After more than two decades in the industry, Virgil Kahl still works 12-hour days, but she says time flies when you’re having fun. “Many people would consider that to be not a balanced life,” says Kahl, the president of $1.1 billion-asset Spring Ridge Financial Group, in Wyomissing, Pa. “It doesn’t really bother me.”
Speaking with Barron’s Advisor, the 53rd-ranked female advisor in the country reveals the advice she’s giving clients ahead of the tax increases she believes lie ahead. She explains how she made the jump from accounting to wealth management—and why she thinks more accountants should follow suit. And she lays out the reasoning behind having her team of 13 work together in the office most of the time.
Where are you from and how did you get into the wealth management industry? I was born and raised in Luzerne County, Pa., in the Wilkes-Barre/Scranton area. After graduating with a degree in accounting, I worked for public accounting firms for six years. I became licensed as a CPA in 1990.
After six years in public accounting, one of my audit clients offered me a job that would be the equivalent of a CFO for a nonprofit organization. In addition to being the financial manager of the organization, I did their balance sheets, income statements, annual reports and all of that.
Before I got there no one really asked the right questions of the asset managers and reviewed the results or asked the team that was presenting what was happening. That got me more interested in the investment side of the business, which was so important to that organization’s bottom line. While I was there, I realized the lack of knowledge the average person had when it came to investments and retirement plans. And because I wanted to do a good job for that organization, I went deeper and deeper. I thought to myself, after educating the board and affecting positive change, wouldn’t it be great if I could do the same for people outside of that company?
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I was given an opportunity in 2002 to join an existing firm, and at the end of 2006, I purchased the practice of the lead financial advisor at the time. I grew the firm, the employees, and the assets and the clients, over the next 20 years. I am the sole owner of the entire firm today. So what attracted me to the business was my desire to help other people. That sounds very cliché, but it’s genuine and from my heart.
I imagine your CPA background allows you to see deeper into your clients’ financial picture. I honestly wish more people with an accounting background would work in financial planning and investing. I think there is something extra that you can offer to your clients when you started as a CPA, because it is a very detail-oriented mind-set. It’s got to be right. It’s got to make sense.
But to use that expertise, you need the full picture of the client’s finances, not just what they’re willing to show you. Is that ever a challenge? Well it’s true, because sometimes they don’t even know their own picture or never thought about it. It’s our job to extract all the pieces and tell them why it’s important and consider things that they never did before. And if you have a long-term relationship with the client, you grow deeper in your knowledge of who they really are and what’s really important. I think a lot of advisors don’t spend enough time with their clients. I work long days, and I have a lot of meetings, because it’s important for me to be in front of the person and their family as much as possible.
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Your typical client has a $2 million net worth. How would you describe them? The biggest part of my clientele are preretirement and early-retirement individuals. And from that, we tend to end up having the entire family. Clients often have adult children who are starting their careers and need guidance. And they’ll often refer their parents, who have a different set of problems, as well.
You have a 99% client retention rate. What’s your secret? It’s not a secret, it’s basically being at work all the time. I put in a long day, although it doesn’t seem long because I enjoy what I do and I enjoy being with my clients. I think leadership means coaching from the top, so I set that example. All the service advisors in my firm are on the phones, are in meetings, are giving 24- hour attention to all the clients. We live in a world where customer service isn’t always great, but in our firm we have high expectations. I expect a lot of anybody who works here, that they take as good care of my clients as I would in my absence. But I’m here most of the time.
How many hours a day do you typically work? At least 12. Many people would consider that to be not a balanced life. It doesn’t really bother me.
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What do you expect of your employees in terms of hours? Well, if you’re a professional, you work until the work is done. Everybody gets plenty of vacation. We are not a work-from-home type of office. We only allow our employees to work from home 10 days out of the year, because we think it’s important for camaraderie and exchanging ideas and knowing what’s going on in our life for us to be present in the office. A few of my employees work long hours because they want to or they like to, and then I have people who try to wrap it up in eight-hour days. My mother always told me that you get out what you put in. But I can’t expect everybody to be me; they’d be business owners if they were me.
Aside from putting in the hours, what have been the other keys to building your business? I do have a weekly radio show that I’ve done for 17 years. I started doing that because there are lots of financial advisors in our area—you can find one on every corner—and I always thought, “How is anyone ever going to find me?”
