The following conversation was conducted over email and edited for flow and clarity.
Acquania Escarne of Wealth Noir (WN): Kamila McDonnough I am so excited to interview you for our readers. You have an amazing story, but before we dive into that, can you tell us a little bit more about yourself?
Kamila McDonnough of GRID 202 Partners: Thanks for having me. I am a Partner and President at GRID 202 Partners, a holistic financial planning firm with offices in North Carolina and Washington, D.C. I’ve been in the industry for about 20 years, spending most of my time in corporate America with Vanguard and Dimensional Fund Advisors. I decided about a year and a half ago to use my experience and expertise to support individuals and institutions with investing. Specifically, I focus on impact investing.
At GRID 202 Partners, we help our clients with investment management, insurance, alternative investing and tax planning. I am also active in my profession serving on the Board of Directors for the Certified Financial Planner (CFP) Board, the policy-making organization for over 87,000 CFP® professionals.
WN: Wow, over 20 years of experience is a lot. I bet you have seen some things, helped a lot of people and witnessed explosive changes in the personal finance space. Let’s go back into your life. What is your money story, meaning what inspired you to choose a career in personal finance?
Kamila McDonnough of GRID 202 Partners: I was raised in a single-parent home in Philadelphia; even though we were comfortable, we weren’t wealthy. I knew about money, how others had more but didn’t place a lot of emphasis on it until I got older and began to understand the system and why income disparities existed. A job I had as a teller at a local bank during college changed the trajectory of my career.
Through my role as a teller, I met several individuals, particularly those of color, struggling to meet their needs in retirement. People who worked very hard their entire lives now solely living on social security, struggling with housing issues and food insecurity. So I then began reading about retirement planning, stocks, bonds, etc. Upon graduation from undergrad, I started working at Vanguard in an entry-level role. I immediately loved the industry, read the Wall Street Journal every day, acquired investing books and dedicated myself to continuous learning.
WN: Interesting. Can you share more about your first job at Vanguard? What’s something that happened that you still remember today?
Kamila McDonnough of GRID 202 Partners: At Vanguard, I was in an entry-level role working with participants of 401k plans. Looking back, this was the best first job for me in the industry. As a Communications major, I was able to really learn the industry and how to communicate investment concepts to others. I would help individuals enroll in their plan and update their contributions and allocations. The diversity of the participants varied along with investing knowledge, so it allowed me to flex my communication skills to educate others on retirement planning and the options available to them.
WN: Is it true that most people do not have a Certified Financial Planner or fiduciary to help them with their money? Can you explain what is a CFP and why someone would consider working with one?
Kamila McDonnough of GRID 202 Partners: Yes, there are about 300,000 Financial Advisors in the United States. Only 87,000, about 30% of advisors, are CERTIFIED FINANCIAL PLANNERS ™. The CFP ® is the preferred designation for Financial Advisors if you are a fiduciary for financial planning with your clients. This means that you must put your clients’ interests ahead of yours when recommending products and services. CFP® professionals also undergo annual background checks, are required to participate in continued education, and must adhere to the CFP Board’s Code and Standards with respect to ethical and competent financial planning. We at GRID 202 Partners require that all Lead Financial Advisors have the CFP® designation due to the respect we have for the designation and commitment to ongoing learning and development.
WN: Kamila, thank you for explaining that so well. So, as a follow-up question. How does a certified professional help clients through difficult times such as the Great Recession in 2008 or even more recently?
The United States, especially, has experienced nationwide job loss and stock market volatility, which impacts families as well as retirement and investment savings. How do people stay the course with their financial plan or overcome huge financial setbacks?
Kamila McDonnough of GRID 202 Partners: I think the most important aspect of successful financial planning is to have a realistic financial plan. Meeting with a financial advisor allows you to understand your goals, personal and financial, and the model of the cash flow needed to achieve them, along with preparing for life and the interruptions that happen along the way. We support our clients as a trusted advisor when making important financial decisions, should I buy this new property or invest in a fund, or can I really retire early. We also help take the emotion out of investing, since we have a practical long-term view. We don’t let short-term movements in the market, like the recent decline due to COVID-19, change our entire view on investing or derail a client from reaching their goals.
Many people ask, when is the right time to work with a Financial Advisor, thinking that you need to be a millionaire before you engage. However, working with a Financial Advisor can help you get to a million more quickly. We help you prioritize activities that generate wealth and help prevent you from making decisions that could delay you in reaching your goals.
