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Advisor Charles Zhang on Efficiency, Community, and Caring for Animals

Sep 30, 2022

Charles Zhang, Barron’s top-ranked independent financial advisor for 2021, isn’t your typical advisor. A first generation Asian-American immigrant who left Shanghai for the U.S. at age 21, Zhang is founder and president of Zhang Financial, a Portage, Mich.-based fee-only wealth management firm with $5 billion in assets. His wife, Lynn Chen-Zhang, is CEO and chief compliance officer.

In this week’s podcast, Zhang reflects on lessons he’s learned over three decades and discusses the following:

  • The importance of operations management and having a strong support staff.
  • Zhang Financial’s tax planning expertise. “We have a very strong tax team. Seven of us are CPAs. Every client actually has a CPA service, too.”
  • His firm’s long-standing commitment to the local community. “Community involvement is key. I’ve been in the business for over 30 years. So we’ve been doing this for 30 plus years, too.”
  • Zhang’s expectation that his firm will have $10 billion in assets within five years. “I see myself continuing to work for the next 10 to 20 years or more.”
  • His fierce devotion to animal welfare and his palpable affection for the family’s Shih Tzu, Sparky. “We love our dog and we just became animal lovers and are involved with the Humane Society and other things as well. I think it’s important.”

You can also read the transcript below:

Greg: This is Greg Bartalos for Barron’s The Way Forward. My guest today is Charles Zhang, founder and president of Zhang Financial. Charles was recently named by Barron’s as the top advisor in Michigan for a 10th straight year. Charles, welcome.

Charles: Thank you.

Greg: Thank you so much for joining us. So, we have a lot to cover today. Your firm has grown to now close to $5 billion in assets under management. 

Charles: Yes.

Greg: And you’ve done this basically organically. Tell me what’s the secret in terms of operating efficiencies. What can you tell me about how you did that so successfully?

Charles: Operational efficiency is very important to our firm, how you operate and make sure everything is efficient and streamlined and maximize the efficiency in helping our clients in all aspects of  financial planning. So that’s what we focus on. And actually I learned a lot from my MBA program from Northwestern University’s Kellogg School of Management. Kellogg is still using our study. Zhang Financial at that time was called Zhang Associates. One of the textbooks is actually using our case on how to teach people to improve operational efficiency. And I heard that the University of Michigan’s MBA program is using our case as well.

Greg: And where are some areas where you tend to see inefficiencies?

Charles: Operational efficiency for an advisory firm is very important. We have a different specialty too, right? No one knows everything. So, we have seven CPAs help our advisors on the tax planning side, estate planning side, and portfolio management, making sure it’s more tax efficient for our clients. That’s one area. Another thing is that for every client service manager we have one or two, sometimes even three, supporting staff, helping them. We have a senior client service associate and we also have junior client service associates as well. So, they help them with paperwork so the client service manager doesn’t have to worry about paperwork and prep work. Their job is to just meet clients and deliver advice and continue to improve themselves.

Greg: What’s a common sign, where you say, ‘oh, this clearly is not running efficiently’? 

Charles: As your client service advisor, which we call the client service manager, on average we have anywhere between a $200 million to $600 million relationship. And with two, three supporting staff, the difference is that we do have CPA support. We have investment team support, and three CFAs as well. But our client service manager is very efficient, and our client satisfaction results are great, too. We have very high satisfaction results, and our current retention ratio is over 99.5%.

Charles Zhang

Photo Illustration by Barron's Advisor; Photography by Gary Yonkers

Greg: That’s exceptionally high. Your name is quite well known and distinctive. Tell me about the brand. I think that you’re a big believer in the importance of having a brand.

Charles: At Zhang Financial we try to become the number one fee-only advisory firm in Michigan. We manage close to $5 billion. And we want to make sure that people know our firm is fee-only, objective, cost efficient, has a comprehensive approach, and is committed to the community. We donate roughly 20% of our profit every year to our community and other places. We supported a senior community center (Charles Lynn Zhang Portage Community Senior Center), which should be finished in May (set to open this Friday). And we have the Charles and Lynn Zhang Legacy Collections Center. We have a career center for a university and we set up a professorship. 

Also, we are animal lovers. My wife and I have a dog, Sparky, who is 13 and a half years old. So we’re involved with an animal center, too. We help in the community and helped the Humane Society build an animal center. So all those things make us a pretty unique firm. We care about our clients. We care about the community. We also want to become the best fee-only advisory firm in Michigan and hopefully the nation, too.

Greg: It’s noble and also very interesting that you give so much back to the state because the (wealth management) business is often more of a local business in general. And yet there are a lot of advisors who are focused on advertising on Twitter or all over the world. And really it’s often better to start in your own backyard, where you have roots in the community, and they see you. And it’s reciprocal. It just seems to make a lot more sense. I don’t know if it’s vanity or whatever, but some people just love to put their name everywhere, but it’s not necessarily so smart for business.

Charles: Right. Community involvement is key. I’ve been in the business for over 30 years. So we’ve been doing this for 30 plus years. 

Greg: Are there any hard and fast lessons you could point to after succeeding in the business for such a long time? Granted, there’s no easy formula. It’s hard work, it’s dedication, et cetera, but any bits of wisdom that you could share?