I don’t solicit for clients on the show. But it does give me a little bit of credibility if I’m willing to talk about the markets and answer questions every week no matter what. But my real source of business is taking good care of people. If you have a staff that also helps you take good care of people, you will get referred friends and family of those people and your business will grow nicely.
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What issues are your clients most concerned about right now? I think everybody remembers what their account balance was at the beginning of 2022, and some people just want to know, “When am I going to get back to that number?” In addition to wondering when the markets are going to stabilize, national debt is on everybody’s mind. Everybody knows that tax rates are likely to change after the Tax Cuts and Jobs Act of 2017 sunsets at the end of 2025. Everybody’s probably going to get at least a 3% increase in their taxes.
Everybody wants the next generation to be more prosperous than the one before. But most of my clients are concerned that the future is going to be more difficult, not easier. As far as the market goes, everybody was taught to diversify and have more fixed income as you get older. People are looking at what happened to the income markets last year and saying, “Well I tried to be safe, and it didn’t work out so well.”
It’s a fair complaint. What are you telling them? Post-2008, we for the most part had a zero-interest-rate environment before last year. That was not normal. What we’re getting back to now is more normal, where you can actually earn money on your savings. If you invest in the bond market now, you’re buying at discounts to par at high interest rates. And going forward, once the bond markets stabilize, the stock market will also stabilize. Both markets tend to keep repricing themselves as interest rates change, and it’s not going to last forever.
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Are you saying that it’s safe to go back into a 60/40 portfolio? Last year we went through, “Oh, 60/40 is dead.” Well, I think the 60/40 allocation is probably going to wake up.
You mentioned that you expect an increase in tax rates. How are you preparing clients? It is important for financial advisors to show clients what their expected tax rates will be over the balance of their lives. Since the Tax Cut and Jobs Act sunsets at the end of 2025, many people will see an increase in their effective tax rate even if their income stays the same. Therefore, people have the tax years of 2023, 2024, and 2025 to “fill up” their tax brackets by converting some of their IRA and/or 401(k) balances to a Roth IRA, to take advantage of potentially the lowest tax rates for the rest of our lives.
We’re also advising people on their estates. Right now the estate tax exclusion is over $12.9 million per person, but it’s probably going to go back down to where it was. Nobody knows for sure, but let’s say it goes back down to $6 million. People who don’t need all the money that they have need to come up with a plan to make sure that they take advantage of the high estate exclusion limits before the end of 2025, by funding trusts or executing gifting strategies to minimize the size of their taxable estates before the limits decrease. If you already know where you want your money to go after your death, you can set up a plan to get it to those loved ones or charities while you are alive.
The other thing that’s not talked about a whole lot is standard deductions. Because they went up a lot with the Tax Cuts and Jobs Act, most people don’t itemize anymore. If the standard deduction doesn’t stay where it’s at, people will have to meet with their accountants. Things that they used to be able to deduct, they might be able to deduct again.
Do you provide tax preparation? An employee in my office has a tax practice, so we can provide that. We do provide a lot of tax planning, even without prep, because it’s part of the financial planning.
What is the biggest business challenge you face right now? I run out of hours in the day. I wish I could work 12-hour days and still have another four or five hours. I also think everybody’s business is challenged by the fact that we want to find ambitious, hardworking, detail-oriented advisors in the next generation. I’m thankful and blessed that I have them on my staff, but we’re always looking for others. We want to make sure that we are growing the next generation in our image and likeness.
What career advice can you offer young advisors? Never think that you know enough. Remain as inquisitive as possible. And never take things at face value. When you start to learn things, you should always be asking yourself, “What else should I know?” I wake up with questions in my mind. Any time a question comes up, I’m immediately researching on the web, pulling a white paper to get the answer. Be resilient when things don’t go your way. And surround yourself with people who know more than you. If you’re the smartest person in your firm, how can you possibly grow?
What else is on your mind? As far as advice for the next generation, a lot of young people live their lives behind the computer screen or on their phone. I think the next generation has to re-engage in person with the people they’re working for or with. Too many companies are still working from home, and we’re missing something.
Thanks, Virgil.