#FA Success Ep 383: Leveraging YouTube Videos To Organically Grow 9X To $750M In Just 5 Years, With Troy Sharpe

Resources Featured In This Episode:

• Troy Sharpe
• Oak Harvest Financial Group
• Oak Harvest YouTube Channel
• Marketing Lead Analytics, Estimated Earned Commission, Production, Events and Appointment Conversions Report Samples – Download (PDF)
• Lead Center
• Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork by Dan Sullivan and Benjamin Hardy
• The Gap and The Gain: The High Achievers' Guide to Happiness, Confidence, and Success by Dan Sullivan and Benjamin Hardy

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!

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Full Transcript:

Michael: Welcome, Troy Sharpe, to the "Financial Advisor Success" podcast.

Troy: Glad to be here, Michael.

Michael: I really appreciate you joining us today, and an opportunity to, I think, get to nerd out a little on one of my favorite topics, which is the wonderful return on investment you can get by spending money on marketing as a financial advisor. If you look broadly at the industry benchmarking studies, basically almost none of us spend hardly anything on marketing. The average advisory firm spends barely 2% of revenue on marketing, if you look at most of the industry benchmarking studies. Yet there's been such a frenzy of mergers and acquisitions in recent years that a lot of advisory firms are spending like 2X revenue, 2.5X revenue, even sometimes 3X revenue on acquisitions for advisory firms, and just continue to look at some of these numbers, including some of the research that we do on our platform and keep seeing advisory firms that get good at marketing spend way less than 2X revenue to get like a dollar of actual revenue from marketing expenses. In fact, for some of them it's a much, much better ratio than that. And I know your firm has leaned very heavily in this direction in investing in marketing, lots of work on YouTube, in particular, but other channels as well. And so, I'm excited to talk to you as a firm that's invested heavily in marketing about how you think about the spend on marketing, I guess, overall, how you think about the spend on marketing compared to what so many other firms seem to be spending on mergers and acquisitions instead.

The Favorable Math Of Marketing Spend Compared To M&A [4:25]

Troy: Well, we've always felt that organic growth is the correct fit for us. We've explored, to some extent, had conversations about maybe acquiring other firms where they have $50 million, $100 million, maybe $200 million under management, maybe the principal is about to retire. There's a lot of risks that come with those types of deals. You obviously have the merging of 2 different cultures, which doesn't always go well. You have to worry about retaining those clients that you're actually paying for. Negotiating the deals themselves can be complicated, and obviously legal fees, other costs associated with it. So, yeah, it can be very expensive when it comes to acquiring firms, but we've always leaned towards the organic growth side of things because, one, we have far more predictable revenue streams. We want to create multiple different channels. And we're not really happy unless we're getting at least 3:1 first-year revenue on those marketing channels.

But then, when you look at the 3-year, for example, return on investment of those marketing dollars, we're in a business that provides compounding revenue streams. Obviously, there's some fluctuation there if the market goes down. But overall, we mostly as financial advisors should believe that capital markets appreciate in value over time. So, while, yes, in the acquisition game you are buying an appreciating asset, obviously there's a lot of risk that comes along with that. And also, it's a much quicker way to grow the firm. You can go from a billion to 2 billion over a few months through an acquisition. It's a lot more difficult to do that through an organic growth strategy. But at the same time, we're in the relationship business. We love working with our clients, we love the planning, and we just feel it's a safer route for us. And we're not trying to roll up a bunch of different firms and then sell to a private equity firm or something like that down the road either.

So, for us, if we're going to invest, $100,000, a million dollars, whatever it might be in various marketing channels, we're expecting to get at least 3X that revenue or that investment as far as ROI. And then, we have some channels where it's 4X and 5X and some even a little bit higher. But the compounding of that revenue stream, when you look at the return on investment over a 3-year or 5-year period, assuming you provide good service and you build relationships with your clients, that's a very valuable asset.

Michael: So, I want to highlight these ratios that were bouncing around a little bit. So, you're talking about a 3:1 revenue return on your marketing. We often talk about like 2-3X revenue in acquisitions for advisory firms. But I feel like...those are actually opposite ratios. When we talk about like a 2-3X revenue ratio, that means like $2 or $3 spent for every $1 of revenue. You're talking about getting $3 of revenue for every $1 spent. So, if your marketing was characterized the way that we do mergers and acquisitions in the industry, if an acquisition is 2-3X revenue, you're running at 0.3X revenue as what you spend in acquisition to get a dollar of revenue. I'm framing your numbers correctly, all right?

Troy: Yeah, yeah.

Michael: And how you approach?

Troy: Correct.

Michael: So, that to me, on the one hand, it fascinates me is this is the biggest arbitrage opportunity in the entire industry. If you can build a marketing system that brings in revenue at 0.3X revenue and acquirers will put enterprise value at 2–3X, you have like a 9X enterprise value return every time your marketing system produces a new client dollar of revenue. The results become enormous, but I'm struck as well, Troy, as you framed it, I think you said we've leaned towards the organic growth side of things because of the more predictable revenue streams, the more predictable channels, and the really strong ROI of like $3 of revenue per dollar of cost or a 0.3X revenue acquisition.

And frankly, when I talk to most advisors over the years, when most advisors talk about marketing, the words I do not hear are predictable and great ROI. Those are usually not the words that crop up, which, frankly, I think is why a lot of us spend very little on marketing and do more mergers and acquisitions. We seem to struggle to find marketing systems that actually generate predictable, consistent results at strong economic metrics. So, I'd love if we could just go there a little more directly, like talk to us about some of the marketing things that you are doing that are producing the kinds of predictable and compelling ROI results that you're getting.

How Troy Evaluates His Firm’s Marketing Strategies [11:01]

Troy: So, we like to have short-term, intermediate-term, and longer-term marketing strategies. So, short-term, these are workshops, live streams we may do on YouTube. These are seminars or referral events for clients. And these are things that are designed to have it at some type of immediate call to action where if we're doing a workshop and we ask someone to turn in their sheet at the end, if they appreciate the message and want to come in and have an analysis of the risk in their retirement, a written retirement income plan, or a tax analysis, then that's an immediate call to action. And that's a short-term marketing funnel. And then, we want to focus on intermediate-term items. And this is more of our YouTube channel, this is more of the radio show. And then, longer-term marketing ventures. And longer-term, we're working on a few exciting things, I think exciting, where we're going to take the YouTube channel to the next level, but these are projects that I'll be working on for 6 months at a time, maybe 12 months at a time. And I think long term, they're going to bring tremendous value. I hope I'm right about that. So, that's kind of the first part is we break the marketing funnels down, so to speak, and to near-term, intermediate-term, and then longer-term.

Michael: So, does that change what you invest or your expectations of returns in value, or just literally the timeline like, "Hey, this spend probably produces revenue in 3–6 months and the spend probably produce revenue in 6-12 months"?

Troy: Yeah. I guess it does impact our spend to some extent because you can't invest everything in the long term. You'll run out of money and not be able to do the day-to-day operations.

Michael: Long-term successful, short-term out of business. Not a good balance.

Troy: So, to an extent, it does impact that, but for me, what I kind of find is that it really helps manage expectations. I think one of the biggest mistakes that advisors make, and not just advisors, people in other industries as well, when it comes to marketing endeavors is a lack of patience and expectation of immediate results and a disappointment if those results don't come to fruition within 2 weeks or 6 weeks. So, it really helps to manage those expectations, for me at least, to break down the short-term, intermediate, and longer-term.

Michael: So, what kinds of expectations do you have when you talk about the short-term things and the medium-term activities?

Troy: Yeah, so our short-term, as I said, those may be workshops, they may be referral events that we host here at the office or maybe out at a barbecue restaurant or golf outing or something like that with clients where we're asking for an introduction to their friends. And that's not too unconventional in the financial advisor industry. I think for many advisors, referrals are probably their number one source of new assets. And that's where you start to get into a lack of predictability and reliability because you can only ask the same people so many times for introductions to their family and friends. So, the short-term stuff, we do expect short-term results. It's easier to kind of focus on if we're doing a webinar, or if we're doing a live event.

