#FASuccess Ep 139: Plugging In For Large Firm Support To Refocus Your Time On Clients Instead, with Michele Clark

What You’ll Learn In This Podcast Episode

Resources Featured In This Episode:

• Michele Clark
• Acropolis Investment Management
• Charles Schwab
• Nexa Insights
• Client Insights
• Garrett Planning Network
• Alliance of Comprehensive Partners
• Financial Planning and Building An Advisory Firm With An Abundance vs Scarcity Mindset
• How Can Financial Advisors Differentiate Their Services Across Segmented Client Tiers?
• The Checklist Manifesto by Atul Gawande
• Redtail CRM
• XY Planning Network

Full Transcript:

Michael: Welcome, Michele Clark, to the “Financial Advisor Success” podcast.

Michele: Thank you, Michael. I am thrilled to be here.

Michael: I’m really excited about today’s episode and the discussion with you. We’ve had a few guests on lately that have, as I put it, done all the different industry channels. We had someone who started in the insurance world, then went to the independent broker-dealer, and then became a hybrid broker-dealer, and then ultimately became an independent RIA, which I feel is kind of the migration path that a lot of advisors have followed over the past 20-something years. And you have followed what I think is a very different nontraditional path, or at least nontraditional by, I’ll call it, industry standards, that you actually spent much of the formative years of your career at Charles Schwab in sort of a retail financial consultant role in the Schwab system, then you actually lived in the hourly model as an independent for a number of years before more recently tucking into a large firm and shifting your business model again.

And so in a world where so many of us have gone from insurance sales to mutual fund sales to hybrid AUM to RIA model, you’ve done this world of Schwab financial consultant to hourly planner and onwards from there; it’s just a very nontraditional path. I think probably one that’s going to be a lot more traditional in the future but certainly not so traditional historically. So I’m just really excited to chat through your journey, and what you’ve learned, your insights and experiences in all of these different models that are different than what most other advisors followed.

Michele: I’m excited to be here. And it’s been an interesting journey like you say. It’s a little different than others; I attend a lot of conferences and chapter meetings here locally for different financial organizations, and it’s not a path that I run into very often, but I do think it’s a path that gave me a lot of excellent background upon which to build.

Michele’s Early Beginnings in Banking [00:05:15]

Michael: So can you talk to us a little bit about this journey? I know you started in the business in the ‘90s, so you’ve been doing this for 25 odd years. So did you go straight into financial services and become a financial advisor, right out of school? Was this always what you wanted to do? How did you get started and land in the industry?

Michele: Well, it is what I did straight out of school. It wasn’t what I always wanted to do. I had thought I was going to become a professor. I majored in psychology, and actually a little bit of theater. So we have a similar background. And the final semester of college, I had been doing some research under a professor, and I actually got to teach a class as an undergrad at Purdue, which was unusual. Now that I have a student in college, I think, “Oh, goodness, I can’t believe...I wonder what those parents would have thought if they knew that they were paying tuition, and an undergrad was teaching their kids.” But I loved it.

So I liked the teaching, but I didn’t want to go down that path. I decided at the last minute when I was sitting with my mom; I said, “I just don’t know what I want to do.” And she said, “Well, your uncle always liked working at a bank.” So, I went to work for a bank right out of college. I’ve always been in financial services, but I really got bored very quickly...you can learn it all when it comes to just the savings accounts, the checking accounts, car loans, etc.

Michael: There are only so many different products available at your average retail bank; at some point, you can just say, “I know all the different things” and then I would imagine the conversations just become very rote and boring. People come in and you figure out whether they need a checking account or a savings account or a loan, and then you do your thing, and then you help the next person in line.

Michele: Right. And you cross-sell. That was a big thing, cross-selling the other products. But boy, it didn’t take long for me to feel like, “I know all about these products.” And they recognized that I was from out of town and that I liked to learn, so they tapped me on the shoulder for a special project. This was back when banks were not allowed to do banking outside the state borders. They were going to roll out selling mutual funds and annuities all across the state to all the branches, and they needed somebody to get licensed, learn about it, and then go to all the branches and teach the branch managers and the financial service representatives all about this, get them licensed, and then get them selling these products. They asked me if I wanted to do this with one other lady. And I said, “Yes, of course!” Well, that was my first taste of the investment industry, and I never looked back.

Michael: So I kind of envision this in the ‘90s as mutual funds were on the rise, the independent broker-dealer model was on the rise, and there was a massive, massive industry shift into mutual funds in the ‘90s all at once. I think, if you adjust for inflation and market size, the mutual fund shift in the ‘90s was bigger than the ETF shift of this decade. The whole world just went mutual fund all at once, and they cropped up in broker-dealers, they cropped up in insurance companies that really ramped up their insurance broker-dealer subsidiaries, and they started showing up in banks and credit unions.

Michele: Yes, yes. It hit the world like wildfire and just spread like crazy. That was in ‘93, and very exciting. And then, well, I wanted more. I wanted it all. So at the bank, I wanted to get fully licensed. They really were supporting that, but said, “We only have seven brokers for the whole area.” And these were a bunch of old guys who were never going to leave. But my mentor within the bank said, “Just keep studying, keep studying, we’ll support you to take the 7, but you won’t necessarily be able to be a broker until one of these folks leaves.” And I was talking with a friend of mine, telling her my tale of woe, “I really want to be a broker but there’s no spot for me at the bank, and I love the bank.” And she said, “Well, I work at Edward Jones, and there’s a whole department just trying to recruit women brokers.” I said, “Tell me more.” So I ended up going to Edward Jones.

Stepping Into The Financial Advisory Industry With Edward Jones [00:09:31]

Michael: And it’s worth noting that you’re based in the St. Louis area, which is like Edward Jones HQ central.

Michele: Yes. Yes. Edward Jones headquarters. And I’ll tell you, I actually loved knocking on the doors and meeting people. I hear a lot of people say, “Oh, I worked for Jones, I hated knocking on doors.” I’m one of those rare few that loved it. And I got a lot of new accounts.

Michael: All right, I’ve got to pause there to talk about that further. So you liked knocking on the doors.

Michele: I loved it.

Michael: All right. So what were you finding so enjoyable that very few other people seem to enjoy? Why did that work for you?

Michele: It did. Now, here’s the kicker. Most of when I was knocking on doors was in the summer. I was wearing a suit (and back then, you would wear pantyhose and heels), walking around subdivisions for miles a day in 100-degree weather. I remember one day I came home and I told my husband, “I knocked on the doors today.” He said, “I heard on the radio today that cows were dying in the field.” It was so hot.

Michael: So you’re walking door-to-door to sell in a world where literally animals are keeling over dead from the excessive heat.

Michele: Yes. Yes. People would be offering me glasses of water, “Do you need water?” I’m like, “I’m fine.” But I loved it.

Michael: That’s part of that very St. Louis Midwest welcoming culture? “You look parched, would you like a glass of water?”

Michele: Yes. “You’re here to sell me some stocks, but would you like some water?” I just like hearing people’s stories and connecting with people. So it was a really good fit that way for me. So yeah, I enjoyed it. You’d go back to your office and you’d have your list of folks who you met, and then you’d reconnect with them. And it was good. But it wasn’t the right fit for me.

Michael: I’m just wondering, was there something different about what it was like cold knocking now versus then? Was it a bit more accepted, or did you still get a zillion people that would slam the door in your face that you would completely rolled off, and you’d only be loving the few people who said yes and invited you in for stories and a blissful glass of water?

Michele: Yes. Well, I did get bit by a dog a couple of times. Yes, you did get doors slammed in your face. I will tell you, there was one man...

Michael: Did they sick the dog on you, or did the dog just accidentally get loose?

Michele: Yeah, exactly. Yeah. So nothing on purpose. It wasn’t a whistle and a running down the street away from the house. But yeah, we had the negative too, but not very much. I don’t know if it was a different time, a different era. I don’t know.

Michael: So what was the pitch back then? Was it just literally like, “Hey, what are you doing with your portfolios? Have you ever heard of this thing called a mutual fund?” What exactly was the pitch when you were knocking in neighborhoods?

Michele: I don’t recall. I will tell you this, (and maybe you should have known this about me before you invited me on your podcast!) but I’m not the most silver-tongued person. What people like about me generally is not that I’m the most eloquent speaker, but just that I’m very genuine. So if there was a pitch, I probably didn’t say anything that was memorized. I probably just talked, told them why I was there, because I’m a very frank person, and that I wanted to see if there’s anything I could help them with. I did go in with the most open heart wanting to help people. That was part of what I became a little discouraged about when I’d get together with other brokers, because I was very naive and young, and only about four or five years out of college; I discovered, “Oh, wait, not everyone is in this to help people.” And that was eye-opening and discouraging.

Michael: So you’re selling mutual funds door-to-door. And I’m presuming this was the commission-based model of the time. I’m trying to remember, I think funds were paying 5.75% upfront for A shares at the time. And that was your world.

Michele: Yes. That and then annuities could have been a product people sold at the time. I don’t know that I sold annuities, but I opened lots of college accounts for people, and retirement accounts. IRAs, I was big on, “Let’s put money away every month. Let me get you set up doing that.”

Michael: Interesting. And got traction with it.

Michele: Yeah. Now, keep in mind, I was there for a year. But they have a great training program. They keep bringing you back into the office and then they parade you across a stage...I remember I got a T-shirt once. It was like, if you opened 13 accounts by the next time you came back, you got this T-shirt with big boxing gloves on it. And it said something like “Ted’s Fighters” or something, with a big 13 on it.

Michael: Because you’re a fighter and the branch manager was Ted?

Michele: Yes, exactly. So I remember getting one of those. And each time you went back, if you reached some milestone, you got some trinket of some kind and they paraded you across the stage. Everybody is clapping for you. I’m sure the people in the seats were like, “Urgh,” but every time you came back, there were fewer and fewer people in your training class, because it’s tough. It’s a tough way to go.

