Ferociously Independent-Minded

On episode 6 of Decision Dialogues, Mark Willoughby speaks to Karen Keatley, herself a Principal and Wealth Manager at Modera. Karen’s firm, Keatley Wealth Management, merged with Modera at the beginning of 2020. Karen talks about her experiences in the financial world, where she began in asset management, and found that Wall Street was both male-dominated and outwardly hostile to women trying to establish a career. Karen did ultimately earn CFA certification, but after having her second child, noticed she wasn’t getting the same quality of projects. After a period as a stay-at-home mom, she transitioned to the personal side of finance, eventually founding Keatley Wealth Management and taking on four employees. These decisions—especially her decision to be flexible with her employees, who were all working mothers themselves—led to outstanding growth, and ultimately her firm’s merger with Modera, a weighty decision in itself.

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Transcript

Thanks for joining us on Decision Dialogues. We’re thrilled to have you along. My name is Mark Willoughby, and I’m a Principal and Wealth Manager, and the Chief Operating Officer of Modera Wealth Management, LLC. Today, I’m very happy to be joined by one of my partners at Modera, Karen Keatley, who’s based in one of our two Charlotte offices.

Karen merged the firm that she herself founded, Keatley Wealth Management, into Modera at the end of 2019, right as the Coronavirus pandemic was beginning to spread around the globe. Karen, thanks so much for your time today, and welcome to the show.

Thanks for having me. It’s fun to be here.

I know we’re gonna go back into your history. But I can’t help but think how interesting a time it must have been for you in that first few months of this year. There you were, having built your firm, and having decided to merge it into another firm, and then suddenly, we all had to deal with a pandemic together!

Well, I think if somebody had said to me a year ago that “You’re going to merge your firm and then we’re all going to have to stay home and work from home for the rest of the year, right after you do that,” I probably would said, “Let’s not do this right now, let’s just maybe come up with a different plan.”

An incredibly surreal time for all of us back then. So let’s go back into the mists of time, Karen, with you, in terms of you know—there’s probably a few different phases in your career. And I kind of wanted to dive into the different challenges that you faced, the different decisions you’ve had to make. So if I could bring it all the way back to, let’s just deal with a little bit of the the initial part of your career, and to give our listeners an idea of later on in your career, how that impacted the decisions you made later on.

I was an economics and psychology major in college, and when I was in college economics and psychology had absolutely nothing to do with one another. Of course, now here we are, and they we realize they have everything to do with each other. That I think started me down a road that I didn’t know I was on at the time. After college, I went and worked for an economic research department at a large transportation company, and then left there to go get my MBA in finance at Duke.

After finishing the MBA program, I went to the New York metro area and worked for a large institutional asset manager where I was a portfolio manager for them—mostly fixed income, doing some leveraged buyout equity analysis, but mostly fixed income. Got my CFA during that period of time, and settled right into the corporate world. Had two children, and then everything changed—pretty quickly.

So let me back up a little bit there. Because you’ve just said a few things—very interesting things—that you made sound like it was nothing, but some interesting decisions back then.

So as we know, even to this day, the financial services industry tends to be skewed in terms of the number of participants up to the male side. So you decided to take on the CFA early on, which I don’t know the exact breakdown there, but I think it’s dominated by males as well. Talk to us about your experiences, you kind of embarked with your CFA into the life of Wall Street.

So interviewing on Wall Street was interesting, because I did encounter a little bit of resistance initially coming out of business school—and they did hire women, but I think that there were some additional hurdles that women had to go through to get hired. So some of the big white shoe investment banks were not as receptive to my candidacy for employment as I would have liked. one of them even asked me, they said to me, a partner at an investment bank that is now no longer in existence—it went away during the financial crisis—but a partner that firm said that he would want to meet my boyfriend, before he would consider hiring me to come to work there. I wondered if he was subjecting the men to the same level of scrutiny. But that’s neither here nor there. Times have changed.

How did you react to that, Karen?

