said before, we talked about earlier, I used to. And I put this in the script or I put "common questions people ask" just in the bottom, and I have a response that I share. And I said exactly what I said to you, you know, "I've found it to be more productive when it's video conference. And so that is the only...that is how I meet with clients. Would that work with you?" Or, "Would that work for you?" That's what I say. And then I pause. I pause. What I tend to do before I had the script was I tend to negotiate with myself in the moment.

Michael: "Would that be okay with you? Unless it's not. And if it's not then we can work something out. But would it be okay with you if it is okay? Is it?"

Phuong: Exactly. Exactly. And, I mean, I've heard before that women tend to do that. You know, we question ourselves even before the other person questions us. Like, it's internalized. So it helps me stick to my guns.

Michael: Interesting. Interesting mechanism for it. And I guess and it works even better because you're literally doing it virtually. So it's not like you're sitting across from them where it might feel weird if they see you reading a script. Like, you're in front of a computer, you can totally read the script. It's right there on the screen while you look at the camera.

Phuong: You know, and it gives me more confidence to go off script sometimes too. Just it forces me to just know I didn't forget this. I didn't forget that. And also what really helps is I put a motivational mantra to myself at the top of the template to remind myself to be confident. So I'm not going to share what it is because it's a little embarrassing, but it helps.

Michael: I won't call you out on it. Just if it works for you, fine. Whatever words of inspiration work for you, and...

Phuong: Exactly. Words of inspiration.

Michael: Yep. And just keep them out there as a daily affirmation.

Phuong: Exactly.

Michael: So I am curious again about just where you see all of this going. Do you see this as a model for others to adopt that want to just move, I hate the label, but, like, move further down market? Maybe, like, move more mainstream American is a better way to put it. You know, as we said earlier, like, you know, there are some advisors that make some pretty high incomes, because if you work with really affluent folks, the dollar amounts get really big. But, you know, you just get to numbers like $1,000 per client on average, you know, a few people a little below median income, a few people a little above median income charging 1.5% of their income, and, like, you can make what for yourself will be above the median household income in the U.S. Like, do you see this as a model for expanding financial planning to more communities or is this just your experiment right now and we'll see how it goes?

Phuong: I think it could be. I think it could be. And sometimes I wonder, you know, would I ever want to expand this to have employees? Maybe. But when I talk to other professionals who work with low-income families as a financial coach or counselor, usually they're working in a non-profit. When they hear about what I do, they think, "Oh, wow, maybe I could start my own business." And I say, "It's possible. It's absolutely possible. You know, you might have to have a part-time...do part-time work at the same time, but if you can find part-time work that supports and builds your practice at the same time, that would be incredible." Because when I do these trainings, I'm learning so much. And it actually reinforces the value I could bring to my clients.

Michael: Well, and, I mean, the truth is, almost any of us, I mean, you can go work with some pretty affluent folks that have a lot of dollars, almost no one makes any money in the first few years. We're all kind of scrounging with savings or part-time jobs or side hustles or whatever it is. Like, almost no one is earning much dollars in the first year or two.

Phuong: Yeah, absolutely. And I've learned that from the podcast too. And I think, like, we're all in such silos that I didn't know a ton of other financial planners. And so when I was thinking of doing this, there's no way I would have charged what I charge now when I first started. Even when I started my own business, I thought, "These fees are incredibly high. Who would pay for this?" I thought that too. And people still tell me, "Your fees are very reasonable," and I go, "Really? Really?" I still feel like they're high. But then I hear from financial planners who have higher fees, "No, this is really unique." That tells me, "Oh, interesting." It's all what you're used to.

Michael: Yeah. Well, and, I mean, that was part of why I'd asked early on of just, how do your clients react when you talk about these fees. And, you know, it sounds like the answer is a lot of them are quite fine with it. I mean, just the nature of charging 1.5% of income, right, I mean, it's not hard to go to anyone anywhere in the spectrum and say, "In the past year, have you done something dumb with at least 2% of your income?" I feel like pretty much everybody can answer yes to that. So you're like, "Great, I am a smart thing that's less expensive than the dumb thing you did in the past year with 2% of your income. Now, do my fees seem reasonable?" "Yeah, probably."

Phuong: And I also put my fees really clear on my website. And so before we even have the first call, I send them an email and say, "Hey, thanks for scheduling. I'm looking forward to talking with you. If you haven't had a chance to look, here's my services page that lists my fees and how I work with clients. So if you have time, make sure to read that over before we talk."

