#FA Success Ep 271: Right-Sizing Your Client Base To Operate As An Intentional High-Margin Solopreneur, With Cady North

Resources Featured In This Episode:

• Cady North
• North Financial Advisors
• “The Resiliency Effect: How to Own Your Adversity to Act on Your Biggest Dreams” by Cady North
• “The Artist's Way” by Julia Cameron
• Calendly
• Zapier
• iRebal
• XY Planning Network
• NAPFA (National Association of Personal Financial Advisors)
• CFP Board Mentorship Program
• Elizabeth Jetton
• FPA (Financial Planning Association) conferences
• Mint app
• George Kinder EVOKE Training

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Full Transcript:

Michael: Welcome, Cady North to the financial advisor success podcast.

Cady: Hi, Michael. Thanks so much for having me.

Michael: I really appreciate you joining us today. And I'm looking forward to the discussion of talking about just how we build advisory firms in the image and the vision of what works for us.

There's a lot of labels out there around advisory firms. Like solopreneur practices and ensembles and silos and all sorts of labels that we give, I think, sometimes, because the industry likes to put certain models or types on a pedestal. Other times, just like we're just trying to understand the nature of the business and what it looks like. And some terms are, I think, helpful and descriptive in that end.

And so I know you live a model of building your great group of clients that works for you, gets you to the income and business goals that you want. Some people call those lifestyle firms, other solo practices or solopreneurs. But I'm looking forward to the discussion of how you've come to that for yourself, how you design the practice, how you decided how many clients is the right number of clients, and deciding what you're going to build. And just talking about that journey of what you've built over the past several years to build, what I would characterize a very successful solopreneur business.

Cady: I look forward to chatting about it.

North Financial Advisors As It Exists Today [03:44]

Michael: So I think to kick us off, I would love if you could just describe for us the advisory firm as it exists today. So just help paint a picture for us of North Financial Advisors.

Cady: Sure. So I have clients from Maine to Alaska. So I work nationally. I do have an office in the Washington, DC area, and I have an office in San Diego where I'm primarily based. And my goal is to work with women who are breadwinners of their family to make sure that they're living their best life. And a lot of times what that means is they're making a big change in their current career structure because they've gotten burned out from what they do now. They've done what they want to do, and they have these other big goals in their mind that they're trying to do, but they're needing some help to get over the finish line there.

So a lot of times I help my women business owner clients start a business or grow a business. Other times, it's about taking a sabbatical first before we do anything, and taking a real step back and examining the things that are important in life so that when you take that step back you can survey the land and figure out what the next steps are. So career changes, businesses, sabbaticals, that's all my wheelhouse.

Michael: And so, how many clients do you serve? I don't know if you measure number of clients, or assets under management, or revenue. Help us understand the scope of the clients.

Cady: Yeah, so I'm starting off this year with 30 client households. Initially, when I started my business, it was mostly advice only, like retainer revenue. But since I've gone through my evolution in my firm, I would say it's probably 75% assets under management, and the other 25% is financial planning fees.

Michael: Okay. And what's a typical client for you?

Cady: A typical client is a woman in her 30's, who has hit that quarter-life crisis if you will. They make a good living, right? They don't have trouble saving. They're already there. They're saving, but they're trying to figure out what their next steps are. So most of the time, my clients are saving $1,000, $2,000, $3,000 a month of their income or trying to figure out the best way to put that forward. And then we're coming up with investment plans to figure out how to make that work within the things they wanna do, both in the short term and the long term. And a lot of my work is being that sounding board, being that member of my clients' board of advisors if you will. To help them discover what is the best use for their capital, the money that they have coming in, and money going out? And how can we make sure that we balance those short-term goals with the long-term goals?

How Cady Charges Fees For Financial Planning And Assets Under Management [06:33]

Michael: And so, if the business is heavily AUM, from a fee structure, you're operating on assets or management basis, like what's the asset base then for 30 client households?

Cady: Yeah, so I don't have any minimums. That's one really unique aspect about working with me is I refused to do asset minimums. And so I can do a hybrid approach where a client basically will start off paying me a financial planning fee. And typically, the minimum is around $6,000 per year. And then as we're entering into this gathering phase of figuring out how much they're going to be saving and where they need to be putting their money and that sort of thing, I'll start opening accounts for them and then I will manage those accounts. So I can grow with the clients, if you will, as their total net worth grows and as they evaluate their plans.

Michael: Interesting. So no assets under management minimum, right? You're doing a combination of planning and investment management offering. So, "Hey, if a $6,000 a year minimum fee works for you, here's all the things that we do." And I think we'll get more into that in a few minutes of what those things are, but "We have a $6,000 minimum fee. If and when and as you save assets and grow a portfolio, we'll help you manage that as well." I guess just at some point when their assets under management fee exceeds their financial planning fee and now they're on assets under management basis and that's the transition.

Cady: Yeah, yeah, exactly. Right.

Michael: And so what's the AUM fee schedule then? Are you at call it the traditional 1% of AUM or..?

Cady: The traditional 1%. And the reason for that is just because it's easy to understand for clients. And you don't have to spend a bunch of time explaining it. And that's just the easiest way. So I don't do a breakpoint or anything like that.

Michael: Okay. And so effectively, just once they get over $600,000 of assets under management, then they're at a $6,000 AUM fee, and at that point, they're on an AUM schedule instead of a minimum fee schedule?

Cady: Hmm. Hmm. Yeah, except for existing business owners, because it is a lot more work. So I do continue to charge consulting fees for business consulting.

Michael: And what does those fees look like? Like how do you set those fees?

Cady: Well, for those, it kind of is a little bit of a sliding scale based on total net worth, but for that, the minimum is $10,000.

Michael: Okay. Okay. And what's the overall assets for management base for the business at this point?

Cady: I've got more than $24 million, something like that. And then probably bring in another $60K or so in just pure financial planning fees.

Michael: Okay. And I'm just wondering, I'm thinking about that from just the pure math end of 24 million of assets under management across 30 client households. So average household of about $800,000, which, for a typical client in their 30's, that's a good amount of dollars to have saved for someone by the time they're in their 30's. So it sounds like you're getting some folks who do have those fast-income, fast-saving starts. But then, as you noted, maybe came at that a little bit too fast, are hitting burnout, or hitting quarter-life crisis or hitting moments saying, "Okay, it's going well, and I'm making a lot of money, but I'm not actually enjoying where life is. So I've got some savings, I've got some success, it's time to do something different. I need to figure out how to do it and I just heard about Cady North."

Cady: Yeah, it's sort of like that where they've done well for themselves. They don't necessarily have a liquidity event, but they probably are sitting on a lot of cash right now. So there's immediate investing that we do. And then there is a lot of saving that they're doing on a month-to-month basis. So very often, I'll go from managing $0 for a client and then managing 200 or $300,000 of assets for a client within the first year just as we develop their plan.

Michael: Okay, because this tends to be folks who have a lot of income moving around, a lot of savings that's happening on an ongoing basis.

Cady: Yeah, and for the most part, none of my clients have ever worked with a financial advisor before. And so this is the first time they're actually sitting down and thinking, "Oh, I can actually stack my money, I can actually figure out a way to make this work for me. Instead of just letting it sit in a savings account, which I know that I shouldn't be doing, yet I don't have the skills yet or know what to do next."

Maintaining A Smaller Client Base To Ensure Better Quality Of Service [10:56]

Michael: So, is 30 client households, is that a waypoint on the journey for you of growth? Or is the goal like, I want to be at 30 and if people come on now, then, as the saying goes, someone has to step off the bus because we're trying to hang out at 30?

Cady: Yeah, basically. Wanting to hang out sort of where I'm at. One or two clients more or less doesn't bother me too much. Mostly, I'm wanting to find those, right? Like, more than the actual demographics of the clients that I have, I'm looking for certain psychographics of the clients, and to make sure that they're a good fit for the firm and they'll be able to work with me, and me work with them, and for us to be able to make progress. Right? So that's what I'm looking for if I do want to bring a client on, which maybe last year, I think I brought on three clients. So I'm not in a phase where I'm growing leaps and bounds anymore.

