#FASuccess Ep 402: Accelerating Early Advisor Growth With A (Federal Employee) Specialization That Evolves Over Time, With John Mason

Resources Featured In This Episode:

• John Mason: Website | LinkedIn | Podcast
• Federal Employee Financial Planning Podcast
• Federal Employee Financial Planning Podcast Episode On The New Client Process & Client Experience
• Riverside
• Nerd's Eye View: Financial Advisor Fees Comparison – All-In Costs For The Typical Financial Advisor?
• Summer Reading List Of "Best Books" For Financial Advisors – 2024 Edition
• The 80/80 Marriage: A New Model for a Happier, Stronger Relationship by Nate Klemp and Kaley Klemp

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

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Full Transcript:

Michael: Welcome, John Mason, to the "Financial Advisor Success" podcast.

John: Michael, thanks for having me. It's great to be here.

Michael: I really appreciate you joining us today. I'm excited to talk a little bit about what admittedly is known to be one of my favorite subjects, talking a little bit about niches and specializations. But a particular dynamic of it, which is a number of advisors I talk to are concerned about specializing. There's this fear of what if I go after a group of people that turns out not to be big enough or there aren't enough of them and I can't make a business. Others though, I find, there's a fear at the other end of the spectrum, which is, well, what if I go after them? Like, it works and I can really start to systematize and standardize.

And then like, does it get boring? Does it stop changing? Can you even evolve and grow as a practitioner if you serve the same clientele for "too long"? How does it change? How does it evolve? And I know you are in a firm that has focused on a particular segment that is very sizable. So you're not running out of people anytime soon. But that the firm's been pursuing for the better part of 20 years. And so, I think, part of me is excited to talk not just about generally niches and specializations, but what it looks like as they evolve when you go after a particular ideal client for the better part of 20 years.

The Challenges And Opportunities Of Serving The Federal Employee Niche [04:45]

John: We specialize, Michael, with Federal employees. And Federal employees, sometimes people don't really know who those people are. And sometimes when you hear a Federal employee, you'll think active duty military, or sometimes you hear Federal employee and you have this one thing in your head of what that means. But there are so many different kinds of Federal employees. There's NASA engineers, there's postal service workers, there's veterinarians, doctors, engineers, congressmen and women.

So, our specialty doing financial planning and tax planning for Federal employees, like you said, has been going on for the better part since the early 90s. Although Mason & Associates, which was launched in 2003, we began specializing with Federal employees probably '92, '93 timeframe. And it's been a wild ride. It's deciding, going to a target marketing class, learning who you're going to specialize with. We picked Federal employees because they're right here in our backyard in Newport News, Williamsburg, Yorktown, Virginia. And we kind of cut our teeth with NASA engineers, which was a good group. And it was a good idea, but it was lean at the beginning. And I'll just kind of share with you why it was so lean at the beginning, is that the old, and you probably know this, but the old Federal employee Civil Service Retirement System, CSRS, was created in like 1920 before Social Security. So, guess what they didn't pay into?

Michael: No Social Security. Well, for a while it was all these fancy, specialized rules about what to do with people in CSRS who didn't pay in and had to learn about Windfall Elimination Provision, Government Pension Offset, and all the specialized rules.

John: Exactly. And later in their career, so a lot of these people retired and they had a massive pension and they only had a pension.

Michael: CSRS was a pension.

John: Correct. Defined-benefit pension. So then, I believe, don't quote me on the exact year, but sometime in the early 1980s or mid-1980s, the Federal government created the Thrift Savings Plan or the TSP. So, CSRS folks, the TSP was an afterthought for them. While as financial advisors especially Mike and Ken, my father and uncle who grew up in the business, things like AdvicePay and retainers and one-time financial planning fees didn't exist, so, how'd you make your money on AUM? It had to be assets. Well, we started specializing with Federal employees, specifically with CSRS people, who many of them had never saved a dime in TSP.

It was a little lean at first, but the vision was that basically when Mike and Ken would get ready to retire, every new client would be rolling a million-dollar TSP. And those FERS [Federal Employees Retirement System] employees, those FERS employees have a lower pension. They also have Social Security, but they were told they needed to save in TSP because it's a 3-legged stool. And in order to match those CSRS counterparts, they must save. And Mike and Ken's vision was great. It was lean in those early years and some of their friends have said very complimentary words, like, you guys were the bamboo farmers who just waited until it worked. And it was a good idea. You worked it until it worked. And now all those Federal employees that started in 1990 now have 30 or 40 years in the system and TSPs in excess of 7 figures. So, it's been a wild ride.

Michael: Interesting. There is a part of it I'm chuckling. Like, it's the 1980s, we really have to run an asset management business. Let's go after the Federal pensioners.

John: And we did a lot of life insurance back then too. You know, annuities, mutual funds, that was kind of…you remember how the industry was back then. And so, even though there wasn't a huge AUM amount, you could still make a living back then. But certainly the industry has changed over those years and we've made that change too to a fee-only financial planning firm. So, it's been a big journey, I'm honored to have been a part of it now for the better part of 14 years. But, Michael, one thing that you kind of led into with this specialty is does it get boring? And I think the answer, if we're being transparent, which is what we want to do on this podcast, is sometimes it does get a little boring.

It's sometimes it does get a little boring when you're like, I know how that first pension is calculated. I know everything about this person from a financial planning standpoint before they even walk in. But what does that allow us to do? It allows us, one, we can serve more people if we want to because we're not relearning a bunch of systems every day. But what I've found, and it's pretty surprising, it allows us to connect with our clients better on an emotional level. It allows us to ask better questions. It allows us to listen better. And I feel very passionately that our niche and our specialty, we connect with our clients better as humans because we're not spending so much brain power trying to learn, you know, what is FERS, how to spell FERS, what is FEGLI [Federal Employees' Group Life Insurance], Option B, etc.