Michael: So that way, like, you don't... I mean, I guess that's the other good news of this structure is, I'm going to imagine you don't actually get a lot of strategy calls with prospects who push back on your fees. Because if they are going to push back on your fees, they just read it on your website and they don't call, saves you time on not talking to non-qualified clients.

Phuong: Yeah, absolutely. And I think eventually once I...eventually I do want to put resources on there for people as well when they get on my website that are more pro bono or more free. Or free, I should say, not more free. That are free so that they can, you know, see what else is out there too. So just as a free resource for people. So I want to put that on too.

What We Can Do To Improve Diversity In Financial Planning [1:28:28]

Michael: So I have to ask, like, as someone that's coming in from...you know, coming into financial planning from, as you said, like, a lower-income background, a background as a person of color, like, we frankly in the financial planning world have not done very well attracting women or people of color or people of lower-income backgrounds. Like, what are we not doing or what are we doing so badly that we need to do better to improve diversity in planning? Like, is it just we're working off a bad legacy history of income inequality and some of the racial and class lines that it divides so they don't find their way into financial planning or, like, we're still actively screwing this up in the financial planning world?

Phuong: Michael that is a huge question. That's a huge question. And you're like you know it's a big question to be asking. So let's break that apart a little bit. There's a story also that I want to share that I didn't share earlier when I talked about my transition into financial planning. When I went to my first networking event for financial planning, I was so incredibly nervous. And I don't think networking events exist when you're a teacher. Yeah, I didn't even have business cards, and I found out the hard way that you're expected to have business cards. Someone said, "You don't have a business card?"

Michael: You didn't have a business card to hand out at networking event? Geez.

Phuong: Someone looked at me and said, "You don't have a business card?" And they just walked away.

Michael: Fantastic. Welcome to our community.

Phuong: But that was towards the end of the night. But I walk into the room and I get there early. So people are still talking, mingling before the panel. And I stand by a group, and I'm just, like, trying to just be a nondescript with just, "Oh, you know, I just came in here. I'm comfortable. I'm one of you." And I realized they're talking about who they work with. And as if on cue, as soon as I, you know, stand there and I hear one of the financial planners say, "I work with teachers mostly. Teachers are so bad with money." And everyone starts laughing and nodding in agreement."

Michael: And you're like, "I'm a teacher."

Phuong: Yeah. Yeah. But obviously, I didn't say that.

Michael: "But I'm not bad with money, so I guess I don't belong here."

Phuong: Yeah, yeah. So then the bell rings and everyone starts dispersing and we head to the main room. And I'm standing there like, "What just happened?" Yeah. So that was my first experience first five minutes of a networking event, my first networking event as a transitioning financial planner.

So I say that all, I say that all because there are stereotypes, right, of certain professions. There are stereotypes of certain groups, communities and we have to unpack those. And now I'm talking more on the interpersonal side of things. You know, the stereotypes we put on other people who don't seem like they have a lot of money, didn't grow up with a lot of money, don't have a lot of wealth. And oftentimes people of color, whether or not they are low income or don't have wealth, because of the stereotype, people will assume they don't know how to deal with money or aren't good with money because of the stereotype in this country, right, of people of color not having a lot of wealth and being irresponsible with it, or not having the financial discipline to build wealth for themselves and their families and communities. There's those outside stereotypes.

But then there comes the internalized part of that. When you hear those stereotypes enough, you don't need those outside voices anymore to hear those stereotypes. And so I heard that. You know, I heard that teacher one, and I tell that as a story now, and it's funny, but back then it was confusing, I should say, but now it's funny, right? But I've been able to build that confidence. But if I was hearing that every day and if I was hearing that, you know, it would have sunk in.

Michael: At some point, you become convinced you can't be a financial planner because you're a teacher and teachers aren't good with money.

Phuong: Yeah. Yeah, exactly. And, you know, I'm saying people of color as a group, right? But there are literal shades in that group. So I am a light-skinned Asian American woman and I have a different place in society than a dark-skinned Asian American woman than an African American woman, than a black woman, than a black man, than a white man like yourself. I am more cognizant of that now than I've ever been in my life because of being in financial planning and realizing that I am so different.

I didn't really think about that as a teacher because although my colleagues were mostly white women, my students were people of color, were students of color mostly, for different reasons. But people who live in poverty are more likely to be identified as learning disabled. And so I was a special educator, and so I was managing and working directly with those students, in addition to the whole classroom. But black and Latino people in this country are three times more likely to be in poverty. So it's like we talked about before, the class and the race issues, they're very linked. And so I was surrounded by people of color in education, right? And other school districts had more teachers of color. So I would see them at conferences, things like that.