Michael: Short-term results for you is like in a month we're going to know, basically at the end of the event we're going to know. What's that time horizon for you? Or I guess even when you're looking at to evaluate, most people don't literally do the rollover paperwork at the back of the web seminar room.

Troy: So, let's say we have an event, and we don't do as many seminar events as we used to ever since COVID. But I did one a couple of weeks ago. And we have a few key metrics that we're looking at there. So, first, how effective was our mailer? How many people registered? How many people showed up to the event? Of the people that showed up to the event, how many turned in, we call it a blue sheet? Of those that turned in their blue sheet, how many scheduled a first appointment, how many actually attended their first appointment, so a set capped ratio. Typically, it's within about 30 days, we run a 2 to 4-appointment process. How many of those people become clients?

And we have a much larger case size, I think than the average financial advisor. It's around $1.2 million. But we don't really focus on assets. We do have a $500,000 minimum. But when we're looking at the marketing, just the effectiveness of the marketing, we're really looking at those percentages. That's what I mean by we're not looking at the assets. Obviously, assets matter because that's how you grow your firm, that's how you can refine your message and tailor it to attract the appropriate clientele that your firm is capable of serving. But when we're looking at just marketing execution and the metrics that tell us how successful we are, we're looking at those percentages.

So, yeah, so at the end of the seminar itself, I'm going to know how many people turned in their sheets. Unlike a lot of people that do seminars, we don't schedule appointments at the event, although we are working on a digital automation tool that's going to take care of the scheduling component all by itself. But we call people the next day. So, I know at the end of the event, how many people turned their sheets in. Within 2 days, I'll know how many people scheduled an appointment. So, I'll know, did I do my job if I'm the presenter, or if one of our other advisors are presenting, I'll know if they did their job. And then, usually, by the end of about 30 days, we'll know how successful we were at communicating our message, providing a value proposition to where X number of those people who kept their first appointment decided, "Yeah, we want to work with you guys at Oak Harvest. We see value here.". And it's either they're about to retire, maybe they're not happy with their current advisor. So, we'll know that within, let's call it 30 to 45 days.

Michael: And for those who aren't familiar, what's the sheet they're turning in, what's the blue sheet?

Troy: So, we keep our seminar typically to 3 main topics. And then, the blue sheet just has their name, contact information, few checklist points where they can, "Yeah, I'm interested in coming in and looking at this tax analysis that you talk about", or, "I'm interested in coming in and having an analysis of my retirement income sources". And then at the end, just a section for them to have any notes and then what day of the week works best for you. Please select 2, morning or afternoon, and 2 different days in the week. So, just information for our scheduling team to reach out to them and try to pair them with the correct advisor that's available the same times that they are.

Michael: And do you know offhand, like just as you went through that list of metrics, what typical metrics are that you expect as you go down that path of registered, and showed up, and turned in sheets, and scheduled, and kept down the line? So, what's typical for you, or what do you shoot for, where's the goal?

Troy: Well, typically, if we're going to do a mailer, and now we do supplement it with Facebook, our marketing team will run a simultaneous Facebook campaign. But Facebook leads, typically, aren't as reliable as the mailer leads. So, we'll mail out somewhere between 10,000 to 15,000 pieces. Depending on how many people register, we'll then supplement it with a Facebook campaign. And Facebook leads for these events, they don't show up as much. So, we'll supplement it with that Facebook campaign. And then, we'll have anywhere from 40 to 60 people in a room, typically. Our goal is to set 50% of those households. So, not individuals, but families.

Michael: So, I just want to make sure I follow the metrics. So, you might start with 10,000 to 15,000 mailers. It's possible that only like 100 of them register, half of those show up. So, you get like 40–60 in the room. So then, what comes next so if like 40–60 are in the room, how many turn in a sheet and go down the rest of this path?

Troy: So, we'll typically get somewhere around about 80% of those sheets turned in. Of that 80%, we're going to set appointments with probably 50% of the room…is the target. And it fluctuates, but these numbers are pretty replicable, meaning, if we do 10 events, the numbers are going to be pretty much in line. And then of that, about 80% of those appointments will actually show up. So, that's our set cap ratio in regards to...we call it the stickiness. And then out of those 80% that come in to see us, our goal is to convert about 30% of them.

Michael: And so, if I'm kind of mathing down that funnel, if that was your processes you went through, you end out with something like a half a dozen clients that actually close...

Troy: In a perfect world. Of course, some events will do, and there'll be big, fat goose eggs. And then, other events will do, and we'll bring in $5, $6, $7 million. So, it averages out, of course, over time, but, our goal is just to provide...we're a very value-oriented firm. And as we go through the conversation today when we talk about YouTube and we talk about the radio, it's always about providing as much value to people as possible. And I firmly believe that people choose to go with us, one, because it's a very low-pressure process. We don't have aggressive calls to action. Our close is, "Do you want our help?" and we feel if we've done our job well enough, and that's to show value, how we can help you generate more income in retirement, sleep a little bit better at night maybe because there's less risk in the portfolio, be more connected to your money, understand where your income is coming from, help you pay less tax over time, coordinate with your attorney, coordinate with your CPA. So, we're kind of the quarterback of your situation. If we can show you value, then there's a reason you came in to see us. All we have to do is simply ask, "Do you want our help?" So, if we provide value and then ask, "Do you want our help?"…we feel if it's the appropriate time for that person that we have a good chance of building a new relationship with them.

Michael: And what does it cost to do a mailer and cue up the top of this flow?

Troy: So, I'm a little bit detached from that these days, but we used to spend around $10,000 for...so, if it's going to be a lunch workshop, then you're going to have to provide lunch or a dinner, and then the mailer itself. I don't know what the mail pieces go for anymore, but typically around about $10,000.

Michael: And so, there you go. If you're spending $10,000 and a little bit on the meals and such, although most of the spend is usually just the mailers to get the people in the room, you're spending a little over $10,000 and a few million dollars converts at the end on average, some goose eggs, some $5 to $7 million if you're finishing with something like $3 million on average, proverbial 1% on $3 million is $30,000 of revenue, and you're $10,000 in and $30,000 of revenue out, you're right there at your 1 to 3 ratio.

Troy: And again, you talked about this earlier as far as the multiple of enterprise value created when you're looking at the difference between acquiring firms and paying 2–3X revenue versus in ROI with your marketing dollars of let's say you're getting 3:1 per dollar invested, that's just first-year revenue. That multiple is going to expand, I imagine, exponentially with the compounding of, maybe not exponentially, but it's going to be substantially more than just that growth in the asset base over time.

Michael: Well, just even on that basis, I spent $10,000 to get $3 million of assets that have $30,000 of revenue. And if my firm is valued at "just 2X revenue", and that's even on the lower end of the industry these days, $30,000 of revenue with values as $60,000 plus of enterprise value, it's like your $10,000 spend produced $60,000 of enterprise value in a few weeks.

Troy: Yeah. So, when you look at it that way, it's...

Michael: It's quite above...

Troy: But I think most advisors, it's about creating replicable systems that can reliably generate opportunities for themselves or their advisors to consistently sit in front of people. As advisors, we're typically pretty good at the investment side or the planning side, but we're not always the best at generating new leads. And that creates an opportunity for firms like ours that view ourselves, I don't want to say first and foremost as a marketing firm, because at our core, we're planners. We absolutely love the planning. But planning doesn't pay the bills. And to the extent that if we don't have opportunities to sit in front of, then we're not growing. We're not helping more people. And our belief is that we have a responsibility to help as many people as we possibly can. So, the core philosophy of marketing comes from that belief that, "Look, we don't like to talk ill of different firms or different advisors, but there's a lot of stuff going on in the industry that we simply disagree with. We want to keep things a bit more simple and provide a higher level of planning around taxes, income, and things that are important to people in retirement". So, we feel a responsibility to get our message out there and find people that are a good fit for us. And that's a big part of what our core belief has been for a very long time. And that's why we are so marketing-oriented.