Michael: Interesting. By the time I've seen my zillionth Federal employee, I so know all the benefits, and the systems, and the issues, and the stuff that comes up like the back of my hand that I don't have to think about any of that stuff, it's all second nature. And so then what do I do with my time sitting across from the client? I just get to talk to them and connect with them more because I don't have to think about anything else.

John: You get to focus on what matters and we use sports analogies and Mike, my dad has been, him and Ken both have been, big mentors for me over my entire life, not just my 14-year financial planning career. My dad always said this business, when you catch a ball, like in football, when you catch a ball as a Little Leaguer. You're 5, 6, 7 years old. You catch that football, Michael, and what's the first thing you do when you catch it? You just start sprinting as fast as you can. And there's people diving at you from all over the place. The play is happening so fast and you're just sprinting. You really have no plan. You're just sprinting.

And Mike said to me one time, he was like, that's what it's going to feel like for your first little bet in this career. But then one day you're going to be like Jerry Rice and you're going to catch the football and everything's going to slow down. And instead of just turning and sprinting towards the end zone, everything's going to slow down. You'll be able to make a decision. You'll be able to cut, you'll be able to do a spin move, you'll be able to leap over somebody if you have to. The game will slow down once you've gained that experience.

And he was right. The game slowed down. Now we can focus on the things that matter. And he mentioned to me one time, I remember I was frustrated early on in my career. I had way too much coffee before an appointment and my face got all red. I was probably 22, presenting an initial financial plan. Face all red and sweating. I had to leave. I had to excuse myself from the appointment, go collect my thoughts, come back and start over. And that's the advantage of working with family is, it was actually Ken who I was running the appointment with. He said John's going to step out, he's going to start back over. We ended up making it through the plan.

But I remember I was so frustrated and Mike said, "Son, one day, instead of sitting across the table from your clients, you're going to feel that you're hovering above the appointment, that you're almost like watching yourself have these questions, watching yourself have these conversations because you're going to be able to listen, think, make the next move. You're going to be able to do all of this at the same time once you've gathered this experience." And I still remember the first time I felt like I was hovering over the appointment. And I don't think I would have gotten there nearly as fast had I not developed a specialty, had I not begun becoming intimately familiar with a specific group of people. It would have taken a lot longer on that journey, I think, before I had that slowing down or the ability to hover over an appointment.

Building Credibility As A Junior Advisor By Having Expertise In A Client Niche [13:06]

Michael: Why was it faster? Why do you feel like it was faster with a specialty?

John: I think it was faster because as I began learning specific things about Federal employees, for example, I could instantly be credible. Because I knew more about their benefits than they did as soon as they walked in the door. And so, it was an instant credibility thing.

Michael: Because you didn't have to learn everything. You had to learn their benefits.

John: Exactly. And that was the bulk of the folks we were seeing was new Federal employees. So, I was able to look at a Leave and Earnings Statement or an LES really quickly at 22-years-old, pick things off of that, ask really pointed questions, demonstrate credibility, and begin to prove myself in those meetings at a very young age because I was able to effectively prep. So, as a financial planner, so much of what we do is preparing for an appointment. Well, you cut out a lot of prep or you're already prepared for everybody when you have a niche. I think it just allowed me to focus on the things that matter, focus on having good conversations, focus on connecting with people on a real human level rather than just asking them, can you please go back to HR and give me an accurate pension estimate because I don't know how to calculate that my own self.

Michael: And out of curiosity, how far into your career was it that you had the first, "Oh, I'm above the table right now"?

John: It was probably my second year, second to third year in the business. And at that time, I remember we set up a structure where we would do these public seminars, "Avoid the common financial planning mistakes made by Federal employees." There was about 10 of those and we would present one in Chesapeake, Virginia and one in Newport News, Virginia. So, we did 2 seminars a month. And as we started bringing on new clients, it's probably the third year in the firm. I've already started saying, "Hey, guys, we're going to start running into some capacity issues here." And you are getting full, what are we going to do about it?

So we devised a system that said everybody that had under $300,000 of potential assets, John would meet with them individually. Everybody between 300 and 500 [thousand dollars], or 500 [thousand dollars] and over, we would meet with together as a joint team. So either John and Ken or John and Mike. But I was probably 24, Michael, when I was running solo appointments, intro meetings, fact-finder meetings, delivering initial plans within 2 years of starting because that was just kind of a natural filter for us. It was, I've got the team, I've got resources, I've got the credibility. I can fall back on my mentors, I can fall back on the founders of the firm if I need to. And those folks who trusted me at 24, 25, 26 years old, although when you say $100,000-$300,000, it doesn't seem like a lot of money, but it was those people's life savings.

Michael: Those were good. And those were clients. Yeah.

John: Yes. They were clients back then, it was still their life savings. And what I'll say about all of our clients, if any of them end up listening, which would be cool, too, is that ever since I started, nobody ever treated me like I was an also-ran or the new kid on the block. I always feel like our clients treated me with respect, like I was an expert. And I think a lot of that is the niche. I think a lot of that is fortunate to be working with your dad and uncle, too.

Michael: It reminds me like a version of the saying that I had heard from someone a long ago, is if you're getting started and you feel like a small fish, the easier way to be a bigger fish is just to find a smaller pond to swim in, like to focus down into a particular area and just be awesome at that thing. You can be a big fish in a small pond pretty quickly. It takes a really long time to be a big deal in the ocean.

John: Absolutely. Absolutely. And I think, Michael, as I think back to the specialty and in the niche. And I know we're talking a lot about this. Hopefully this is where you want to go, is that I remember a distinct time early in my career. This was within 6 months to a year where I felt like I had to wear a suit. I felt like I had to ask really sophisticated questions and talk about betas and alphas and all this kind of stuff. And I didn't feel like me. And when you start getting more comfortable, you start understanding the benefits package, you know your clientele very deeply. You can connect.