Michael: And you got drawn to them because they had a women’s initiative for hiring female brokers.

Michele: Yes. Yes.

Michael: Interesting. Was it just the appeal that they were willing to be supportive? Was there a particular thing they were doing, or just “they care enough to care about me” was enough to draw you in, at least to get started with them and leave the bank where you had to wait for someone to die to get a job?

Michele: Yes, probably that. I was too naive to really know to look around at the time. I had a friend who worked there. She showed me around. They did have a really neat women’s group. And then we met on a regular basis. They gave us one piece of advice that I still use to this day. And I call it the same thing. Because we were women walking around and getting invited into strangers’ houses, they said, “Always file a flight plan each day.” Leave a note on your desk of what your plan is. What streets you’re going to go to and in what order, so in case something happens, they can track you down. I still do that. If I get the heebie-jeebies about something, or if I’m going to be going to an area of town I haven’t been before, sometimes I’ll tell my family, “First I’m going to do this, then I’m going to go here, and then I’m going to go there.” Following my flight plan.

Michael: So I’ve just got to ask, the whole, “Hey, you’re going to sell mutual funds door-to-door, and you need to file a flight plan in case you go into a house and don’t come back again”, that didn’t freak you out?

Michele: It didn’t. There’s something I’ve always said. People will ask me, “How did you last this long? So many women don’t.” And I’ve always told them, “You have to have a tender heart and a thick skin.” I think you do have to have a tougher temperament, or at least I did. I think now there are newer paths where you don’t have to have that thicker temperament. But I think that it didn’t scare me because of the temperament I had.

Michael: So you said ultimately you were only with EJ for a year. So what happened that led to a shift from them? Eventually, you were one of the people who didn’t quite make the numbers and didn’t come back, or you chose your way out of the system?

Michele: I chose my way out of the system. I was in the green. They have this (or did then) green, yellow, red system. And I was still in the green. But I was going to these meetings and hearing how people would talk about clients. I’m sure it’s totally different now, but back then I just didn’t care for it. I can remember in particular one meeting and it was the deciding point where I was like, “Nope, no more of this.” I should tell you that the meeting before that, somebody had come around, an annuity wholesaler, and said, “We’re having a trip to The Bahamas if you sell X number of dollars of Hartford annuities.” And I went to the next meeting and all anyone would talk about in this regional meeting, was, “Oh, I put this much in Hartford annuities this month.” They were all comparing how much they put into the Hartford annuity, and I thought to myself, “Not one person had said one word about the Hartford annuity before this meeting, but this is all anyone’s talking about right now.” I’m thinking, “It’s because of that trip. That’s weird.”

Then the next meeting I went to people were talking about touchdown bonds, and reminiscing about, “Oh, do you remember those touchdown bonds, those bonds from Canada? Yeah. Every time we sold them, we’d throw up our arms and we’d yell ‘touchdown’ because there were eight points in the bond.” And I thought, “Eight points? That was an 8% markup. Holy crikey, how can you sell something with an 8% markup in it?”

Michael: Well, it was a little easier because they yielded more back then, so people didn’t notice as much.

Michele: Well, then. Yeah, exactly.

Michael: Sort of sad but true.

Michele: I was like, “Oh, my gosh.” Then somebody else said, “Yeah, too bad they went bankrupt and nobody got their money back.” I thought, “That’s it. No more. I’m done.” Now, I could have just been in the middle of a bad bunch, and I’ve known plenty of Edward Jones brokers who are amazing people. Amazing, amazing, amazing, terrific. But that was it for me. I was young. I was naive. I got into it just to help people, and then I was exposed to this part of the industry, this little sliver and I thought, “Nope, I can’t do this.”

Michele’s Transition Into Brokerage Firms And Her Introduction To Schwab [00:19:43]

So I had been talking with a woman who I had worked for at the bank, and she had gone to work for another bank brokerage firm and she had been wanting me to come to work for her anyway. I called her and said, “You know what? Is that position still available?” And I went to work for her.

Michael: So what was that role like? Still doing more in business development, just hang your hat at a different broker-dealer...hang your shingle under a different broker-dealer at that point or was it a different kind of role?

Michele: It was a little bit different. It was more of a servicing bank brokerage firm for clients, and being a backup to the bank broker. And I did that for a couple of years. I actually liked it very much. It was a salary plus bonus situation, and I was happy with it. I really, really liked it. And then someone I worked with there that I liked very much, he went to work for Schwab, and every time he’d come back to visit us, everyone would hand him their resume.

Michael: We’re in the ‘90s, when this was the heyday of Schwab’s rapid growth mode starting to really take over the world after having gotten almost 20 years of traction in the discount broker realm. Great brand, huge company on the rise, and rising national footprint.

Michele: Exactly. The growth was exponential at Schwab. And everyone kept handing Scott their resume when he’d come back and visit, and he visited on a pretty regular basis. So Scott said, “Hey, would you get me a resume?” I said, “Scott, I’m one of those terrible people that just never keeps an updated resume. I just don’t do it.” I’m like, “But thanks.” I said, “I really like working here.” Because I was working with my friends, I really loved this lady I worked for. I’m like, “Thanks, but no, thanks.” Well, I get a phone call from the branch manager at Schwab, and he said, “I’ve got a stack of resumes here on my desk, but I hear you’re the one I want to have work for me.”

Michael: Oh, good old recruiters. It’s got to feel flattering when that phone call comes in.

Michele: Exactly. He’s the branch manager. So I said, “Thank you so much, but I don’t do resumes. I just don’t put the effort in to put them together.” I said, “I really like where I’m at.” And he said, “Well, I heard that you don’t like the commute.” And I answered, “Well, that’s true. It’s an hour and a half. I don’t like that.” And he says, “Well, Clayton would only be 45 minutes.” I thought, “That’s a good point.” So I said, “Okay, I’ll take the meeting.” Well, I went, and I can’t tell you how amazing it sounded at Schwab. He introduced me to all the people who worked there and everything seemed so fantastic. So I went and moved to Schwab, and it was as wonderful as it sounded.

Michael: Interesting. So it’s kind of like striking shifts. You started out in the bank, you left the bank because you wanted more opportunity that you basically wouldn’t getting until one of the seven brokers retired or passed away. So you went to Edward Jones, had success but didn’t like at least some of the co-workers and the sales environment that you found yourself in, or the people who were very motivated by the sales environment you found yourself in, so you shifted back into a bank environment with people you were more comfortable working with, and then Schwab came knocking. Do you know even, at least in retrospect, why they came knocking? What were you doing at the bank at that point that the branch manager had a stack of resumes and said, “I don’t want any of these people, I want Michele because I heard about Michele?”

Michele: I had given advice at Edward Jones, and Schwab was just starting to give advice. So they were looking for people who had been advisors before.

Michael: And in that context, that meant what? You had certain Series licenses? You were actually getting paid separately for planning fees and planning work? You had a Series 65 and not a 7, or not solely a 7? What did experience giving advice actually mean in that context?

Michele: It was the assumption that when I was at Edward Jones, I told people which mutual funds to buy. So Schwab before that really had just been about servicing. And they really put a lot of pride in the fact that, “We don’t give advice, we only give education; we don’t give you advice on which funds to buy.” Now, they did put together a select list of, “Here’s what our analysts say we think will be some good mutual funds over the next quarter”, but you couldn’t sit down with someone and have them tell you, “Here are three mutual funds that you should purchase,” and make a solicited recommendation.

Michael: It’s an interesting distinction because now there’s a lot of buzz about Schwab, all the different ways they give advice, right? They’ve got Private Client, the CFPs in the branches, the robo platform, and the CFP-for-$30-a-month subscription thing, all these different pieces. But the roots of Schwab – they were a discount broker. The founding of Schwab was basically, “We’re going to use technology better than other wirehouse or brokerage firms so that we can drop trading fees and leverage technology to put other brokers out of business.”

And it was kind of the technology plus human disrupting the financial advisor business model of the ‘70s and ‘80s, brokerages back then were all order-taking. If you knew what you wanted to buy, Schwab was the discount broker that would get it executed for you at a much lower cost. And they could do it for a much lower cost because they didn’t have to pay the outbound brokers to sell stuff. They could just pick the inbound orders at a lower cost. So the whole phenomenon of giving advice in a firm like that, which happens in a lot of different ways today – that was a monumental shift at the time, as well as Schwab’s version of the shift from selling stocks to selling mutual funds.

Michele: Right, right. They gave us a software program, a little tool, to figure out someone’s asset allocation and to help them. You’d sit down with someone and ask them questions, basically give them a risk tolerance questionnaire, and then it would spit out, “Here’s your asset allocation model.” And then the asset allocation model would help us answer, “Okay, how much do you need in large-cap?” etc. and help us figure out what recommendations to make. Well, for some reason, 95% of the clients came up with what we called the blue hockey puck. And I can’t remember any more what that breakdown was, because that was 20-some years ago, but I always remember this initial tool that Schwab came up with. Their fledgling efforts at advice always generated a blue hockey puck. So it was funny, but it was j their very first attempt at giving advice. And it emerged quickly. I was there for the Private Client rollout as well.

Also, when I started at Schwab, I was a financial consultant. Because Schwab didn’t give advice they had the Schwab Advisor Network, where we could refer clients to registered investment advisors. So that exposed me to this idea of fee-only financial advisors. And I sat with clients through many, many appointments. I sent many clients to these advisors in St. Louis and got to see, I don’t know, maybe over the years, a dozen different firms, how they work, and what the onboarding process was like. I got to hear their investment philosophies and learn all about how they work.

Michael: So take us back, if you can, to a little bit more of what the model was like back then. If you were to take this job in the ‘90s to be a financial advisor, or financial consultant – I think they were calling them FCs then– what was that job? What did it entail? What were you doing? What did day-to-day or week-to-week life actually look like in that environment?

