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Creating Your Circle of Competence

Max Leopold | Managing Partner, Leopold Wealth Management

Early in my career, I decided that I would rather work closely with less people than work loosely with more. I see older financial professionals who have 5000 “clients” who they have may never met and will never meet. Under those circumstances it may be difficult to make sure that each of those clients are sufficiently protected, accumulating wealth in the right places, and utilizing tax and debt strategies to maximize their financial potential.

I want each and every household that I work with to be set up perfectly.

Of course, that is easier said than done.

Building a practice in such a way means that:

  1. The planning process is intensive.

  2. We are very careful in deciding who to work with.

So when I sit down with a prospective client for the first time, I always say the same thing:

“In the next 90 minutes or so, I am going to outline for you my firm’s process and philosophy. At the end of this appointment, if it is clear that we are not a good fit for you, please tell me.”

It is impossible to overstate the importance of that statement. In my opinion: not all two people are meant to work together. Why would all philosophies and methodologies align? Why should we assume our methods, our costs, and our approach is right for everyone?

I work with physicians. Do doctors carry the same misguided assumption that every patient is a perfect fit? Why would we assume that one physician's approach to a surgery, or to treating an illness, is the best one for us?

My firm’s approach is straightforward:

Step 1: Get organized

Step 2: Protect

Step 3: Save

Step 4: Grow

Step 5: Maintain

Step 6: Enjoy

Is that the right fit for everyone we meet? Of course not.

If someone is interested only in protection, and not savings or growth? Not a great fit. If

someone is interested only in growth, and not protection? Not a great fit. If someone is looking for a packaged, 100 page “financial strategy”? Well, we do not believe that is what makes one’s personal finances work. Again, not a great fit. And we need to be comfortable recognizing that.

Having a trusted financial professional by your side is one of the most important things in life. I have seen it be the difference between marriages succeeding or failing, between children going to college or dropping out, between retiring at 50 or 65.

And a common denominator that I see in financially successful households is an ability to

recognize the elements of life in which you are not an expert, and then to surround yourself with trusted, smart people to fill those capacities. Warren Buffett calls it a “Circle of Competence”.

So, if you are building a financial life? First, begin to surround yourself with excellent people, and second--in doing that--find a financial professional. If you are a financial professional? First, recognize the type of practice you want to build, and second, make sure that the people you are working with are the right fit for your approach and philosophy.

If done properly, the gratification--for both the financial professional and client--is endless.


This post is for informational purposes only and should not be considered as specific financial, legal or tax advice. Depending on your individual circumstances, the strategies discussed in this post may not be appropriate for your situation. All opinions expressed in this post are solely those of the author and do not necessarily reflect the opinions of Penn Mutual, its affiliates or employees. Always consult your legal or tax professionals for specific information regarding your individual situation.


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