Michael: And so, why not? I have all these questions. Why 30? And why not still growing and adding more?

Cady: Well, I don't believe in full-time work as defined by the corporate world today. Would you agree that as financial advisors, we do deep and thoughtful work for our clients?

Michael: Yeah, often outright draining work. I always look at just some of the discussions out there of firms like, "We're scaling financial planning, to like 200 clients per advisor, 300 clients per advisor." I've looked at enough P&Ls of advisory firms. I totally get why the math works. That really doesn't sound enjoyable. For a financial advisor, that sounds exhausting.

Cady: No, it is exhausting. And so what I found for me, and this is what works for me, right, is that I need time and space to be able to provide that quality of service and hold the space for my clients so that they're not picking up on my brain going 7,000 miles a minute, right? And that they're not picking up on me trying to fit one more thing in my day.

The 40-hour workweek in and of itself was designed during the industrial revolution. It was designed to make widgets not work in a knowledge-based economy. And I know that this is hard for a lot of people because I am definitely a recovering achievement-focused to-do lister. Okay like, love to-do lists, but honestly...

Michael: A recovering achievement-focused to-do list checker.

Cady: Yes. And I've had to let to-do lists go. And the reason why is because it brings me back to that frantic mind space of checking one more thing off the list, but honestly, the list just keeps getting longer. And...

Michael: In all seriousness, how do you let go of the to-do list if you're a to-do list checker?

Cady: There's a couple of techniques I use. But basically, what I found is that in order to create a financial plan, even if you're not client-facing, even if you're someone in the back office working on financial plans, there's only so many formulas you can run to make it accurate. There is that art component, as you have often written about to financial planning. And I think really, the only way to explore that is to give yourself the time and space.

And so, I actually borrowed a concept from clients that I worked with who were therapists, right? And I don't know if you knew this, but therapists do not work a full-time job. The maximum number of hours a therapist typically works is 20 to 25 hours in a week. And the reason is the same, right? I'm not a therapist. I don't do therapy work for my clients, of course. But the reason they limit their hours is the same as the reason I limit my hours. There's only so much of another person's energy and time and focus that you can take on yourself before it starts to impact you. And so I wanted to make sure that I wasn't presenting that frantic mindset to my clients. And I just decided, "Look, one, maybe two of these deep thought work types of client meetings are allowed on my calendar per week." That's it.

Michael: I don't even know how you measure this. How many hours per week are you spending in the business?

Cady: It ranges probably between 20 and 30 hours, maximum. And I just got back from a month-long vacation in Mexico. And I wasn't totally off of work. But I probably worked five days throughout the entire time I was gone for a whole month. So I can take a step back. I can take steps back and I focus too on days off per year. And that creates time and space and balance for me as well.

Michael: And so do you have targets of only working X hours a week or taking Y days per year of vacation of time off?

Cady: So the hours per week is less of a target for me. I'm okay if I have a week that's a little bit more busy than another week, but I call it my  time-take-back. So what I do is I allow clients to schedule calls or meetings with me up to like no more than two weeks in advance. So, meaning, like two weeks in advance, my schedule is definitely set, and nobody else can add things to it, right?

And so what I do is I go in, and if those time slots aren't taken, which there often are, time slots not taken, and I take back that time for myself. So those are things that when the tide is low in San Diego, I go explore and I take a walk on the beach, or if I'm working on another type of creative project I schedule my time to do that. Or I just schedule that downtime. And I do things for myself, whatever that looks like for the day. So I'm not as big on, "Mondays I do this and Tuesdays I do this and Wednesdays I only work two hours." It's kind of like seasonality and a little bit more of, there's a season to my work. Like in springtime I do different things than in summertime.

Michael: And so did I hear you say clients can only schedule at least two weeks out? I'm presuming so that you always know what your schedule looks like over the next two weeks as it would have had to have been pre-scheduled. But what if something's going on and clients want a meeting in less than two weeks?

Cady: Yeah, so my philosophy about finances is that there are no emergencies in personal finance. If there are emergencies, we've let things that we haven't done correctly. And there's some exceptions to that. Like if somebody passes away. A parent, a spouse, or something like that. Of course, there are emergencies that can come up. But for the vast majority of situations in financial planning, there really shouldn't be any emergencies. And so I teach my clients that, not explicitly, but sort of implicitly in the way I approach financial planning and discussions around financial planning, and discussions around setting expectations for clients. So that's a really important piece to this puzzle as well. Clients know that if they try to click on my Calendly link, they're not going to see dates available tomorrow. They know that. And that's just an expectation that's been set. Of course, if something really is an emergency clients know they can reach me in email.

Michael: I was going to say, is there still active email or phone calls or something in between? Or is it just...?

Cady: Oh, certainly. Certainly, people can expect an email back from me within 24 hours, in most cases, for things, unless it requires a big new analysis or something like that. But in that case, I may say, "Hey, I need some time to think about this. Let's plan to meet in two weeks or three weeks," or whatever the case may be.

Managing Time and Tasks As A Solopreneur [18:34]

Michael: And how often are you meeting with clients throughout the year? Just how active are you in ongoing planning work with 30 clients.

Cady: So for a new client, I have a structured three-meeting system that I take them through in the first year. And so one meeting is around cash flow, money coming in, money going out, figuring out where to put savings, what types of accounts. One is about investing and giving them a good foundational understanding about investing strategies that we use and what we'll employ working with them. And then a third meeting to talk about what I call remainders. This is like homeowners insurance and car insurance and benefits at work and thinking about estate planning, and those sorts of things. Things that clients definitely don't look at nearly often enough, but are hugely important, especially if there are holes in any of those coverages.

And then on a more ongoing basis, I guess for the first year, so it's usually about 15 hours that I spend on client work, on average, more or less, and then on a more ongoing basis, we are more responsive to what the client's actual needs are. Like if a client is really chewing on, "I've got six months and then I'm going to leave this job and I'm going to go on a six-month sabbatical," we might need to meet several times before they actually pull the trigger on taking a sabbatical. It's not because of the financial aspects of it because we've long discussed the financial pros and cons and looked at all those scenarios. It's probably more about the mindset and the things that they are working with and the challenges that their brain is bringing up saying, "Oh, this is scary. I'm leaving my job. And everyone tells me that I'm acting crazy."

So, on a more ongoing basis, it really depends on the client for how many hours I'm spending with them, but it's probably around that same like 12 to 15 hours a year.

Michael: Okay. So, how does it work then when you're off for a month as a solo advisor? Do you have staff or other team around for covering you if you're in Mexico for a month?

Cady: So, I don't go off email. So I'm still getting my emails. I don't have any contractors or staff that read my emails or manage my calendar. I tend to do that myself or use robots like Zapier, for instance, to help manage my calendar. I do have a paraplanner help that works with preparing reports and preparing a financial review for a client or my series of documents that I prepare for meetings in the first year for a new client. But because I have sort of set this expectation that there are no emergencies, I don't find myself getting interrupted, outside of when either I've invited a client to have a meeting at a certain time or they have something going on.

But I will say that had something come up while I was in Mexico, I have internet and I could take a call with someone, but I'm not going to do it in a way that upsets my flow of what I have going on. You know what I mean?

Michael: And so, how does this work from the investment side as well, if you've got assets under management? Are you looking at portfolios? Are you trading and rebalancing while you're out? Do you have someone that's doing that work for you?

Cady: Yeah, when it comes to trading and rebalancing, there are the kinds of stuff you do towards the end of the year. And what I ended up doing when I was in Mexico is I did a lot of that work before I left is I looked at any tax loss harvesting that I needed to do that I hadn't already done in the year, I took a look at making sure there was enough cash in the accounts when I ran billing. But for the most part, a lot of that stuff is automated as well. Like using iRebal, for instance, in TD Ameritrade or having a quick spreadsheet that gets updated so that I can run in and do it.

I think one thing that I am good at or that my brain is good at doing is switching gears. And I don't have to work for an hour to get into figuring out what it is that I'm doing. My husband is a software engineer. And he's always really frustrated with me when I can literally hop on for 10 minutes, work on something, and go about my day when it takes him about three hours to actually get into the right mind space to write code and to prepare something and get it done. And so I think I've realized that that is a skill that I have or a gift that I have and that my brain can glom on to things pretty quickly and get some stuff done. And so it doesn't take too much out of my day if I have to run a rebalance really quick while I'm on vacation.