But in financial planning, it actually was more rare. And actually, talk of race, even though there wasn't a ton of it in school, there was a lot more of it than in financial planning. So I felt like that was always like an undertone, but it wasn't up in the forefront, right? Like, so for me to be able to say with you right now that I'm a light-skinned Asian American woman, that's not something I would have said five years ago, because I don't know if I would have had the vocabulary to say that. Because it's such a loaded thing to say. Like, so what does that mean? Right? Does it just mean my skin color or does that mean...there's so much history in me identifying myself as that.

But I'm not nervous about it anymore. But it took a lot of encouragement from mentors, from friends, from heart-to-heart conversations to be at this level, to be so confident and be able to say that. And not all people are, right? And I don't think it matters what age you are, but I think, again, my passion and talent for teaching in front of groups has saved me again. Because, as I've had to train and talk to people about the financial history, there's no way I couldn't start using that to reflect on my own history and my own place here in the U.S., I should say. I'm talking about here. It really freed me to really understand who I am.

Michael: And so, how do we draw in more people? I don't if it's wrong to say, like, more people like you. More people not like me. Like, I get it. I'm a white male who grew up in an upper middle-class suburb of a metropolitan area. Like, most of the financial planning world looks like me. Most of our clients look like me. Lots of different reasons. But, you know, the kind of differences you talk about, like, it's so not the world I came from, just kind of the point. But it's so not the world I came from. Like, I don't even know what I don't know about how we fail to be an open community for people of color and financial planning aside from just the sort of sheerly obvious, like, you walk into any financial planning meeting and clearly we're mostly white and we're mostly male.

Phuong: So let's break it down a little bit more. So I talked about the internalized racism before when I said oh, there are stereotypes that are put on us but also that stay in my mind that I have to work against sometimes. They're less so now but still, there are stereotypes of Asian American women that I have to contend with. But then there's other forms of racism. So there's interpersonal racism, right? That's racism between individuals. And so if you don't understand this history and you were coming into a conversation with me as a financial planner and this has happened before, where I've talked to other financial services professionals and they've said, "Wow, you work with people who are low-income, that's amazing. So you help them learn how to not buy the latest iPhone? You help them be responsible. That's so noble of you."

So there's two things that are happening there. There's a lot of classism, right? Because they're not...and I've had people of color tell this to me too. Not just wealthy white people, right? It's not about that. When I say it's not about that, I mean it's not...classism is different from racism, but it's so connected. And I know I keep saying that, but I say that because I don't want it to seem like only people of color are experiencing poverty in this country. And that's not true. But there is a history there that we still have not contended with.

And I think even today, we are more sympathetic as a country to low-income white Americans. Because we assigned to them a context where we assigned, "Oh, the traditional financial services system, you know, has been there but it's failed them." But when we talk about people of color, traditionally black people and Latinx people, we think the system has been there but they haven't taken advantage of it because they haven't been disciplined enough to do what they could with it and to build wealth like other Americans have been able to over the last century, or over the centuries that this country has been founded, right? So we blame it on the personal rather than the institutional failing when it comes to people of color.

Michael: Right. And then in the planning community, we tend not to see it in the first place because it's at this point more the domain of financial coaching and counseling that's been working with these populations and less so in traditional financial planning. And so, I don't know, I'm just trying to think like, are there pathways we can build for just promoting more connection between the financial planner community and the financial coach and counselor community?

Phuong: Yes, I think so. I think the history that we've been talking about today, I think that is the missing link. Although I have talked to people who work with low-income individuals who still maintain similar biases of, you know, if they had more discipline or if they spent less money they'd be in a better financial place, but usually, the majority of people I meet and talk to who work with low-income people understand the systemic issues. But when I talk to financial planners who typically work and come from higher-income backgrounds and work with higher-income families, they're not so aware of those systemic issues.

In the beginning of my career as a financial coach, I mostly came into contact with those types of financial planners because they were working pro bono. They were volunteering to teach a workshop or they wanted to volunteer to work one-on-one with our families. And sometimes those conversations were tricky because if they showed judgment or a lack of an understanding about the context of our clients' lives, we couldn't put them in front of our clients. And I didn't want to collaborate with them, right? But I have worked with and met with wonderful financial planners who, even if they don't understand the contact, they want to learn, and so they ask a lot of questions. And I'm happy to talk about it, just like I am now with you. And I recommend books they could read. I recommend articles. There's documentaries on this.

Michael: I was going to ask, so like for anyone who's listening who just wants to understand more about this, like, is there a particular book? Like, is there a one go-to thing that you recommend as a starting point?

