Fee-only is the only way

Elijah Essa of Coats Financial Planning

By Bridget McCrea

When he was a student at Western Kentucky University, Elijah Essa recalls having “absolutely no idea” what career path he wanted to take. He declared a major in “exploratory business” and later switched to marketing. Neither track engaged Essa for very long. “I wound up taking a personal finance course with a really great professor,” he says. “I learned quite a bit in that class about finance. It really grabbed my interest.”

After completing that course, Essa recognized that he’d found his calling. “I realized financial planning was definitely worth considering as a career,” he says. He changed his major to finance with a concentration in financial planning and got involved with the Financial Planning Association (FPA) at Western Kentucky.

Through his FPA involvement, Essa gave a tour to Stuart Coats, founder of Coats Financial Planning, and another planner from the firm. “We hit it off and Stuart invited me to come and visit the firm that winter; it turned out I was a pretty good fit for his organization,” says Essa, who was hired as a full-time employee in early 2018. Today, he’s a financial planner for the Louisville, KY, firm.

Because he learned about the fee-only profession while in school, Essa says he never wavered in deciding what type of financial planning he wanted to practice. “I knew fee-only planning was the only way that I wanted to go,” says Essa.

Managing in uncharted waters

Founded in 2000, Coats Financial Planning was one of the first fee-only firms in Louisville. The company has seven employees, including five planners, a compliance officer, and a client service associate. With about 150 clients, the company operates on a retainer model and doesn’t track assets under management.

“We see the retainer model as the most effective way to work with our clients and to provide them with ongoing value,” says Essa. “They can call on us if they need anything, and we can ensure that we're always looking at their evolving situations.”

Most of Essa’s clients fall into one of two categories: younger professionals or soon-to-be retirees. The first group is generally seeking a long-term relationship with a fee-only planner who can help with various saving methods, tax planning, and investment recommendations. The second wants validation of their retirement savings strategies and guidance as they enter “the uncharted waters of retirement,” says Essa. “They're also looking for a long-term relationship to help manage all of that.”

In most cases, Coats Financial Planning’s investment advice centers on low-cost domestic and international index funds. “We're not trying to actively beat the market,” Essa explains. “We focus on the long-term implications of holding very inexpensive, diversified investments.” 

The firm also factors in where the investments are held. For instance, assets that are in a Roth IRA grow tax-free, so they should be earmarked for long-term growth. Essa's firm typically allocates Roth assets to the stock market for this reason. For fixed income exposure, the best approach may be allocating this to tax-deferred retirement accounts, since these are slower-growing assets and will be taxed upon withdrawal. “We focus almost as much on asset location as we do on asset allocation,” Essa adds. “The two go hand in hand for us.”

Focused on diversity

As the emphasis on diversity continues to evolve in the financial planning profession, Essa says Coats Financial Planning takes the responsibility very seriously. “We’re always on the lookout for diverse job candidates from a wide variety of backgrounds,” he explains. “We’re pretty dedicated to making this a friendly, open, and welcoming space for everyone.”

At the time that we spoke, Essa says he and Coats were the only two male employees on the advisory team; the other three members are women. “That's definitely a different statistic than you would see with the overall CFP^® community, and it’s something that we work to maintain,” says Essa.

“We feel that women's voices have been kind of muted in the financial services profession, which as a whole is beginning to think about diversity a lot more,” he adds, “along with the rest of the world.”

Like many growing firms, Coats Financial Planning has recently been in hiring mode, looking for a new associate to support its expanding client base. The current labor shortage has made this mission challenging, but Essa says the firm strives to maintain the right ratio of planners to clients.

“We’ve had to refer potential clients out to other firms and/or put some on a waiting list due to the sheer volume of new prospects that we’ve been dealing with,” says Essa. “When so many clients are depending on you, it’s important that we continue to prioritize their needs over anything else.”

On a positive note, the firm hired a new, female, full-time advisor who was scheduled to start in early 2022, when she’d become the fourth woman on the team. The new hire is a recent graduate from Essa’s alma mater. “We’re really looking forward to getting some slack on the team to work with,” says Essa, “which will allow us to begin adding new clients again very soon.”

The benefits of membership

Essa joined NAPFA in 2018 as soon as he became a full-time planner with Coats Financial Planning. NAPFA’s webinars and online forums helped to fill in some of the knowledge gaps he had upon graduating college. “Through these resources, I learned a lot that I didn’t learn in school,” says Essa, who then set out to immerse himself in all that NAPFA has to offer.

In 2019, he applied for and got a conference scholarship for NAPFA’s conference in Austin. “I met some great people there,” he recalls. “When I got to that conference, I realized NAPFA was more than just webinars. It's a rich community of awesome planners, and I made a lot of friends at that conference.”

After that experience, Essa applied for and then joined the NAPFA Genesis Leadership Committee for members age 33 and younger. He’s now the committee’s membership coordinator, tasked with welcoming all new members into the fold. “When they join NAPFA, they get an email from me letting them know that they can reach out to me if they have any questions,” says Essa. “I'm basically the point person for any questions that new Genesis members have.”

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Getting in on the conversation

For Elijah Essa, being a part of NAPFA goes well beyond leveraging the organization’s online resources. Soon after joining, he amped up his involvement on various fronts, with one of them being ongoing participation in NAPFA’s conversation circle series that helps members connect with other peers, discuss topics of importance, and foster community and collaboration.

Each session runs for one hour and is facilitated by a NAPFA member or expert in the topic area. The sessions are designed to be both interactive and lively (learn more at napfa.org/napfa-conversation-circles). Essa has led several conversation circle sessions and sees them as a great way for new and veteran members to get together and discuss relevant topics, brainstorm, and share best practices.

“This is an exciting new offering that I’m not sure many members know about,” says Essa. “Through these interactions, we can bounce various ideas off trusted people in the profession.”

Set up like webinars, the sessions are led by one or two people, but all participants can join in at any point to share a perspective or ask questions. Some of the 2022 conversation circle topics include College Aid Pro™, through which financial professionals act as advocates for parents of college-bound students; career changers, through which professionals will share the pain points, joys, and useful tips of navigating life as a financial planner; and large firm succession planning, which will focus on the current mergers and acquisitions landscape.

Essa recently participated in a conversation circle session on the value of going beyond the CFP (e.g., to earn an EA or other designation). "The discussion was helpful because I learned that the EA can be valuable if you want to speak directly with the IRS. That could be a nice way for planners to improve their practices, especially if they have an emphasis on tax planning."

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Coats Financial Planning, at a glance

Location: Louisville, KY

Website: coatsfinancialplanning.com

Year founded: 2000

Number of staff: 7

Number of clients: 150

Amount of money managed: N/A

Description of typical clients: Younger professionals and soon-to-be retirees

Typical client needs: Long-term relationships to manage finances, with an emphasis on tax planning

Favorite financial planning website: investopedia.com

Favorite non-financial planning website: youneedabudget.com

Piece of advice to fellow NAPFA members: “Get involved as much as you can. I don't know what that looks like for everyone individually, but attending a conference was a great starting point for me. Also, try your best to actually meet the folks around you, because they're down-to-earth, genuine people. NAPFA's a great community, so it's definitely worth not just perusing but actually trying to get to know the folks around you. They're all pretty awesome.”