Michael: And you said there's a paraplanner that helps with some of this as well. So is that a full-time staff member that's covering for this? Or is that some kind of outsourced position or relationship?

Cady: Yeah, it's an outsourced contractor position. So I do have help in a couple of various areas. Whether it be marketing, business coach, someone to do my bookkeeping. But all of them are contractors. So it's all part-time work.

Michael: So can you talk about who or what you use for this? Are these one-off people? Are these businesses that serve advisors? How have you built the structure around you for supporting the business?

Cady: Yeah. So I actually hired my first paraplanner a year into having my firm because I was at a stage where I think I was bringing on three to four clients per month. And it was very overwhelming because any business owner will see that as their primary bottleneck, the bringing on new clients piece. And so, through word of mouth... I can't even remember the exact ways in which I found her, but through word of mouth, I found someone who was willing to do part time work and help me with financial plan preparation, data cleanup, producing a few reports in the ways that I like it, and that sort of a thing. And really just taking a load off of my plate as it relates to this huge bottleneck of bringing on a new client.

And I was nervous, rightfully so, because when you're in year two, you're really not making that much money. And certainly, you have to be mindful of profits and that sort of a thing. And so it was an investment. But what I realized is like, "Hey, this is actually so much more sustainable when you have help." And not only that, but I also learned that I really enjoyed the mentorship aspect of managing someone in this way. So someone young and new to the industry.

And within, I think it was about eight, nine months to a year, she'd learned a lot. And I was grateful to have her. But we sort of treated it almost like an externship, if you will, or like an incubator, in a way, because I wanted to make sure she could live the career she wanted to live. And it turned out, she wanted to go do full-time work. And she actually went to work at a broker-dealer at that time. But I was able to coach her through that process and help her make the decision and look out for potential pitfalls, and that sort of a thing.

And so I've found my next paraplanner kind of in the same way, a little bit different. She was hoping to get her hours for her CFP requirement. And it's hard to do when you are working part-time, but we tried our best. And then at the end of it, when she was able to get her hours, she ended up launching her own firm. And so, again, I found that I really enjoyed this kind of mentorship opportunity.

And so that's sort of the way I treat my paraplanner position is, I know that they're not going to be with me forever, it's part-time work, they're probably working with me and several other advisors, but let's make sure it's mutually beneficial for the both of us. And how can we make that happen? And how can we get them living the career that they want to live in?

Michael: All right. So then, kind of two follow-up questions. One, just, where are you finding them now?

Cady: So I find that I do a lot of mentorship, informally, within the industry. And whether that be because people have heard me on a podcast or saw me through the XY Planning Network, that's a great network to meet people. But I just find that I get people reaching out to me pretty frequently, and they just want to chat for a little bit, right? And so I have a special link on my Calendly where people can do that. I have to limit it to some degree, but I'm always willing to talk to people in the industry. I'm an active mentor through the CFP Board as it relates to the CFP exam and passing it and that sort of a thing. So through those various channels is how I typically find people to serve as a paraplanner for me.

Michael: And then, I know for a lot of advisors, one of the challenges for hiring, in general, is just it can take a lot to train the person and get them up to speed. I feel like that's only amplified if your conscious expectation is that you're going to mentor them and develop them and then they're going to leave and move on. So I'm just wondering, how do you handle being in this mode of constantly retraining a new person?

Cady: I was consciously thinking about this when I first hired my first paraplanner, right? And so one of the projects that we worked on together was creating sort of an operations manual and templates for things. And so it's not too much, it's not this massive binder that I hand over to someone when they come on board. It's enough that it's manageable. And so basically, I walk them through a little bit of a process that, "This is how I do things. And I'll always make sure to ask you for a due date so that you and I both are setting the expectation for how long this is going to take. And here's the template that we use. And could you work on this now? And then this is the next step after that." And so, I don't have to do a lot of training.

I think back to my Bloomberg days, right? When I first went to work at Bloomberg, I literally had to sit in classes for two weeks before I could actually go do my job, right? So it's not at all like that. It's something they can do that they're going to be interested in doing because they're either working on their CFP or they've already taken their exam and they're working on their experience requirement. And so it's going to follow a similar sort of course of work to sort of the way you think about like a capstone project for the CFP, for instance.

Michael: And it just strikes me that, at the end of the day, if your plan is to have these folks rotate through and change on an ongoing basis, then it pays to spend a little more time putting that into an operations manual, making a template, writing up processes and procedures. And then once you have that, it's easier to train them because you've written an operations manual template and have processes and procedures. It strikes me there's sort of a natural loop for this. Like yes, if you're planning to do it, you will tend to systematize and when you systematize more, it makes it easier to do a more steady flow of new paraplanners coming through.

Cady: Absolutely. And I have my own checklist of like things I turn on, things I turn off. Make sure to have this conversation. If we're using public Wi-Fi somewhere, we have to use a VPN. It's like there's little things that it's like a reminder for me of these are the things we have to go through when we're onboarding or off-boarding a paraplanner.

Michael: And so, what are you using to fill in some of the rest of the support services around you? I think you'd said you're hiring up for marketing, you're hiring up for business coach, you're hiring up for bookkeeping. So how does all that work?

Cady: So that is either trial and error, or through my network is typically how I found things. The story of finding my business coach is I initially experimented with doing a group coaching program. And what I found having gone through that was that group coaching didn't really work for me. Because again, it feels like the commoditizing aspect that I'm trying to actively work against with my business. I'm not trying to commoditize financial planning. And so I met my business coach, Elizabeth Jetton at an FPA conference, I think it was three or four years ago, and we started talking and I was like, "Well, do you happen to have any openings next year?" And so that's how that relationship came to be.

With marketing, I experiment and do different things. I don't have to actively market at this point. I think most clients, like my Google game, and my SEO game is fairly strong where most clients just say, "Oh, I found you on Google. I don't know exactly how, but I just found you on Google."

Michael: What are they looking for? What are you keyword optimized around? What's driving it?

Cady: Fee-only financial planner for women. I think in places like Washington, DC, for instance, there are still so few fee-only financial planners that have an office in downtown DC. I don't think there are any, actually. It's just a rare thing. And so that's really helpful. In San Diego it's kind of the same thing. There's a lot more fee-only financial planners in the San Diego area, and in Southern California, generally. But fee-only financial planner for women, I'm up on the list. So that tends to bring people through the door.

How Cady Qualifies Prospects And Converts Them Into Clients [32:07]

Michael: And so how do you qualify them? What ultimately makes someone a qualified prospect for you and how do you winnow that down?

Cady: A lot of it has to do with the savings rate. Like when it comes to just like facts and figures that they are filling out online. So, somebody who's in debt and who isn't saving anything right now is probably not going to be a good fit for me. I know and I can refer them on to somebody like a financial coach. And that's something that I can do without even having to meet with them. For the the psychographics that I was talking about. The things that actually truly make someone a good client and working with me. I find it's just best to have a phone call. And so if they meet that initial, taking a look at the form they fill out online, they meet those qualifications, then I'll have a call with them. And we can start talking about the things that make an ideal life for them and what they want to accomplish in the short run, in the long run, and get a better sense for how they approach these sorts of things.

Michael: What answers are you looking for?

Cady: It's not black and white. It's not really black and white. But one of the main goals of the prospect meeting for me is also setting expectations for the client. Starting to set those expectations. And giving them a sense for, Hey you're not just hiring somebody for one-off advice. Someone that you can call randomly when you have a question that you can't google or don't want to Google. You're actually hiring somebody who's a thinking partner for you, and someone who's going to be a partner in what it is that you want to achieve and do in your life. And so some people are game for that. And you can tell just in the way that they communicate with you, and other people are not game for that. And they are sort of looking for that more commoditized financial planning approach, which plenty of people offer. And that's totally fine.

Michael: And so, I think you had said there are things you're asking about on your website as well. I'm presuming to some of your questions on a Calendly link or something. What are you asking to screen in an intake form versus what do you wait to ask in the phone call?