I was absolutely thunderstruck.

I assume you didn’t end up working at that firm.

No, no, I didn’t and that is just as well. But the place I did wind up working was wonderful, and it was a wonderful place for me to start my career in financial services. And the CFA was part of the job—we were expected to get that credential. So a year after graduating from school, I started on the three year CFA program.

Any regrets about the time you worked on Wall Street and in that sort of environment?

Not at all. Not at all. It was a great experience.

What for you were the best parts of the experience that you carry forward?

I think I saw a lot of things. I think as an investor, it makes me a better investor; it makes me a more sophisticated investor. I think I understand things in a way from having a long term perspective, and working with so many smart people over the years—I think understand how the markets work in a way that maybe you don’t get unless you’ve been around for a while.

Yeah. And how long was that part of your career?

I was there for seven years, and during that time, I had my children. And what I did find was, as I had my second child, that my opportunities for advancement were changing a lot, and in the industry, I think as a result of me becoming a mom. There was a lot of talk about sort of mommy tracking and becoming “on the mommy track,” and that didn’t seem really appealing. So when my husband was given an opportunity to take a job, starting up an investment banking operation down here in Charlotte, we decided to relocate. And then I would sort of land there and figure out what to do next after we got settled in Charlotte.

And before we talk about that part—so there was a period of time where you were, being a mom, being a parent, working on Wall Street—you want to talk to us about sort of that experience? How did you juggle? Were you living in Manhattan at the time?

We had moved out to New Jersey, suburban New Jersey. It was hard. It was tiring. We had a live-in nanny, but I think the real nail in the coffin was having the second child not a whole lot longer after getting the first one to go to sleep at night. So it was hard.

Can you take a little deeper dive on that “mommy track” reference that you made? I mean, what did that look like? I mean, was that—I’m assuming it wasn’t formalized, but it was understood.

It was. You know, when I came back from maternity leave there, a male colleague whose wife had just had triplets as a matter of fact—and he’s a great guy, and his wife is delightful—his wife was staying home with the triplets, whereas my husband was an investment banker who was traveling every week on multiple airplanes every week. We just had a different set of constraints around us. And all of a sudden, he was getting the really interesting projects to work on, and I wasn’t anymore.

So that’s sort of I think what the mommy track was gonna hold for me: was I could certainly stay in the chair, as long as I wanted to, and my firm was very supportive, but it just wasn’t going to be the same kind of career track that I’d had before.

Would you ever see yourself going back to work in corporate America in that sort of environment?

Absolutely not.

And that that sort of switches into the second phase, so you and your husband and your two kids moved to Charlotte.

We did. And that sort of, I think, led me very slowly towards the path of founding Keatley Wealth Management, because a couple of weeks after we moved to Charlotte, my father passed away very suddenly. He had been retired for six months, and my mother—they didn’t seem young at the time, but certainly looking back now they were in their early 60s.

He was young. He was young.

So yeah, he was young, and young to be a widow, for my mom. And of course, we were all devastated, and I started spending my time with her and using my skills to help her formulate a financial plan, and make sure we were organized with her resources, and make sure she was going to be set going forward.

She had no idea how to approach the problem, and I just, you know, all I had was Excel, but we you know, we figured out how to do a financial plan and get her portfolio set up right. So I became—she was my first client,

Was that your first experience of personal financial planning?

It really was, I don’t think I was really that good at it. You know, you can go to business school and get a degree in finance, and you can get a CFA and you can work at the highest levels in institutional investment management, and really not know very much about personal finance and how it applies—how taxes and different things apply to individuals

See, you had all this wall street experience, but it felt like a beginner.

I did in some ways, yes, that’s absolutely correct.

And a crash course given the sad death of your father.

It was a crash course. And then I did the real crash course some years later: I decided that it was time to get back to work, and earn money and help support my family. So I did the challenge for the CFP.

Did that come directly from your experience of helping your mom, Karen?