Michele: Well, it evolved greatly over time, but when I first started, it was primarily helping people who walked in off the street who had tasks to do that were more complex than what could be handled at the front desk. So the front desk did deposits, deposited stock certificates, etc. So really operational things that were a little more complex. And then opening accounts, cross-selling other accounts, uncovering assets. Our compensation was tied to net new assets. We didn’t have practices assigned at that point, that wasn’t to come until much later. You would keep track of the people that you sat with, and if they brought in $500,000 but they took out $100,000, then your net new assets from that was $400,000.

Michael: Right. Because that’s part of the Schwab model and the model really for most brokerage platforms. At the end of the day, there are lots of different ways that they can make money and get paid. They’ll make money off of trades, they’ll make money off of money markets, they can make money on the back end from funds, managed account offerings, all this different stuff. The goal for most of the platforms is just the more money that’s on the platform, the more money we can do something with in a way that ultimately lets us provide a service and get paid. So I know brokerage firms, in general, have long focused on NNA, net new assets, as the driving key indicator, “As long as we’re expanding our reach of assets on platform, we’ll have some opportunity to provide a service and get paid. So just focus on getting the assets on the platform and we’ll figure out later what in particular we’re going to do for them.”

Michele: Right. And through that role operationally, it’s really a great training ground. I’d say that I learned so much more at Schwab than I did at any of the other positions because you just never know who’s going to walk in. I handled so many estate processing situations where people walk in, and would say, “We found these stock certificates in dad’s house,” or...

Michael: Because this was a world where, even getting back to the ‘90s, we had electronic form investments for a while, but a lot of people still had physical paper stock certificates or direct held accounts with individual companies that administer their own direct stock purchase plans. And just moving and consolidating that stuff was a big thing in the ‘80s, ‘90s, and even into the early 2000s.

Michele: Yes. And handling the trust and the changing trustees and, “Dad passed but we never got that taken care of. Then mom passed and so stuff’s still in dad’s trust,” and just handling all that, handling estates.

And then another thing that Schwab did – I don’t think they do this anymore, but they did it quite regularly, and I seemed to be the one that always did them in our branch (it seems like if you start to learn something and it’s a little complicated, then you seem to handle them all) – was privately held equities. Every doctor in town decided to open up their own surgery center and fund it through private equity. So wanting to do that in their IRA or have it held in their brokerage account, we would work with our structured products department to have them vetted and put into their account. Also, accounts held as collateral for a local bank, and just being exposed to these different things early in my career has just been so helpful over time.

Michael: Interesting. Interesting. So you’re just getting, I guess, massive exposure to all this stuff that happens in the real world with real people, dealing with their investments and portfolios. It sounds like, though, that a lot of it was, more just operations and execution-oriented? Where did the advice components start kicking in? Or the investment discussions, more broadly?

Michele: So that would be interspersed. You had to take what you got. The volume of clients you dealt with every day was mind-boggling for most.

Michael: So what does that mean? How much interaction would you have?

Michele: You’d probably have 10 to 20 people that you worked with every day. We’re not talking about a little 15-minute conversation, we’re talking about somebody who has been putting something on their to-do list, and it’s at the top of the to-do list, but it never got to the top of the to-do list, because it’s such a hairy deal. But then finally they took a day off of work and they brought this giant packet of stuff to do with Schwab, and they walked in the front door. That’s the kind of stuff that you did when I was there. Because it was as if they were saying, “I’m going to get this done today. I finally came in.” And we would say, “Great, come on down. I’m going to help you get it done.” So we’re not talking about the stuff they could just walk in the front door and say, “Could you deposit this?” That’s front desk.

Michael: Right, because that got handled at the front desk. You get the call in the back to walk up to the front, like, “Mr. Jones is here and he has three shoeboxes of stuff we have to figure out. Call Michele.”

Michele: Yes, yes. And it’s your turn. And we just rotate through all that. So that’s what you’re doing all day. And then the follow-up involved with that. But you’re also discovering things, “Did you know, I’m looking in your account and you’ve got $50,000 in cash sitting here?” And, “Oh, that’s right, I’ve been meaning to do something.” “Would you like to talk about that?” So we’re giving advice on the account. Or, “You left your job and you’ve got a rollover here. Do you know what you want to do with that?” “Nope.” “Well, let’s talk about that.” So it was just interspersed with everything else. But a lot of times, and think about that in your own life too, a lot of times things are important but they’re awfully hairy. So we know we have to set time aside specifically for those things. And that’s what a lot of these people come to us for.

Michael: I’m struck by this path as well. One of the other things that emerges in the world of roles at Schwab and particularly where you’d come from at Edward Jones, is basically all this inbound traffic: inbound clients, inbound prospects, inbound need, because Schwab was this rapidly growing firm with a huge retail presence that’s doing its own direct-to-consumer marketing and Talk to Chuck campaigns and all of those.

So talk to us about just the dynamic, because you’d actually lived on both sides at this point. From being in a bank where people come in with their questions, going to Edward Jones where you’re literally cold knocking neighborhoods with a flight plan so they know where to find you if you go missing, and then living in a Schwab world where 10 to 20 clients a day walk in the door to work with you to get help or servicing or advice, or just support or whatever it is. And it’s all inbound traffic because Schwab’s got this megabrand and marketing that they do. So how do you just look at and think about that spectrum and what it means to get clients or have clients or build a practice in those different environments?

Michele: I remember when I first went to Schwab, I could not believe how much money just came into the door every day. In fact, my very first day at Schwab, you know you’re the low man on the totem pole when you have to run an errand on the first day of work. So this is, as you pointed out already, in the era of, “Hey, I placed a trade and I’ve got to bring in my stock certificate to let the trade settle.” So people were bringing in checks and bringing in stock certificates. And at the end of the day, you had to settle the books and put them in a UPS box, and UPS would come by and pick up the box. Well, the person who did that wasn’t able to get that done by the time the UPS guy came. And so that meant the box had to be driven to The UPS Store, which was not too far, maybe a few miles down the road.

So the low man on the totem pole is Michele, it’s her first day, so she has to drive this to The UPS Store. I’m thinking, “Okay, sure, no problem.” And I remember, as I drove this box of securities and checks on the way to The UPS Store, I remember driving down Brentwood Boulevard and looking over at my front seat and thinking, “Holy crikey, I’m driving $8 million of checks and securities on my first day of work to The UPS Store.”

Michael: $8 million of stock certificates and checks.

Michele: Nuts, just nuts. The amount of money that would come in every day, it was nuts. Yeah.

Michael: I’m sure there are a bunch of us that live in the brokerage world right now that are hearing this and going, “Oh, my God, you’re not supposed to take possession of clients’ stock certificates. That’s custody,” because you’re driving down the road with $8 million of someone’s assets sitting on your front seat.

Michele: I was like, “Do I belt this in? Oh, my gosh, holy smoke.”

Michael: If I get in a car accident, and it gets ejected from the vehicle – am I liable for that?

Michele: Nobody hit me. Yeah. Whew, goodness. The other thing people would do is they would come in and say, “I’m shopping you and Fidelity.” And so you’re wanting to do arm-wrestling with Fidelity to win them over. It wasn’t as if it was going to come in automatically, necessarily. You were trying to win business, obviously. And then in town, we had Scottrade as well, which was headquartered here in St. Louis at the time. But our goals for net new assets, they were in the neighborhood of $6 million, $8 million a quarter. When I tell people who weren’t at Schwab or Fidelity, it just boggles their mind, each quarter!

Michael: Yeah. That’s $24 million to $32 million a year in 1990’s dollars. Even today, starting at a lot of brokerage firms it’s like, “Can you bring in $10 million in your first year?” And most people don’t hit that number and don’t succeed and don’t stick around. And $24 million to $32 million was your baseline in numbers 20 years ago. That was just what people did.

Michele: Yep. Yeah, it’s crazy.

Michael: So it paints an interesting environment, though, that to me is very striking overall, that so much of the industry has always hired and attracted and recruited people, bringing them in and then saying, “Welcome to your job as a financial advisor, now go find clients for yourself and some people to sell stuff to.” And as you lived in the role at Edward Jones knocking for prospects or walking for prospects or cold calling for prospects, the mechanisms have changed, but the gist has pretty much always been the same. ”Go find people to sell stuff to, and if they buy it from you, you’ll survive long enough to stick around.” So we had stock sales quotas and then annuity sales quotas and then mutual fund sales quotas and then AUM gathering quotas, but the system has always been the same. And it’s so built around the fact that the only people who survive are the ones who can get good at finding prospects and finding business.

And then you get these firms like Schwab whose problem is, “We just need someone to give the advice and handle all the servicing for this flow of people that are coming in.”

Michele: Now, that was early Schwab, things changed dramatically over time.

Michael: Success breeds competition, unfortunately.

Michele: Lots of competition.

Michael: Lots of competition. So you start in this world where you’re getting the inbound flow, but I’m struck, it doesn’t sound like you joined for that reason in particular. Because it’s not as though you were actually having trouble getting business even when you were at Edward Jones and you had to go get your own clients. The challenge more was just you were actually good at getting your own clients but you didn’t like the other people who happened to be in the branch getting their clients with slightly different means and motivations. It wasn’t a challenge to get clients, just not wanting to do it in that environment. And I guess, at least at the time, not knowing where else to look or shop or even figure out who would do it differently in the mid-1990s. So you bounced around at a few firms and happened to land at Schwab.

Michele: Yes. I went back to what I knew, which was working for a woman that I loved and adored. I loved her ethics and had fun every day at work. I guess I’ve never thought of this, this is almost like therapy. I’m seeing a theme emerging here, Michael, and it’s that I value fun. I value fun. And yeah, I’m having fun now where I work. I never really realized that. But I must value fun. I didn’t care for what I was doing at Edward Jones, even though I was successful and I enjoyed the clients, but I didn’t enjoy the environment. Then I went to an environment at the bank I liked, but then I got pulled away to Schwab. And I liked it.

Michael: But at Schwab, you got the same fun environment but half the commute.

Michele: Half the commute.