How Troy’s Firm Leverages YouTube To Generate Leads [22:33]

Michael: So, what are the marketing channels that you've been most active on these days? I guess what's driving the most activity because you've noted everything from seminars to webinars, to workshops, to client referral events, to the medium-term stuff like YouTube and radio show, what's driving outcomes for you at this point?

Troy: So, our number one is YouTube right now. Number two is the radio. And both of those are more intermediate. YouTube has become more of a short-term funnel now that we've, I don't want to say mastered it by any means, but I've been doing YouTube videos every week for almost five years now. And we've grown the team. We've obviously added to the marketing department to help with the thumbnail creation, the analytics side of it, helping to come up with content. So, we have a whole big team now. But just simply through trial and error and experience, we've been able to, to a certain extent, turn YouTube from what originally began as a long-term marketing strategy to an intermediate-term. And then now, it's almost a lever where we can kind of pull if we need to generate more appointments or more opportunity in the short-term, but that's come with a lot of learning, a lot of ups and downs, and just gaining experience over the years.

Michael: So, help us understand more about what you're doing that makes business results show up from YouTube.

Troy: So, I think a little background is kind of important here because to a certain extent, we had a convergence of a few events take place at the same time, which acted as a catalyst to our success. And then, what we've learned from there, we've been able to apply and get better and grow the channel. Originally, it was just a long-term thing. It's a passion project of mine. And there was something holding me back. And I think this holds a lot of advisors back from doing events, or getting on YouTube, or doing radio, or whatever it might be, getting more involved in the community. And that was fear. I was afraid of putting myself out there. The critics, the comments, the feedback, I was just afraid for a very long time, I'd say probably 12 to 18 months where I wanted to do this, but fear was just holding me back.

So, I went into Jessica here, who is my business partner, went into her office, and I told her, "I'm going to do YouTube". And she looked at me and gave me the thumbs up, and she's like, "Good luck with that. No one does YouTube. YouTube's not really going to generate any new clients or whatnot". I said, "Well, look, here's the plan. One, I want to provide valuable content to our existing clients. I want it to be a home base of sorts to where we can provide ongoing education to existing clients, stay more connected to them. But also, I want to help younger people. And I want to help people who aren’t our target demographic, who we'll probably never work with, they live in Rhode Island, or Georgia, or California. I want to help them understand what happens if you continue to let your IRA balloon and follow this conventional wisdom belief, and what happens when you get RMDs. How that impacts social security, how that could impact IRMAA and Medicare premiums".

So, I wanted to start to educate people about, that we would never meet, that I had no intention of ever meeting or helping, some of the concepts that we believe in our core, you should address if you're in retirement or approaching retirement. So, she said, "Great, go for it, do it". So, after about 12 to 18 months of talking about it, I finally just made myself do it. The channel was originally 2 distinct focuses. One was younger people, and then the second was our target demographic. And then, probably about a year in, we started to very clearly see, maybe not quite a year, but the people that were watching our videos were our target demographic, and younger people really didn't care. So, about a year in, I go to Jessica in her office, and I let her know, "Hey, we have like 25 subscribers or something like that". And she's like, "Way to go. Keep it up.".

And then, COVID happened. So, this was really one of the catalysts that I talked about earlier because COVID created a couple of fortunate dynamics to come together. And the first one was our target demographic was the most vulnerable to COVID. And they were also the ones that were either being laid off or not going into work or not going back to work. So, you had millions of people that were 50 years old and above sitting at home, twiddling their thumbs, trying to figure out what to do, "Am I going to go back to work? Am I going to get fired? Is my company going to go away?". So, it just so happened that they started to really focus on learning about retirement through YouTube. I think it's either 50 and up or 55 and up is the fastest growing demographic on YouTube, the last I checked. It's been a couple of years. So, COVID, I believe, was a pretty big part of that.

And the 2nd catalyst was the adoption of doing business through Zoom. Prior to COVID, if I was talking to someone or expecting someone 60 years old in Connecticut to actually want to do business with us and to close that deal, it was pie in the sky. But through Zoom becoming more popular, people becoming more comfortable using video conferencing as a medium of doing business, that at the same time as YouTube becoming popular within the demographic, those two things coming together, I think were a very fortunate combination of events that contributed to our early success with YouTube. One day I came into the office, and we had a video that had 100,000 views. And still no appointments or anything, but I was like, "Oh, that's pretty cool". And we got to work just recording the next video.

Michael: So, two questions I have here. One, so I guess it's trying to connect the dots. So, it's this combo of COVID happens and, A, a bunch of prospective retirees or pre-retirees in their 50s suddenly have a lot of spare time, a greater desire to retire, and some opportunity to go on YouTube and learn about it. So, lo and behold, when you're there, this goes well. And, B, the fact that we all suddenly went into a world that Zoom was acceptable meant when they found you on YouTube and you were in all likelihood not in their geographic area, that suddenly wasn't a problem anymore. Like you had a channel where suddenly everyone was watching across the country and everyone might be willing to work with you across the country, all because of this COVID video Zoom shift.

Troy: Yeah, yeah. I'd like to take credit 100% for it, but now I believe that those were 2 big catalysts in the success of the channel, but also turning it into a reliable source of new prospects for us.

Michael: So now, my next question is, you noted you got a video that went really popular. I think you said you came in one day and there was 100,000 views on the video. Out of curiosity, do you remember what it was? What was the thing that got so popular?

Troy: Yeah. So, it's funny now. So now, I have, I don't know, it seems like 20 or 30 people out there are copying all the videos that I've done. And some of them, there's the same thumbnails and same titling, which is imitation is one of the finest forms of flattery. And I'm fine with it. It doesn't bother me at all. But that video was...I think we were on the Federal Reserve website, and I was just looking at average retirement account balances. The most difficult part with YouTube is coming up with content that's interesting. So, in the beginning years, I spent a lot of time really focusing on, "Okay, what could get some views? What would be helpful to people?".

And there was an article I read, and then I started to do some research. And I think it was the average 401(k) savings balance or income by age or demographic in the country. So, nothing too spectacular, but it was something that had interest. And I think later on, over the next few days as I thought about it, if I did a seminar, then I may get to speak in front of 50 people. And then once it's done, it's done. But if I do a video, and now it can be viewed by 100,000 people, but then guess what? It's still there. And the next day and the following and following day, it's evergreen. So, some of that started to click with me as well, and...

Michael: So then, the 2nd question I've got that I think gets to the heart of a lot of people wondering about or considering or maybe dabbling in YouTube, as you said, there was 100,000 views, still no appointments. So, when and how does actual business show up from “I talked about money things on YouTube”?

Troy: So, it goes back to what I originally talked about with longer-term marketing projects. I had no expectation of immediate results. So, I wasn't looking for appointments. I figured in 6 years, or 8 years, or 10 years, I would be thankful that I did this project, and we probably would generate some clients, but if not, hey, at least I'd be delivering value to our existing clients. So, I had no expectation of appointments. So, I wasn't bummed, I wasn't upset. And going into it with the right mindset really helped to manage the emotions around not getting any "results". It's because I wasn’t looking for results. And then, things just kind of turned a corner. I can't pinpoint what video or what necessarily happened. I do think COVID and whatnot contributed to it as far as the factors we discussed previously. But all of a sudden, we started to get people calling in. And they call in, they want to sit down for an appointment, and it just organically happened.

Michael: So, how were they finding you, how were they getting to you? Was there anything you were doing to try to prompt them or just some subset where this was so compelling, I just need some help, and I'm going to reach out to this person that I found on the internet for help on my finances?

