Jack Sharry: Hello everyone and welcome to this week’s edition of WealthTech on Deck. Wealth management seems to be focused on one big question: How do you generate meaningful organic growth?
That is a good thing, a very good thing. Wealth management has been growing at only about a 2% or 3% annual rate, hardly a growth stock by any stretch. Yet top-performing firms are growing much faster. They are doing it with intention, discipline, and focus.
After four decades in this business, I’ve learned that success is rarely, if ever, an accident. In my observations, successful firms and practitioners operate with a clear vision and focused strategy, one that reflects how I’ve defined organic growth in a series of profiles of successful advisors in Financial Advisor magazine.
Here’s what I’ve observed about successful advisors. They leverage technology to earn the privilege of managing the full household. They retain more assets in client portfolios by helping clients reduce taxes. They accumulate more assets by compounding what clients keep after taxes. They attract new assets through consolidation, generate positive word of mouth by delivering strong client outcomes, and earn the opportunity to manage more of the household balance sheet.
Today we’ll speak with someone who has figured this out. Our guest is Ann Covington. Ann leads Covington Alsina, a fast-growing advisory firm known for comprehensive planning, tax-aware advice, and a strong focus on women investors. She has been recognized by InvestmentNews as a Woman to Watch and by AdvisorHub as an RIA Advisor to Watch.
I’m looking forward to discussing with Ann how she better serves clients and grows her practice. Ann, welcome to WealthTech on Deck.
Ann Covington: Thanks, Jack. It’s great to be here.
Jack Sharry: Great to have you. You’ve built an impressive business. You’ve earned national recognition and grown your firm at a pace many advisors would envy. I’d love to explore how you’ve done it, what makes your approach different, and what other advisors can learn from your success.
Let’s start with how you got started and developed such a strong foundation for your practice. Tell us about your career journey.
Ann Covington: I have an accounting degree, but I started my career in the automotive industry. I worked in dealerships as a kid, then worked for a manufacturer, and later became a consultant.
When I was getting engaged, I said to my fiancé, “We have to have a financial plan.” He looked at me like that’s something every 28-year-old says.
But that’s really how my brain works. We found a great advisor in Washington state, and he kept saying, “You know a lot about this. I don’t know why you’re not doing this.”
I was a consultant at the time, and I said, “Thank you so much, but Toyota called me this morning. I’m not looking to change careers.”
He became our advisor. A few years later, I went in and said, “We’re starting to think about having children, and I want to talk to you about college. I know these are the different ways you can save for college. I think this one is best for us, and this is why. What do you think?”
He said, “What I think is that I don’t know anyone who could walk into my office and list every way you can save for college. You’re not even buying anything. You need to come work here.”
I said, “No, I’m going to be a mom. Remember? We did the whole plan. We bought the little house we could afford on just his salary. We did everything. I’m going to be a mom.”
He said, “You’re going to go crazy sitting home alone all day with a baby.”
And he was right.
I knew nothing about the industry, but he was an independent advisor. It was an eat-what-you-kill environment. If I sold something, great. If I didn’t, it didn’t cost him anything to have me there. I became an advisor, initially working part time around my kids’ schedules.
My then-husband was active-duty Navy, and we moved from Washington state to Annapolis, Maryland. Another firm recruited me after trying to attract some of my clients. The clients told them, “No, we really like Ann,” and the firm asked if they would introduce us. I ended up joining that firm.
A few years later, we had some differences in values. I put my filing cabinet on wheels, went down the street, and opened Covington Alsina. It’s been 14 years now.
Jack Sharry: How long have you been in the business altogether, including your time as a part-time advisor?
Ann Covington: Twenty-three years.
Jack Sharry: That’s great. Tell us about the firm today. Describe the practice, its size, and what you do.
Ann Covington: We recently opened a second office in Jacksonville, hoping to spur more growth. We now have two offices and five advisors, including me. Every advisor has a CFP certification at a minimum.