It really did. It’s very simple: I realized there’s such an important need for people who give good advice that isn’t, you know, oriented by sales commissions or brokers. I didn’t really know at the time what “fee only financial planning” was. I had stockbrokers that were friends, insurance people that were friends, and my only view of the financial planning profession was that people sold products and worked for big institutions, until I bumped into a family friend who was doing hourly financial planning. He was on a very limited scale, and it seemed like the right way to deliver advice—just to separate advice from all the conflicts of interest.

So I decided that that would be a nice way to go forward, and I could kind of do it part time slowly, you know, hourly—there’s not a whole lot of ongoing commitment there. So it seemed like a nice way to dip my toes in.

This is a kind of a tricky question to ask, but was there a moment where the light bulb went off in your mind? Or was it just a slow, growing realization that this was something that you could get passionate about?

Well, I think it was a slow realization that this is something I could get passionate about, as far as the decision that I really needed to get back to work. That was a little bit of a light bulb.

And I’ll tell you a funny story about my daughter: She was lying in bed crying because she didn’t want to go to school. I think she was in kindergarten at the time, but she, “I don’t like school, I don’t want to go to school.” And I said to her, “Well, you have to go to school, because if you don’t go to school and get an education, you won’t be able to get a very good job when you grow up, and you might have to work in a job that’s not pleasant for you. So you really need to get your education.” She said, “Mommy, why can’t I just go to the gym everyday like you do?”

So that was one of those light bulb moments for me! Time to go back to work!

So it sounds like you slowly got familiar with the whole fee-only fiduciary area. Talk to me about the CFP and how you decided that that was a credential—that was the direction you wanted to go in?

Well, again, the person I’d gotten to know was a CFP. I realized that after looking at it, it covered sort of the holes in my knowledge in terms of what I needed to understand better to do this job. So it was pretty obvious that’s what I needed to do. And I just did a self-study for a couple of months.

And talk to me about Keatley Wealth Management.

Keatley Wealth Management didn’t happen right away. I started doing hourly financial planning for a few years, and I like to refer to that time period as my unpaid internship, because I really didn’t earn very much money. I paid for my software, and I think I learned how to be a pretty good financial planner. I learned how to do financial plans and how to talk with clients and work with clients. I met some really wonderful people who later became Heatley Wealth Management clients.

But I did get pretty frustrated with the hourly business model, just because I felt like I was working awfully hard. You can never build for as many hours as you actually work because you know, everything always takes longer than you think. And I was pretty frustrated with it.

So I was at a NAPFA conference actually, in the fall of 2006, and just kind of grumbling about that with a woman that I’d met—another CFP. She was an owner of a family firm in Virginia—wonderful person, we’ve become fast friends. And I was just talking with her, because I didn’t know: it seemed, to start an RIA firm from scratch that was going to have a custodian relationship, manage assets and do all the compliance and all the other things that needed to happen—all the infrastructure that needed to come into place to do that—it seemed really daunting to me. And I had ridden in to the airport, and I’m in a cab with a couple other NAPFA people, and they were talking about all these things they were dealing with, and I kind of put my head in my hands, I thought, “Oh, this just sounds terrible. How am I going to do this?” And I was explaining this to her and she said, “Honey, honey, these boys, they make everything sound so complicated.” She said “You absolutely can do this, and you need to get going.” So that’s what I did!

So it sounds like just ferociously independent minded. It sounds like you made a decision not to work at another financial planning firm to kind of develop your skills, you decided to dive in and just set up your own firm.

I did, and I really sort of launched with the first asset management clients in 2007. I had to come a well known mutual fund company to allow me to put their mutual funds on my platform when I had zero clients, zero assets under management.

How did you do that, Karen?

With a little help from my friends, honestly. I had another advisor that I’d gotten to know, that had a relationship, and he kind of beat ‘em up a little bit about letting me on the platform.

On your behalf.