When I started saying things like cool and sweet and maybe people won't like this if I accidentally call a client "dude," you know, during an appointment. But once I started allowing myself just to be me, still professional me, but not agonizing over trying to sound like a dictionary or a textbook. That was when my career really, I believe, took off. When I was able to make that transition from pretending to be somebody I'm not to just being comfortable in my own skin and understanding that clients will either like me for who I am or not like me for who I am. But I can't change that.

Showing Clients In The Federal Employee Niche How They Have Unique Planning Needs [18:33]

Michael: Help us understand how the business was actually growing and bringing in clientele. You mentioned briefly a seminar, so I don't know if that was the whole system or part of the system. But help us understand more the way marketing was working to just build with Federal employees.

John: Sure. So, 2003, Mike and Ken launched Mason & Associates and at that time we launched with a broker-dealer. And from 2003 to 2010, 100% commission-only firm. It was some annuities, some mutual funds, term life insurance policies. We very rarely ever did permanent because most of our clients permanent insurance is their survivor benefit on their pension. That was the first 7 to 8 years of the firm. I joined in 2010, right after I graduated from Virginia Tech, and our marketing strategy was we did a live radio show. We had a live radio show on AM 790. Mike would go to Norfolk, Virginia twice a month, the first and third Tuesday and he would record from 6 to 7 p.m. live "Ask the Expert" talk radio. And it was all Federal employees.

And to get the "Ask the Expert" radio show, we would also do radio spots and those radio spots would be on other local channels. And the radio advertisements would either direct you to register for a seminar or they would direct you to listen to the "Ask the Expert" radio show. And the radio marketing drove people to the seminar. The seminar was 2 hours complimentary. You'll like this. We would even say on the radio show, it's not a gourmet meal, but it's a gourmet meal for your mind because you're going to get a pizza and a coke when you come to our seminar, not a lobster or a steak. And we would do those. And I think I started my first section was Federal employees group life Option B was my first section of the seminar, probably in 2011. And that was that was it. It was the radio marketing. Then it was drive them to the seminar. Then it was drive them to a complimentary consultation is what we used to call it. And then they would go through our financial planning process from there. The marketing has certainly evolved since then.

Michael: Talk me through a little bit more of just the numbers of how it works.

John: I believe, we did not present in December. We either did 10 or 11 months, 2 seminars a month. So, let's say somewhere between 20 and 22 seminars. They were 2 hours long. So, we do hour, short break, hour. And early in my career, let's call it 2011 through 2015/16 if I'm just kind of guessing. Attendance was pretty high. It was common for us to have north of 10 families, if not close to 15 or 20 families at these seminars. It was pretty rare that we'd ever have excess of 20 families. But easily 10 or more early in my career, there was often 15 or 20.

But later, when we started getting into 2016, 17, 18, the attendance dropped off. I don't know if that was all of a sudden regulation, BOI [Beneficial Ownership Information] and DOL [Department of Labor] and all these things start coming out. But maybe just like general education on fee-only versus commission versus "be scared of the seminar." There was definitely a point in time where attendance dropped. And that was about the time that we were starting to get to capacity anyhow. So, we ended up stopping seminars probably in 2017 or 18 if I'm not mistaken.

Michael: I want to know what came next from there. But before I want to go back a little bit more. How did the seminars work?

John: We had a Marriott Hotel. It was actually attached to our office in Newport News. We would walk down the stairs, walk right into the hotel. We'd have at that Marriott specifically, they would bake their own pizza. We had waters on the table. We had a couple of pizzas made. We had some soft drinks available and everybody would put their name on a name card.

The content started with 2 specific points. And we still use this today in our marketing. They, T-H-E-Y, they are not talking to you and you are very special. And "they" are the media, financial planners. They're the talking heads or the people giving advice, but actually not giving advice to Federal employees. Why is that? Well, the majority of people in this country do not have access to a defined benefit pension. The majority of the people in this country are not Federal employees. So, I'm not slamming Suze Orman, Clark Howard, any of these people. But at the end of the day, they're selling a book, they're selling their material and they're going to market it to the masses, the majority. Well, you as the Federal employee are part of a minority, so they cannot possibly be talking to you. So, the next time you hear any financial planning advice, take a step back and say, "Are they really talking to me, the Federal employee?" So, that was always a big one.

Michael: I like that framing just as a way, as a different way to try to get clients to unplug from all the stuff they hear in the financial media ecosystem to kind of double down on the particular specialization, the particular segment you have to say, "You should not be listening generalist advice because you are different and you are special."

John: And then we would dive right in to you are very special. Why are you special? And it's because you have a pension. And we would do a side-by-side comparison of a Federal employee versus private sector. And you may know this, Michael, but the old Federal employee retirement system, those folks pay 0.8% for their pension. So, on 100 grand, they pay $800 a year. That's that's their FERS contribution. So, we would show it on the screen and we're like, okay, so a Federal employee saves 17% of their pay and they get X. A private sector person save 16.2% of their pay and they get $30,000 less every year for the rest of their life because they don't have a pension.

So, for $800 a year, you beat the private sector person by 30 grand a year. And we would we would just like throw that right up at the beginning because we wanted to just kind of start knocking down barriers, start knocking. You know, Federal employees were at one point over-benefited and under-compensated, but that changed over the years where Federal employee compensation went up and benefits stayed. And unfortunately, a lot of Federal employees coming to these seminars and even today have this mindset that they are not wealthy when, in fact, they are some of the wealthiest people in the country.

Michael: I've got to ask, you know, a lot of advisors that work with pensioners at the end of the day have some version of the lump sum rollover or not. Many of us are in the investment management business where there's some incentive and desire in the rollover direction. Just you're setting this up so heavily around the special value in nature of defined benefit pension plans, does that mean you're generally not doing rollovers? Maybe you're working with TSP because that's a separate balance like you're not typically having clients lump sum out of pensions when it's available?