Cady: Well, I like to ask some of the financial questions in the intake form. Just the basic ones of like what is your income, and what's your monthly savings rate? But I do specify in the form that if they're not comfortable, or... It's not a required thing. Like if they choose not to fill that out, because it can be triggering or shameful, or whatever the case may be, they can skip it. So that's totally fine. But I do want to know a little bit about the motivation for why they reached out to a financial advisor now. And I think I phrase it one way on the form. That's a very simple, like, "What prompted you to reach out to me?" But then when we talk, I'm actually wanting to get at, "What is the reason you reached out now? What was the event? What was the thing that happened to make you actually say, 'Hmm, I really do need to find a financial advisor'?"

I also like to learn a bit more about what they do now for seeking advice. Like, do they have anyone in their life that is a sounding board for them on finances? And if so, who is it? And that can be really useful information. Just to know, do they rely on their parents? Do they rely on friends? Do they have no one in their life that they're getting this information from and where is it?

And I think it's also reflective for clients to do that work and to think, "Hmm, no, I don't have anyone right now." Or "Yes, I do rely a lot on so and so." Because it starts that expectation-setting process that we're not just talking about a right or wrong answer when it comes to finances. We're talking about what makes the most sense for you? And coming at it from their frame of reference for how they've approached finances before.

So those are some of the questions. I also asked specifically, and this is a George Kinder life planning training type question that I ask in a prospect meeting is, In order to deepen my understanding of what's most important in your life, when you think about your ideal life, what are the three most essential elements?

Michael: Okay. And that's a discussion in the qualifying phone call you're going to that level the conversation?

Cady: Yes. Yes. Mm-hmm. Absolutely, yeah.

Michael: Okay. And I'm just struck, certainly, that gives them a taste of what it's like working with the firm, right? I'm going to venture say a lot of other advisors are not necessarily asking questions to that level in an approach talk meeting. So for better or worse, they're starting to get a feel for, Okay, this is what's going to be like if we work together.

Cady: Yeah, and I think that pays a lot of dividends, right? Because I don't have a three-part prospecting meeting thing. That is my prospecting meeting. And so at the end of that, and we spend a little bit of time talking about what the process is like and what the fees are. And at the end of that, I ask, "How is all that sounding to you? Is it in line with your expectations?" And that leads to a conversation then of "What are the next steps?"

And so I find that after that meeting, a client is either going to sign on within two weeks of that conversation, or they're not, and they weren't a good fit. And so I don't do a lot of follow up or trying to get to yes or no. Some of the "sales techniques," I have air quotes, if you can't tell, some of the sales techniques that people are taught. I don't do any of that. And the reason why is because I don't have time for that. I should say, I don't want to spend my time chasing down prospects. It's just not something that brings me joy.

Michael: And once you get to a point where you've got the clients and revenue that you want to be at, you don't have to.

Cady: Exactly.

Michael: It's okay if they move on because you didn't actually really need the next new clients because you're good where the business is.

Cady: Yeah, that's another side effect, too, is I'm not in a place where I need need to bring on new clients. So yeah.

Cady’s Sabbatical And Life Changes That Shaped Her Firm Launch And Client Acquisition [38:08]

Michael: So, now help us understand the journey of just where all these clients came from. I think you said earlier, you were at Bloomberg previously. So, career change in the financial advisor side. But that early on, you were, within a year, at a pace of three or four new clients a month, which is a lot of new clients coming on board. So take us back to the start of what was the transition and launch into becoming a financial advisor? And how did you get growth and new clients going early on?

Cady: Yeah, so I think somewhere deep down, I always wanted to do personal finance work. And I don't think I knew necessarily what a financial advisor was or knew that a financial advisor could be what I am doing now if that makes sense. Like if I had any concept of a financial advisor, it was probably somebody who worked at a bank. And it was involving stockbroking or something like that. Like if I think back like way, way, long, long time ago.

And so, I ended up pursuing more of a different path in my undergraduate and I studied government. And I did basically, government affairs work for almost 15 years in Washington, DC, as my job. And part of that led me to go work at Bloomberg because Bloomberg at the time, post financial crisis, was launching a government product called BGOV that was meant to serve lobbyists and members of Congress and their staff with insights into how business and industry interact with government. And so I was sort of Bloomberg's expert on Dodd Frank, and all the regulations surrounding post-financial crisis regulatory efforts, and help them launch their product and research for them and that sort of a thing. So that was a very interesting job. But it's very, very different from what it is I do today, obviously. Related, but not not the same.

And as I was thinking through those career moves that I had made in DC and beyond, I always was trying to get closer and closer, whether it was like intentional, or not as intentional. Getting closer and closer to doing personal finance. And I got to a point at Bloomberg where I myself got completely burned out. I myself was in a place where I was very frustrated with my day-to-day life and job and had gotten so caught up in my identity being what I did for work as opposed to something I do versus something I am, if that makes sense. And so that just led to a need for me to shut it all down. And I decided to take a sabbatical. And initially started off as I'm going to take six months and figure out my next steps. I had just finished my MBA at Georgetown. And so that maybe played a role in the burnout as well because doing a full time MBA while also working full time is a challenge for anyone.

And so basically, I was figuring out what my next steps would be. And one of my projects at business school was looking at an app for personal finance. Kind of like a Mint light app. Did a little bit of research, like consumer market research on that.

And so I was already starting to look into the RIA space and saw several resources, including your resources, Michael, that are inside of your blog, and all those sorts of things. And it led to me kind of daydreaming about how I potentially could serve people in my peer group. People who had just finished their MBA, for instance, and were trying to think about next steps in their life or people who had had a similar career journey to me and wanted to really take their lives to the next step, from a financial perspective.

And luckily, by the time I wanted to do all of this, a lot of the people who had gone several years before me had set up a lot of cool infrastructure around the RIA space, whether it be technology, having support, and networks of people that you could have study groups with, and that sort of thing to help me launch and figure things out.

And so I think, my approach was to take the Series 65 exam and see how that worked. And then start my CFP coursework and see how that worked out. And all of that moved along fairly quickly and easily. And at the same time, I started to do some discussions. I was based in DC at the time, so I was sitting down with a lot of local RIA advisors, finding them through NAPFA, and things like that, to talk with them about their experience. And my hope was that maybe one of them would want to hire me, at least part-time, so that I could learn the business, so to speak. And what I found, which was really interesting, which turned out to motivate me even more was that very few of these firms hire anyone, very few of these firms are growing. And there are a scant few women-owned firms or firms that focus on working with women.

And so I immediately saw an opportunity and was highly motivated to say, "Well, I'm just going to have to do this myself. Because what I want to do doesn't really exist. And certainly working with people in their 30's is not something that is done right now, or at least not done at scale."

So that's what motivated me to start my firm. And so I did it.

Michael: So were you doing your Series 65 and CFP coursework, and started to talk to local advisors, was this all while you were on sabbatical? Was this starting while you were still at Bloomberg and then you did the sabbatical?

Cady: No, I was all on sabbatical. There's no way, when I was working at Bloomberg, that I would have had the time to do that kind of work, meaningfully anyway. They had me back and forth to New York every other week. I was doing a lot of travel. I was traveling around the country doing a lot of talks. So there's just no way I would have been able to do it without having the time and space during my sabbatical.

Michael: So, what came next is you decided, "I'm going to launch"?

Cady: Yeah. Luckily, I found the XY Planning Network, who helped tremendously with even just the basics of compliance, and what do you file where, and how does that go? Those sorts of questions. And I just took took all of the lists and to-do items and worked at them, basically. But I think having had the sabbatical and also having just come off my MBA, I still had that sort of steady mindset. And I will say it's very rare, and the CFP exam is hard, but I worked on it from August to December, did my capstone, took my exam the following March and passed on my first try. So I did a very condensed CFP exam kind of thing. Finishing it up, and all that stuff.

Michael: So, what was the vision when you were launching the firm? Like, where did it start? What was the original business plan?