We focus on comprehensive planning. We have 12 employees and approximately $330 million under management, depending on what the market is doing that day. We’re growing pretty rapidly.
Jack Sharry: When did you realize your firm was growing faster than others? When did you recognize that you had figured this out?
Ann Covington: It really took off around 2018 or 2019, when my kids finally went off to school and I was truly able to focus on the business. I wasn’t a mom first any longer.
I was at a conference where they were talking about organic growth. Market growth is one thing. Everybody’s business grows when the market is doing well. But how much are you growing in terms of net new assets?
They were saying that most advisors were experiencing low-single-digit growth. I realized we were in the double digits.
I looked back in preparation for today. Over the last four years, our organic growth, based only on net new assets under management, was 24%, 25%, 15%, and then 32% last year.
Jack Sharry: Wow. When I hear double-digit growth, I think 11% or 12%, which would be huge. I don’t hear numbers like yours very often. How do you achieve them?
Ann Covington: We’re very fortunate. We’ve developed a strong brand in Annapolis, and that’s what we’re hoping to replicate in Jacksonville.
A slow week for us includes about four initial consultations. Sometimes we have as many as 10 initial consultations in a week. On average, about two-thirds of those prospects become clients who complete a financial plan with us. A little more than half of those become clients whose assets we manage.
Sometimes people aren’t a good fit. Some want to manage their assets themselves, and others don’t have assets for us to manage. We give clients the opportunity to remain with us for annual planning even if they don’t have assets to move.
Jack Sharry: What’s your secret sauce? You don’t earn that kind of organic growth by accident. What are the most important things you do to differentiate the firm and attract so many new people?
Ann Covington: I think there are two sides to it.
One is our branding. We have a strong brand, and that comes from consistently offering educational events. We conduct more than 70 educational events a year, some online and some in person.
We’re very active in local social media groups, where we provide information and resources. Most of our marketing budget goes toward sponsoring nonprofits.
We have a strong presence in the community. If you go to an event, our logo will probably be there. Think of a good charity you support, and we’re likely to be affiliated with it. That’s the awareness piece.
The other side is that we do truly good work for our clients. We provide fully comprehensive planning, including areas many advisors don’t necessarily address. We make sure their auto insurance is where it needs to be. We double-check beneficiaries, even on assets we don’t manage. We provide true tax planning.
It doesn’t matter what I make. It matters what I keep.
We cover the full gamut of comprehensive planning. We take the really complex, crazy stuff, make it simple for clients, and give them peace of mind. Then they become ambassadors for us.
Jack Sharry: I want to return to that ambassador point in a moment, but first, you mentioned that you have five CFP professionals. How do you hire advisors who will follow the path you created? Do you train them, or is it a combination of both?
Ann Covington: Both.
Before we became this large, one of the things I did was truly develop systems for the business. We work with SEI as our primary custodian. At the time, SEI had a system called BusinessWise or ProcessWise. We worked with them to load automated workflows into our CRM, and then we customized those workflows.
We now actively use about 70 workflows. We continually modify and update them to make sure they still fit our business and nothing is falling through the cracks. Whenever there’s a problem, we can go back and determine that either a workflow wasn’t launched or it wasn’t followed.
We also have an online training manual that documents everything we do. By everything, I mean how to run a client review meeting, how to send birthday cards, how to stock a conference room, and even how to fold the hand towels in the bathroom. Everything is documented.
The other piece is consistency. It doesn’t matter which advisor a client talks to or meets with. The client should receive the same advice, the same answers, and the same plan every time.
When advisors join us, we train them in our methodology, planning process, and way of doing things.
Most Fridays, depending on my travel schedule, we meet for two or three hours as a group of advisors. We talk about how we explain things to clients or conduct training to make sure everybody fully understands a topic such as the new military retirement system, a state retirement plan, or new divorce laws.
We once had a 15-minute conversation about how to display Medicare costs in our planning software. Should it say “John’s Medicare,” “John’s Medicare Plus Supplements,” or “John’s Medicare and Supplement?” We had that discussion so every plan would look exactly the same.