WN: What is the most common question you get asked or one thing you see from prospective clients often?
Kamila McDonnough of GRID 202 Partners: The most common question I get asked is, I have discretionary income, what is the best way to allocate it? Should I invest in the stock market, alternatives, real estate or other goals? We work with individuals that have increased their income through their profession or entrepreneurship and need assistance in building wealth.
WN: For those that might be interested in becoming a personal finance professional, can you explain how the job works? For example, do you work for GRID 202 Partners or are you an independent industry professional that is associated with them, but essentially operate as a full-time entrepreneur?
Kamila McDonnough of GRID 202 Partners: The personal financial services industry is very complex, with different pay structures and ways to serve your clients. We at GRID 202 Partners are an independent Registered Investment Adviser (RIA) firm and fee-based firm. As an independent RIA, we are entrepreneurs managing all operations from business development to technology. This is an exciting part of our business as we are able to control the client experience from the beginning to the end. We manage the website, marketing, communications, etc., so it requires you to be a jack-of-all-trades and develop expertise in many areas even outside of investing. Fee-based means we don’t sell commissioned mutual funds or investment products, we aren’t conflicted in choosing one investment product or another because of potential commission. We earn our revenue from planning fees, an asset management fee or commissions through insurance products.
WN: Are there a lot of African Americans or women in your field? I understand you are a successful African American woman but are you sometimes the only woman of color in the room? What has that been like for you?
Kamila McDonnough of GRID 202 Partners: There are not many African Americans or women in the financial industry. African Americans represent about 2% of all CFP professionals and women overall represent about 23%. This is one of the areas of focus in the industry right now: to have financial advisor diversity that represents the overall population.
You are right, being in this industry means that the majority of the time, I am the only woman of color in the room. It was a challenge, often people questioned my credentials, my experience and how I got in the room. It is a tough industry for women of color, as evidenced by low retention rates at large and small firms. However, this is something that I am really passionate about improving with mentorship and nonprofits that I support.
WN: Kamila, I also understand you are also a member of the Board of Directors of CFPs. What does that organization do and what is your role?
Kamila McDonnough of GRID 202 Partners: The CFP Board is the policy-making organization for all CFP professionals. We determine the standards, education requirements, certification and continuing education for all CFP professionals in the United States. As a board member, I support the strategic work of the CFP Board focusing on providing awareness of the CFP® designation, accountability for professionals, and access to competent and ethical financial planning for all Americans.
WN: If you could flip a switch and get everyone to do one thing related to their personal finances, what would it be?
Kamila McDonnough of GRID 202 Partners: Budget and don’t fall into lifestyle creep. Oftentimes, people think budgeting is only for people looking to save money or pay off debt, but it’s important for those that want to maintain and continuously grow their wealth, too! Your budget, how you spend your money, should be a representation of your values, they should align.
Regardless of the stage, take 30 minutes out of the month to reconcile your spending and ensure that where you spend your hard-earned money aligns with your goals. Are you saving what you want for retirement, college for your children, or even your passions?
WN: Okay, last question before we end this powerful discussion about life, money, and finances. Are there any exciting products or offerings you have coming up? Anything you are currently working on now?
Kamila McDonnough of GRID 202 Partners: Right now, we are working on racial equity and social impact strategies. I think now, more than ever, it is important for investors to support Black, Indigenous and People of Color (BIPOC) communities. Right now, not just through statements on social media and protests, but with their money.
Do you want to invest in organizations that do not value their BIPOC employees, have been subject to lawsuits and settlements for racial discrimination, or their products or services adversely affect communities of color? More to come, but this is a priority for our firm now. As a diverse and women-owned firm, we feel it is important that our clients understand that we invest in firms that believe in equity and fully support diversity and inclusion.
WN: I fully agree with your final statement. Thanks for sharing your story with Wealth Noir readers. I can’t wait to see what you accomplish next. If anyone wants to get in contact with Kamila or work with her firm please make sure to connect with her directly.
Connect with Kamila McDonnough:
Acquania Escarne is the creator of The Purpose of Money, a community of women building generational wealth for their families one dollar at a time. As an entrepreneur, real estate investor, and licensed insurance agent, Acquania has always been passionate about financial literacy. On her website, Acquania blogs about ways to help you improve your money habits, create wealth, and invest in real estate. Follow Acquania on social media for daily tips.