Troy: Yeah, no, believe it or not, it's the latter there. So, if you go through and watch any of my videos, you'll very rarely see me make an actual call to action. Now, we'll have a link in the description if someone wants to reach out to us. But in the beginning, we did not even do that, even have a link in the description. So, I'm pretty adamant about this. And my marketing team knows it. To me, YouTube is not a platform for advertising. You lessen your value, you cheapen your material if you're directly soliciting with calls to action. And I know that flies in the face of conventional marketing think. "We have to capture them, we have to build this list, we have to strike while the iron's hot". And I strongly disagree with that approach. It's all about providing value.

If I provide enough value over a long enough period of time, I firmly believe that those people who I connect with and they connect with me, if they are in need of our service, that they will reach out. And if they don't, that's completely fine, too. There is capacity constraints that we have to deal with. We can't help everyone. But I do it because I want to provide value, and I want the material to stand on its own, and I want people to receive value from it. Some of the comments we get, "Troy, thank you so much. I've worked with my own financial advisor applying some of the strategies that you talk about on the YouTube channel, and you've changed our lives". That is just as satisfying to me than the person who calls in and decides, "Hey, we want to work with you guys. Here's our situation. Thank you so much for the content. Let's grow this relationship together".

Michael: So, how is it turning into business? I know you're sharp on marketing funnels as you’ve lived and articulated in every step of the funnel in the webinar context. What's making this the most successful channel for you?

Troy: So, again, it's a belief, I don't have the actual numbers to back it up, but I do believe just the concept of providing value and not soliciting direct calls to action is a large part of it. And the simple answer to your question, Michael, is people are just proactively reaching out to us. Either about 40% of our appointments from YouTube are people that go to Google and search us after watching a video, and then they proactively call our office. So, when someone leaves the website or leaves the YouTube channel and goes to Google, we can't track that with any of the kind of backend SEO stuff, metadata, whatever. But they tell us...

Michael: How do you know they're doing this?

Troy: They tell us. So, the first question when someone calls in and they say, "Hey, I want to have an appointment, sit down". Frank has been with me for about 12 years now or so. First question he asks is, "Oh, great. How did you hear about us?". "And I was on YouTube surfing around. I watched these videos about Troy and this topic. And it pertains to my situation. And I want to have a conversation". So, Frank goes into the system, and he marks them as a YouTube lead. And about 40% of our appointments from YouTube come from that method. And then, about another, let's call it 40% or so come from someone clicking on the link that we have in the description so that we can track. So, that gets automated. If someone clicks on the link in the description box, goes to a form fill, they put in their information, it automates into what's called Lead Center. This is our marketing and lead tracking software, and that's all tracked and automated as far as data population is concerned. So, I'm not making calls to action. Occasionally, in one of the hundreds of videos that I've done, you will see a call to action, but it doesn't feel right. People are proactively reaching out.

Breaking Down The Costs Of A YouTube Marketing Strategy [36:20]

Michael: So, how do you think about this from, I guess, a marketing cost perspective? If you're not running, I'll call it a traditional marketing funnel, spend this much money on ads to drive people to the call to action to get to the outcome, how do you think about spend and ROI on your YouTube efforts?

Troy: So, for the first, I'd say, 3 years, we spent absolutely nothing. Google actually paid us. So, that was pretty cool.

Michael: Oh, because you had their ads program thing turned on so you get your 7 cents every 1,000 views or whatever it is.

Troy: Yeah, yeah, correct. And I think 7 cents per 1,000 views is generous, but...

Michael: Yeah, it might not be that high anymore.

Troy: So, yeah. So, we weren't paying anything. But Steve here in our marketing department, that's his area of expertise. He worked for Microsoft for 15 years, and then he ran his own ad agency. So, he understands all of that backend SEO stuff. And he started to link our YouTube videos with different Google campaigns. And then we AB tested multiple videos and AdWords ads or whatnot. And so, they've started to run that. And we started really small. I think our budget in the first year was about $20,000. And now, it's grown obviously because we've refined it, we've AB tested enough to know what works, what doesn't work for us. So, that ad budget has grown obviously over the past few years.

Michael: So, these are Google ads?

Troy: Yep.

Michael: Not YouTube ads, like Google search ads.

Troy: Yeah. So, we'll do a combination there. So, we will have YouTube ads, and then we'll also do Google ads. Again, it's really getting in and just testing everything out. And I think that's probably why our budget was so small in the beginning is because you don't have to spend a lot of money to do all these various types of testing.

Michael: I don't even know if I think about $20,000 is small. Just for a lot of us that don't spend much at all on marketing, that's a big number. I guess when you live a world of like $10,000 a pop for every seminar to put 50 people in the room, $20,000 for the year to figure out how to activate YouTube traffic into something that drives more results is a very manageable spend. It's like, "Okay, instead of one or two seminars, let's try this out. We're already getting some traction with the views. Let's see if we can drive some more results".

Troy: And it's one of those things where you, I believe, because it's above my head…the technology side of things. And we've hired...I'm sure this is a common story that other advisors share. Before we brought our own internal marketing team in and grew that, we had hired probably 4 or 5 different SEO ad agency gurus over the years who would promise the moon and really not be able to deliver. So, if you're going to go down this path, one, you need patience. Two, you need someone in-house with the technical expertise to pull it off. So, if you don't have that person, I highly recommend recruiting them. And those are really the two things. And then, it's a matter of doing a lot of tests, monitoring the results. It's a full-time job. One of the problems in our industry, I've always believed, is when you have a one-man advisor shop. That person has to be the CEO, financial advisor, the paraplanner, the marketer, the HR person. They wear so many different hats, and it inhibits growth, where investing in people is really the key to growth.

Michael: So, from that perspective, this isn't a big marketing spend compared to like $10,000 a mailer for seminars. The cost comes in the form of internal staff. You need to be able to manage it, though.

Troy: Yeah, I guess that's more of just my recommendation if you're going to go down this path, just realizing your own limitations and capacity within your day-to-day schedule. Because if you're going to start focusing on the digital side of things, and I've said for a long time, I believe digital marketing, it's the present, but it's also the future, and being able to attract people across…whether it's state lines or just people who may be right next to you but don't know of your office, but now they see your online advertisement, and they want to learn more, I think all financial firms that are focused on growth need to have some level of technical expertise when it comes to digital marketing. So, understanding your limitations and the capacity that you have day-to-day, if you're not going to commit to an approach 100%, you're probably just throwing money out the window, because I know I did not have time to track the success of all these different campaigns we were running, the split tests, set the programs up. I would have never been able to successfully do it if it was just on me. But I said, "You know what? we're moving in this direction. I want to make the investment into someone who can do this for me". Dan Sullivan talks about this, and I'm sure there are other people out there. It's the who, not the how. So, I didn't need to figure out how to do it, I just needed to figure out who I could hire to do it.

How Troy’s Marketing Team Implements The Firm’s Strategies [41:32]

Michael: So, what does that team look like now? How many people do you have that support marketing, and what roles do they have to support all these different marketing things you're doing now?

Troy: Yeah, so we have our chief marketing officer who oversees the entire department and is really the strategy behind the digital side of things. We have a marketing coordinator who focuses on supporting Steve, but then also she's been with me for, I want to say almost 8 years now. And she has a lot of experience with events, other automation such as drip emails and setting up various campaigns. So, she's been in the marketing department for 7 years, so she has a lot of experience there. We've recently hired one more to focus on the digital side along with Steve, and she actually puts together our thumbnails for the YouTube videos, and does a whole lot more. But we've added her to the team. We have an event coordinator. And she not only does our live events for prospective clients, but we have a lot of employee events, building the culture here, and also client events. So, she's in charge of all that. A couple support people that wear administrative hats around the office, they'll chip in as well. And then, we have an outsourced team of engineers, software developers, SEO experts that are independent contractors. They live all over, and they provide support and assistance and perform some of the work as well.

Michael: So, I don't even know if you look at it this way, but how do you think about marketing spend as a percentage of revenue of the firm overall? Is there some target of how much you want to spend on, I guess, marketing programs and/or marketing staff to execute all the things that you want to execute for growth?