Cady: Well, having just finished my MBA, I was very much gung-ho on changing the world and doing something totally different and disrupting an industry. And "I'm going to serve 200 clients in the first two years." Looking back on it, and I learned pretty quickly just by talking to other advisors that that was pretty unrealistic for a lot of different reasons. But I also learned, too, for myself, like as I started actually putting pen to paper and doing financial plans for real humans, that I didn't want to just have this templated financial plan that I send out to people, right? And I wanted to spend time with them.

The first clients that I found that I got were, I sent out a LinkedIn message to my contacts. And I was basically like, "Hey, this is what I'm doing now. Let me know if you are interested." And I had an old intern that worked for me, years prior, call me. And I had one of my business school colleagues call me. And so those were my first two clients, basically, that came on.

And then I was so grateful as well to NAPFA because there were advisors there in DC that I talked to and they were kind of mentors to me. And then I just asked a simple question, and I would advise anyone starting a business to ask this exact simple question, which is, "When you get clients who don't fit for what you're looking for in your firm, what do you do?"

And more often than not, they say, "Well, I don't actually don't know. I don't have anyone to give them to. Would you be interested?" And so, clients...

Yeah, exactly. So clients like 3,4,5,6 were probably from that. It's like other advisors referring me to clients that they couldn't take on, basically.

Michael: So, just is that what drove the growth in the first year? Just communication to friends, friends, colleagues, existing relationships, and referrals from other advisors of clients who weren't a good fit for them, but could still be a good fit for you?

Cady: Yeah, absolutely. I always tell people who are just starting out. It's like, you need to make sure that your friends and people that are close to you can describe to another person what it is that you do and why you do it. And it's going to take a little bit of work because there's nuance to that. But you need to be bold enough to explain that to people. So then you have little folks out in the world talking about you and who you are and what you do. And that's going to directly contribute to your success.

And the surprising bit about that is a lot of those people can be within your own industry. And that's what's so wild to think about is like most people think, "Oh, I've got to be leery of anyone in my own industry because they're just going to steal clients from me." And I share this with my own business owner clients, too. It's like, "No. actually, that's a hugely valuable resource is people in your own industry as contacts." Not only for referring out but just from being able to learn from and share ideas with. It's easy to learn from each other.

Michael: So how did you do the communication to friends, former colleagues, and the rest. I know, for a lot of the newer advisors, it feels awkward or intimidating. Sometimes like, "Hey, you knew me for 15 years in this thing, but now I'm a financial advisor." How did you communicate?

Cady: Yeah, the word "financial advisor" tend to scare people. And I've seen that, even today. But everyone's got a reason why they're doing this. And so I would focus on that. Getting at your why, and figuring out sort of an elevator pitch for lack of a better term of your why story. Like why are you doing this? And what makes it interesting. And I think that will be leaps and bounds. For a long time, what I would say in a minute or less was, "I want to be able to serve people who are like me who aren't served by the industry at this point." We're flat out turned away by the industry at this point. And so that's the reason why I wanted to become a financial advisor.

Michael: So, what did it look like in the first year in terms of clients coming in? How many clients were you getting and where were they coming from?

Cady: Yeah, I think in the first year, I was able to bring on 25 clients or something like that. And I doubled it the next year. Doubled it to 50. And I think part of it was my fees at the time. When you have a close rate that's like 80%, 90% That's a real indicator that you're not charging enough, FYI. But it was this idea of affordable and "We're going to do this process." And it was a combo of all those things that I've mentioned. Which is Google search, CFP Board, or NAPFA search, and then other advisors and my own actual network of people.

Michael: And so were you already starting to frame around financial planning for women and fee-only financial planner for women? You said your Google SEO game is pushing well for you now. Did it start there? Was that a focus for you from day one? Or was it, "Ok I'm launching, I'm just going to get anybody who's willing to do business with me and pay me and I'll figure out how to focus in more later"?

Cady: No. Definitely, my website reflected that early on. I worked with men too, my first year. I would take more clients than necessarily, like my website laid out. But that's the thing that you realize, too, when you first start is people don't always read. So...

Michael: Which is funny to me, because like your homepage literally says, "We help women dream big and have their financial freedom." It says we help women on the homepage more than once.

Cady: Yes, it does. It does. But that's okay. People can read as much as they want to read, and I'll meet them where they are. But yeah. So I was already targeting that space. And I think, over time, maybe the nuance has changed just slightly or the the phrasing maybe has changed a little bit. But overall, I haven't done too much broad swath changes to the marketing language that I use to target people.

Michael: So, I'm sure as you know, like a lot of advisors when they get started, really struggling getting clients going, and may not see 25 clients in their first 2-plus years, much less, 25 in year 1, and doubling it in year 2. So what do you attribute just the fact that you seem to get such traction and it went so well early on?

Cady: I think it was really excellent to have support around me. I found a couple of different really good study groups, like working groups of people that I could connect with that, were in similar stages of business. And I think that's really helpful because...

Michael: Meaning other advisors....

Cady: Other advisors. Yeah. And I think that's really helpful because you could say something like, "This is really crazy. Was it just me?" And they will agree. "No, it's not just you. That's happened before." Or "This is how I've handled it."

Michael: And how did you find your study group since you were coming to the industry not having existing industry connections for study groups?

Cady: Well, the XY Planning Network was a good group. NAPFA was a good group. I think one of the first conferences I went to was XYPN, and quickly met another advisor, who was, I think, two years ahead of me, and her and I hit it off. And so we started having a monthly call. And XY Planning Network actually sets up study groups for people. And so that was another way that I connected with a group of folks that I still meet with today, actually, who are in similar stages of business. So it was a little bit of that. The connections around me, the associations that I belong to.

How Cady Evolved Her Firm And Steadied Growth [53:12]

Michael: Okay. And so, what happened next? Because just I'm struck that you're like, "Yeah things got going. And I grew to 50 clients after the first 2 years, and you're at 30 now." So, some things changed in that journey. What changed? What shifted?

Cady: Well, what changed is, after a while, I would start to joke with my husband, the running joke was, "Oh, God, I have too many clients." And that's a joke, because why would you ever say "I have too many clients"? It's money coming in the door, and you're a business that's two years old. But the truth is, is that was a real eye-opener for me at that point because I was nervous and scared to death about getting back to a place where I was when I was working in corporate world, right? I never, never want to go back to working 60-hours a week, always on, everything's an emergency. Life is an emergency. Work is an emergency. I was in real danger, I would say, of getting back to a place like that where everything felt like an emergency.

And so I started to reassess where I wanted to be. And at that point, I definitely changed my fee structure a bit. And I started to slow down the number of clients that I wanted to bring on. And it was at that time, too, that I was basically one client a month is maximum that I wanted to bring on. But even that is a lot in a given year. So, by addressing fees for new clients, that was a natural winnower of a new business coming in...

Michael: Meaning you just started ratcheting minimum fees higher, and calling the group. So what were your minimums originally, and then, when did you start raising them too?

Cady: So I think my minimum was before was 4,000 or 5,000, something like that. So, each year, I have an upfront fee that I charge and then a monthly fee. So each year, I would ratch it up both, like the upfront fee, and then the monthly fee. And they correspond to an annual minimum kind of a thing.

Michael: So how would that break down in practice? Was that like 2,000 upfront and 2000 ongoing? Was that more upfront, less ongoing, less upfront, more ongoing?

Cady: I think originally, it was something like 1,500 upfront and 250 a month or something like that.

Michael: Okay.

Cady: That was the original. And then add 25 on the month and add an additional 500 or 1000 upfront, each year, kind of a thing that I would do. And so now it's 350 a month and 2,000 for an individual and 4,000 for a couple, upfront.

Michael: Okay. And so you started lifting minimums, just to slow the flow. So what was revenue after the first two years, just that you got comfortable to the point of saying, "I think I'm going to slow the flow"? Was everybody at 4,000-plus by the time you were in the third year with 50 clients you're at 200 thousandish of revenue?

Cady: Oh, no. Definitely not. No, definitely not.

Michael: I guess because you don't get the upfront after the first year and ongoing is lower.

Cady: Yeah, yeah. For sure. I think top-line revenue in my second year was less than 80,000 a year.

Michael: Okay, so not everybody was at full minimum because you're still ratcheting up early on?

Cady: Yeah. Not just that. But like the timing of when someone came on, you know? Not everyone's coming on and you...