Michael: Which is nice.

Michele: Get to have more fun at home and less driving in the car.

Michael: So I am curious, what did compensation look like back then? How did it work? I know how it worked in the Edward Jones world. It was 5.75% multiplied by the amount of assets that you brought in. That math was pretty straightforward. That was your commission payout.

Michele: Times 40%, I think, something like that. Times 40% or 50%, something like that.

Michael: Right, right, because they would keep half off the grid. So how did it work in an environment like Schwab at the time?

Michele: Oh, let’s see. I think it was salary plus bonus. And the bonus, in the beginning, was based on branch, where the branch earned a bonus, and then every quarter we met and we figured out in advance how we would divvy it up. It usually had to do with things like how many accounts you opened, net new assets, that sort of thing. I can’t remember when exactly, but Schwab did have customer satisfaction surveys, and at some point, that became part of the compensation payment, which is a good thing.

Michael: Yes. I’m a fan of that. I’ve long been amazed that there aren’t more firms in today’s environment that just directly tie client satisfaction scores to the compensation they pay their advisors. There’s just now a couple of platforms starting to come out like NEXA Insights that just does client satisfaction surveys so that you can actually figure out what your clients think, right? For a long time, we just basically didn’t have the survey tools. So you get NEXA Insights and Client Insights and a few tools like that now that at least make it easier to do. But it has long surprised me that firms don’t just, as a standard process, send surveys to clients and say, “What do you think of the service you’re receiving?” and tie the advisor compensation to it.

Michele: Yeah. Yeah. Schwab did. And anything that was below a nine was bad. I remember that. But what I liked was that we could go in and we could see the comments that people wrote about us. And I really liked that. I really, really liked that.

Michael: Well, you liked it because your comments were probably good. The bad comments were probably a little bit less exciting to have shared.

Michele: Goodness!

Michael: So I am curious about compensation dynamics. I feel like one of the challenges that’s out there that frankly makes some people pause on systems and opportunities at large firms like Schwab is, that the downside of going out on your own and hanging your own shingle is that you’ve got to go and find your clients. You don’t have a system like Schwab’s national brand marketing that brings them in. But the good news is you participate in more of your upside when you go and hang your own shingle and do your own thing. A lot of these jobs in large firms tend to be salary-based or maybe salary plus bonus but not necessarily the same kind of upside dynamics that exist when you build your own firm with your own clients. And you tasted at least some of that on the Edward Jones side. So I’m just curious, was that a factor for you? Was that something in your head as you were looking at and evaluating opportunities?

Switching Roles From Financial Consultant To Investments Instructor [00:46:12]

Michele: Well, actually, Schwab’s compensation changed dramatically while I was there because the Schwab model changed dramatically. So I was at Schwab, and I was enjoying what I was doing early on, but I had this strong desire to teach. And I mentioned I wanted to be a professor when I was in college, and that desire never really went away. When Schwab came out with their website I would teach classes on how to use it, and I realized I really loved it.

So I wrote a job description and proposed that I teach investing...that I stop being a financial consultant and just go full-time to teach investing classes to clients of Schwab in St. Louis, and proposed that to our regional manager. He said, “I love the idea, but only if you do it for all of my territory,” which was St. Louis, Kansas City and I think Springfield at the time. So I did do that for a while, and it kind of ballooned and expanded to four states. And someone got wind of this and they rolled out a program like it across the country and it eventually became like 32 of us. But this became pretty time-consuming. I did it for a few years, and I was traveling on the road constantly. And I had a toddler at the time.

Michael: Well, that’ll take the fun factor back down again.

Michele: Yes. Yeah. Whenever I’d pack, he’d watch me pack. And he’s so sweet and mild-tempered. And he’d watch me pack and he’d say, “Where are you going?” And I’d tell him. And then, “So why are you leaving?” He said, “What do you do?” And I said, “I help people.” And one time I was packing and, “Where are you going?” And I’d tell him what city I was going to. “What are you doing?” And, “I have to go help people.” And he said, “Why do they need your help more than me?” And I stopped after that trip. I called my boss and I said, “I’ve got something I need to talk to you about.” He goes, “You know what? I do too.” And I said, “Well, why don’t you go first?” He goes, “Well, you know how we’ve had you traveling on the road three weeks a month, I’m so sorry, but we need to increase it to four weeks a month.” I said, “Well, that makes what I have to say a lot easier to say.” And I told him. It was my favorite job I ever had in my life. I loved it, but I just had to give it up for my family. So I did.

And so then I went into the branch. Schwab had changed in that two and a half years dramatically; now the branch role was really far more about giving advice.

Michael: Just for context, so part of what changed in the intervening two and a half years, I’m going to presume this was like late ‘90s, really early 2000s?

Michele: Yep, this is at the end of the tech boom.

Michael: So the transition was over the two and a half years that you were out there, you were doing all this investor education around how to use the website and tools when Schwab went digital. They made the transition from discount broker to online discount broker. And suddenly, branches didn’t do what they used to do because all that stuff suddenly rapidly was getting done online instead.

Michele: Yeah. And the classes I taught, I taught 20 different classes; they were on how to build a diversified portfolio, understanding bonds, understanding stocks, market history, and how to use the website. So it was a blast. I loved it, loved it. More than 500 classes. I should have kept track. It was somewhere between 500 and 1,000 classes. It was so much fun. So much fun. But yes, you’re right, the environment had changed a lot. The things that people were walking in to do, they really didn’t have to do anymore. We used to do things like, “Can you turn on dividend reinvestment for me?” Well, now people just logged in and – click! – they did it themselves. It freed us up to do things that were so much more valuable. Having deeper, better conversations about things that really matter and that would have a long-term impact.

How Schwab’s Private Client Program Deepened Michele’s Interest In Financial Planning [00:50:21]

So when I went back into the branch, I thought, “Wow, this is so exciting.” And it started bubbling up in me this interest in other topics, health care and retirement and college planning. So I started reading and reading and reading and having deeper, better conversations with clients. And then Schwab rolled out Private Client. They decided to assign 100 families, or households (I always called them families, but it was “households” in Schwab parlance) to each financial consultant. And our job was to build strong relationships with these families to make sure that we retained their business with Schwab and to expand that relationship, asset-wise, if we could.

Michael: And this would be...this was 100 Private Client households on top of whatever else you were doing and responsible for? Just like, “Hey, here’s the equivalent of your A clients, make sure you really retain and expand these on top of the rest of what you do?”

Michele: Nope. Private Client started out at Schwab first of all with just one or two Private Client representatives per market.

Michael: Much more of a centralized one-to-many.

Michele: Yes.

Michael: You get the top 100 clients in this branch or across this group of five branches in the area kind of thing.

Michele: It was a fee-based service, so it wasn’t as if anybody was assigned. In St. Louis, we had two fellows who were the Private Client representatives. We could refer people to Private Client and we, as the branch representative, would get paid a bonus for doing so. Then the client would be assigned to that Private Client representative, and that client would then pay an ongoing fee. I think it was like 50 bps on fixed income and 75 bps on equity holdings. And then that was a new relationship for that Private Client representative. So back then, at the very beginning, there were only a couple of assigned Private Client representatives per market. Eventually, it became where the financial consultants in the branch could have their own Private Client relationships.

So this assigning I’m talking about, I thought it was transformational for Schwab, frankly. Before, as clients would come in, they would just be assigned, “Next. Who’s next on line?” to help this client. So instead, I don’t know whose idea this was at Schwab, but I think it was brilliant, they said, “Okay, we’re going to divide up the top clients. If you’ve got four representatives who work in the branch, the top 400 clients are going to be assigned to these 4 representatives. And we’re going to put the representative’s name on their statements. We’re going to put their photograph on the website so when the client logs into the website, the client will see the photograph. And that person is responsible for reaching out and calling that household and developing that relationship.”

Well, if you had an account at Schwab for 15 years and you’d never heard from anyone at Schwab before, you were going to have one of two reactions. You were going to think, “Hey, I came to Schwab so that I wouldn’t be pestered.” That’s one. And that was the minority. Or two, “Hey, I love Schwab. I’ve loved everything about Schwab, and now I get a person?”

Michael: “I get all this extra service, I get a dedicated person. I don’t just have to take whoever is next in the queue when I walk into the branch. This is a nice high-touch service for me.” Which of course, you’re only doing for clients that have sizable assets in the first place in the platform. So it’s just a much higher touch with your most valuable clients.

Michele: Yes. It was wonderful. I loved it. So now I’m getting to know the same people who are in. And I’m a person who loves stories. I love to hear stories, love to tell stories. So now I’m chitchatting on the phone with the same people all the time, and they’re coming in, I’m taking them to lunch. I had a budget. I had a credit card now to take people to lunch. I was loving it. But what happened is my 100 families very quickly became 300 families, and I was squashed. I’m like, “Holy cow, what happened here?” I went from having fun to being stressed.

Michael: How did that happen? Was that just Schwab said, “Hey, this program’s working,” and they just kept adding more people to Private Client and expanding the threshold or was this a like, “Hey, Michele is doing her Private Client stuff and has great net new assets on her private clients, let’s give her more since she’s doing so well,” and you just became a victim of your own personal success? Like, “She’s doing well, let’s give her more. Oops, we crushed her.”

Michele: No. How does that normally happen? It’s, Mrs. Smith works at Monsanto with Bob Jones. And Mrs. Smith is in love with Michele because she takes her to lunch and does everything that needs to be done, and they have great conversations. And they’re at the lunchroom and Bob says, “Hey, I’m about to retire in a year.” “Oh, I know this girl, Michele. She talks to me frequently.”

Michael: So you actually started building your own inbound client referrals.

Michele: Yeah, like crazy. And so I went from 100 to 300 and got crushed. And you know what? That’s not an unusual story.