Troy: Yeah, yeah, we do. So, whenever we budget for the upcoming year, I have a pretty decent idea of what our revenue will be. And I typically pull that back by about 20%, and we'll budget off that reduced number. And so, this year, we look at marketing 2 different ways. So, overhead salaries, etc., and then external marketing spend, YouTube, seminars, client events, all that stuff. So, our external spend this year will be around 10% of revenue. It's the highest that it's ever been. And the internal spend is probably an additional 2% or 3% as far as the overhead.

Michael: Okay. So, it's not the staffing expenses that added up the biggest dollars. It's the external $10,000 for the mailer, $20,000 for the ads, all that stuff adding up large.

Troy: Correct. And again, we feel that we have some reliable, predictable, marketing funnels that if I invest 10% of revenue, the goal is, of course, to bring in, minimally, 3X that investment within that first year.

Michael: So, can I think about that literally as like if your total spend is 12% or 13% of revenue between these two, your goal is 36% growth if you can get 3:1 on all of that spend?

Troy: I've never done the math like that, but it sounds okay.

Michael: Is that the kind of growth rates that you guys have been having? Well, I guess we should even just take one step back. So, what is overall size of the firm at this point as you've been doing all the marketing things that you've been doing?

Troy: Yeah, so our RIA, we've grown from $85 million AUM at the end of 2018. So, 2019 January 1, we started at about $85 million. And then this past year, we finished the year about $750.

Michael: Okay. So, yeah that kind of sounds like 40% plus growth rates compounding for a few years there.

Troy: So, yeah. No, obviously, you have some client attrition, you have some other things going on. But again, our goal is to also grow within ourselves. We will never grow at a rate faster than which we can service clients. So, I think we're up to about 44, 45 employees right now. And at 45, we're talking...to exclude myself and Jessica's advisors, I think we're at 14 advisors. So, it's about servicing that business as well.

Michael: How many clients is it?

Troy: So, we're around 1,000 households right now, I want to say. I know we're going through all the ADV stuff right now. And I want to say that's a pretty accurate number.

Michael: Okay. So, I can see just the sheer magnitude of growth rate, going from $85 million at the end of 2018 to $750 at the end of 2023. I mean, you are just shy of 10X-ing. You're about 9X in five years. And it sounds like you didn't have acquisitions in there, like that's all this marketing stuff, just running on repeat and volumeing up.

Troy: No acquisitions, all organic growth.

Michael: So, at this pace, is the vision literally hundreds of new clients this year across all the different marketing channels that you're engaged in?

Troy: Yep. So, we always hire ahead. So, when we get to the end of the year planning and we're budgeting out, one of the things we're looking at is, okay, if we do X amount of marketing, and how many clients will that bring in? Well, we have really good data. So, we know if we spend X amount of dollars that most likely it's going to result in Y amount of clients. Then because this is my promise to clients is we'll never grow beyond our ability to provide a world-class level of service to you. So, we then are proactively hiring throughout the year ahead of the need of those advisors to service that book of business. And then, we operate in a pod structure as well where every client has typically three advisors and a client service representative that's familiar with their overall case and circumstance. So, we're always hiring ahead when we're doing that budgeting. Let's say it's 300 new clients this year, we're going to look at the existing capacity that we have, who we need to hire because it takes...for a service advisor, it's going to take three to six months to really get them up to speed to where I feel comfortable they can sit down with a client that has a million, $2 million, $5 million and provide the level of tax planning, and that client can receive the same level of service that if I were on that appointment because we go deep with the planning. Various softwares to use, to learn how to use, so there's an acclimation period, that's for sure.

Using An Advisor Pod Structure To Serve A Rapidly Expanding Client Base [48:23]

Michael: So, how do you think about client capacity? Are you a ratios firm? Every 75 clients, you need a new advisor, every 150 clients, you need a new advisor. How do you figure out how many advisors you need when you're trying to clock in 300 new clients this year?

Troy: Yeah, so now, we're getting into some of the challenges that come with scale and developing process and then documenting that process, trying to automate it the best you can. So, it's been a learning curve, for sure. And by no means do we have everything figured out. I guess some context would help. We have the lead advisor, which is typically responsible for business development. And then, we have a service advisor, which we call a senior planning advisor, but they're the one primarily responsible for the ongoing relationship. And those are two different personalities. The lead advisor typically doesn't want to be that ongoing, planning person that's building relationships and growing over time. And then that senior planning advisor, they don't want to go out and try to develop new business. They just want to build relationships, take care of the families that they work with, and that's their job. That's what they like to do. So, we're always trying to find alignment between the advisor's personality and their actual role in the company.

And then, the third advisor in that pod is going to be what we call an associate advisor. So, this is really a career path role, typically younger advisor on the path to get their CFP designation. Maybe they already do have it, but they're learning our way of doing things or how we plan, they're learning taxes because most advisors don't really understand taxes that well. So, there's a process. So, the associate advisor, and then we have one paraplanner who kind of jumps around from pod to pod. And then also, what's kind of unique about our system is advisors don't have to do paperwork here. So, they don't do new account applications, they don't do transfers or client service requests. So, each pod also has a dedicated client concierge rep that handles all new account onboarding, ACATs, following-up, paperwork, DOL paperwork, all that stuff. Of course, the advisor has to help out a little bit with some of the DOL stuff and other documents that we have to get filled out these days. But our goal is to have business development advisors focused on developing new business, planning advisors focused on planning, associate advisors focused on planning and developing that career, and then the client concierge providing a world-class level of service, not just on the onboarding, but ongoing service needs as they come up with families.

Michael: And then, what's the capacity of a pod? If you measure by clients or revenue, how many can a pod like this handle at this point?

Troy: It's about 300 families, is pretty comfortable because we don't want it to be so stretched out where they are 6 appointments a day, 6 days a week.

Michael: So, you end out like sort of 100 families per advisor on the pod, although I'm guessing they don't literally split up that way and in like a third, a third, a third across three, but you've got three people on hand that are registered and client-facing to handle 300 families

Troy: Correct. Yeah. And the most important thing we found is just communicating directly and upfront with the client from the very beginning of what the pod structure looks like, the different roles and responsibilities that advisors have. And then, of course, we'll segment it out a little bit where maybe some of the C and D type clients...and everyone's treated the same, of course. But if we have a client with $2 million or $4 million, they have needs that are...we're going to want them sitting with one of our certified financial planner professionals or one of our CPWA professionals that has experience and an expertise with that level of family wealth. And then, someone who maybe has come aboard, they're still working, they have $700,000, trying to build, they're going to be working more with that associate advisor, possibly the senior planning advisor, just depending on what the needs are. So, yeah. So, comfortably, probably 300 clients per pod with the majority of that senior planner about 200 family capacity.

Michael: Okay. And so, for where you are now, you've got like four or five pods like this that you're staffing up and managing to?

Troy: Correct. So, we have enough capacity now for every single client that we'll bring on this year, that we expect to bring on. So, second half of this year, we'll start hiring for 2025.

Michael: So, help me understand how the firm handles such a flow of prospects. Aiming for 300 clients this year just in and of itself is like literally signing more than one client every business day of the entire year. And if the reality is obviously not every prospect closes, if you're going to close 300 clients, I'm assuming that means you may talk to like 1,000 prospects. So, how do you handle like...who does that? Who does all of the prospect calls? How do you divvy that up when there's such a volume?

Troy: Yeah, so I was using 300, I think, as an example. I believe our actual target number is around 250. But give or take, it's close enough. So, that is the business development advisor. So, we have five...

Michael: Meaning that lead advisor at the top of each pod.

Troy: Correct. Correct. So, we have five of those right now. And, yeah, this year it's 1,000. That's the number of first appointments kept. So, we track first appointment scheduled. And, of course, what matters is first appointments kept. Typically, about a 20% drop off there from what's scheduled to kept. But, yeah, so with 1,000, that's the goal this year.