Jack Sharry: One of the things you’ve talked about is your passion for helping successful women navigate increasingly complex financial lives. Why have women become such an important part of your practice?
Ann Covington: It’s actually because of my coach.
Around 2008, we were working together and talking about how to grow the business. He said, “Ann, you built Cape Canaveral.” I had all the processes and systems in place, but how did I launch the rocket?
I think part of it is that you have to go small to get big. When you focus on one particular area, it doesn’t mean you can’t help other people. But when your marketing and branding focus on one area, people opt in.
People come to us to buy. We’re not going out trying to sell something. By the time people come to us, they’ve already decided that we may be the firm they want to work with. They’ve heard good things, they like the system, or they like that it’s a woman-focused firm.
My coach and I talked about how we provide truly comprehensive planning. He said, “How do you explain to someone that you’re not just trying to sell whole life insurance with some software? You can’t easily explain that to a prospect or put it out to the market.”
I said, “I’m a CFP professional.”
There are hundreds of thousands of CFP professionals.
I said, “I’m a fiduciary.”
A lot of people say they’re fiduciaries. Everybody wears two hats these days, so even if they’re not always acting as a fiduciary, they can say, “I’m a fiduciary.”
How do you differentiate yourself?
We completed hours of interviews with the marketing team, and they came back and said, “Your focus is women.”
I said, “Women? Really?”
I have to be honest. If they had said my focus was male SEC football fans between 40 and 60, my office would have been redecorated in five minutes. I would have had sports paraphernalia everywhere.
But they said, “Think about it. You’ve spent your career in male-dominated industries, first automotive and now financial services. Think about the people you really admire.”
They named some women, and my reaction was, “Look what she’s doing. She’s such a badass. She’s doing great things. She’s amazing.”
When they put it all together, I thought, “I like those women. I can work with that.”
For a long time, financial services didn’t focus on women. Traditionally, men were the breadwinners and handled the finances. Women might have paid the bills and managed the household budget, but men handled the money and investments. The wife was often ignored by older advisors.
The industry is shifting in that regard.
The other difference is that women as a whole, and I recognize that this doesn’t apply to every woman or every man, tend to see money in terms of what it enables them to do for their families. What does this money do for my family? How does it help us? How do I achieve my goals?
Men, again speaking stereotypically and not universally, tend to see money more as a scorecard. It’s something they might brag about at the club because a stock achieved a certain return. They’ll never talk about the one on which they lost everything.
We come in and say, “Here’s what that money enables you to do.” It’s a different approach, and the truly comprehensive nature of our planning makes a difference.
Jack Sharry: My wife recently purchased a vehicle, and I joined her as the spouse because we both had to sign some papers. The salesperson was a woman, and my wife hit it off famously with her.
I said very little. I may have helped pay for it, but I was not the central figure. It was interesting to be in that role because years ago, that would never have been the case.
After purchasing the car, my wife wanted to meet her designated service representative, who was also a woman. She told the business manager, “I really appreciate that I can go to a woman to buy the car and have it serviced.”
I’m sure you’ve had similar experiences.
Ann Covington: We do hear that. I don’t want to denigrate male advisors because I think the vast majority of people in our industry do really good work and care about their clients. That’s why we become advisors.
But a lot of women come to us because we’re a woman-led firm. We have two male advisors and three female advisors, and everybody else in our office, even the office dogs, is female.
Women are attracted to that. They feel they won’t be condescended to and that people will take the time to explain things to them.
One of our signature events is Women, Wine & Wisdom. We’ve been doing it for close to 20 years. It’s an in-person educational event at a nice restaurant with a roundtable discussion.
I liken it to a group of girlfriends getting together with a glass of wine and some really good appetizers, except one person in the room actually knows what they’re talking about. We’ll bring in an estate attorney, our CPA, or a home and auto insurance professional to explain the details and help educate people.
We also host one co-ed event each year, our annual investment market update. We’ll usually bring in a speaker from SEI, our custodian. The dynamic is completely different when the event is co-ed compared with when only women attend.