Charles: Continue to improve yourself. I think education is important. Get your CFP done. Maybe have a graduate degree. I have my ChFC as a charter financial consultant. I got my MBA from Northwestern Kellogg. I have an MA degree in economics as well. So, I think education is very important and delegation. You don’t want to be a micromanager. And you want to be a leader not a manager who tries to manage everything. We leave a client service manager alone and let them do the work. And we do a client satisfaction survey every year so from clients we know how well they’ve done. Be a leader and be a supporter. One thing I also learned is to treat everyone the same, equally. I don’t like to think because I’m the owner, I’m the founder that I’m above any person. Our office is very friendly. Our client service associates talk with our senior VP and they’re very comfortable, like a family.

Greg: I think that humility is something that you don’t always find in the business, right? I mean, certain people at a certain point may feel a little entitled. And I think that not being nice is also simply not good business. Everyone wants to be treated as an equal. If I may go back to it, you mentioned that you and your wife are animal lovers. Is this something that’s always been there or something that’s changed over the years? And what’s the root of that?

Charles: We have our dog, a Shih Tzu who is 13 and a half years old. And so through him, just like our third child, we have two children and we think the third one, the youngest one, Sparky, we love him as equal as our sons. Maybe even more! So we love our dog and we just became animal lovers and are involved with the Humane Society and other things as well. I think it’s important. The dog and the cats. It’s just our family member. I truly think it’s worth the money to spend on this. And we found out recently that our dog is sick and we went to the emergency room to see how expensive the cost is. And we found out some people, of course, can’t afford to treat the animal. So the Humane Society will be able to help those people. And we are so grateful and we’re so happy we’re able to help them.

Greg: That’s great. That’s definitely very noble. And I can relate. I grew up with a dog and then four years ago we got a dog (and six months ago a second one) and it’s a bit of a cliche, but it’s true. They’re like a part of the family and the bond is just hard to describe. It’s really, really profound. So let’s talk about on the client side, how do you distinguish yourself from other firms? What’s something special that your firm does?

Charles: Our firm, as earlier mentioned, employs a comprehensive approach and is a fee-only advisory firm. And we don’t take any kickbacks and any money from any investment firm. We want to give objective advice and overall low cost and help our clients. But with the comprehensive financial planning approach we do pretty well compared with other firms because my wife is also my partner. Her background includes PricewaterhouseCoopers, CPA, and CFP as well. So we have a very strong tax team. Seven of us are CPAs. Every client actually has a CPA service, too. An actual service not just a tax return. We have a few people we do tax returns for but the majority of people receive tax planning year round, including year-end tax planning and tax loss harvesting to make sure your portfolio is more tax efficient. People are looking for overall net return, which is after after-tax cost. So we want to make sure they receive the best results possible and achieve their financial goals.

Greg: Has there been increased interest in tax services?

Charles: Yes, it’s become more and more important.

Greg: In terms of investing, are there any particular areas or assets where you see particular value? Or anything you’re trying to avoid?

Charles: In terms of investment vehicles, we are using Vanguard, Dimensional Fund and different types of ETFs, like BlackRock and iShares. We also have portfolio managers pick individual securities. As earlier mentioned, tax efficiency is very important. We are value buyers, too. We are overweight small caps and value. Emerging markets are at a reasonable price and we’re buying it. Today an advisor told me, ‘hey, Charles, I remember one or two years ago you mentioned buying some gold. Looks like that was right.’ We do invest in gold and commodities as well. So just diversify our portfolio for our clients, but looking for the opportunity for the market as well.

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Greg: And when you invest in gold or commodities, do you buy SPDR Gold Shares (ticker: GLD) ETF  or the miners? Physical? How do you get exposure there? 

Charles: I use the GLD and SPDR Gold MiniShares (GLDM) gold ETFs. That’s normally what we do. We also invest some like recently a Vanguard commodity fund. But this is just a small portion of the overall diversification. 

Greg: And tell me about diversity efforts at the firm and what your thoughts are on the topic. 

Charles: We think diversity is very important of course. I’m Asian American and a first generation immigrant. And I definitely think it’s very important. I’m very lucky to become the number one independent advisor in the United States based on Barron’s ranking this last year of 2021. But overall, Asian Americans among top advisors are still a very small percentage. And we do have a lot of minorities in our group, Hispanics and Asians as well. We also think it’s very important to have gender balance and more female advisors. I think this business is wonderful for female advisors because we can be more flexible and they can take care of the family as well as clients.

It’s a wonderful business for females to be involved in. And we see more and more. I’m the founder, but the CEO, my wife, Lynn, she is very big on this. She’s a great leader and is chairman of the board of trustees for Western Michigan University. She is an advocate for diversity big time and other things of course, including LGBT. I think it’s important because the more diversity there is the better for our community and for everyone.

Greg: And to wrap up, you’ve been in business for 31 years. I’d be remiss if I didn’t ask about your succession plan. What might be in store?

Charles: There’s a lot of merger and acquisition activity right now. And our firm is a $5 billion firm and definitely a target. Either we buy someone smaller, which we haven’t done because we believe in organic growth, or someone will want to buy us. I did receive some offers last year and this year as well. I’m sure a lot of registered investment advisory firms that are our size all receive those offers. We decided we’re going to stick with it and I’m going to continue to work and continue growing our firm. And I see in the next four or five years our assets will be over $10 billion. And I have two sons and one of them is planning to come back to work for our firm. And so he’s pursuing his CFA right now and law school as well. So I think our firm will continue growing, becoming the best fee-only advisory firm in the United States. And I see myself continuing to work for the next 10 to 20 years or more, I hope, for our clients.

Greg: Excellent. Well, thank you so much for sharing all that and for joining us today.

Charles: Thank you so much.Greg: It’s my pleasure. My guest was Charles Zhang. For more advisor specific podcasts, please check out For The Way Forward, I’m Greg Bartalos.

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