Michael: And so, each biz dev advisor ends out with something like 200...well, would that be 200 appointments through the year? Well, I guess, which gets manageable, and I've started breaking it down that way. That's basically one prospect every day to talk to. That's not a bearing amount. That's a pretty good flow. Your calendar's going to run out of time to do first-time appointment meetings if you got to get through 200 of them per lead advisor per year

Troy: Right. And in the real world, it obviously always works out a bit different than in theory. So, we do believe in a meritocracy to the extent that some of our better advisors, more experienced advisors are going to have a heavier allocation of opportunity. And then, it's not just having that first visit, it's you have all the second visits from last week, and then all the third visits from the week prior, and the fourth visits from the week prior. And then, you're still helping out with some of the clients on the reviews and in a perfect world focus strictly on business development, but they have to chip in and help out with reviews and so on and so forth also.

Michael: I guess what strikes me around this...well, so I guess I've got two questions. As these business development advisors go through with these sales appointments from a business development, and they don't have to source the leads, they're not doing the prospecting for business development. They're doing the closing part of business development like, "We're going to send you a flow of interested prospects, turn a reasonable percentage of them into actual clients, please".

Troy: Yeah, yeah, good point because, again, we've set the firm up to have people in the roles that is their expertise. So, our advisors also don't manage portfolios. They don't do paperwork. They don't generate their own prospects. Now, they are charged with trying to get referrals when there's an opportunity, and they've done a good job to ask, of course, for a referral. But we want advisors advising. Too often, advisors are buying in and out of different funds and managing portfolios. And most advisors really don't have that skill or expertise. They shouldn't be doing that, in my opinion. Some may be qualified, of course, but we don't believe in a model to where advisors actually manage portfolios.

Michael: So, my next question is, in this pod structure, so if a business development advisor is at the head of this team, like closing this volume of prospects that come in, and a pod has a capacity of 300-ish families or so, what happens when the pod fills up? Like the lead advisor still wants to do business development closing, but there's no more room at the end on their pod.

Troy: So, it goes back to really the messaging to the client because the client always has to come first. So, it's a communication that we do take a team approach, and there are multiple advisors within the pod that you'll meet with and you'll work with. So, once a pod does reach, let's say, its theoretical capacity, well, one, we're going to sit down with the advisors. And what our plan has been is the clients that are working with the senior planning advisor, okay, what's their capacity? And then how many can they pass off to that associate advisor? Because that associate advisor role, that's really a career pathing role, meaning they're coming in, they maybe have one, two, three years experience, but by the time that pod gets filled, they're going to be very well versed in our planning software, our planning methodology, the approach that we take because they're sitting on hundreds and hundreds, if not thousands of appointments over that one, two, three-year period.

Not to mention we have 2 separate training sessions on Monday mornings, on Wednesday mornings. With the YouTube videos, they watch them as part of the job requirements to understand what I'm telling clients and what we're doing from a planning perspective. So, we're going to start to kind of pass some of those clients for the senior planner over to the associate planner. And now, that person has capacity, let's say up to 200 people for their ongoing service and reviews and planning capacity. And then, that's going to open up for the senior planning advisor. And then, the lead advisor, theoretically, should never really have any capacity constraints because they're not charged with doing all the ongoing planning and every single ongoing review. And then, we can just add more people to the pod.

Michael: Okay. I was going to ask like, do the pods get wider? Do you end up with more than three people in a pod, or do pods start spawning new pods where an associate advisor says like, "Okay, you're at the point where you're ready to be a senior planning advisor, so we're going to spin you off to a new pod, your clients go over there, we put a new associate advisor on the old pod, and now we created capacity that way"?

Troy: So, we've always done it to where they get a little bit wider. But also, there's another component here that’s tied to marketing. So, if we're generating more appointments because our marketing endeavors are more successful, now we need to bring another business development advisor in. So, we're going to do that, and then we're going to spawn off essentially a new pod with possibly hiring in another service advisor or senior planning advisor, another associate advisor. But really, in the beginning years of that, let's say the beginning year of that new lead advisor, it's going to be more of a cross-pod participation.

Michael: Okay. So, that's interesting for me. So, if there's so much growth on a pod that the capacity of the pod is getting stretched, the pod just gets wider. There's another senior planning advisor or someone that comes on for capacity. What spins up more pods is not the number of clients into the pods, it's the flow of leads that determine how many senior folks you need at the top to handle the lead flow, which then rolls down to the pod you backfill behind the new biz dev person because there's so much lead activity that we need to spin up another pod.

Troy: Yeah. And from a business owner's perspective, we find this advantageous to have the families that have entrusted us that have watched the video, listened to the radio, and they said, "You know what, Troy? We want to work with you and your firm". We don't want 1 advisor to be that sole family's connection to the firm. We want 2 or 3 advisors. That way, if one does decide to leave an advisor, we're not all of a sudden scrambling because that one advisor is responsible for $400 million of assets, and I haven't personally talked to those clients in a long time. Those clients may be tempted to go with the new advisor. And so, obviously, we want to retain those assets and those families. And having more people there to service them, to build the relationship, connects them, we feel, more to the firm as opposed to any one particular individual.

Michael: So, how do you structure advisor compensation across these teams?

Troy: So, again, it's part of what I spend a lot of my time doing these days, as opposed to financial planning and working. So, we've had a few different comp models over the past couple of years. And it's the lead advisor, obviously, is a compensation-based model without a salary. So, no salary, no trails for that lead advisor. It's simply based on business development. The senior planning advisors and the associate advisors, those are salary-based jobs, and their bonus is based on client retention and a few other KPIs. So, ultimately, it's a small portion of a trail of the book that they are responsible for. And they have to hit certain benchmarks in regards to client retention, client satisfaction, and that can equal a different payout tier for their performance.

Michael: Okay. So, they’re W-2 salary style, but it sounds like it's not just a flat dollar salary plus bonus. The salary is calculated as a percentage of the client base that they're serving?

Troy: It's a bonus payout, essentially. So, it's a salary that does increase annually. And then, based on client retention, client satisfaction, they receive a small trail from the book that they are actually responsible for. So, as more people come into that book, and then the book is hopefully growing with the market, a $100 million book may turn into a $400 or $500 million book. So, their personal success and compensation is directly tied to providing a very high-level quality of service to those clients and retaining those clients over time. And then, they have to ultimately decide, "Hey, I'm at capacity. I'm no longer able to provide a high level of service", because they know if they're not able to, the retention rate is going to go down, their personal compensation is going to go down. So, there's kind of a balance there.

We're always trying to create these checks and balances. And unfortunately, there's no holy grail for us to follow. It's try to figure this out as you go. You talked a little bit earlier, before we got on today, about the iceberg. You see everything from the iceberg and the nice shiny tip top of that, but really underneath, the challenges and some of the struggles that we deal with is how do we develop these systems? Are these the most appropriate systems? How do we negotiate these systems? How do we keep people happy? How do we stave off recruiters and people trying to poach our talent? And these are a lot of the things that I find myself dealing with. And it's stressful, that's for sure, but I do enjoy it, and it's a challenge. And ultimately, I come back to if you build systems, you try to create processes that make them scalable and automate things as much as you can with the client being the sole focus. Meaning if there's ever should we do it this way, should we do it that way, usually, if you come back to what's the best for the client, the best internal system...

Michael: It's amazing how well that turns out to work.

Troy: ...best internal structure, it leads you to the right direction, to the right answer.

Michael: So, just curious in that vein, I understand for the associate and senior planning advisors how you measure retention, that's fairly straightforward, how are you measuring satisfaction? Just what's your...?

Troy: Client surveys.

Michael: Okay.

Troy: Yeah. So, that's something new that we're launching. So, we haven't actually done it yet, but we've created...so, one of our big hires this past year was...let's say it's the head of our advisors. So, chief of the advisors, basically. So, one of the things that he's been tasked with is to develop this client satisfaction survey that's going to be based on the client experience from onboarding to frequent communication, to the advisors doing what they say they're going to do, to performance with the investment portfolio, all these kind of different metrics and where he's in the process of actually getting that ready to hopefully go out. We're going to decide if we're going to do it twice a year or once a year, but probably just once a year.