Michael: Yeah. Well, and particularly in that environment. Now we’re in the 2000s, and online discount brokerages are in full steam. There are lots of websites where you can do the trade, schwab.com, Ameritrade is big at this point, E*TRADE is doing their commercials; trading online is so easy a baby can do it. You’ve got this explosion of online service. And suddenly the clients with the most service demands and the most complex needs are craving human beings. Schwab rolls out high-touch human beings and boom, the growth takes off.

Which to me becomes an interesting metaphor for where we are today, kind of another one of these cycles. The technology is getting better. Now it’s robos doing the whole asset-allocated portfolio instead of just schwab.com executing the trade online. And all this discussion of, “Does the technology eliminate the humans?” I think it’s fascinating hearing this because what you’re talking about is every step that the technology got better, Schwab would roll it out on the website and then you would be able to do more things on the website, then more and more clients would be able to easily self-service on the website. It led to all of the people who worked there offering more value-add advice services for clients, and clients reacting incredibly favorably to being able to get additional service and additional advice beyond what the technology was suddenly providing that made the humans from 10 years ago irrelevant. It just shifted what the value was.

Michele: Exactly, exactly. And you said something interesting, and I have a viewpoint on it. And that is some folks are nervous about technology and robo-advisors. And I have never once been nervous about that. I think technology is going to help human advisors be better advisors. And that yes, there will be a small segment of the population that will be drawn to robo-advisors and will only use robo-advisors and not human, but those weren’t going to be your best clients anyway. I find that this is something that needs high-touch and that people crave in-person or phone help with some of these really more complex issues. And even with millennials I was like, “Oh, the millennials are just going to go to all robos.” They’re really needing help right now with figuring out how to balance their competing needs. So I’ve never been concerned about that.

Michael: So you’re in this environment where Schwab is doing Private Client, you get to do that now as a direct financial consultant, as an FC, it’s going really well so clients start layering up and you balloon up from 100 households to 300 households and now you’re starting to drown. So what happened next?

Michele: So when I started to drown, I approached my branch manager and told him, “I never expected to make this much money. It’s not a motivator for me. I would like to pay out of my own income for an assistant. Can you make that happen?” Well, I loved this guy. He was new to Schwab, and he was new in our branch. He said to me, “This is a common thing. And where I came from...” He had come from A.G. Edwards, which had become Wells Fargo recently, and then he came to Schwab. And he said, “This happens in the wirehouses all the time. You make teams as you grow. Let me talk to Schwab.” And Schwab was so wonderful. They tried and tried and tried to figure it out. He said they were looking at Hay points and trying to figure out how they could do that, but they just couldn’t. They couldn’t figure out how to make that work.

And I told them, “I think I’m just a little bit ahead of everyone else in this whole ‘my practice got too big’ thing. I think everyone else is going to be just behind me.” You really need to figure this out.” But I realized I was there at night, I was working too much. This happened before, where the work got too big and I needed to back off a little bit so that I could spend time with my family, which is what I did with the regional investor education specialist job. I gave that up so I could help my son more than help the clients. So I started thinking, “Oh, goodness, I need to find a solution to this.”

Now, at the same time, this interest in financial planning had been kind of bubbling up within me. Schwab had rolled out a very rudimentary financial planning software tool – really, really basic. But I had been using it with my clients quite a bit, so much so that it got the attention of someone in San Francisco somewhere who reached out to my branch manager and said, “There’s a woman in your office, Michele Clark, and she uses the financial planning software tool more than anyone else in the country. And we’d like the other financial consultants...” I guess we were called...I don’t remember what our titles were there. I think it was Vice President Investment Consultant right before I left. But they said, “We would like her to hold a conference call for all of the representatives in the branches, the financial consultants in the branches, on how she uses it, why she uses it, and what the benefits the clients get from it.” And I thought, “Yes, that’s a great idea, because I want everyone to be as passionate about financial planning as I am.” So I did that.

And just the recognition that I had an interest in financial planning that was more than what other people had, was also an indicator to me that maybe I needed to look at a path or an opportunity that would be more focused in that area outside of just investments. The fact that the business was growing so much and that I was having to spend so much time away from my family, which I didn’t want to do, coupled with this kind of blinking neon arrow that Schwab headquarters had pointed me in that said, “You like financial planning a lot.”

Michael: “We have the data to prove it. You literally like it more than anybody else.”

Michele: Anyone else. It made me think, “Why don’t I look into that?” And it was just kind of a happenstance conversation that I had with a gentleman who was in our active trading department that I’d known for a long time. I’d met him as I was a regional education specialist. He was in town visiting us doing a workshop on active trading for some of our active trader clients, and we were chitchatting. He told me about this woman named Sheryl Garrett out in Kansas City. I have a reading addiction, a serious reading addiction. And I thought to myself, “Sheryl Garrett, I remember reading about her in ‘Consumer Reports’ a year or two ago. I need to go look up that article again.” And that led me to the Garrett Planning Network. When I read it again with these fresh eyes and this fresh need of a new solution to this problem of needing to make a transition in my life, it just seemed like all the bells went off. “Ah, open your own firm, Michele.” That’s how that led to creating my own RIA.

The Decision To Build Her Own RIA [01:03:48]

Michael: So talk to us about that transition. There’s so much that happens there. You’re going from big corporate environment to hanging your own shingle as a solo and no more big company brand name. You’re changing business models, because Garrett’s model was hourly financial planning. So you’re going from having lived in a world of net new asset flows for 10-plus years to suddenly being fee-for-service and charging per hour of your time. You go from, as you said, making more money than you ever thought you were going to make to zero. That’s what happens when you go and start from scratch.

Talk to us more about what was going on in that transition. You made the comment earlier, “The work got too big, so I had to back off.” And I’ve seen a lot of advisors over the years that never managed to make that shift to back off. Not that it’s necessarily like going out on your own and hanging your own shingle, starting from zero again, but just figuring out how to make a transition that has what often can be a very big income shift along with it.

Michele: Yes. Well, I should start by saying I had the luxury of being able to make that income shift. Part of it was having started saving so early in life, the other part of it was that I am married, and so having a two-income household does give you cushion. I started putting my babysitting money in stock when I was younger, and then when I got out of college, I knew right away to start saving money. So that is the advantage that some people who want to start a business don’t have is not knowing about saving early on. That is the nice thing that we have as investors. We know that early on.

Michael: I’ll admit even from my trajectory and career as well, I did a similar thing. I made a shift from being full-time in the advisory firm to deciding to go out largely on my own and spend a material portion of my time doing what now ultimately became the speaking and the blog and the newsletter and all this different stuff, ironically, I think almost the exact same time you did, in 2008.

And it was the same kind of path for me, that I had lived rather inexpensively through the early years of my career. As my income went up, as I climbed the career ladder and earnings opportunities, my income went up and my lifestyle just didn’t move much. And so I ended out saving a lot of money and had pretty low personal costs and overhead. And that’s what made it possible for me to be able to do the leap and the shift in the first place. It was mostly about the financial stability of having low expenses and a lot of savings, much more so than the vision of the business opportunity and what it can become and all that stuff that sounds neat but it’s just not feasible if you don’t have the financial foundation in the first place.

Michele: Yeah. And the other thing, too, is when I was telling my colleagues at Schwab what I was going to do, they were stunned. And one person said to me, “Why would you give this up?” And I said, “You’re right, I really love this. And I love what I’m doing here.” I said, “But I’m starting to feel this pull.” I’d also kind of mentally all along been making lists in my head of, “I really like how we do this, but if I were to do it on my own, I would do this instead.” You know how if you have an entrepreneurial heart, I think you kind of think that way. “I like this and this and this, and I would change that.” And you just start accumulating those lists in your head, or at least I did.

And then when I started thinking about creating something on my own, I just started feeling this real pull towards, “Ooh, this would let me do that.” And I never really had any fear at all. And I think it’s because my mom, she started her own business when I was in seventh grade. So I just grew up that whole time. She still has a business. I just had that modeled for me that it’s just a normal thing. My mom’s a woman who owns her own business, no big deal. And when I married my husband, for the first several years of our marriage, he owned his own business. And you know what? My dad, when I was really young, he owned a business and myself and my two brothers, we’d go out behind the business and we’d play with the stuff in the backyard, in the back of the business. I can remember playing with the stuff back there together. And so I just was surrounded by it. It just seemed like such a normal thing. But when I announced it at Schwab to my colleagues, that was the first time that I realized, “Ooh, maybe this isn’t something that everybody does.”

Michael: When everyone else is like, “You’re doing what and why?”

Michele: “Are you insane?” But yeah, it was a very exciting time.

Michael: How did you explain or rationalize it to them? Because I think if you did the same thing now, I’m pretty sure they would still tell you that you were insane and ask, “What are you doing?”

Michele: I think sometimes it’s just a different perspective. But it’s good to have all different types of people in the world. One frustration I have had as a business owner working with other people who are also business owners, who came to me as they saw my RIA grow and grow with more and more clients, and who would ask, “How do you get so many clients? I don’t understand. And can you help me with that?” I’d say, “Sure, of course.” – because I live from an abundance standpoint; there are far more potential clients out in the universe, in the world, than there are advisors, so yes, I’ll help you get clients – my frustration came from realizing, “Oh, wait a minute,” and it took me a long time to realize this, “Not everyone is meant to be an entrepreneur. They like the idea, but the work that’s required is not what they’re wanting to do. I see.” So I don’t think you can explain things to everyone. And if they think that it’s insane and it’s nuts, I’m perfectly fine with that.

Michael: It does strike me, though, that you were talking about the list you were making in your head of like, “If I was ever on my own, I would probably do it this way instead.” That one of the things I’ve long observed of advisors who decide to make that leap to independence, the ones who take the path like you and not like your co-workers who said you were nuts, part of the distinction that I find driving that shift to independence far more often than just the economics – which frankly look pretty horrible when you walk away from your own salary or opportunity to start over from zero; I find for very few advisors it’s the idea of, “I want to build this business entity I can sell someday,” sort of the other end of the economics – overwhelmingly, what it basically just comes down to, is that some people after spending a certain amount of time in the business and getting a certain amount of experience of doing things, however they do it at their firm, they get to this crossover point and say, “You know what? I think I’m pretty clear now that there’s just a certain group of people I want to serve and a certain way that I want to serve them, and I’m just going to go do that now.” And that it’s much more driven by just the desire to serve who you want to serve the way you want to serve them. The economics then tend to follow, as opposed to making shifts for the purpose of the economics alone.