Jack Sharry: Explain that. I’m not surprised, but tell us what you see.
Ann Covington: When it’s just women, they tend to be more open about asking questions. They don’t feel that someone will explain something in a condescending way, put them down, or say, “Don’t you know that?”
There was a gentleman at one event who was trying to be the impressive alpha male and kept asking questions. A woman finally looked at him and said, “Dude, that’s five pages further into the program. Just be quiet and let him do his job.”
It was so funny. She called him out on it.
When it’s just women, people aren’t trying to make a point or show how smart they are. They’re genuinely trying to learn. Again, I’m not trying to bash men, but the dynamic is different.
Jack Sharry: What have you learned from your focus on women? It sounds like women’s perspectives about themselves and money are changing too. Talk about that dynamic.
Ann Covington: It has been fascinating to observe over my 23-year career.
When I first started, men were primarily the breadwinners and controlled the finances. I’ve seen a dramatic shift. Maybe some of it reflects our branding and focus because we work with single men, happily married couples, and not-so-happily married couples.
I increasingly see couples who are equal breadwinners. In other cases, the wife is driving the financial conversation. In many cases, women are now the primary breadwinners. They’re driving everything, and the husband is along for the ride.
You can see it in education too. More women are attending college and entering professional schools, including law, veterinary, dental, and medical schools. We’re seeing a tremendous shift.
The other thing people talk about is the transfer of wealth from baby boomers to Generation X or millennials. But they’re skipping a step. It isn’t necessarily going directly from baby boomers to Generation X. It’s going from baby boomers to boomer widows and then to Generation X.
I’ve heard a statistic that 70% of widows leave their current financial advisor, although I’ve also heard that number may be exaggerated. But the reason they leave is that they don’t have a relationship with the advisor.
We also see that in divorce cases.
One of the educational workshops we offer is called Second Saturday. It’s presented in partnership with a California nonprofit called the Women’s Institute for Financial Education. The workshop takes place on the second Saturday of every month and brings together our team, a family law attorney, and a therapist to talk about divorce for women.
The current statistic is that after divorce, women’s standard of living declines by 30% to 40%, while men’s increases by 10%. A lot of women are looking for help with navigating the divorce process and getting back on track afterward.
Jack Sharry: Let’s dig further into the organic growth playbook you’ve developed. I’m hearing a lot about education and speaking directly to clients’ issues and concerns.
Do you have a marketing person? Do you do this on the fly? How does everything come together from a business development standpoint?
Ann Covington: There are a couple of pieces.
Every December, usually during the first week, I go away for about a week. I sit in a hotel and plan the following year. That includes cash flow, the budget, and all our educational events. I calendar everything.
That allows us to put the events on the website, add them to community calendars, and set up the Constant Contact emails ahead of time. Everything is ready for the full year rather than us suddenly asking what we’ll do next month, realizing it’s too late, and playing catch-up.
Everything is calendared, and we have processes for each event, including how to promote it and what steps to follow.
In addition to our educational events, we hold about 14 or 15 client appreciation events a year. Those are also calendared, planned, and heavily systematized with checklists, processes, and workflows.
We also work with a marketing firm that manages our social media. At the end of each month, I receive a calendar for the upcoming month. I review and approve all the posts and make sure they’re compliant and don’t contain promissory language.
The firm distributes a monthly press release about our educational events. They also prepare press releases when we receive an award, someone earns a certification, or we hire somebody new. They handle our graphics and film videos that we post on social media.
I also contribute to a larger podcast. Every Monday morning, I have a segment called the Monday Money Report, which is about four minutes long and goes to approximately 16,000 households.
I record it over the weekend. It’s included in the daily news brief on the podcast platform at 7 a.m. Monday. We post it to social media and turn the transcript into a blog.
On top of that, we sponsor many nonprofits. If there’s a gala or another event, we may sponsor it, attend, and invite clients.