On my behalf. And then this well known mutual fund company—and I’ll make another little sort of funny woman joke—that was my female friend in Virginia who had a relationship with that firm. And that firm wasn’t calling me back—they weren’t returning my phone calls. And I complained to my friend Helen, I said, “They’re not calling me back. I can’t get get any traction there.” She said, “I’ll take care of it.” Apparently she said—she told them, “You need to talk with her. She has her CFA and she’s tall and blonde.” So that got the call back, and that’s how we got started with that mutual fund company.

Sad but true, right? Sad but true.

You decided to launch: What were the best decisions you made around that time, that led to your success?

I think at that point, given where I was, it was smart to start slowly. I had wonderful clients who I had developed relationships with, as financial planning clients, who became my early wealth management clients. That was a great way to start. You know, I certainly look back, I see that there were a lot of mistakes I made. I learned from every single one of them and changed them and corrected them going forward. But you know, nothing is perfect.

I think it was really important to network with as many people as possible who could help me figure out the things I needed to figure out. This particular—again, my friend, Helen, in Virginia—I spent several days with her firm being sort of going into basically to school, boot camp, with her firm to figure out how they did everything. From how they write their investment policy statements, we talked about portfolio design, you know, compliance, everything. In fact, we became one another’s investment Committee—we were for several years. We met annually and did investment committee work together.

I think of the profession that we’re in, and I think of the generosity of the folks in our profession to other people in the profession. And that’s just another great example of, she didn’t need to do that. She just did it out of the goodness of our heart. It’s pretty cool stuff. And in the sign of how small our world is, I’m pretty sure I know who the Helen  you’re talking about is. But that’s a sign of the sort of mindset that a lot of people in our niche of the financial services industry have: they just want to help each other to succeed.

Like all of us, I’m sure you’ve made mistakes. And if you’re like me, you’ve made some, maybe, big mistakes. Are there any in particular, that you’d really like to have avoided? You know, just thinking of our listeners, as they’re embarking on their careers and maybe their entrepreneurial careers. Are there any in particular?

I think it’s tempting when you’re starting a business to do whatever you can do to get that going. To maybe take the client that you shouldn’t have taken, or agree to something that maybe you’re not going to be happy with down the road. So I think when I think about the mistakes I’ve made, I would say, “Make sure that you’re always thinking about the long term consequences of the decisions that you make, so when you decide to work with a specific client that maybe isn’t a good fit, it’s going to come back to haunt you down the road. Maybe think that through a little more carefully.” Or if you make an agreement to do something—these things—you wind up sticking with these decisions for a long time.

Okay, so you’ve founded your firm, you’ve networked and you’ve started doing off-site training courses with colleagues of yours in places like Virginia. How did Keatley Wealth Management grow?

Well, we really grew organically. For the first couple years, we grew very slowly—I wasn’t out really looking for clients. I had clients coming to me that had been hourly planning clients, and wanted to transition over to the different business model, and that was busy enough.

But then, a couple years in, somebody named Jenny Martella started knocking on my door. She was a former banker, and was doing the whole CFP curriculum, and challenging for the CFP. And she, in the way she does, was networking, interviewing all over town. And one day at our third or fourth lunch over a period of 18 months, she looked at me and said, “I want to come to work for you.”

And I said, “Well, I figured we were getting there because we’d been having a lot of lunches together.” But that meant that for me, we’re gonna have to, we’re gonna have to get real about this, and commit to growing. When you’re floating around in a boat, and it’s just you in the boat, the boat can go slowly and do what it wants to do. But when other people start getting in the boat, I knew I was going to have to start growing the business a little more quickly.

So we moved at the end of 2012. She came to work for me part time. We moved into professional office space for the first time, retooled the website, and the business took off. So we grew primarily word-of-mouth and through people coming to us based on the website. People were excited about a female-owned firm. That’s how we grew. We grew at about a 20% compound annual growth rate ever since that time. 

Amazing.

It was some years more some years less, but it was all, you know, all organic growth. And it was fun.