Michael: In December, you don't get the $4,000 for the year, you get maybe the first check.

Cady: Yeah. Exactly. Exactly. So one thing I learned in that year and years beyond too is I started to do more management of assets for people because initially, I was like, "No, I want to do this without managing assets. I want people to be able to do it themselves." But what I realized very quickly was that the only people who end up coming to you are a lot of the people who end up coming to who are do-it-yourselfers are near-retirees, people within 10 years of retirement. And so they basically wanted to pay for like, a gut check and then never speak to you again. And so I was attracting these people who weren't at all fitting the mold of who I actually wanted to work with. And so I realized I had to do a lot more expectation setting and addressing that through my process and the fees that I charge and everything else.

And part of that, too, was starting to manage assets for people because what I realized is that for the clients that I was managing assets for, we were doing so much for them. And they were having much more success. Like, I had a client save for a down payment on the house in Washington DC within a year, which is tough to do. They ended up saving like $250,000, in a little over a year. And they wouldn't have been able to do that if I wasn't working with them and I wasn't managing their assets for them. They would not have executed on the strategy. They just would not have.

And I found that time and time again with clients is that there was this component missing in the advice-only category of the execution. And advice only works great for people who are ready to execute. But there's a whole lot of people out there who aren't ready to execute. They think they are, but they're not. And they don't actually take action when they need to.

And so what I found by managing assets for people was that I could do so much more for them. And there was so much more appreciation, both in my appreciation of working with the client and seeing their progress, but also the client themselves seeing so much progress, that it was just much better for me than the churn that I would see on a pure retainer, advice-only model where people would be like, "Well, great. I worked with you for six months, and I'm happy so I don't need you anymore." But they have all these things that they actually hadn't done yet.

Michael: So it sounds to me like AUM for you wasn't necessarily like a business revenue decision, "Okay, I need to charge the fees this way to get to the revenue I'm trying to charge or generate higher fees." It sounds like from your end more of a psychographic issue of just the clients who had and were willing to delegate assets and work with you on them and implement with you on them tended to be the kind of people who implemented things with you in general, and those were enjoyable clients to work with. Like it was the psychographics of people who are willing to engage AUM more than literally the, "I need to get assets under management fees to get my fees to the level I want."

Cady: Yeah, absolutely. And that was a huge surprise to me because my hypothesis, if you would ask me in 2015, was not that at all. My hypothesis was that I was going to be able to help do-it-yourselfers and people who were like me. I was like, "I'm going to help people like me. And I can do this myself." Right? But what I found in real life and in practice was that I enjoyed much more working with these people when we could all see the benefits happen in real-time. And I had an experience where I saved a client so much money in taxes by doing some tax-loss harvesting after they had huge capital gains. And I was like, "That just paid for my fee for the next four years, or five years. That's value. That's real tangible value.

Michael: So, how did the business... I guess how did it continue to evolve? I understand raising up the fees to slow the pace down a little more, you got it down to one a month, and maybe even not that often because of the work of new clients. But that’s still, you're at 50-plus clients, you're slowing down to just "one a month." But you're at 30 today. So how did you get from there to here? What came next in framing up the business?

Cady: So, over the course of the next two years is when I brought on a business coach to help me think through where I actually want to take this in the future, and who I actually want on this bus with me. And Elizabeth Jetton gave me this beautiful quote. I don't know if it's hers, or something that she got from somewhere else. But it's like you're creating a garden. And initially, when you create your first garden, it's beautiful. But over time, things change and shift and some things grow faster, and some things don't. And so it's nice to go in and redesign your garden from time to time. And so, over the course of the last three years, basically, I've been redesigning the garden of who I actually want, and what that looks like. And being clear with that upfront with clients instead of burning myself out trying to do a bunch of prospect meetings that are going nowhere.

And so what that meant was a lot of people "graduated" from foundational financial planning is what I called it. And so I would send emails to people and I would say, "Look, congratulations, you've done so much work. When you started this, this is the things that you were focused on. We had the opportunity to work on all these things and now you've completed foundational financial planning." And so I...

Michael: So you had thoroughly sold them on foundational financial planning coming in. Just that's how you explained it to them, as you basically said, "We're not going to be working together anymore because you joined me for all this financial planning help. We've done all this work together. Congratulations, you've really put the foundations in place. I wish you the best."

Cady: Yeah, exactly right. And it's very cordial. And I wish these people all the best, right? But that's exactly the way I started thinking about my original business plan was that my original business plan was meant to get people on a foundational footing where they could fly on their own. And I was no longer going to do that. I want lifelong clients. I want to be that partner with them through their financial life.

And so that means that I ended up letting go of a lot of people. And that was okay. And consequently, my life improved in a tremendous way. It's exactly what you think. It's like the 80/20 principle. Eighty percent of your clients are fine, but there's that 20% who take up so much time and give you that anxiety, and you have this dread sometimes before you take meetings with them. It's like I have no time for that, and no patience for that. So those are the kinds of people that were the first to let go.

And then I started moving up the list. And my goal is that I don't want ABCD clients. I just want A clients. And I think that's what my clients deserve, is that service. And so that's what's led me to where I am today.

And as a result, initially, retainer revenue and financial planning fees were like 75% of the business, and now is totally flipped, where AUM is the primary. And AUM is like 75% of the business and financial planning fees are 25% of the business.

Michael: So, as you set up these clients to graduate because they've completed the foundations, did you refer them out to another advisor? Did you try to send them somewhere else? Or you just told them, "Congratulations, you're in a better place. I don't think we need to continue working together. Wishing you the best in life." And that's that.

Cady: Yeah, for some people, I held their hand a bit more. Like if they were in a transitionary phase or something like that, I wanted to make sure that there was like a handoff. And so I found another advisor for them. I spent a lot of time on it. Because these people had been with me for three years or four years at this point, right? So there's just some loyalty there. For other people, though, I would just maybe send a list of advisors to them and let them do their own due diligence of who they wanted to reach out to, or it just may be dependent on the the kinds of situations that they were in.

Michael: So it sounds like you had your list of people who were going to be invited off the bus. But then were much more specific for each of, literally, the path for it, it sounds like. Because if you just said, "Congratulations, you've graduated. Off with ya." Others, it was, "Here's a list. If you still want to work with an advisor." Others it was, “Okay, I’m going to work with you a little bit more directly to help you work with this new advisor instead.” And did the transition more hands-on. So just very client by client about how they were helped off the bus.

Cady: Yeah, yeah.

Michael: So how did you decide who comes off the bus?

Cady: Well, like I said, if it was somebody that I had that sinking feeling, just based on my experience with them in the past of like, I've got a dreading meeting with this person." Is an indicator that they weren't a good fit for my firm. So that was like the first call of people...

Michael: Almost literally the gut feeling. Like if you have that sinking feeling in the gut when you get the email or the Calendly confirmation that they've just scheduled another meeting with you. If that's your gut response when you see a meeting with them, that's probably one of the people that needs to be on the list.

Cady: Yeah, yeah. You've definitely got to trust your gut, you know. And then there were other people that was purely just a financial thing. They had a much more complex set of financial challenges that they were working through, and they were paying me like a base fee that I had been charging them for three years. So I hadn't done a good enough job of explaining to them, "Things have changed over time. And we're now doing X, Y, and Z. And it's more complicated." And rather than have that difficult conversation of trying to raise their fee, probably like triple it or quadruple it, I just decided to let them go. And I think probably, it most likely had to do with the fact that they also probably weren't a very good fit for the firm and where I wanted to go.

Michael: So, was it is an all at once thing? Like, "I've come up with my list of 25 clients I'm going to graduate."And then we send the letters and start doing the thing, and 6 to 12 months later we're there? Or was it a more gradual, "We're going to move a few, and then we'll see how it feels and we'll move a few more, and see how it feels, and we'll move a few more?

Cady: Yeah, it's definitely the latter. That kind of thing is hard to do. That's a big, huge transition. And so, I needed to be mindful of what I could handle with something like that. And so, I sort of dipped my toe in the water. And I would do it a few at a time and see how it went. And send the email, cringe. What's going to happen? And then it would go fine. And then I would get the courage to do another one, kind of thing.