We also have a package we donate whenever nonprofits ask. It’s called our Purse Power package. Our logo includes a small handbag, so we import leather handbags from Italy in our orange or blue brand colors. We combine a handbag with a gift certificate and a book and donate it as a silent-auction item to almost any nonprofit that asks.
Jack Sharry: You’re clearly organized and thoughtful. Does the marketing firm help beyond social media?
Ann Covington: Occasionally. We don’t do much paid advertising.
We’re doing some in Jacksonville because we’re new there and are building brand awareness. Other than that, we may do one or two paid advertisements in Annapolis, usually as part of a special promotion.
The marketing firm also creates graphics. For example, we’re on the back cover of the opera program, and they’ll create an advertisement for something like that.
Jack Sharry: Word of mouth seems to be an important part of what you’re doing. Is that one of your biggest sources of new assets?
Ann Covington: I think it’s everything, and I’ll explain what I mean.
We track webinar attendees in our CRM. Someone recently came to us for an initial consultation. I asked how she had heard about us.
There’s a local social media group where I’m very active. She said, “I see everything there. Every time someone asks about a financial advisor, several people recommend your firm. I’ve known about you for years.”
She attended one of our webinars six years ago and only recently decided to become a client.
I liken it to pushing a snowball up a hill. You have to push the snowball uphill, but once you reach the top and it starts rolling down, you begin gathering momentum.
Sponsoring a nonprofit by itself isn’t enough. Nobody goes to a gala, sees “Covington Alsina,” and suddenly realizes they need a financial advisor. Nobody goes to the opera, sees an advertisement, and decides on the spot to hire an advisor.
Those activities create background awareness. Educational events put us in the community. We’re also fortunate that our clients are true ambassadors for us.
Whenever somebody says online, “I need an advisor,” one of our clients is probably there saying, “You absolutely need to see Covington Alsina,” and tagging us.
We also have clients who refer us directly. They’ll say to a friend, “Something you said makes me think you should talk to my advisor. Please call them.”
It’s all part of brand awareness. When someone reaches a pain point and says, “I need to talk to an advisor,” or “My advisor isn’t giving me what I need,” they’re already aware of us. We’ve made it into their decision funnel.
Jack Sharry: One of the things you discuss in your literature, and something I know you do well, is tax-aware planning.
I’m aware of a client relationship in which tax-aware planning and asset location helped you earn more than $14 million in assets by quantifying the value of your advice. How did that relationship come about, and how did it become such a large opportunity?
Ann Covington: The client’s daughter came to us first. She was looking for a new advisor because her advisor was retiring. She had heard of us through the social media network.
After meeting with us, she said, “You really need to talk to my parents.”
Her parents came in. Their previous advisor was retiring, and they had a large portfolio composed entirely of A-share mutual funds. Don’t get me wrong, they were very good mutual funds. I like the company. But the investments were incredibly tax-inefficient.
Every year, the clients were hit with massive capital gains distributions, and there was nothing they could do about them. At the same time, you can’t tell someone to sell $14 million in assets and realize all those gains at once.
We’ve worked with SEI for about 19 years, and they’ve been a tremendous partner. I don’t think we would have grown the way we have without SEI operating as our back office and helping us scale.
They have a program called LifeYield, and we were able to receive early access to it. It is the most revolutionary tax technology I’ve ever seen.
We’ve always practiced asset location, but not at this level and not without a tremendous amount of background work. Previously, we used massive spreadsheets and performed manual calculations.
With LifeYield, we were able to enter everything and show where the assets would be if the household were 100% tax-efficient. You can’t get there overnight, but we were able to systematize the process, break it down, and transition assets gradually.
We could transition the qualified accounts on day one. For the nonqualified accounts, we used several strategies.
We strategically gifted assets to the children because the family faced not only current capital gains issues but also Medicare IRMAA surcharges, eventual estate tax issues, and significant required minimum distributions that could push them into higher tax brackets.
We used asset location and gradually transitioned assets. We gifted appreciated assets to the children to remove them from the estate and contributed assets to a donor-advised fund. We also completed systematic Roth conversions.