John: Good question. The Federal government doesn't allow for any sort of lump sum on CSRS or FERS. That decision is made for us pretty easily. So we just get to focus on TSP. Now, we probably have 50% of our clients or so, Michael, who are non-Federal. What I mean by that is a Federal employee is not always married to a Federal employee. They could be a Virginia Retirement System, they could be Huntington Ingalls, they could be Sentara. They could be Dominion. We have a lot of private sector companies that we work with, too. On those 50%, we will independently analyze whether or not a lump-sum pension makes sense.

Generating A Return From Seminar Marketing [27:25]

Michael: Now take us further through what you would cover in the seminar. You open with this, "They are not talking to you and you are very special." So you've kind of set the table to me just in a really fascinating way. Everyone's now tuned in on, "I'm special. I need different kind of advice. I can't listen to the generalists. And here I am in this room with people that I'm probably here because they literally run an "Ask the Expert" radio show." So, by this point, I feel like most people are pretty dialed in like they're special and you're the expert in people like that. You haven't said it with those words, but you've very much set the tone at this point.

John: Yes. We would cover everything. We covered many topics and I won't be able to get them in the exact right order, but we would cover FEGLI basics. Federal Employees Group Life basic and we would describe how that works. One mistake was keeping Federal Employees Group Life Option B for too long. If you're a nonsmoker, on average good health, we would say, you can replace your group term with an individual term and save a bunch of money. And we would show how those premiums increase over time.

There was another mistake that was no knowledge of your disability insurance that you have through the Federal government. TSP contributions being too low, which would be not doing the 5% to get the full match. TSP contributions being too high or too quick, maxing out before the end of the year. The government matches you per paycheck. So if you max out in June, then you're missing matching money. So we would cover TSP too low, too quick, too high. We would cover insurances, FEGLI and disability. We would cover no knowledge of survivor benefits. No knowledge of in-service survivor benefits.

And that would all dovetail really nicely into a conversation on this very well-dressed insurance salesman comes and sits down at your house, shows you a beautiful life insurance policy that you never needed. But you bought it because you didn't know you had survivor benefits in the future. So one of the mistakes was not knowing you have it and not committing to taking full survivor benefits at retirement and all of those mistakes that you can make along the way because you didn't commit to that decision. Those those are many of them. And we would also tell a football story and maybe if we have time, I can share share with you how the football story went.

Michael: Now I'm curious. What's the football story?

John: Towards the end of of the first half of the seminar, so, it was right about the hour mark, we wanted to have some fun. And we would poll the audience and we'd say, "Who in the room likes football?" And no doubt somebody would raise their hand. We'd ask them who their favorite team was. It didn't matter who they said. We would always say we were actually looking for a pro team. So that always got some laughs. And we'd say, okay, so, Joe, you are coaching the Washington Redskins in the Super Bowl game of 2024.

Now, I know that's not going to happen because we all know the Redskins aren't going to make it, but let's just pretend for a second. You're coaching them in the Super Bowl game because the head coach has gotten sick. You're a huge fan and you have this opportunity to coach the Redskins in the Super Bowl game. Will you take it? And the audience member would always say yes. And then we would tell our story that says, you know, so Joe is the coach and he's not paying any attention to what's going on in the first half. He's on the other side getting autographs from the football players and the cheerleaders. He hasn't watched one play of the game. During halftime, he's getting autographs from his own players.

Well, now the other team has kept the ball the entire 4th quarter. The Washington Redskins get the ball back on their own 2 yard line or on their own 20. There's 2 minutes left to go in the game. And the quarterback comes up to you, Coach Joe, and says, "Coach, Coach, what do we do? Do we run or do we pass? Joe, what do you say?" And Joe would look at us and he would always say, "Pass." And we'd say, "Really? Why pass? Who in the room agrees with Joe? Who thinks they should run?" And almost always, Michael, it was we should pass.

And at the end of the day, we would look up at our projector screen and say, "Joe, all you had to do to get this right was turn your head up and look at what? The scoreboard. Because if you're winning by 3 touchdowns, what are you going to do? You're going to run. If you're down by 3 touchdowns, we must pass. Passing is more aggressive. Running is more conservative. How many of you are throwing or passing or going after Hail Marys in your financial plan because you don't know the score of the game? What we do at Mason & Associates is we help you develop a comprehensive financial plan to show you so you know your score so you can call the right plays in your financial plan."

Michael: Oh, I love how that came together. Is that the close? Is that the "And you can set an appointment at the back of the room now…?"

John: That was how that was how we closed the first half. And then we would come back, and then in the second half, we would tell your decisions either compliment or you conflict or they conflict. You either plan or you react. Remember that the base of your financial planning pyramid as a Federal employee is your lucrative benefits package. If you'd like a comprehensive understanding of how that works, you can schedule a complimentary consultation with us. So that's kind of how we closed it.

Michael: Where did this presentation come from? Did you build this from scratch?

John: We built this from scratch. Mike and Ken actually designed their first presentation and I was able to help them modify it over the years.

Michael: When you did this event and you've got 15 people in the room, plus or minus a few, how many would schedule consultations? What was a normal outcome for you on this seminar?

John: I would say if we had 50%, Michael, would be a good wag. 50 to 60%, I would say would schedule.

Michael: Wow. Okay. That's a good number. I lived some early days of my career in the seminar world as well. And we used to live for shooting for 30%. A third schedule and a third of those who schedule eventually become clients was numbers that we saw. You would get 50 to 60%. You might get the majority of the room to at least do a meeting. How many of those would then actually follow through and become clients?

John: That was probably more. I'm going back in memory, but that was probably more in your 30 to 40% range. And, I think, one of the biggest advantages we had back then and why so many folks scheduled and why our conversion rate was pretty high is that all 3 of us, John Mason, Mike Mason, Ken Mason had a presentation section. And we're all unique. We're all different. Mike kind of looks like a traditional financial adviser. Ken's got a different personality, and I was the young buck. And it was really interesting to see how that group presentation, the audience would...we had green forms.