Michael: So were there any that got upset? Or "How dare you?" Or "I've been with you from the start" right? Like all those things that we tend to get anxious about. Did you get any friction or pushback from a few?

Cady: No. Not a single one. It all went very smoothly. Yeah. And thankfully...

Michael: All that stuff we build up in our head, none of it.

Cady: All of those fears were unfounded, thankfully. And so that was not an issue, thankfully. Yeah.

Michael: So how many ultimately did you call down from the client list?

Cady: Quite a lot. But some of them happened through a general attrition, without me having to let them go, so to speak, because there were a lot of people who, initially, I had like a 6-month plan, and I moved it to a 12-month plan. So there were a lot of people who it was just at the end of the 12 months. I didn't renew their contract, or I didn't move forward. And then there were other people who had been working with me for years. Those were the ones that were the harder ones where I actually had to write the "You've graduated" email.

Michael: And so did you have a target of, "Okay, I'm up at this 50, 60-plus clients, and it's feeling really draining, and I'd really like to get it down. And I figured out 30’s my number, so I'm just gonna keep winnowing this down till I get 30?" Or did you start winnowing and decide when it's winnowed enough? How did you get to 30 as a particular number in this journey?

Cady: It's not necessarily like a hard and fast target for me. I think I could probably do my job with less and be happy. I think I could probably bring on a few more clients and also be happy. So it's not like a metric that I'm tracking as like, "How close to 30 can I get?" I think it's a little bit, has more to do with what I feel my capacity is and how excited I am to bring on a new client when I speak to them. And so the people that I let go of, that didn't exist. I no longer had that excitement and joy thinking about working with them. But the people that I still have I do have that. I do have that excitement and joy. And so I think that's how I look at it versus like a specific target of how many people I let go of each year or something like that.

Michael: And just how did business revenue play into this? Were you going backwards in revenue on this? Was it kind of treading water because you're attending the let some clients go who may have been like the older ones with a much lower fees and then you're taking on new ones that are the higher fees so you can let a few go to get one big client and replace them? So was revenue going backwards, or kind of treading water or still...

Cady: No. That's the beauty of this is that when you let go of spending your time that is not fruitful for you. You can spend time where it is very fruitful. So I've never had a year where I had to go backwards in revenue. And when I look back on my compound annual growth rate year over year, it's been almost 40%. So I've had many years where it was triple-digit growth. And then more recently, it's leveled off, the growth has. But over time, like compound annual growth has been almost 40%.

Michael: Because at the end of the day, just more bigger or gooder clients were coming on than the ones that you were letting go because I guess, almost by, not universally true, but very often the ones that don't feel good, that aren't a good fit, kind of tend not to pay your full fees. Because if they valued you that much it usually feels like a better relationship in the first place.

Cady: Right. Right.

Michael: So, how long did it take to get to this transition of, I don't know, I kind of think of this as right-sizing the practice. Like, "Whoops, took on more clients than I meant to. This doesn't actually feel good. I'm going to winnow this number down until it gets to a better place." How long did it take you to go through the right-sizing process?

Cady: It was probably a full three years. Like I wasn't happy with where I was up until like the end of last year, basically. And so it took three years to go through the process and figure out, "Oh, I'm happy with my client roster here. And I'm not focusing on some new achievement or something like that.

Michael: So what led it to take that long as opposed to, "I'm not happy, I'm just going to call. And I want to get through this in a year. It doesn't feel good to be not thrilled for three years."

Cady: Yeah. Well, I think it has more to do with who you replaced. And like who you found to fill those seats, right? Because it takes time. These people aren't all just going to knock on your door in one month, or one year even. And so I think that's the part that took the time.

Michael: So you were waiting as new clients came on board, you would make a decision to let go of some, as opposed to just let me grow a whole bunch of them and try to grow your way back later?

Cady: Yeah, sometimes. There was definitely like a year where I let go of 10 people, in a year, kind of a thing.

And then I kind of staggered it on a more ongoing basis. But I didn't do like a one-for-one thing. It had a lot more to do with my mindset and my capacity to go through that process with my existing client roster.

Michael: And so what were the mindset shifts from your end just to get comfortable with that and get there?

Cady: Again, it's like a fear of rejection of like, if you reject somebody, are they going to reject you back, or? There's that that goes through your mind. There is also a guilt of I've helped this client do a lot of things, and what are they going to do if I'm no longer here? There's those sorts of feelings that come up. So it's just...

Michael: And how do you deal with that? Or I guess, it took you three years to get there.

Cady: It's a fair amount of self-reflection, honestly. I think sometimes I have a lot of courage, and I'm fine with it. And other times, I don't feel up to it. So it just might take time. And so I just try to be patient with myself as I try to be patient with my clients, right? It's like, I can decide affirmatively to do something, but it may take some time to execute. And that's okay.

The Surprises Cady Encountered Throughout Her Journey [1:13:51]

Michael: So as you look back through this journey, what surprised you the most about building your advisory business?

Cady: I think it never would have occurred to me that I could work so few hours yet feel fulfilled, both financially and mentally, right? It just never would have occurred to me that I could create that... I would have always said, "Oh, I'm going to create the business that I want to have." Right? And I have control over that. But I don't know that I could have dreamed up as good of a situation as I have it, so to speak.

Michael: So what did you miss that you didn't realize it could go this well but it does?

Cady: I think there's just a general viewpoint in the world of entrepreneurship is hard. And it's always going to be hard. And you're going to struggle, and this and that, right? And so you kind of have that expectation going into it to some degree. And you want to work against that. You want to do everything you can to not feel that, but it kind of makes its way into your psyche to some degree to expect that. I guess. And so, I think letting go of it and just being okay with creating the business that I want to create has been really helpful.

And I think starting with when I did the George Kinder, Registered Life Planner, five-day EVOKE training in 2020, it was a big turning point for me because it was there in Hana, Hawaii, that I decided to write a book that was not going to be financial planning focused. That was going to be sharing a lot more of my story, not just as a business owner, but my life story to people in hopes that my vulnerability could help other people live the life they were meant to live instead of toiling away at it and being scared to talk about it. Because I felt that way for a lot of time, right? I always wanted to do personal financial planning or personal finances undergrad, but I had no skills or no way to figure out how to do that when I was in college or whatever.

And so that was a big motivational turning point, I think, of giving myself the time and space to reflect enough that, in fact, I can create whatever it is that I want. And simply writing it down is more than 80% of people do. And then when you write it down, and you start talking to people about it, it's pretty amazing what you can achieve. And when the energy is there when it flows, and you feel like you're in flow.

And so yeah, 2020 was a big year for me, because in January, I decided to write my book, and December 6th, 2020, I published "The Resiliency Effect." So it was a quick process, because I had a lot of help, and I was motivated, and I had that energy flowing behind me. But it was a tremendously valuable project, not just because I got to share some of this with the world, and hopefully, it's making a difference in people's lives. But also, it was therapeutic and helpful for me too, just to write down a lot of my story and have it live in paper somewhere.

The Low Point On Cady’s Journey [1:17:06]

Michael: So what was the low point for you on this journey?

Cady: I think my lowest points probably came many years before I ever started a business. And so one benefit of my experience is that I know that I don't want to go to those low points, and so I can avoid before I get too far in. So like the example of realizing that I was really getting close to burnout. And making some changes to make sure that I didn't go all the way. That was a low point, right? But I was able to turn it around pretty quickly.

Michael: So how do you find those points, detect those points? I feel like a lot of us, at least try to be reasonably aware that we don't really want to drive ourselves into a wall, drive ourselves to the ground. Yet a lot of us do, at the end of the day. Right? Burnout is a thing. Which means most of us don't actually head off the burnout before we hit the burnout. We hit the burnout, then we're unhappy. So what is it that you seem to be able to find your sensor spot, the burnout points, and intervene before you actually hit them?

Cady: I think when I feel like there are emergencies happening all around me, that's a really big indicator. When I feel pressure to complete things, or feel that pull to start a to-do list again, for instance. Those are big indicators to me that I'm doing something wrong, and I need to reset some expectations, or address it, head-on. I think. I have a history of anxiety and depression. So when you start to feel those twinges of the blues, so to speak, it's like, "I need to go take a walk, I need to go outside, I need to change my location. I can't just sit in a room and try to get through whatever it is I'm stressed about."

