They are often cited as pioneers in fee-only advice in the US, having taken their firm down that route in 1993. Katz, an amateur pilot, says she decided to make the transition from commission-only to fee-based after a chance phone call with a reporter from The New York Times.
Press call
“The reporter said, ‘Do you know any independent financial advisers? My editor thinks I should only quote people without a conflict of interest.’ I told her to call me back in a couple of weeks.
“In the meantime, I told Harold and our other business partner that we were going to become fee-only. After I’d picked them up off the floor, they thought that it was a good idea. That’s how we changed the industry. Back then, there weren’t any fee-only firms around,” she says.
At first, the firm struggled to keep clients after informing them of the fees they intended to charge. “It was not successful in the early years, because we had to tell people what ‘fee-only’ was, before they could decide if we could work with them. There are lots of ways for advisers to hide the fee conversation.
“People had no clue what they were paying back then,” she recalls
Describing the firm now as “very successful”, at last count Evensky & Katz had $1.6bn of assets under management.
The industry has changed drastically since Katz started her career as a financial adviser in the early ’80s after becoming disillusioned with her job as a teacher.
“I decided I couldn’t teach the kids and wanted to do something that was less stressful, like managing other people’s money,” she says.
“The biggest change today is that more advisers have embraced the fee-only concept. When I started, we used to sell product and give away advice. Advisers were not business people, they were just nice people who wanted to work with their clients.
“Today, we do just the opposite. We sell advice and the product is an extension of an implementation,” she adds.
Alongside her husband, Katz is also the co-founder of Alpha Group, an association for senior investment advisers that launched in 1990. It works to improve transparency in the asset management industry.
“In those days, nobody would talk to advisers. Portfolio managers had a proprietary approach, which they didn’t want to share. We told them we needed to tell our clients why we were investing, and so we began to have monthly meetings with portfolio managers, who gave us information on their strategy. That was another big inroad for us,” she says proudly.
Training game
Katz is a permanent fixture in rankings of the influential people in the financial planning industry, as well as being named year-on-year as the ‘woman to watch’ by the leading US adviser publication Investment News.
Last year, she received the magazine’s Alexander Armstrong lifetime achievement award, which recognised her work in educating the next generation of advisers.
She decided to take a step back from financial planning and return to teaching 11 years ago, when she realised that “unless we started working with the next generation we wouldn’t have anybody in our practice who could take over when we wanted to leave”.