And they would go to their person that they wanted to meet with and they would hand the green form to Ken, or they'd hand the green form to John, or they'd hand it to Mike, or they'd write Mike's name on it. And you could just see we had an advantage because we had 3 competent, professional, unique personalities in the room. And that's carried over to today as well because we still, today on our intro meetings, even though all 5  advisers are owners, and all 5 advisers are leads, and all 5 advisers are senior, whatever title you want to give us. We still put 2 financial planners on the first meeting because we always say if you don't like the way I part my hair, you'll like the way Tommy buzzes his. And at the end of the day, it doesn't matter to us who the face of your plan is. But we have a personality here that's going to mesh with yours, even if it's not John Mason or Tommy Blackburn, for example.

Michael: So, if I'm just rough-mathing this, you're getting 15 people in the room on average, half or more schedule. So maybe 7 or 8, half a dozen schedule, a third of those on average become a client. So, basically, you do a seminar and you get 2 clients out of it. Plus or minus one with some variability.

John: We were doing so many in our peak. I was doing at least a financial planning presentation a week, if not more than that. I would say some months we could deliver 5 to 10 initial plan presentations because we were moving through those pretty quickly. And that's when we started implementing minimums. That's when we started changing where I basically had to go to Mike and Ken. I was like, "Guys, I'm doing all these plans and I can't keep up and we've got a problem." Too many people are saying yes and we're filling up too quickly and we haven't thought about how to do that.

Mason & Associates' Introductory Meeting Process [36:59]

Michael: When you were doing initial plan presentations, is that something you do for prospects as part of the gang and you know them? Or is that because they become clients and that's the initial planning process after they become a client?

John: The process is largely similar to today as it was back in 2014. We call it an introductory meeting now rather than a complimentary consultation. I'll take you back to what it was like then and what it is now and kind of compare and contrast. So, 2014 was seminar or they would just schedule because of a referral. We would have a 2-hour complimentary consultation where they would show up and bring in all of their documents. Pay stubs, tax returns, etc. We would spend 2 hours with them initially. One, because we had never seen any of this stuff before. 2, we may have never talked to any of these people before, so we really had no idea who they were or why they were here.

At the end of that appointment, if we thought it could make sense and this is how we grew the business, we would pass over an engagement letter and we would say the next step is a financial plan. And if you'd like us to produce your financial plan, it'll cost $1,500 and we'll pick that up at the end of the next meeting. We would move to appointment 2. Oh, on that engagement letter, we would also say here are the assets that we could potentially manage. Then we would deliver the plan. We would collect a $1,500 advisory fee via paper check.

And at the end of that meeting, we would lay the foundation for the third meeting, which was what we would call the implementation meeting. And that's when we would begin showing any tweaks to the financial plan. And we would also begin presenting investment options. And the goal was at the end of that third meeting to gain a commitment to become an ongoing client at that time.

Michael: Okay. 2-hour complimentary consultation. But if they actually want to move forward and get a plan and get some expertise, you charge for that. There's no, "Can I just ask you a few more questions?" If you want to move forward, it's $1,500 because we're going to do some analyses and come to you with some recommendations.

John: That's correct. We did not do complimentary or free financial plans for those folks. The $1,500 planning fee was pretty cool and it's one of the things that allowed us to switch from 100% commission to fee-based to fee-only because as we were beginning to move money to RIA-type space or AUM space, we didn't have pops. We didn't have commissions. We didn't have any of that. And we were able to offset some of that revenue loss, for example, by doing the one-time planning fee. The process has evolved quite a bit since then. We don't do the seminars. We do an intro phone call, which is about 15 minutes, kind of like a "Who are you? Let's talk about how all this works. Let's make sure we're clear on minimums and expectations. And are we a good fit?"

If we get through that, then we move to the intro meeting, which is now 1 hour instead of 2. Documents are provided in advance rather than at the meeting. The initial plan is now $2,500 instead of $1,500. That is still 2 hours. And then appointment 3 begins the implementation and the onboarding, which would be laying the groundwork or foundation for the investment strategy that we're choosing, as well as whatever we need to do to implement those rollovers. So, the process has changed quite a bit and has gotten a lot more fine-tuned. And we went from doing 100% of our appointments in person, Michael, to 95% now are Zoom. Even for our local clients, the bulk of our meetings are Zoom.

Michael: What portion of clients who go through planning process typically implement with you versus say thank you very much for the plan, write you your planning fee check and then part ways to move on.

John: We've had 12 new clients onboard this year. So we're recording, if it's okay for me to say it, sometime in July. We've onboarded 12 new clients this year, 22 clients since January of '23. And that's about $55,000 if I did my math right and one-time financial planning fees. And then...

Michael: So, is clients in that context people who paid planning fees and then became investment clients or some paid planning fees and then that was the end.

John: 99% percent of people that pay a financial planning fee become ongoing. I'm sure there was 1 or 2 in there that maybe didn't. But we don't even track it because it's so solid that if they want to do the plan they're likely onboarding.

Michael: So, out of curiosity, I've got to ask because this comes up a lot for a lot of firms. If so many are onboarding and becoming long term clients at healthy investment management amounts, why the one-time planning fee? Do you worry some people won't pay the planning fee? Are there like long-term clients you lose because they balked at the fee up front?

John: We don't seem to get much pushback on the one-time planning fee. The way we present it because we have 2 advisors on the first and the second meeting is that we're going to answer all of the questions that you have. We're going to answer questions that you didn't know that you had. We're going to give you as much good advice as we can. And at the end of the next appointment, you're going to have a plan you can run with. And that's worth something. And I like to share this with prospective clients, too, is at the end of every meeting throughout this process, I'm going to ask you if you'd like to move forward to the next step. You can either move forward immediately. I can pull up Calendly and we can schedule or I can send you a Calendly link and you can think about it for as long as you need to. Overwhelmingly...

Michael: So you give them a choice. Not the you have to schedule here, not the go home, think it over. Just, literally, like you can schedule with us or go home and think it over.