Michele: I would predict that the people who shift to serve a certain type of client a certain way would be far more successful than the people who shift because they want to chase the economics, because you have to really muscle through a period of no economics to get to the good economics.

Michael: So talk to us, though, about that. You didn’t just shift the business and say, “Hey, I’m going to hang my shingle and start over, and there are certain things about how we do business that I want to do differently when I do my own thing.” You completely leaped into a new business model as well. It’s not like you went to make an independent firm to do the assets under management model that you basically were already doing at Private Client, you would just get to use your own tools and technology and do it your way. You went from a Private Client model to Sheryl Garrett’s hourly model. So were you hourly only? Did you actually do a blend of hourly and some of this AUM model you already knew from the Private Client world? What did it look like and what was going through your head on just the business model, on how to structure it?

How Michele Structured Her Business Model [01:13:15]

Michele: So in 2008 I joined Garrett Planning Network, the hourly model network. What really appealed to me was the fairness of it. One of the things I didn’t care for at Schwab is it had moved away from that original feeling of whoever walks in the door, we sit with them the whole time until they did what they needed to get done, and we would match the client’s effort. “You put some time in here to get what you need to get done, and I will match the amount of time that you have invested in getting this task done or getting your investment ideas put together, whatever you need.”

And it evolved instead, unfortunately, by the time I left, to, “We have to evaluate the A, B, C, D client. And if the C client walks in the front door and wants some investment recommendations, we evaluate and say, ‘Okay, well, they get the recommendations.’” We wouldn’t turn anyone away, that would be unkind. But they really only would get about 10 or 15 minutes of time. Now, the A client, who was one of those clients that came to Schwab because they never wanted to be pestered and they wouldn’t return any of our phone calls, we had to still keep after them. We had to keep offering them baseball tickets and wine tasting event invitations and call them every six weeks. And I’m thinking to myself, “This doesn’t make sense to me.”

What appealed to me about the hourly model was the fairness of it. If you have a very complex client, they’re going to pay more because the complexity demands that there’s more time involved than somebody who is smaller, but they get the same level of expertise, credentialed assistance, and they as the client get to determine how much help that they need; not, “Well, you’re not worth as much, and you’re worth more.” You know what I mean?

Michael: Yeah. Yeah, absolutely. To me, it’s one of the interesting challenges that I’ve seen crop up in a lot of advisory firms.... We do the same thing, I think, on the independent side that Schwab was doing. It’s frankly what I feel like everyone started doing in the 2000s, which was this whole exercise of, you have to segment your clients so that you give the most stuff to your “most” clients, which is “fair” because they’re paying the most and you have to do less for your lower-end clients; you’re not trying to be mean to them, but just literally the economics do not hold if you’re doing the same amount of work for a client that generates drastically less revenue. So you’ll run a better business if you “right-size” the time and effort you’re spending with the amount of revenue and profits the client drives. And certainly, from the purest business sense, it’s hard to argue with the economics of that, and aligning revenue, cost structure, and cost to service.

But the phenomenon I’ve long observed in our financial planning world in particular, because often the primary motivator is much more around helping and serving people than the economics, although it happens to work out well if you serve people well in this business, is that when you take people who are wired to help others and you say, “This person doesn’t have as much money, you have to help them less, you have to help them less”; either at best, it doesn’t sit well and it feels awful, or at worst, they basically blow off the instructions and give the client the same service anyways. And then ultimately, that creates tension and challenges in the firm because now you can’t handle as many clients because you’re doing the same work for your C clients as your A clients. But how can you not give it to them because they’re human beings and you want to help them? And it often creates, I find, these challenges where, say for helper-oriented firms, segmentation and practice rarely line up with the theory, because they just can’t bring themselves to serve their smaller clients differently or less.

Michele: And the other challenge was the compensation structure at Schwab, which is actually posted on their website, didn’t allow for effective segmentation. It was just an arbitrary, “Well, they’re not in your practice and they have a smaller dollar balance, but this guy has a giant dollar balance and he will simply not engage.” It just doesn’t... I don’t know.

Michael: So the appeal to you then of going to the hourly model is, “Okay, we’re going to simplify all this stuff. I’m just going to get paid for my time. The client can decide how much of my time they are or are not going to engage in this manner.”

Michele: That’s one thing. And that isn’t even really the major thing. What I liked is I was moving away from only dealing with investments and going to true financial planning. And at the time, true in-depth financial planning was really only available through Alliance of Comprehensive Advisors and the Garrett Planning Network. And I just liked the Garrett Planning Network better, was all it really came down to.

Michael: So you join Garrett Planning Network. Part of their model is just literally helping give you the consulting and guidance of what you need to set up your firm and get registered, how to run the business model, how you get clients, and so forth. So you engaged Garrett Planning Network’s services, they help you get launched, and now you’re underway as Clark Hourly Financial Planning.

Michele: Yes. Now, I took a couple of years to get my CFP, Series 65, and CRPC. And part of that, too, was because I had a child who was in preschool. So I thought, “You know what? I’ll take...” Maybe it wasn’t even two years. I think it was like a year. But I had a child who was in preschool, and I thought, “You know what? I’ve worked so much, I think I’m going to go ahead and spend this last year before he starts kindergarten and focus on getting all these designations. And I’ll spend that time getting the website designed, getting all the ADV stuff worked on and getting all those licenses under my belt.” So I did not meet with any clients or do anything in that period of time. The day he started kindergarten is the day I turned in my ADV to the state.

Michael: So what was it like at that point trying to build an hourly business? You’d spent 10-plus years in the Schwab world where it was either heavily inbound or then eventually heavily referral-based, but it was referral-based because you already had the clients, which may have come from inbound. So now you’re starting from scratch. There’s no inbound and there are no referrals, because there’s no one to refer because you don’t have any existing clients who can refer you. You’d done cold knocking door-to-door almost 15 years prior at Edward Jones. So what was the business plan as you launched of how you were actually going to get clients and make this thing work?

Michele: So, also in that time period before I submitted my ADV, I did a lot of research on SEO, blogging, and social media. That was one area of marketing that I wanted to focus on. A second was, while I was at Schwab, Schwab had the Schwab Advisor Network, where you could refer clients to the fee-only registered investment advisory firms. They typically had minimums of $1 million, some were half a million. Actually, the day that I walked out the door at Schwab, I came home and I already had job offers on a couple of those on my voicemail. I had good relationships with the firms here in St. Louis, and so I contacted them and told them what I was doing and asked them if they would refer clients that didn’t meet their minimums to me. And many said, “Yes, of course.” In fact, I think they all said, “Yes, of course.” I got referrals from many but not all of them over time. So I was getting referrals from them.

Michael: And that to me is the piece that’s so often overlooked for newer advisors getting started is just, successful advisory firms, because they have their own capacity challenges, often migrate upmarket over time, have higher minimum fees or higher minimum assets, and someone else’s C clients or just outright reject clients, “Doesn’t make our numbers,” can still be your A clients when you’re getting started. And that there’s a huge opportunity for just building relationships with other large firms with higher minimums and finding a kind way to basically say, “Hey, I would love the castoffs that you literally don’t want anyways, but this is exactly who I want, and I will service them well, and I will make you look good for having referred the person to me.”

Michele: Exactly. And then actually, that started snowballing. So those folks had their own referral partners, CPAs and attorneys, and I started getting referrals from their referral partners.

Michael: Right. Because then they get a referral. A CPA friend calls and says, “Hey, Jim, I’ve got this new client that I want to send your way.” And then they talk a little and it’s like, “Oh, that’s actually really not a good fit for us. Hey, you should call Michele.” Because I want to keep the good relationship with the CPA, I’ve got to help that CPA find a place to send their client. If I can’t take them, I can still keep the relationship with the CPA by referring the client. I’ll just send them to Michele, Michele will love them.

Michele: Right, exactly. And they know that...they can trust that I’ll preserve that relationship for them. And yeah, it’s all a good thing. I would really recommend that if someone is starting up a new RIA, that they really try to get to know their RIA community.

Michael: So what ultimately worked in terms of just making the business work and getting traction? Was it heavily driven by relationships with local RIAs? Was it ultimately that you mastered the world of blogging and SEO and you had a digital marketing thing? Where did clients come from? What worked or what didn’t work for you?

The Importance of Tracking Where Prospects Come From [01:24:11]

Michele: Well, I would say one of the things that was most important to me was tracking where referrals would come from. I had a document that I kept by the phone, and when people would call in, I would ask. That was part of what I would ask. On the client intake form, it’s on there. And I had an appointment scheduling software tool – it would ask there, too. So this whole identifying where people are coming from is a really important part of the business development workflows and knowing that’s important.

Michael: But it’s a good point of just how few advisors actually really do detailed tracking on where their new business is coming from and where their opportunities are actually flowing in from, so you know what’s working. It’s one thing if you have hardly any growth, because if I only got one or two prospects over the past few months, kind of remember where they came from because they were scarce, so it crystallizes in your mind. But once you get a little bit of momentum going, and the business is growing a little bit more and a little bit faster, most of our brains just actually can’t really keep track of all the different sources that prospects come from, and trying to figure out which ones are working the best or working the worst or working at all. It’s hard to just intuit the patterns when you’re mired in the day-to-day reality of getting stuff done. And when you just actually track it and ask people where they heard about you or how they found you, it’s amazing sometimes what you learn.