Essentially, you kind of lost control of things once you hired that first person, right?

Yes, I did. But I think in a good way—I think it needed to happen. But I think I was not making—I was letting decisions be made for me, rather than making the decisions on my own, and it turned out well. But I knew that I needed to commit myself to the business going forward.

Fair to say that once you started working with Jenny, your experience of Keatley Wealth Management started changing from that point forward.

It did. And then we, within a year, we had Amy, and then a couple years later, Erica, and then Melissa. The other thing I will say: One of the smartest things I ever did was, I hired women and allowed them to be flexible with their work-life balance. I hired working moms. Every single one of these people is enormously talented and enormously committed to the work that they do. And I don’t think I would have gotten them, had I not been that kind of a place where they could come and be themselves, and know that they could get the work-life balance they needed. And sometimes that wasn’t real convenient for me, because my kids at this point are a lot older than everybody else’s that I worked with, and so I didn’t have as many demands on my time. But it was well worth it. I got some really, really talented people.

That’s a great story to tell. And you know, when you look at the last eight months, if somebody had told us this time last year that our entire team would have to work from home for over a year, we would have said, “No way in heck are we going to be able to pull that off!” But it goes to show how creative people are, that they still are able to find ways to get it done even in this really unusual environment.

It’s been a tough environment. And it’s been interesting joining Modera, and then not really having the opportunity to go meet everyone face-to-face.

A real challenge.

It’s been a real challenge. And so I think that you know, when this whole thing lifts, you know, I’m just going to be hanging out in Atlanta and Boston and North Jersey—I’m just going to start moving in for a week at various offices.

I think that’s particularly applicable to you know, not to single out Modera, but the type of people we are—we like being around people. And this past eight months has been a real challenge.

I think you have to like being around people to do this job well, because that’s what we are. We’re in people’s lives, we’re talking about their money, and it’s fun. The clients energize me.

Talk to me about the female element of Keatley Wealth Management. It seems like that’s been a real strong point in your growth.

It has been and it I think when I started this whole endeavor, I thought that we would be a financial advisory firm that catered to women clients. And it didn’t really turn out to be that way. We have a lot of women clients—I think at the time of the merger, about a quarter of our clients were single women. But I think what was such a surprise to me, was how much the men wanted to work with a female advisor.

Sometimes they just wanted a different touch. Sometimes I think maybe they feel that women are less confrontational, or it’s easier to be vulnerable with a woman. In some cases, they wanted to hire us because they wanted somebody that their wife could relate to, and become involved in the process with. There were a lot of different reasons, but most of our clients were married couples. And oftentimes, it was the man in the couple that was doing most of the interacting with us.

But I do think soft skills are important, and that’s certainly something we have a lot of—we had a lot of—at Keatley Wealth Management. And even down to how we decorated our office. We believed it was very important that our office just conveyed a feeling when you came in and sat down that was very much like a home or a living room: that we just we pay attention to all aspects of the experience.

What do you think about the future for females in the financial advisory profession?

I think this is a great profession for women. I also think it’s a great profession for women who are wanting to have a second career. And a lot of women like me are taking time out of their careers to be home with kids. And this is a great, great profession for that.

So the last section I wanted to touch on was really, after the great success you experienced with Keatley—when did you start thinking that maybe you needed to do something different from what you had done from the outside of the firm?

Well, I really was thinking about it pretty early on, because I knew that what we were doing was not going to be ultimately sustainable. The growth was quick—in some ways, we struggled to keep up with it. So I knew that either I was going to have to—I was going to make a decision, I was going to have to decide: Either to stop growing anymore, and just to hunker down with the clients that we had and the people that we had, or we were going to have to come up with a different plan.

And it didn’t seem right for the employees, or for the clients, for us just to sort of hunker down and stop growing. I was very aware that I had four other people who had gotten on the boat with me, and that they had careers that mattered, and that I needed to make sure that their careers continued to advance. And then we also had over a hundred client families that were working with us that were going to need a long term solution.