John: Exactly. And if they want to schedule, it feels silly not to just pull up Calendly and do it. I don't like the idea of forcing people to go home to think about it if they don't want to think about it. I always say, "At the end of this meeting, I will ask if you want to keep moving forward." On an intro meeting, I'll say, "At the end of this, if I think it makes sense and you think it makes sense, I'm going to ask you if you want to schedule the initial plan. And at the end of that initial plan, you're going to pay us $2,500. You're going to have all of our great ideas and a plan that you could implement on your own."

But at the end of that meeting, I'm going to ask you, "Do you want to do that? Do you actually want to do all of the work, all of the heartache, all of the managing of this? Do you actually want to implement this by yourself or do you want to hire us as your ongoing financial planning team? I'm going to ask you that next time, too. And if you'd like to hire us for ongoing support, we have a $700,000 minimum right now." And really, we're searching…our goal is really a million-plus, but but our hard minimum, if you will, is $700,000.

The Challenge Of Letting Clients Go To Manage Firm Capacity [44:38]

Michael: Help me understand how this evolved in terms of, I guess, just overall client capacity. What I feel like I'm hearing and referring is you had this seminar marketing system that followed the radio show. You did the they say like every other week all year long. You got a couple of clients at every single one on average, at least. So you just kept doing and repeating them. It's adding up to dozens of clients a year. I think you said like 5 to 10 a month for a while. So we're like 60 to 100+ a year. And then it sounds like suddenly you're hitting capacity and basically shut all the seminars down because you don't want any more growth because you got so many clients that now you're at capacity. So, help us understand more just like what happened, how that played out, how it shifted as the marketing worked.

John: We identified we had an issue. Maybe it was 2014, 15, whatever it was, where we started slowing down, implementing minimums. The hardest I was ever working, I'm pretty sure that I was involved in well over 200 relationships, if not closer to 250. And I was burning the candle at both ends. We were busy. And then we started listening to podcasts like the Financial Advisor Success podcast. And the Perfect RIA and Taylor Schulte and all of these different podcasts and content that's out there that started talking about things called "graduations."

So, we have been through some graduations. We have been through some transitions. And the biggest transition, the biggest thing that really kind of righted the ship for us was our departure from the BD [Broker-Dealer] in September of 2020 and the launch of our RIA. I think it was effective October 1st of 2020. That was the big fix, if you will. That was the "How do we take this from an unmanageable client load to get it manageable?" At that same time, a year earlier, we hired Tommy Blackburn, who is now a huge partner at the firm. He gave us some capacity. We recently hired Ben Raikes in 2021, who's an owner of the firm. He gave us some capacity.

Together that solved our succession plan scare because we didn't know how we would take care of all these clients going forward. So, we now have a better succession plan in place. But I guess the short answer to your question is leaving the BD, finding those folks a new home. Some had to find somebody on their own. We were able to transition some clients to an advisor who we trusted. And that was the big turning point for us, where we were able to kind of right the ship from a capacity standpoint.

Michael: So help me understand why, like, literally, the RIA transition was such a big deal from a capacity end. I'm kind of inferring that means when you switch from BD to RIA, you did not bring all the clients?

John: Correct.

Michael: That you deliberately didn't bring all the clients?

John: One hundred percent. Yes.

Michael: So, then paint the picture for us more like what did this look like before the departure? What did this look like after the departure?

John: So I can tell you that when we launched in the fall of 2020, we launched with about $150 million. So, we were SEC-registered from the beginning. But we probably brought no more than 50% of our clients with us, would be my guess.

Michael: So, how many clients was that? Just like approximately. I don't know if that's $150 million with 150 people or $150 million with 50 big dollar clients or if it goes the other direction.

John: It was probably 300 that came with us. There was a lot of industry research, you included, who talk about the magic 100 number. You know, you can only be close with so many people. So, I would say that when we launched the RIA, we probably came over with no more than 150 per advisor. Tommy didn't really have too many relationships that he was solo on at that point. So, it was definitely less than 450. It was probably more than 300. Today we're about 385, 390. So what's interesting is our number of households hasn't really changed that much over the last few years, but we're now about $370 million under management with 385, 390 households.

Michael: Do you have any sense, like how many clients did you have? It sounds like you were 700, 800, 900 clients at the broker-dealer. Just everything for everyone for 10+ years of successful seminars.

John: It had to be annual reviews is what we used to call them. Now we call them strategic planning meetings. It had to be, Michael, 600+ annual reviews every year. But then you had policyholders because back then you could make money doing anything. You could sell a life insurance policy or a long-term care policy or a one-time A share American Fund or something. And then you'd have people that would go through the ongoing plan or do the initial plan, maybe invest money with you, but never return a phone call for an annual review.

So it was really hard to tell because some people just kind of disappeared. They were, like, but you're a policyholder or you're an investment client, but you don't return our phone calls and you're not really a client, but you did business with us at one point. So when we went RIA, we implemented surge at that time. We implemented our strategic planning meetings at that time. We really zeroed in and said, "Okay, what do we do? Who do we do it well for? And can we deliver our best value?" And that was the opportune time to basically figure out who would be a good ongoing financial planning client.

And you know, it's the people who participate. I really don't enjoy working with clients who just shake their head yes. I want clients to be that active, engaged participant who may ask questions, who want to understand the why a bit. But at the end of the day, may defer to our expertise because that's why they hired us to begin with. So, we were able to do that when we left the BD and as you know, we had to repaper all of those folks. It was like, how are we going to do that? And do we really want to repaper? We looked at the metrics, we looked at we had clients with $50,000 that we just knew weren't profitable. And we were like, well, we can't bring those folks with us.

Michael: So, where did you send the clients that weren't coming along?

John: We had one other advisor at the previous BD, an advisor friend who took on many of those relationships. The BD took on as servicing for some of the legacy annuity and mutual fund products. And a lot of these folks, Michael, the ones who when I think about them, I get sad, the ones who were good financial planning clients, but didn't make economical sense for us to continue to serve, those are the ones we tried to find a home for. The ones who really weren't actively engaged or didn't feel... I don't know if that makes sense. There was a different feeling. There were some people who you just really felt bad not being able to continue to serve. And there was others where you didn't feel so bad.