Michele: Yeah. I’ve had my firm for ten years, and I saw a dramatic change in consumer behavior. I’m a member of NAPFA, a member of Garrett, a member of Financial Planning Association. I have a profile on the Fee Only Network because I’m a member of NAPFA. These all have “find a planner” tools, and people can click a button and send an email directly. I also have a “send an email” link on my website, or people can call me. I used to get a direct email from the “find a planner” sites, and it would say, “I’m interested in help with retirement planning, please call me or email me,” whatever.

That would happen in the beginning. But over time, I would typically just get them from my website or a phone call. On my intake forms, they can select all of the ways they heard about me. I hate those dropdown menus where you only get to pick one even though it might be three things that pertain. I’m very electronically-oriented, so my intake form is also an electronic form And it lets you pick all that pertain. What I found over time about consumer behavior, is that while they used to maybe just go to one “find a planner” tool and use it and send you an email, now they’re doing thorough research on the internet before they call or reach out to anyone. And so they’ll say, “I heard about you on FPA and NAPFA and Garrett,” and so on and so on. So I think that people are now using the internet to do some thorough and deep research before they call you. And they’re just going to call you right from your website.

Michael: Well, the thing I’m struck by in general is that, as much as we talk about a lot of the “find an advisor” search tools, the various platforms that you mentioned, for almost all of them, the primary or often literally the only way you actually search is, “Enter your zip code and we’ll show you advisors in your area.” And at some point, if that’s really all the consumer cares about, they can just type into Google “financial planner” and the name of their city and get the same result.

I’ve seen a number of advisors that have had a lot of success with inbound traffic off their website and from leveraging SEO, and their niche is just, they’re the only comprehensive fee-only financial planner in their area. Not to knock other models, but we don’t see a lot of people searching for “broker in (city name).” We see a lot more searching for “fee-only financial planner in (city name),” because the media has pushed a lot of that out. And if you’re the only person in your area that does that, if people just type “financial planner (city name)” or “fee-only financial planner (city name)”, a moderate level of location-optimized SEO and claiming your business on Google Places is often sufficient to start driving that stuff. Because the “find an advisor” platforms aren’t actually adding much value; at best they end out doing what I think you observed, which was they find you in a local search, then they vet you online. If they vet you online, they may go to the other sites because they’re trying to check out more about you. But it doesn’t necessarily originate from the “advisor in zip code” search; they can do that directly.

Michele: Yes, I agree. One of my “How did you find us?” dropdowns is “Internet Search”, and that is very often selected. Another one is “Found You in an Article.” I’m surprised how often that one pops up. But yeah, you’re right. And I think that’s a good way to describe it, too. They find you with these tools, and then they vet you online.

Growing The Business As A Fee-For-Service Independent RIA [01:29:52]

Michael: So tell us how the hourly model worked for you. You did this for 10 years, what happened? How did it grow you? How many clients did you get up to? How did revenue grow? What did it look like as an experienced hourly planner?

Michele: Well, it started off slow. I think the first year I had 8 or 10 clients. And then the next year, probably double that. And then the third year I realized, “Holy crikey, I need some help.” So I had a person that lives here in St. Louis come on board. And I never had employees. Every person I brought on board I brought on as a contract employee. So I brought on somebody. Oh, you know, actually, it was year two that I brought on somebody. Now that I realize it because we recently joked about it: in 2012, we brought on Terry, 2014 we brought on Brian, 2016 we brought on Debbie, so we said in 2018 we needed to bring someone on. So it was 2012. It worked out very well in some aspects and other aspects it didn’t work out well.

One of the things that came out of the experience that was just marvelous is that I started having monthly calls with a small group of women who were RIA owners. There were about five or six of us, and we talked every month about business ownership items. It was kind of like an informal investment committee. We discussed investments that we were using, and some were the same as others and others were not. We discussed financial planning cases that we were working on so we could collect input and resources to help out with the cases. We still meet up once a year in person at a financial planning conference, and most recently was in May at a Retirement Income Summit. That was just phenomenal. That was a great resource, in addition to the normal resources you had at Garrett.

Also, what worked out really well is… through that exponential growth that I had...it felt like it was very heavy growth. I typically would handle about 90 or so projects a year toward the end there. The total number of clients over the years I ended up working with, when I count all the client files, is just under 300. That was because of the fast and furious pace of the number of projects you’re working on. I am a very system-oriented person, and we really forced ourselves to work with workflows. That was something good that came out of it. I discovered that workflows really came down to three different types for us: business development workflows, operational workflows, and financial planning or client meeting workflows. That was really what got us through.

Michael: So what does that mean when you talk about operations workflows, or financial planning and meeting workflows? What exactly were they? Were you doing or building or creating?

Michele: So it all is based on how the client moves through your relationship. So from the first touch with the client or potential client, that point when they reached out to us, they were a “prospective client”. So we had a “prospective client inquiry” workflow that the administrative assistant did. Then once the prospective client sent in the confidential questionnaire, there was a workflow that went with that. And once the prospective client scheduled the get-acquainted meeting, there was another a workflow for that. And all those were three workflows.

Michael: So just each time they do a thing, it kicks off a series of tasks.

Michele: Right. And then the series of tasks includes a series of scripted phone messages to be left, scripted email templates to be sent for follow-up, and protocols for how often follow-ups are done and who does the follow-up. Because we don’t want to pester too much; we really didn’t need to. So it’s like, “Let’s just do a few touches, and then if we don’t hear back from them, they’re done. But then let’s put them on the email list. And that’s how we’re going to stay in contact with them. But if they do move forward, we do hear from them, then this is where we go.” And I always would say, “I like thinking things through, but I don’t want to think things through more than once. There’s no reason for that.”

Michael: And what did you use to build and track all of these things?

Michele: Well, that’s interesting. When I was at Garrett, I read this book called “The Checklist Manifesto.” Have you read that?

Michael: Yes. Yes.

Michele: One of my favorites.

Michael: Absolutely love it. Yeah.

Michele: Yes. Me, too. One of my all-time favorite books. So I read that book, and I presented at the Garrett Conference on that book. At the end of my presentation, I said, “If anyone would like, I’d be delighted to do a six-month series of conference calls guiding people through creating workflows for their practices. I don’t believe that we can create one workflow that would work for every practice. That just is not feasible. But I would be happy to walk people through the process that I use to create my office’s workflows so that you could create your own for your office.” And we did it. And it was so much fun.

But I’ll tell you, it was really low-tech the way I created them originally, before we put them into our CRM. The way that I created them originally, every time I did something, I wrote it down either on a piece of paper that I kept in a certain spot on my desk, or I opened up an Excel spreadsheet, and each tab or worksheet at the bottom, I gave a different name. And when I would do something, I would, quick like a bunny, go type it into that open Excel spreadsheet that I had open all the time. And if I didn’t have time to do that but I didn’t want to lose the thought or task, I would write it on that piece of paper, and then I’d go back later and add it. So I created this Excel spreadsheet of workflows that we eventually put into Redtail. My life learning lesson is, you’re never done with your workflows. They’re always getting tweaked over time.

Michael: Interesting. But that’s an interesting process of just literally, as you’re going about your day-to-day work and literally doing things, just taking one extra minute to scribble down the notes of the things you did and the steps that were there. Then when you get a little bit of breathing room later in the day or the week or the month, go back to your CRM, like Redtail, and figure out, “How do we actually add this as a workflow in the CRM? And then how do we trigger it?”

Michele: Yep. Yeah. And I have a saying, and it is, “Done is better than perfect.” Because if you try to make something perfect, you’ll never start that task. Or if you get started, you’ll never finish it. And it doesn’t have to be perfect, especially with these workflows, because they are going to change over time. You just get them in there and start using them. And it’s so much better.

Michael: So what did the hourly model look like for you by the end? Obviously, the name “hourly” kind of literally implies billing by the hour and charging for your time. You framed this as, by the end, you were doing 90 projects in a year. So what was a project? How were you offering planning? Because it sounds like this was more chunks of hours in the form of a project, as opposed to literally just, “Come on into my office and I’ll bill you for my time.”

Michele: That’s right. And it was very rarely, “come into my office and I’ll bill you for my time.”

Michael: So what were projects? What did you do? How did you price them? What was typical?

Michele: So toward the end, someone would come in, and let’s say they were a new client for me this year. We’d have our get-acquainted meeting, and we’d have our conversation about what they need, identify their questions they wanted answered, identify what topics that we want to cover. Let’s say it’s investment portfolio recommendations, consolidation and retirement planning. Let’s say that they’re not close to retiring, because that gets really complicated. So that would probably run in the neighborhood of 13 to 20 hours, just depending on what the situation looks like as far as their investments. And the hourly rate is $220. So that’d be probably $2,800 to $4,600 is kind of the range that I’d normally see. And sometimes I’d charge people 25 to 30 hours, depending on the situation. Sometimes I had people with $25 million, $5 million. And I had people who had $700,000. I had the whole range.

Michael: So 90 projects at $3,000, $4,000 a project and up, this was a business doing hundreds of thousands of dollars a year of hourly, project-based revenue.

Michele: Well, that was if they were new to me. If they were coming back, this was a challenge. So this is one of those life things that if I had to do all over again. I got some bad advice early on from a couple of folks in the network, who said, “Oh, I don’t think an annual review should be any more than a few hours.” And then I’d be like, “Well, it’s taking me more than a few hours.” “Oh, you’ll get faster.” I had some clients who were returning who I was only charging a few hours. Well, it’s taking me five and six and seven hours to do their annual review. So I slowly would say, “Okay, well, this is taking me five hours and six hours. And I’m thinking it’s not because I’m slow, because it’s taking me that much and I’m charging existing clients this much, so I’m going to raise a little bit.” “Oh, well, okay.” I was like, “I’m going to add another half an hour.” Well, still, I’m way undercharging some of the long, long, long-term clients.