Having the entire plan mapped out, largely with SEI’s LifeYield technology, gave us a massive advantage. It saved us days of work and produced client-ready reports that allowed us to say, “If you move this, here is the potential tax savings. This is how we can make the household more tax-efficient.”
That truly resonated with the client. At the end of the day, it doesn’t matter what I make. It matters what I keep.
We had another client who came from a Merrill Lynch advisor. Again, she had great performance, and the advisor was doing good work in that regard, but she experienced huge capital gains every year and was in the highest IRMAA bracket.
She wanted to do some charitable gifting, but her previous advisor wasn’t really on board with that. Through tax location, a donor-advised fund, and other strategies, we were able to reduce her taxes considerably.
This was the first time she was in only the first IRMAA bracket, and she was thrilled. Tax management is huge for clients.
I’ll also add that one reason we’ve always worked with SEI, aside from LifeYield, is its daily tax-loss harvesting.
A lot of firms say, “We’ll harvest losses. We’ll look at that in December.” December is too late.
In recent years, the major downturn occurred toward the end of March and beginning of April, and then the market rose for the rest of the year. If you missed March and April for tax-loss harvesting, you missed it for the year.
We can quantify the impact. We give clients reports that show the trades we made and the dollar amount of the potential tax savings. In some cases, the savings are greater than our fee. We’ve earned back our entire fee through tax management alone.
Jack Sharry: I love it.
Our time grows short. We try to keep these conversations to about half an hour, although I could talk to you for many half hours. I’ve enjoyed hearing your story and how you’re building the firm. Congratulations on your success. It’s not surprising in the least.
What do you see as the future for you and Covington Alsina?
Ann Covington: If we can get Jacksonville where I think we can, the hope is to open at least one more office.
Once we have three offices up and running, I’ll see where I want to go with my career. It may depend on whether I have grandchildren by then. Those are the important things in life. We’ll see where my family and my daughters are at that point.
Jack Sharry: Of course. I’ve been hearing about you for a long time. There’s obviously a connection among you, SEI, and LifeYield. You’ve been a great advocate and beneficiary, and your clients have benefited even more. Thank you for all of that.
Let’s move to a more personal note. You mentioned your children and the possibility of future grandchildren. What do you do for fun when you’re not working? You’re clearly very organized and focused. What do you do to recharge?
Ann Covington: I don’t have a lot of time off, but I love to hike and read. I’m also a very passionate Florida Gators fan. I’ll be in The Swamp at Ben Hill Griffin Stadium over Labor Day weekend, cheering on my Gators.
Jack Sharry: Is that the Jacksonville connection?
Ann Covington: Yes and no. Jacksonville was part of a planned expansion.
Three and a half years ago, I put a stake in the ground for where I wanted the firm to be in 10 years. I wanted us to have $1 billion under management because the valuation multiples change at that level.
I looked down the East Coast at places where we already had clients and at what I would call second-tier markets.
If most of our marketing involves nonprofits, I can make a splash in Jacksonville. I can make a splash in Virginia Beach, Hilton Head, New Bern, or Wilmington. I can’t make a splash in Atlanta or Washington, D.C. I don’t have the budget for that.
We chose Jacksonville for several reasons. We already had clients here, and I lived here 25 years ago when I first graduated from school.
It’s also close to Gainesville. My office is about an hour and a half from the stadium.
But honestly, there were tax advantages for the firm. We changed our corporate headquarters and are now a Florida corporation, and I’m a Florida resident. The tax impact alone has saved the firm tens of thousands of dollars.
Jack Sharry: That’s very smart, intentional, and strategic.
Ann, thank you so much. This has been a wonderful conversation. I was told what a great person you are to talk with, and I’m leaving inspired. Thank you for sharing your perspective.
To our audience, thank you for tuning in. If you enjoyed today’s podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. You can find us at wealthtechondeck.com.
Ann, thanks again. This was truly a delight.
Ann Covington: Thank you.