Michael: The ones that you were concerned you tried to do the handoff to the advisor friend. The ones who weren't really meaningfully engaging you anyways, like, they can just be converted to a broker-dealer house account and they'll make sure that they're served.

John: Correct. And what may be what makes us a little unique in this process we've been through. I think 2 of these now when we individually called every single client during COVID, we individually called every client because we were going to launch the RIA, I think April of 2020 was our target. So that ended up being…

Michael: That's a little disruptive. Yeah.

John: But the good news is we figured out how to do DocuSign for the next 6 months. So, rather than having to drive to people's homes or send out things in envelopes, we were able to DocuSign transition most of our clients over the ones that were coming with us pretty easily, seamlessly at that point. So, we individually called everybody, the people who we said, please come with us, the people who we had to do a handoff, and then the people who we said, you're becoming a house account. We individually made those calls to every single person. And right or wrong, we're still getting phone calls from some of those people because we said, if life ever throws you a curveball and nobody's helping you and you can't get answers, 757-223-9898. If you need help, call me.

And to this day, 4 or 5 years later, we are still getting occasionally phone calls from some legacy clients who just need help. And we're not going to be able to provide ongoing financial planning support to them, but we can give them a get-out-of-jail-free card or provide support as needed. And I think that human element, knowing that we weren't going to just completely turn our back on them, made a big difference.

Michael: How did you message it? Not even message it. How did you say it? It's one thing to say, "Hey, we're transitioning to a firm. We're going to do good things. We're excited to have you come along and do that conversation." But for the ones where you've got to call an existing client and tell them that they're not going to get to be a client anymore. How did you have that conversation?

John: It was horrible. It was the worst. I can't say worst time of my life, but I'll say, it was the worst. It was horrible. And like you said, it was easy when you said, please come with me. We used a hotel analogy quite a bit, Michael. And we were like, we've been burning the candle at both ends. We've been trying to help as many people as we can help. And our mission and our vision has changed some in that we want to provide a higher quality of service. We want to do the best service that we can. And we can't work ourselves into the ground. So we only have so many rooms. And there's only so many rooms in the hotel. And unfortunately, we can't continue serving the same number of families that we've been serving for this long and continue to succeed as a firm.

We discussed how we were leaving the broker-dealer and how there was additional compliance, additional work, additional responsibilities of a mature business that, I think, in 2010, 11, 12, we weren't running a business. We were just trying to survive. And it became increasingly clear to us that our rooms, our houses were full. And my memory of it is just as transparent as we could say is I need more time to be president, I need more time to be chief compliance officer and we need more time to enjoy our family and unfortunately, what that means is we can't continue serving the same amount of folks.

Michael: And sort of the express implication at that point was like and you're one of those making the cut.

John: In our mind there were 3 kinds of groups. The people who were coming, the people who were getting the more warm handoff, and then there was the folks who were getting the more of the house accounts. And if it was a warm handoff, we wanted to make sure they knew that it was a warm handoff. If it was a house account, we didn't really try to sugarcoat that much.

Michael: Because they mostly didn't care? If they were that disengaged, I'm assuming most of these people, they treated you as though they were a house account with you already. So, just can be a different person that answers the phone for them but they don't call very much.

John: It was very rare. And you're right, Michael, it was very rare…I think I only was yelled at once or twice during this process where there were clients who were sad. There were clients who asked me to reconsider or said, can you please reconsider? Can we do this a different way? How can we keep you guys on our team? Those were really hard conversations. There was a few people who were angry, but largely, our clients have always treated us as humans, too, and we've always treated them as humans. And I think our clients feel that they're more than a number, that they feel like they're more like our family, even when we had 600+.

That they understood they were like, John, you need more time. You need to spend more time with your son. You can't be working 8:00 to 8:00 every day for the rest of time. It was very heartwarming and very surprising to me how many of these people, Michael, while they were being left behind, if you will, or having to find another advisor, they still felt so much positive connection with our firm that they wished us good luck, that they said you're making the right decision. Many of these folks were kind of cheerleaders for us during the transition.

And I hope I'm not only remembering what I want to remember because I remember some painful conversations, too. But I do remember a lot of "go get 'em," thank you for your support, you've been a rock star. And there were some folks, too, Michael, where it's like, hey, we've been through a lot together. We've activated Social Security, we helped you fix survivor benefits. We got your mortgage paid off. You did your refi. You'd like to list the 5, 7, 10, 20 things that you've helped that family do. And although we never believe anybody's truly on autopilot, some of the message to these folks was "you've got this." We've done a lot of good work together and you've got this from here. It doesn't mean that you don't want us still to be there in case stuff breaks, but you've got this and we've done good work together and you're ready for this next phase, even if it's without Mason & Associates.

Growing Revenue While Charging Clients Lower All-In Fees By Transitioning To the RIA Model [1:00:16]

Michael: Did you give any of them a chance to become a profitable client? Was that ever a discussion if you can get up to $500,000 of investable assets with us, we can continue to work with you. If you pay our $3,000 minimum fee, we can continue to work with you. Was that part of the strategy or the approach or were you just already you had too many so you pick the ones that you were going to continue with and the rest just there was no room at the hotel?

John: It was more the latter and you probably know the economics of this too. I know I've heard it on other podcasts, but we have traditionally used third-party asset managers and still today have an outsourced chief investment officer. And with the BD relationship, we were kind of hamstrung to solicitor fees. We were pigeonholed into what our max fee could be. It was all based on an agreement between the broker-dealer and the TAMP [Turnkey Asset Management Platform]. There was no agreement between Mason and TAMP or Mason and asset manager. And the BD was getting their cut.