Phuong: Oh, absolutely. So the book that I recommend to understand how our economic system has been shaped by race is "The Color of Money: Black Banks and the Racial Wealth Gap," by Mehrsa Baradaran. And it is an awesome book. I've read a lot on this topic, and this is the best book I've read that gives an overview of the racial wealth gap. And sometimes I like to say the racial wealth divide instead. And it just gives a great overview of the history. And then another book that I would recommend about understanding race and being comfortable talking about race is...the book is "So You Want to Talk About Race." And the author is Ijeoma Oluo. And so I thought that was a great book as well.

Michael: Okay. Okay. For folks who are interested and want to delve in a little bit further, this is episode 97, so kitces.com/97 and we'll have links out to a couple of these books as well for people who are interested in diving in further.

So as we kind of wrap up here, I'm curious just any other takeaways around, like, gaps we have in improving diversity, right? Like, at some point, I understand...you know, well, I understand understanding historical context, but I still also just think about like, "What can we be doing now?" Like, unfortunately, I can't fix crappy things we did 50-plus years ago. I've got to understand it, but I can't change it. So, like, what can we be doing to get better today on this?

Phuong: Yeah. We didn't cause this, right? You and I, right? Individuals didn't cause this. Institutions caused this. Laws caused this. It took decades, centuries for the situation to happen. Because diversity is not...lack of diversity is not just a CFP problem. I think the one thing that I would urge you and others to really understand is that it's okay to talk about this stuff. And I think the more we talk about this stuff and more comfortable we get talking about this, which can be really hard because I know that even just saying the word race or saying black, white, brown, Asian can get people's stress levels up. I think there's been research on this. And it doesn't need to be that way. But it's been made that way because of how negatively those categories have been used throughout history.

So we can take back. We can take back those terms and use them in a neutral way, and use them in a way to describe what's happening without pointing fingers at anyone right now, right? But if we can't talk about this stuff then I think we're going to continue to exclude people of color who know the history and who feel like it's not for them, who feel like they wouldn't be treated fairly because their community hasn't been treated fairly and that they might not be treated fairly in a workplace setting. And that their community or themselves might be...that the stereotypes would be used against them, and also they didn't grow up with a ton of wealth, right?

So the wealth stuff, the institutional stuff, that's going to take a lot of time to solve and to fix and to repair, I should say. To repair. That's going to take generations to repair. And it's getting worse actually. The wealth divide is getting worse because of laws that are in place. But I am hopeful that things can change because institutions are made by people. And we can change them. And so by talking about it, by being comfortable talking about it. And on the institution side, I am all for scholarships, right? Like, that's something we can do now. And I know that a lot...that's happening more in the industry, or in the profession, I should say.

I started my education at Boston University because there was a scholarship for people from diverse backgrounds or who are working with diverse communities. And it was the Bob Glovsky scholarship. And Bob has become a mentor of mine. He helped start the Center for Financial Planning. And they're doing a lot to increase the gender diversity but also racial diversity in the profession. And we'll see if their fruits come out of it, but there's a huge push to do that now. And so that's something, right? So if we can recognize the inequalities at all levels, institutional, interpersonal, internalized, we can then tackle each of them in different ways. And having resources is one of those ways, right? And so I don't know if I would have started the CFP program without that investment in me.

And also I think it hit it in multiple levels because it wasn't just those resources financially, but knowing that someone as established as Bob in the field believed in me and felt like I could do this was huge. And it built confidence in me that I don't know if I would have started off the way I did and to be where I am now without that.

And that leads me to the next thing with mentoring. Another mentor of mine that I want to call out is Dan Candura. He's been an amazing mentor of mine. He worked with me while I was still working at the non-profit, and I started doing an apprenticeship with him. Meeting with him once a month, learning how to work with clients in a more financial planning framework. And I did it at the time because more and more of my clients at the non-profit were coming to me and saying, "We want help with retirement." They skewed on the older end. Like, there was a population that skewed on the older end in a certain city just because of the program we were partnering with at the time. And I had a blind spot at the time.

And I started working with Dan. And I sat with him during his client sessions. We would talk through cases together. I would bring client situations and questions from my other work into meetings with him, and he went through them with me. And he gave me the confidence to realize, "This is not so different. The knowledge that I have here in the other areas of my life and my personal experiences are transferable to this industry." And I think sometimes in my life, I hadn't always felt that connection. That what I experienced growing up, the financial stress. And what I care about outside of my work as a financial planner always made sense to bring in to my job. And basically, I didn't know if I could be myself. And no matter what someone's history is, I think we all kind of feel that some sometimes. "You know, is this for me?" I remember hearing you Michael, your own story.

Michael: Yeah. You know, "I'm a human being, do I fit in here?" I think is fairly universal. You know, we all have that need or desire to feel like we belong.

