'Most people have no clue what they’re invested in'

How Kind Wealth is putting clients' values at the heart of its subscription-based financial planning model

'Most people have no clue what they’re invested in'

The influences that would shape David O’Leary’s financial career had already manifested themselves when he returned to Canada after four years in South Africa.

But even he didn’t predict he would eventually go on to found Kind Wealth, a virtual subscription-based financial planning firm, which helps clients create a long-term financial plan and align investments with their values.

Working with its demographic “sweet spot” of 30-49 year olds, clients pay a monthly fee. As one of its services, Kind Wealth offers to examine their investment portfolio at a bank, discount brokerage or robo advisor and explain where exactly their money is living.

Most of the time, O’Leary told WP, clients don’t have a clue. “They don't even know if they're in a mutual fund or an ETF or a stock; they just know they’ve got exposure to stocks. Once you lift the hood, you can show them things, like what percentage of their portfolio is in guns, for example. It’s pretty eye-opening for them and they usually want to do something about it. They just don't know what to do and how to do it.”

Kind Wealth’s planners are not licensed investment advisors, so they don’t process any trades or handle assets. Instead, they provide comprehensive ongoing financial planning and offer additional services like coaching clients on how to take control of their investments and how to change it up to reflect their personal values.

O’Leary can empathize with tales of rags or riches. He learnt the lessons of the market early, going bankrupt at 21 nearly $300,000 in debt. In previous interviews he has admitted his naïvity at leveraging bank credit by purchasing stocks and stock options on margin, only for the tech bubble to burst and his world to come crashing down.

African influence

From this humbling learning experience, O’Leary, who will speak at WP’s Invest ESG event in Toronto on March 25, bounced back impressively. He spent nine years with Morningstar in Toronto, evaluating professional money managers and providing institutions and advisors with detailed reports about mutual funds and whether they were worth investing in or not.

In 2010, he met his now wife, a humanitarian worker. He took a sabbatical from Morningstar and spent some time in Sierra Leone volunteering with World Vision. “It was a pretty impactful experience in terms of seeing the challenges in the world outside of my bubble,” O’Leary said.

They got married and spent four years in South Africa, with O’Leary continuing with Morningstar, doing investment management research for the domestic market. After moving back to Canada, he started a financial advisory practice with two friends who had been advisors their whole careers.

For about 18 months, they grew a business focused on planning and managing discretionary portfolios for mass affluent and high-net-worth Canadians. O’Leary admitted, however, that it soon became clear they didn’t all see eye to eye about how to take the business forward.

He told WP: “I was really interested in a couple of aspects - one was helping clients align their money and their values. It’s a big part of what interested me in going into that space. Financial advisors don't often have conversations with clients around values and their progress, and what they want to achieve in life aside from telling them how they want their finances and having that arranged.

“I wanted to embrace that stuff, whether that’s philanthropy, socially responsible investing, or even how they volunteer their time and effort. Can we help them connect with things that are meaningful to them?”

Transparent fee model

The other aspect that interested O'Leary was disrupting the industry in terms of pricing and transparency. In March, 2017, he took what he called a “radical pivot” away from what he had been doing with his previous partners and established Kind Wealth.

The fee model, he believes, changes the nature of the advice you give – the only cash coming in is from clients, so it’s not conflicted. It’s relatively early days for the business but people like the approach and its base is growing.

“It's been a learning process for us,” O’Leary said. “Traditionally, what happens in the advisory spaces is you’re thinking I'm not going to make any more or less money if I spend more or less time with the client because you're going to take your percentage and that's going to keep coming as long as the client doesn’t just take off and leave. That’s your bar, ‘I don't want to piss them off enough that they'll leave’.”

Instead, with the subscription-based pricing, the amount comes out of their account every month.  As planner advisors, that puts more pressure on them to deliver value on a regular basis. That might be viewed as a negative or it might encourage them to reach out to their client regularly, so you can't afford to get away with ‘we'll see you in 12 months’.

Kind Wealth breaks down the advice into more digestible parts. There is also an emphasis on coaching the client. For O’Leary, the business feels like the culmination of his life’s experiences and he’s relishing the chance to keep building a platform that other like-minded planners can join. He is now searching for socially conscious financial planners who want to build a lifestyle practice but don't want to go it entirely alone.

He credits Morningstar’s strong underdog culture - "speaking up for the little guy" – as an inspiration for Kind Wealth’s transparent pricing and push to remove all conflicts of interest. The value piece – the "Kind" element – is very much down to his wife and the couple’s travels in Africa.

“Wanting to help other people make an impact felt like the best way to maximize my skill set.”

To see the full agenda for Invest ESG click here, while to purchase tickets, including the Super Saver deal, click here.