And I know I’m not going to be working—here’s my announcement—I’m not going to be working when I’m 70 years old. That isn’t going to happen. I don’t know when I’m going to retire, but these clients who are essentially my age, they’re going to need somebody after my career ends. So I felt a responsibility to do the right thing and find a place that could just give us continuity, and let things continue without me when I was ready, even after I was ready to go.

So I started having conversations with other firms years ago, including Helen’s firm, but the demographics didn’t work out well for Helen’s firm, because the partners were wanting to exit in a timeframe that wasn’t going to work. Our ages didn’t dovetail well. I would have been one of the youngest partners, and I needed younger partners, not older partners.

And then there were a few other conversations that were had. But you know, I think it all came down to sort of the stomach test: Do you like the people? Do you trust the people and in the end, that’s why we would up with Modera.

Talk to me about your team’s reaction just at a high level, Karen. It must have been unsettling for them. They’ve got this great thing going, and then there’s the uncertainty around, “Well, what’s this going to be?”

Well, I think you’re right. And Amy said to me, something—it actually in a different context. But Amy, my office manager said to me, “Nobody likes change, especially when it doesn’t benefit them.” I think there was early on, a perception that maybe this wasn’t really going to benefit them at all. Why fix it if it isn’t broken? But they needed to understand that it was going to get broken. I could see a day when it was going to get broken. We weren’t broken. But we couldn’t continue the way we were.

So I think initially there was reluctance to do this. I think now that we’re here, and now that we’re in what month, ten, month eleven of all this? I think people are seeing the opportunities and the energy, the potential for growth. I think everybody’s feeling really good about it now. But initially, you know, I think there was mixed feelings.

It’s only natural, you know. You guys had a great thing going as five of you.

And we had and we still have a great time together.

Yeah, exactly. So what about your client families? Was it somewhat similar?

The client families were really positive about it, I think, with the exception of one that I can think of who had some concerns. Most everybody, I think—they weren’t surprised. I think they all sort of knew that I wasn’t gonna be doing this forever and that something was going to have to happen. Many had even been asking me for years, “Karen, what happens when you retire?” And, you know, I didn’t have a terrific answer. I had a sort of a vague answer or promises: “Well I’ll  make sure everything’s great.” But I didn’t have a specific answer. So I think in many cases, they were relieved to know what the transition was gonna look like. So I think it was really positive.

So I’ll wrap it up here. And I’ll wrap it up with one last question, which is: what was the last non-financial related decision you had to make today?

And that’s a real stumper of a question. My life has not been very complicated so far today, so I have to say it was probably just what am I gonna wear?

Thank you, Karen. Thanks very much for your time today and for sharing your perspectives.

Thank you!

And thank you for tuning in. We hope you’ll join us next time on Decision Dialogues for more stories from successful business owners. So long for now.

About Karen

Karen R. Keatley is a Principal and Wealth Manager at Modera Wealth Management, LLC. Her main responsibilities include helping clients develop their financial plans, implementing wealth management strategies and managing clients’ investment portfolios. Karen is also a member of Modera’s Investment Committee.

Karen and her team from Keatley Wealth Management joined Modera in 2020. Karen’s career began more than twenty years ago in economic research and investment management. After completing her MBA at Duke University, she served as Vice President at a large insurance company managing a multi-billion-dollar portfolio of fixed-income and private equity investments. She made the transition to investment management and financial planning for individuals as a fee-only advisor because she believes in the importance of quality advice that is not influenced by a sales agenda.

Karen has been quoted in The Wall Street Journal, Money Magazine, Kiplinger Personal Finance, MSN.com Money Central, Charlotte Business Journal, and South Park Magazine, among other publications. She has been interviewed on film by local television and is often consulted as a subject matter expert. Karen also contributed to the book, Just Give Me the Answer$: Expert Advisors Address Your Most Pressing Financial Questions.