Michael: Oh, because the problem was essentially that you kind of flat-fee’d out of the gate. Like, “Hey, our renewal cost is $900,” which is about 4 hours’ worth of stuff. And then when it turns out to take six or seven hours, now you’re way underbilling your rate. But you told the client it’s $900 for a renewal, so if you even try to take it from $900 to $1,000, they get grumpy. Never mind that some of them might be $1,500, given the amount of work you’re doing, but they’re anchored on the lower number because you quoted that upfront, and now you’re stuck with it.

Michele: Exactly. And I have such a tender heart. My administrative assistant, she always asks, “Do you want to borrow my backbone?” I am just so tender-hearted. Now, I have no problem asking people for money and telling, “Okay, it’s time to pay up.” And, “Did you bring your checkbook with you?” And, “Here’s what it costs.” But when I’m quoting a fee and I can see that they don’t have a lot of money or I’ve heard the sad story, I might drop some hours off knowing I’m going to eat that. I just had too tender of a heart. It’s not a good thing in this kind of business model. But you’re right, I’d say gross revenues were in the $250,000 range.

Michael: So how would you do it differently if you had a clean slate now?

Michele: For someone starting out, just know that it takes more hours than you would realize. And don’t listen if somebody tells you you’ll get faster. I’m a very efficient person. And so I should have realized that earlier on. But by the last few years, I was charging closer to the hours I was spending.

Michael: Okay. And just don’t be afraid to charge for the extra hours you’re spending.

Michele: Yes. Yeah, that whole quote in advance thing, that just doesn’t work for me, for some reason. Yeah. So you sit down, you have to get acquainted, you quote in advance. Some people do a range, but even the range would not have saved me from the early years’ quotes. But towards the end, I was quoting right. So that’s good.

Michael: Now, I know you’ve made one further shift, because the top of your business card does not read “Clark Hourly Financial Planning” anymore.

Michele: That’s right.

Michael: So what’s changed for you now from where this business was where you grew to $250,000-plus of hourly and project revenue to doing something different?

Plugging Into Acropolis Investment Management [01:42:53]

Michele: So about two months ago, I transitioned my firm and aligned with Acropolis Investment Management.

Michael: So what does Acropolis do? Like, is this tucking your hourly firm in in a larger environment? Is this a shift in business model? What led to this transition? And what are you doing now?

Michele: I’m not really officially tucking in, although I have used the term “plug in,” which is less passive and more active terminology. But my administrative assistant and I have both moved over here. When I had my own firm, I had a handful of investment management clients that did pay an ongoing AUM fee to do investment management, and I’ve brought those clients over with me to Acropolis. Then I’ve slowly been contacting, or actually reacting to, people leaving messages at my Clark Hourly Financial Planning firm, calling them back and letting them know about this transition. I was really surprised by the large number of clients who, even though we’re not doing hourly planning here at Acropolis and only doing investment management for an AUM fee, are coming over to maintain our relationship.

Michael: Interesting. So this transition was essentially a business model transition. You’re moving from hourly to an AUM model now?

Michele: That is true, although I did have some AUM. I had about 14 clients that were AUM at my other firm.

Michael: So what led to the decision to move away from the hourly model after having built it for 10 years?

Michele: I have this unfortunate history of growing too large. I had just gotten to the point where I had grown the firm to the point where I was working until 10, 11 at night. I was coming in on the weekends. And I had kept adding people to the firm to try to help. And I would outsource just about everything I could think of outsourcing. I had a bookkeeper and an accountant and I had a person who did the website. Really outsourced everything I could think of, brought on all kinds of support staff. And the next step for me really was to find another me, another financial advisor. And I’d been thinking about my options and had talked with a couple folks.

Also, because of the Garrett Planning Network, I had the opportunity to talk with other people who had gotten to this point and had moved past it, and they were very excited for me. “Yes, Michele, we’ve watched with interest and seeing the growth of the firm. And now you’re at the point where you’re going to become the CEO of your firm. You’ll bring on financial advisors, and you’ll pass your clients to the other advisors.” And the way they talked about it, I thought, “Ooh, that’s so wonderful. It’s exciting. I’ve reached this phase of my career that’s prestigious and exciting, and I should strive for this.”

Michael: I feel like there’s a “but” coming.

Michele: Yes, there’s a huge, huge “however” coming. I realized, “You know what? They’re telling me I need to pass my clients away.” And the more I pictured that, I realized, “But I love the clients. That’s all I ever wanted to do. I want to chat and hear stories and tell stories and go to lunch and do financial planning and run the analyses. That’s what I want. I want to talk about the results and the trips and how we’re going to pay for the trips. And I don’t want to pass my clients on to someone else.” So I decided, you know what? I know I’m supposed to want to take the next step and become the CEO and rule the world, but in my heart of hearts, I know that I won’t be happy when I do that. I had all this bouncing around in my head.

I was at a financial planning chapter meeting, and ran into a partner from one of those old Schwab Advisor Network firms that I used to refer clients to, that I’d sit in on the meetings. He was with a firm that I admired greatly. We were talking and he happened to say, “You wouldn’t want to come work for us, would you?” And I said to him, “Well...” And he stuck his foot in that door and he did not let go. He very politely asked, “May I ask you questions about your firm?” We talked very frankly, and he made an excellent case for why it would be wonderful to come over here. I could give up all of that business owner stuff that took up all the time, the IT, the HR, the bookkeeping, the compliance work. And then I could just, again, focus on the clients. And it took me nine months to mull it over, because that’s a big decision, giving up a firm that you grew. But I’m just so much happier here. So happy.

Michael: So what surprised you the most about building your own advisory business?

Michele: I always have high expectations for myself. So it surprised me that it did take a couple of years to get it to where I was able to start taking money out of the business, even though everybody told me that, even the accountant.

Michael: How long did it take?

Michele: I think it was two years.

Michael: And that’s coming at it with 10-plus, almost 15 years of experience in the industry and a track record of doing business development and cultivating referrals and even cold knocking in the Edward Jones days, and it still took 2-plus years. Most firms, frankly, I find it takes three years before dollars really start to flow in any meaningful way. So you did beat the average at two, but still a long time when you go back to zero and you’re like, “Am I taking any money out yet this quarter?” “Nope.” “This quarter?” “Nope.” “This quarter?” “Nope. Okay, but maybe 8 to 12 more of these quarters and we might get there.”

Michele: Yeah. Yeah.

Michael: So what was the low point for you?

Michele: The low points all seem to be the same. And it is when I am spending way too much time at the office and don’t get to be...and I miss the baseball games, I miss events with the family. They’re going out to dinner or they’re doing stuff without me. That’s what I don’t like. That’s the low points. Yeah. And did you know that they turn the HVAC off at night and the HVAC is not on on the weekends? And the lights get turned off at 11:45 at my old office building. I learned that from experience.

Michael: Yeah, things you don’t actually want to learn the hard way.

Michele: Yeah.

Michael: I am fascinated, though, that just you’ve had this pattern of being successful and growing and growing a larger and then growing it to a point where you actually aren’t happy because of where it’s grown and just seem to have the ability to make these leaps and shifts and potentially rather significant disruptions to your existing business model and client base to reset yourself, or right-size yourself, back to something that’s more comfortable. And I just, I see so few advisors that are actually able to make that leap. Most people, I think, get a little bit hung up or stuck on just wherever they are or whatever they’re doing. It’s hard to see the world differently than what you’re currently doing. Sometimes just even if you didn’t do it for the dollars, the dollars get pretty good and it’s hard to reset your dollar number sometimes. But you just seem to have this ability or knack to have done this now multiple times through your career.

Michele: Yeah. I think part of it might be that I actually really like change. And I know a lot of people don’t like change. So that might be part of it is that I’m not afraid of change. I like it.

Michael: It’s energizing to have something new for you, as opposed to, “Oh, my God, what am I doing to myself? Am I going to blow up my career or ruin my business?” Or all the other “shoulds” we start burdening on ourselves.

Michele: Yeah. It’s not that I seek it out. It’s not like I get bored and have to change. Because I was at Schwab 12 years and I had my firm almost 10 years. Yeah. So it’s not like I have to have change, but it’s like... I know a lot of people will stick with something because they don’t like change. Well, that’s not me.

Advice To Younger Advisors And What Success Means  to Michele [01:51:52]

Michael: So what advice would you give to young advisors looking to become a planner and start a firm today? What do you know you wish you could tell you from 15 or 20 years ago?

Michele: Yes. So if you are thinking of an hourly model or even this retainer model like your XY Planning Network, I think that with technology being what it is, I would recommend not having an office space but doing everything as virtually as possible. Because I’m one for relationships, but I think you can develop relationships with Skype and see the person or even go to their home if you’re local. And start with as little overhead as possible when you’re starting your business. I’m in the same camp as you are as far as it really being all about your expertise. Develop an expertise in a certain area so that people will want to be your client no matter where they are. And so again, that’s another reason why you don’t have to have the overhead of an office.

Michael: So as we wrap up, this is a podcast about success, and one of the things that we always observe is even just the word “success” means different things to different people. And so as we said, you’ve had these series of several different successful trajectories and then have made some of these big shifts and kind of taken maybe a step back to take two steps forward or at least taken a step back on business to take a step forward on fun. But I’m wondering just as you look at this at a personal level now, how do you define success for yourself?

Michele: So to me, and I think you really nailed it there, success is being able to have that balance where you don’t let the things that you love pull you in too far one direction or the other. Fortunately, I love my work, but I also love my family and friends. So I need to have that balance. And success is doing what you need to do to be able to maintain the balance between the things that you love.

Michael: And being willing to take the step to change it if it’s really not working.

Michele: And hopefully you’re willing to take the steps needed to change if you need to.

Michael: Well, I appreciate you joining us, Michele, on the podcast. Hopefully, there are maybe a few others out there who have hit some of those similar points of not being balanced that will find this as an inspiration that yes, you really can reset the balance and yes, you really can work out on the other end to do so. But thank you so much for joining us on the “Financial Advisor Success” podcast.

Michele: Well, it’s been my pleasure. And thank you for the invitation.

Michael: Absolutely. Absolutely. Thank you.