Taking a Methodical Approach to Growth

Melanie Brophy, Next Play Financial Solutions LLC

By Kevin Adler

Melanie Brophy, CFP^®, EA, runs a small solo practice in Ashburn, VA, and she’s content to build her business gradually. But that doesn’t mean that she lacks ideas about how to add services for clients and expand her marketing to reach new prospects. She’s just going about it carefully. “I’m very analytical. That’s why it can take me a lot of time before I decide something is right,” she says. For example, she spent one year working with a website designer and then had to replace them with a better fit to get the messages and images just right.

Brophy’s career has evolved in logical steps. While working on the institutional side for an investment consulting firm that served pension funds, Brophy decided that she wanted to work more closely with individuals. She left that firm to become an investment specialist and financial planning analyst for an advisory practice. When an employee left a paraplanner role, she stepped in to learn every aspect of client service. “I was taking calls from clients, placing trades, and, eventually, working on improving compliance operations,” she says.

Methodically, she learned the advisor business, becoming a devoted reader of Kitces.com and the XY Planning Network’s blog posts and reference guides. In 2016, she took another step by earning her CFP^® certification. Two years later, she founded Next Play Financial Solutions. Today, the firm has more than 20 financial planning clients and five investment advisory clients.

With her investment management background and planning experience and education, everything was set for a successful launch. Brophy even had picked out two client types to target: young couples who were building their net worth and women. Her website and outreach aimed at those groups, though not exclusively.

Then, the inquiries started coming from an unexpected source. “More calls came in from men closer to retirement. Maybe they liked the way I was appealing to women because they were coming to me and saying, ‘I have a wife, and I care about her very much, and you seem like you could help us come to an understanding on these financial planning issues together,’ ” she says.

After a few financial planning engagements with client couples closer to retirement, Brophy realized she liked helping them. As they looked forward to their retirement years, they had planning and tax needs she could sink her teeth into, and they understood her emphasis on having low-expense, diversified investment portfolios. She gradually shifted to focus on couples within one to five years of retirement. “So much of what I do involves tax planning, and that resonates with the clients I’m working with now,” she says.

The other thing she found is that some of the younger clients were less concerned about diversification. “They were looking for stock picks, but I’m not a stock-picker,” she says.

Brophy says that experienced investors come in with a different attitude. “Some clients tell me they have done well on their investments but now want to focus on a holistic financial planning approach. They want to work with a professional who will help them have a secure retirement,” she says.

Tax Smart

To create that holistic approach, Brophy brings in tax planning, retirement planning, and cash flow review. And she keeps her message simple. “I’ll show clients a chart of their asset location and what is in a taxable account, an HSA, 529, Roth, pre-tax, etc. I show them the contributions with after-tax money and pre-tax money, and how earnings are taxed or not taxed for each type of account. I show how the distributions are taxed as well. They can see on one chart how all of it coordinates,” she says.

Often, clients have significant wealth tied up with their employer, whether through restricted stock units, stock options, or employee stock purchase plans. These are quite common in the tech industry, from which many of Brophy’s Northern Virginia clients are drawn. She says clients don’t always know if they should opt into their stock purchase plans, if they should be concerned about owning too much employer stock, or the tax considerations to take into account. “Also, I’ll help them see what a liquidation strategy could look like,” she says.

Many clients face questions of how to handle deferred compensation—should they elect to defer compensation and when to take distributions. “They come to me for guidance on how to optimize their deferred compensation program while taking into consideration their entire financial situation,” she says.

That’s where the expertise of an advisor comes in. “It’s really hard to go out to the internet and search for the answer on your own because each company’s plan is different, and each individual’s circumstances are unique,” Brophy says.

Given these issues, tax planning comes into play for many of her clients, so she decided to improve her knowledge in this area by becoming an IRS enrolled agent (EA) this year. Not only is this pertinent for current clients, but Brophy believes this will drive new prospects to her. After attending the annual IRS Nationwide Tax Forum in August, Brophy decided that, starting next year, she will offer tax preparation for her planning clients, as well as the current tax-smart investment advice. She says many tax preparers are retiring, so being able to offer financial planning, investment, and tax preparation under one roof will be an attractive service package.

Whether or when those expanded services and larger client base will require a staff member is yet unknown. “I have thought about how much AUM or how many clients would prompt a new hire—maybe $20 million or 30 to 40 clients,” she says.

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Investment Approach There was a time when Next Play Financial only offered financial planning services. However, after an introduction to Altruist LLC in April 2022, Melanie Brophy changed her tactics. Impressed by what she saw at a webinar, Brophy added investment management, using Altruist as her custodian. She hasn’t looked back. “For me, it’s so easy to open accounts with Altruist, and their support team is amazing,” she says.  Brophy develops the parameters of each client’s investment preferences through questions like the following: What is the client’s risk appetite and tolerance? How long will the account be invested until distributions are needed or required? Does the client want a greater proportion of their investment in noncorrelated assets?  For her investment advisory clients, Brophy uses Altruist’s custom portfolio builder to create models. This allows her to build suitable portfolios that include stocks, ETFs, and mutual funds. Some of the model portfolios that she uses to customize her clients’ portfolios include Altruist direct indexing, Vanguard, State Street, BlackRock, Goldman Sachs, and Invesco. “It’s very easy to build a portfolio and set what triggers a rebalance, as well as to research new models to use,” Brophy says.

 

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Next Play Financial Solutions, LLC

Location: Ashburn, VA

Website: NextPlayFinancial.com

Year founded: 2018

Number of staff: 0

Number of clients: About 25

Total assets under management: $3 million 

Typical clients and their needs: Typical client is recently retired, or retirement is one to five years away. They come to review their investments, review tax planning strategies, and for guidance on how to optimize their equity compensation program while taking into consideration their entire financial situation. These clients need confirmation that they are going to be financially secure if they retire at the desired date, or they need advice on what adjustments to make so they can retire on or close to their target date. 

Typical investments: ETFs, mutual funds, and direct indexing. Specifically, Vanguard, Blackrock, Invesco, Goldman Sachs, and State Street Global Advisors funds.

Favorite financial planning websites or apps: Kitces.com, IRS.gov, Vanguard.com, JPMorgan Asset Management

Piece of advice to fellow NAPFA members: “No one knows you better than you. Trust your gut when receiving advice from others. What works best for another person may not be suitable for you.”