Speaking The Language Of Prospects To Win More Clients [1:05:21]

Michael: And I have to ask in the aggregate here, just the marketing metrics and numbers you have are so enormous from just like a pure ROI perspective. Has this huge revenue cycle of spending a dollar to get $3 of revenue. You're now ramped up to hundreds of new clients that come on board. So, help us understand why does your marketing work so well when almost no one else seems to figure out how to get the kinds of numbers and outcomes you're getting.

Troy: I think it's consistency. There's no doubt about that. We're not afraid to fail. We're not afraid to put ourselves out there. We always focus the message on what we feel is front of mind for the prospects that we're in front of, retirement income, taxes, reducing risk. If something happens to you, will your spouse be okay? Will your family be okay? Social Security is a big one for people. We have clients that have $5, $10 million, and their biggest concern seems to be when to take Social Security.

Michael: Always fascinating me about clients are it does not matter...well, it matters at some point. But you can have many, many millions of dollars, and they are just as focused on getting their maximal dollars out of Social Security. "I paid in all these years. I want to maximize my dollars out." It is not probably going to impact their actual financial outcome. In the grand scheme of things, it does not matter. They really want to know how to optimize Social Security.

Troy: And a lot of that comes from different marketing messages that they've heard. But you know what, Michael? If I could really boil it down, I think we have an ability to communicate our marketing message in a way that our target prospects can relate to. So, a lot of advisors talk and advisors speak, and they use terminology that prospects simply don't understand. And this is why YouTube is so successful I think for us is, one, it's not TV necessarily, but these days you can just pop the app up on your TV and it's like you're on TV. But television is the most intimate medium because if you think about your favorite characters in the shows you watch or the movies you watch, you feel like you actually know them. You feel like you’re friends, you like their personality, you like who they are, their character, and you feel a connection to them.

And radio is like this to a lesser extent, but TV, you see people's mannerisms, you can get a good judge of who they are, and if you connect with them or not. So, radio, television allows you to connect one-on-one to people. And if you can speak clearly, not in advisor jargon, about a topic that is of importance to them and come across as genuine and sincere and allow your...because your true character comes out whether you know it or not. People pick up on that. They're really intelligent and savvy when it comes to discerning people with maybe an ulterior agenda or motive versus those that are truly delivering valuable content. So, it's focusing in on the message, delivering a message that they can relate to in terms that they understand. So, I'm not going to talk about beta and alpha and standard deviation and all these terms that you and I could have a conversation about all day long and compare various investment strategies and debate over which ones may be more appropriate in certain circumstances.

But I guarantee you...and half of our clients are engineers. More than half are engineers here in Houston. I guarantee you they don't care. But if I can instead say, let's say we put it into Riskalyze, and we can simply show a range of possible outcomes in terms of dollars, not percentages, how does that make you feel? And have a real relatable conversation in terms of, how does this make you feel? Susan, how does that make you feel? And have a conversation about what their fears are, what their concerns are, and then provide potential solutions in a way that they understand, I think that's really the key, not just with one-on-one visits, but through marketing.

The Importance Of Patience When Implementing A Marketing Strategy [1:09:44]

Michael: So, you set a par of this as well as just you're not afraid to fail and get out there, but as you noted earlier, a lot of advisors try a thing and give up before it succeeds. I feel like there's always a lot of attention in the marketing world of how do you figure out if it's just not working yet or if it's just not working. Time to cut bait. So, I guess I'm curious, what you measure and track and look at as someone that's built a lot of these successfully, both that work and don't work, like what metrics matter for you to figure out is this actually a thing we should keep nurturing and working on?

Troy: Well, I won't start any new marketing venture now, unless I'm willing to commit to it for a year. So, if I wanted to do a Google ad campaign, for example, and I was thinking about hiring an ad agency...if I was in the shoes of someone listening to this podcast, thinking about hiring an ad agency to help me create a Google advertising campaign, but I'm going to give you 3 months, and if I don't see results in 3 months, I'm going to quit. I think it's just the wrong approach because that is a strategy that most likely is going to take a year to 2 years, to 3, to 4 to consistently provide results. Radio, when I started radio, we have a radio show called "The Retirement Income Show" here in Houston, back in 2010, I don't think we got our first client for 18 months. Just kept plugging away, kept going in a belief that, you know what? We're committed. So, I think one of our biggest advantages when it comes to this is just an ability to stay committed, determined to see it through, and the patience to do that.

Michael: So, what's been the biggest bomb you spent like the most dollars in time sticking with to then ultimately say, "I just don't think it's working". We got to tell just with the persistency you have to these, I'm presuming there's got to be a bomb or two in there like you spent a long time on to really prove it's not working.

Troy: The first one that kind of comes to mind was a PR company we hired about 7 or 8 years ago, and it was a lot of money to us back then. And they were a multi-prong. This is kind of fancy digital marketing agency speak, but it was a multi-pronged approach where they had us going on some local television shows, and I had a book back then that they were promoting, and digital advertisements. They gave us a social media guide, how to use Twitter, Instagram. I guess Instagram wasn't around back then, but Twitter, Facebook, I think, and maybe a couple of others. And so, yeah, it was a large portion of our budget. And I think we were with them for about a year, maybe a little bit less. And we literally got no benefit out of it.

What Surprised Troy The Most On The Path Of Building A Business [1:12:36]

Michael: So, as you've gone on this journey, what surprised you the most about the path of building this very large advisory business?

Troy: I miss sitting with clients day-to-day. When you sit with clients for years, I've sat with thousands and thousands of people on appointments, and you get to a point to where the grass is greener on the other side, and I want to focus more on building the systems and allowing other people because I can only do so much to help people. But if I can train 10 other people, and they can train 20 other people, okay, we're having a much larger reach. I don't know if it's the most surprised, but it's the first thing that comes to my mind is really how much I miss sitting down face-to-face and helping a family go through the financial planning, the tax side of things, looking at alternative options to consider, and just having those relationships and those conversations on a day-to-day basis. I didn't realize how much I would miss that, but it's not so much my life anymore.

Michael: I was going to say, so do you keep any clients yourself at this point, or they've all been shifted so that you can do the other growth stuff for the firm?

Troy: No, I do. I probably have 20 or 30 meetings a year. And that's how I know that I still miss it because I gain energy from those meetings, I walk out of them, I'm happy. And just glad to have those conversations and walk people through some of their choices and see the trust and faith that they have in us. So, I might get back to doing that a little bit more.

The Low Point On Troy’s Journey [1:14:12]

Michael: So, what was the low point on the journey?

Troy: It's a lot of the self-doubt, the, "Am I doing the right thing? Is this going to turn out?". So, you have to really learn to trust in yourself. And, of course, the bigger we get, it seems like there's...my grandfather always used to tell me, he said, "Troy, the bigger you get, the more people are going to want to take from you, the more people are going to want to bring you down". So, friendships that have turned sour over what I consider to be small things, but I think it's those things that don't go necessarily your way. You have to accept them, you have to take things for what they're worth and try not to take things too personally and understand that if we're doing well and helping a lot of people, not everyone is going to be happy with that. And so, I just think dealing with some of the surprises that have come along mostly from people and people I don't even know. We have sometimes people that we've never met attacking us. And usually, if you dig deep enough, you see some of their clients maybe have left them to come over towards us and...

Michael: This is like barbs that get thrown at you from other advisors, that kind of dynamic.

Troy: Yeah, yeah. Some of them, we never exactly know where they come from. But, yeah, I think just dealing with...because we all have a plan for how we want things to go. And then when things don't necessarily go that way, you have to try to learn from it, you have to try to accept it and move on. But it's just dealing with the unexpected and dealing with things that you weren't expecting to have to.