Phuong: Yeah. And the messages are so powerful, pushing me against what I'm doing now, right? That I think it's the power of the relationships that I've built, and my friends. Another friend that I've had, Vera Kelsey-Watts, who is an XYPN member. She has been awesome to me. Actually, we met at a non-profit years ago, and we've re-met at a NAPFA study group. And I said, "Vera, what are you doing here?" And she said, "Phuong, what are you doing here?" And we hadn't talked in a few years. And we had both transitioned to financial planning. But we worked with similar populations. She also works with moderate-income people. She has a different model. She has assets under management, but I learn a lot from her, too. I bring questions to her. You know, they've all helped me realize that, "You can do this." That's basically what it is.

So resources, more scholarships for people of color, right? Or for other groups that we want to bring in, because there is a financial barrier. And then also direct mentorship. And I think having those organic relationships is really helpful, right? Because I've met other mentors, and I'm sure they're excellent mentors for other people, but just sometimes you just don't click with some people. But I met a lot of people out there. I mentioned Steve, Dan, Bob, Vera. I'm forgetting someone. Carolynn Tomin, who was a director of BU Financial Planning Program. She's been amazing. Really helped me foster the educator's side and the registered programs kind of track that I'm going down as well.

I think it's even more important for people of color to build that kind of community around them because of all the external messaging saying that this might not be the career for us. Because the majority of our people, Michael, when I say people I mean other financial planners, we're working as, you know, investment, but we're working in investments. We're working as wealth managers. And we've already talked about that. There is a wealth divide. And so you're more likely going to work with people who are white. It's a cycle.

And I think there are different solutions that are needed for each part of why there is an exclusion, right? There's exclusion, but there's also people of color not wanting to go in. So it's a two-way street, right? So people of color do have agency in this situation. Because oftentimes when I hear the diversity issue, I hear, "Oh, the financial planning profession isn't being inclusive enough." No, but actually, people of color also choosing whether or not this is the right profession for them. It's not just because they don't know about it. They might know about it and they've decided, "No, I'd rather do this other thing or stay out of it or stay out of finances altogether." Which is a shame because financial services is such an interesting field. It's a growing field. There's so many opportunities for people to run their own business or join a small business. There's just so many opportunities here, especially on the technology side.

Michael: So as we wrap up, you know, this is a podcast around success, and, you know, we all build businesses and kind of our own vision of what we want success to look like. And so I'm just wondering, like, as you go down this road and you have this interesting blend of, you know, keeping a foot in the counseling and coaching world and keeping a foot in the planning world and keeping a foot in the educator world, you know, like, all these different ways that finance nerd and teacher intersect for you, I'm just wondering, like, as you look forward from here, how do you define success for yourself?

Phuong: I define success through impact. And I think at this point in my life, I want to create change on a systemic level. And I know that sometimes that might take me away from working with individuals, but when I say that I want to be... I remember when I started teaching, I remember telling myself, "I want to be the best teacher possible for my students. And I'm going to be. I'm going to be the best teacher possible." And I started realizing that it might mean that I have to leave the classroom to do that.

And so I'm realizing that now too as a financial planner, that making that systemic change, to change those institutions that we talk about, to change the internalized messaging requires that sometimes I have to step out of those client meetings and to speak to more groups, just to write. And that's something I have to do. Like, I haven't really written much for an audience. It's something I want to do, to clarify my thinking and to allow other people to read it and to comment on it because I need to grow in that way. I need people to say, "Well, what about this? What about this?" To question with me. Because having conversations like this has what led to this kind of understanding, right? For people to push back to what I'm saying. And I've had people of color push back, white people push back. And that helps me grow, but it also helps me clarify what change needs to happen for myself so I can tell and help guide other people to focus their energy too. So that's what success means to me. Yeah, what kind of impact I can make.

Michael: We'll have to have you back on a couple years from now see where this evolves and where the pathway takes you and do an interesting retrospective like, "What have the past five years been like for you in 2023 since we did that last podcast?"

Phuong: Thank you, Michael. And I would also want to say thank you for building a community of financial planners, helping emphasize for us that it's not about being competitive with one another but about helping each other grow. I've learned so much. You know, all the different things that I'm talking about about my practice, many of those things I learned from reading you, reading people from your podcast, looking deeper into other people's practices and getting inspiration from that. Because, like you said, what I am doing and the population I'm working with is so...it's unique for our certification right now.

Michael: Well, thank you. Thank you for joining us, Phuong, and sharing the story of what you're working on.

Phuong: Thank you so much. I really appreciate this time.

Michael: Absolutely.