Michael: Yeah, at the same time, I'm struck that just if I'm feeling the pressure to complete things, that's a big pull. If I'm feeling the pressure to do the to-do list again. I feel like for most of us that's so ingrained in reality to say, "Oh, if you feel pressure to complete things you might want to back off." It's, "Well, and I think I crossed that line like 40 minutes ago, and I've been sitting on the wrong side ever since."

Cady: Yeah. Well, I think that's one of those topics that I explored a lot in my book, "The Resiliency Effect." Right? It's like, in order to be resilient, we have to figure out for ourself, what is good enough, and what is appropriate enough?

And for me, what I learned is that it's not always additive to add more things and to try to get more done. A lot of times, you need to look for what you need to take away. And so rather than trying to learn a new skill, or trying to life-hack your way into solving more problems, maybe you need to think about unlearning some of your behavior or removing things from your to-do list. And so that's a whole chapter that I explored in my book and talking with a lot of people is I found that that is one of those skills is to actually unlearn versus continuously being additive or trying to fit more in.

Michael: So for folks who are listening, this is episode 271. So if you actually want to find a copy of Cady's book, we'll have a link to in the show notes, if you go to kitces.com/271 and go to the show notes we'll have a link out for "The Resiliency Effect."

Cady, I am struck though by just kind of that framing of to be resilient you have to figure out what is good enough. Because good enough tells you what things you actually need to keep so that everything else you can start taking away and deleting and getting rid of it because that's how you back to the good place.

Cady: For sure. For sure. And I think that's why I love that I had my sabbatical experience because that was a huge reset moment. And I think it's one of the reasons why I advocate for my clients to at least consider going through a sabbatical if they're trying to make a big life change. Because sometimes our brain is only allowing us to step back, and take a survey of the land when we don't have all these other things spinning and all these tops that we're trying to keep in the air. But you're exactly right. It goes against everything we've ever been taught. And it goes against everything that our ego says that we need to be doing. We need to be doing more, we need to be achieving more, we need to have a goal, we need to have a to-do list. And so it does take a real change in mindset to take that approach.

Advice Cady Would Give Her Former Self [1:21:33]

Michael: So, as you look back at this journey over the past six years, what do you know now about building the advisory business you wish you could go back and tell you from six years ago when you were still getting started?

Cady: You know, I think it's not just about your knowledge and the knowledge that you have that you can give to your clients. I've found that in a lot in a lot of my work, it's like 80% mindset stuff. And sometimes we even have to go back to the drawing board and just do coaching around mindset to get people to actually make decisions that will be in their best interest. Good financial planning is not just about holding up your certifications and your credentials and saying, "I know the answer. I know the answer." It's holding space for clients and being there as a sounding board when they need it more than anything.

It's useful to have answers, obviously, but it's not the primary focus. And that's something I had to learn over time because I kind of approached it that way in the beginning. Like, "No, look at me, I have the answers. Hire me, please."

Michael: So was there a particular turning point or event or moment where that changed for you?

Cady: I don't know that it was a specific turning point. I think it was just lessons learned over time. You get frustrated, maybe, when a client doesn't take action on something that you think is really important. And, for me, I always have to take a step back from that and realize, "Is this just me being frustrated, or do we need to change our approach? Do we need to ask the client, what do they think about this?"

There's a whole few steps that I've learned to take instead of just immediately assuming the client is in the wrong or somehow they're not good enough because they can't achieve this one thing that I suggested.

Advice Cady Would Give To Newer, Younger Advisors [1:23:23]

Michael: So, what advice would you give to younger, newer planners looking at coming into the industry today?

Cady: Definitely, don't be afraid of both self-reflection and reflection among your peers. And I caution, because I don't want people to think reflection means competition or comparison because that is really detrimental. Comparison to others is never going to get you anywhere. But using your peers to reflect on one another and share experiences, share both your highs and your lows is a really great way to grow and learn. That isn't immediately obvious when you first start out. Because sometimes people feel like we have something to prove, and you got to do it all on your own. And that's just not the case.

For me, I had to learn a lot about asking for help, because there's a real pull in my life of needing to be independent and wanting to do everything on my own. And so, I really had to learn that for myself. Like No, it's okay to ask for help. It's okay to make it a team effort as opposed to an individual effort. And as a solo firm owner, you have to figure out what that looks like for you, because you don't have coworkers anymore. You don't have people to bounce ideas off of that are in your office at the water cooler. So you have to make that for yourself. And for me, it's been finding good study groups to work with and to have periodic times when you need to check in with people.

Cady’s Plans For The Future [1:24:53]

Michael: So what comes next for you on this journey?

Cady: So, I am still in the phase of actively trying to not have new achievements to unlock or things that I'm focused on and trying to be okay with a bit of homeostasis, and enjoying the balance that I've found in my life, as opposed to needing to add more things on. So writing the book was a good lesson in that. Because immediately when you write a book and publish a book, it's like everybody not only is asking you, "What comes next? What comes next?" But also you have like this thing that you've worked on that you want to share with people, and you want to market, but it takes a lot of time and effort to market.

And so, I actually actively have to work against that pull of, "Well, maybe I should write a course. And maybe I should do this. And maybe I should do that." Because before too long, it's like I'll have all the media covered, and then I'll just be doing nothing but media, or something like that.

So yeah, that's my challenge, because it is hard to go to industry events, and like, "Well, I'm actually not working on anything right now. I've worked on a lot of things. So I'm okay chilling for a while." That's a weird conversation to have. Right?

Michael: Well, I was going to say... How do you just deal with an industry that has a whole lot of "If you're not growing you're dying," mentality?

Cady: Yeah. Yeah, I'm not going to win any producer awards, whoops. I'm not going to have that. And that's okay. But I am creating a business that's sustainable for me. And that's really important. And so I have to remember that, even if, from time to time, that pull of the ego is saying, "No, you should try to get recognized and try to get this or that."

So, that's something that everybody struggles with, I think. Figuring out what that balance looks like.

Michael: I love the framing, though, just, "I'm creating a business that's sustainable for me. First and foremost."

Cady: Yeah. For sure. For sure.

What Success Means To Cady [1:27:01]

Michael: So, as we wrap up, this is a podcast about success. And one of the themes that always comes up is just the word success means different things to different people. And so, you've been on the path for a wonderfully successful business that fits your lifestyle and fits your goals and, as stated is sustainable for you. But how do you define success for yourself at this point?

Cady: Success for myself is feeling like my life is integrated, and that I'm not being pulled in a million different directions. That I have space to do things, like go to Mexico for a month and swim with Whale Sharks in Baja, California. That I can explore hobbies and whims that I might have. I don't know if you're familiar with the concept of "morning pages" from the book, "The Artists Way"?

Michael: No.

Cady: The concept, I'll just make it quick, is that you write a little something every day. Like you get up and you spend a little time journaling. And the book offers some prompts about things that you can write about. And one of the prompts is if you had five other lives, what would you be?

And I love this question, because it changes a lot in my life. But currently, if you asked me, I would want to be a singer-songwriter. Or I would want to teach kids to swim in my free time. Spend time with kids teaching them to swim. So it's I want to figure out how to incorporate those things in my life in some way. And so I want to take piano lessons this year, so that's something I'm going to do. And I have the time and space to pick something like that up because I haven't burned myself out in these other areas of my life. And that's really important to me. So that's what success looks like.

Michael: And that's all built around because you've got 30 clients who pay you what you're worth for your services. And so there's enough revenue in 30 very good clients to make all the rest of it work.

Cady: Yeah. Yeah. And certainly, I'm mindful of profits, right? I have a lean business. I have an 85% profit margin. But I've worked at that. It's very intentional. It wasn't like it just happened overnight. That this was suddenly created.

Michael: Part of the six-year journey of getting it from start to here.

Cady: Yeah, absolutely.

Michael: Well, thank you so much, Cady, for joining us on the "Financial Advisor Success" podcast.

Cady: Yeah. Thanks, Michael. It's been a pleasure.