Michael: Well, I guess what I was going to ask is how do you cope, or what have you had to change in how you handle it as more people are throwing things your direction?

Troy: For me, it's having confidence in how we behave, how we act, how we always put the client's best interest first, and just focused on our mission. You start to think outside of what your purpose is, and you allow the imagination to run wild. It can really take you down places you don't want to go. There's a book out there called "The Gap and the Gain." I think it's another Dan Sullivan book. And it's easy to be focused on the gap, which is the things that you don't have or where you should be as opposed to what you've actually accomplished and where you actually are. And I oftentimes find myself in the gap as opposed to what we've actually accomplished and where we're at. So, that's something that I really have to focus on. I used to do a decent amount of meditating, but meditating is hard for me, so I struggle with that. Breathing exercises also helps. Believe it or not, I always thought that was cheesy, but it's amazing, the power of your breath. So, just trying to stay present, stay focused, gain some mental peace with some of the different directions that you get pulled in. I think those are all important skills to develop, because life is hectic, and things come at you a million miles an hour, and that's whether you have a really big firm or a really small firm. And we're super tiny compared to a lot of firms out there.

What Troy Would Tell His Younger Self [1:17:36]

Michael: So, what else do you know now you wish you could go back and tell you like 10, 15 years ago when you were still very early on this journey?

Troy: Enjoy the journey, for sure, the good and the bad. Understanding that the good will pass, the bad will pass. I remember 13 years ago when we opened the office here in Houston, we had a big event the very next day. And I was sitting in the room there, and I was saying, "I wish I could fast forward 10 years into the future and see how this all turns out". And if I could have done that, it would have been the worst mistake because the highs, the lows, all the work, the relationships, everything that transpired during that timeframe, that's what really made it special. The mistakes you learn from, you hopefully don't make them again. And so, really just again, being present and enjoying the journey. For one reason or another, what has happened, good or bad, has always led to the next direction in the road, the next step that we're going to take, and where we are now is the sum of all of those decisions that were made and things that took place.

Troy's Advice For Newer Advisors [1:18:44]

Michael: So, any other advice you would give younger, newer advisors, maybe coming into the industry today?

Troy: Yeah, for sure. Obviously, education is very important. CFP, CPWA, I think amazing curriculums, credentials, getting as much experience as possible, but going slow. My business partner here, Jessica, she was always the one to kind of slow me down when I wanted to spend more money, do these different projects, expand much more rapidly than maybe was prudent. We kind of had that balance, the yin and the yang, to where we could balance each other out and come together to make the decision about the best course of action. So, I'd say go slow. You're not going to change the world overnight, you're not going to necessarily...just be patient and be more measured with the decision, but don't be afraid to make the decision.

As advisors, we like to analyze, and that can often lead to paralysis. So, at some point, you have to weigh the options, consider pros and cons, and ultimately, make a decision and take an appropriate risk where necessary when it comes to marketing projects or hires. One of the biggest hires we've ever made, which really helped transform our firm was our Chief Investment Officer, Chris Paris. And he came with an amazing resume, a lot of success in the institutional world, Harvard MBA, electrical engineering undergrad. So, those negotiations, took some time, and we came to an agreement that for us was a pretty big financial outlay. But weighed the pros and the cons, felt it was the right thing to do for our clients, felt it was the right thing to do for our firm. And then, we decided to make that investment in him. And it's paid tremendous dividends over the years because he's invested so much back into us, just from his ability to make positive impact and positive change in the company, and for our clients as well.

Michael: What drove all the change? What was so different once he joined the firm?

Troy: So, back then, we were at, I want to say about $50, $60 million in AUM. So, brought a level of credibility, level of expertise, and experience. Back then, I was wearing the hat, partially of portfolio manager. And my strategy was to keep things pretty basic and simple, but that's not my lane. And I just never personally was a fan of third-party asset management. I had a hard time explaining the value of me charging you, the client, 1% a year, but then this other advisor who's actually managing the money is going to charge you 1% a year. So, I never felt comfortable with that. So, we decided to bring that internal and it was a big outlay. But it was something that I believe was right for the clients, again, coming back to...if you go to, "What's the best thing to do for the clients?". Oftentimes you're going to find yourself in the ability to make the right decision.

Where Troy’s Business Is Headed In The Future [1:22:02]

Michael: So, what comes next for the business from here?

Troy: Well, we've been building structure for 3 years now, improving process, starting to really be able to automate, for example, onboarding of employees, onboarding of new advisors. We have systems in place now to where I'm not involved in that at all. We have an automated process that's replicable. We've hired Stu, who is the head of all of our advisors now. So, I'm not in the day-to-day management of them anymore. So, we spent 3 years really just building the foundation and the structure by investing in people, and then having those people build the systems and processes that allow us to scale more efficiently. And again, come back to clients. The firm's more stable. We have more talented people in place. Teams are working better for one another. All of that means that we can do a better job for our clients.

So, now that we've been doing all this structure building and process building, now we're really back into the next step. So, we've partnered with a firm up in Dallas, a CPA firm. We've started a radio show up in Dallas, and we're looking at an office down in South Texas here. We're looking at expanding down there. So, again, more organic expansion, but starting to spread the footprint a little bit. A few other marketing projects that we have in the pipeline, I'm in the process of writing a book that has been somewhat of a project because I've written it 4 times, and I go back and start over. I've done that for a couple of years now, but I'm going to be releasing that pretty soon.

Michael: And what's the focus of the book? Is that industry-oriented, or is that consumer, retiree-oriented?

Troy: Yeah, more consumer, retiree-oriented. It kind of delves into...we call our process the “Retirement Success Plan”. So, finding the appropriate allocation, a balance between someone's willingness to take risk and their capacity to take risk based on their income needs. So, finding that appropriate allocation, generating income. We believe in a dynamic spending plan in retirement. We're not a 4% ruler-type firm. We find a lot of clients could spend a lot more than 4% in the first 3, 4, 5 years of retirement. But you need the guardrails in place, you need to monitor it, you need to have a plan, and you need to be able to have visibility into what those decisions mean for 10 years out, 20 years out, 30 years out, and you need the flexibility, of course, to pull back when things don't necessarily go your way. Step 3 is the tax plan, healthcare plan, and estate plan. So, we're going to delve into those topics and really our philosophy around how we plan for clients and why we think having all of those different pieces working together in retirement is important. And that's why we call it the “Retirement Success Plan”.

What Success Means For Troy [1:24:54]

Michael: So, as we wrap up, this is a podcast about success, and just one of the themes that comes up is the word success means very different things to different people. And so, the business is in this wonderfully successful place is you're cresting $750 million of assets and almost 10X growth in 5 years. So, the business is in a wonderful place right now. How do you define success for yourself at this point?

Troy: So, I have my first child on the way, so that's successful.

Michael: Congratulations.

Troy: Spent a lifetime here building the company and professionally being my focus. So, that's a big success for me. So, that's a big part. But for me, it's relationships. Relationships with clients, relationships with employees, relationships with vendors, with people that have supported us. It's not about accumulating the most amount of assets or making the most amount of money. We strive to have successful relationships with all those in our lives and treat people the way that we want to be treated. That really, as simple as it sounds, has been the key to our success over time. And if we can 20 years from now look back and see all the amazing relationships that we built with clients and how we've helped them move from retiring to 20 years later, employees help them get to where maybe they were financially insecure when they started to work here, and now they're able to retire successfully. And then people that are in the industry that I'm close to grow those relationships and people that have supported us along the way. We all want to be successful together. And for me, that's, at the end of the day, if I can accomplish that, then we will have done our job.

Michael: I love it. I love it. Well, thank you so much, Troy, for joining us on the "Financial Advisor Success" podcast.

Troy: Yeah, thank you very much for having me and giving us an opportunity to hopefully impart some piece of nugget or wisdom that others out there can take and possibly apply or don't apply. But I'm glad to have been a guest. Thank you very much.

Michael: Absolutely. Thank you.