And then we had X amount of, at the end of the day, Michael, we now charge our fee now is 1.5% on the first million. And then we charge 0.75% on the second. And 0.5% on everything above that. And part of this transition was, okay, here's our new fee schedule. 1.5% all in for us was often less than what clients were paying at the BD. And we made more money because we didn't have to pay all these other people too. So, from an economics perspective, we were able to scale back the number of families we were serving and serve them better and make similar or more revenue all at the same time while the clients weren't paying more out of pocket fees. It was kind of the best of all those worlds and that many of these clients got a fee reduction and Mason & Associates had a fee increase.

Michael: Because of the broker dealer platform fees, investment platform fees and all those layers that just got stripped out when they're not in the picture anymore?

John: Exactly.

Michael: As I'm fascinated by this from the math end, if I'm hearing you right, you effectively left behind almost half the clients and the half that came with you with updated fee schedule without additional BD costs was more revenue for the half you kept than the whole you used to have.

John: Correct.

Michael: That's quite a shift.

John: It was transformational and where we are now, it has been amazing, like I said 385 to 390 households, about $370 million AUM between…we custody at Axos Advisor Services, we have a little bit at Nationwide and their fee-only annuity, and we do have some recurring AdvicePay and one-time planning fees. But it's been very cool to serve clients on a deeper level. The average fees are certainly higher, average AUM is certainly higher, but I think what we can see in our Google reviews, what we can see in our client retention, what we can see and just general like happiness of the advisors, and clients, and operations team is that we're humming along nicely, but we're coming close to another capacity wall. So, that's coming too. We're kind of enjoying where we are right now but we're also not naïve to the fact that you continue to hit capacity walls if you're not careful so you have to continue to plan for those too.

Michael: One more question around this structuring that I'm curious to ask and I want to bring us a little bit more current. But just you said fee now is 1.5% of the first million and then it steps down to 75 basis points in the next million and moves down from there. The industry likes to talk so much about the proverbial or actual 1% AUM fee. Do you get concerned about being at 1.5% on the first million? Does that worry you and/or does that come up with clients who say other advisors said 1% what's this 1.5% thing?

John: Well, thankfully there's this guy Michael Kitces, who posted a really, really good blog post. I don't know when you did it, Michael, but it talked about the mythical 1%. Do you remember this blog? And it was like it's not really one, it's one plus the BD fee, it's one plus TD Ameritrade's fee, it's then 12b-1 fees and expense ratios and this 1% is really like 1.7. And I may be misquoting slightly, but you really gave good indications and good research on the all-in fee is not one [percent].

I refer to that, we refer to that blog post pretty frequently because it's like, yes we're 1.5 [percent] on the first million. Axos has a small platform fee that the client pays and then we'll pull up our average expense ratios, which are between 10 and 15 bps for a portfolio. So call it all-in at 1.75 or less. Which, I think, if we went back to your blog, maybe you remember it, put us not at the extreme high, but on the high side. And we're okay being there. Not out of the realm of reasonable based on some of the research that you had provided.

And if anybody brings up the fee objection, it's rare. We had one this year who could not come to grips with paying us more than he was paying his other firm even though he said you guys will provide more value than them, I can't justify paying you more. I was like well, sorry. I don't know what to say, but the 1.5% if we get some fee objections we often quote your article, not word for word, but we'll say, make sure you understand the all-in cost. Make sure you understand what that actually means because we can show you every cost there is with us and everything is transparent and we are, buzzword, a fiduciary fee-only financial planning firm for Federal employees and we own it. We own it. Yes we're a premium fee and we deliver a premium service.

Can I share one other thing with you before I forget?

Michael: Please.

Using A Podcast To Reach Ideal Target Clients [1:07:23]

John: We talked a lot about the marketing, we talked a lot about kind of the radio show and the seminar. But we now have the Federal Employee Financial Planning Podcast. We never really talked about how marketing shifted. Now we have marketing via the podcast and YouTube channel, which are doing very well for us. But on our home page, we have a podcast episode that's called "Special Episode: New Client Process and Experience." And talks about our minimum, it talks about strategic planning meetings, it talks about what it means to be a client, how ongoing financial planning makes sense. And I believe that that is very helpful because the people who are scheduling have likely already listened to that podcast, been directly referred. We're so open and transparent with what we do and how we do it that if you're doing any research on us at all you know our minimum, you know our fee schedule, you've got that new client process and experience podcast episode. And so that's there. I think that helps quite a bit.

Michael: What's the regular focus the podcast? You said Federal employee financial planning. So, radio show-style just on a podcast format of nerdy technical things for Federal employees around financial planning like that's the core of it?

John: Federal employee financial planning it's me, Tommy, Mike Mason, and Ben Raikes we host. Sometimes it's all 4, sometimes it'll be a lighter crew. But we record via Riverside, episodes are between 30 and 40 minutes long. And overall, we do tend to talk about things that are pertinent to Federal employee financial planning. So, we'll talk about Federal employees group life, we'll talk about FEGLI, we'll talk about Social Security, we'll talk about survivor benefits. So, I'm looking at some of our episode list now, we have distribution planning assumptions. In that episode, we talked about how financial planning software assumes linear distributions over time. But there's also these things called guardrails, or smile, or what have you, or the phases, the go-go, slow-go, no-go. We have TSP competitive advantages and disadvantages, financial planner to client ratio, get the most out of your financial planner, are virtual meetings as good as in-person.

Michael: I don't mean this in a bad way, but it's not just the technical education for your audience, you are highlighting very directly what you do and how you work with clients, like, virtual meetings are good because 95% of our meetings are our virtual and you had a special episode of the podcast that was literally just your process and client experience.

John: Exactly. We have one that's called financial planner compensation where we talk about, fee-only, fee-based if you're still allowed to use that. I'm sure in that episode we talked about how we get paid. And so, there's always financial planning content and it's always fun. It's always fun to just share what we're doing at Mason & Associates and...

Michael: I'm struck as I hear a lot of folks that have done podcasts who have been, who don't even want to mention their firm and "sully" the education with advertising. I'm saying that tongue in cheek, but you have tried to keep I'll just call it a super pure educational format. And I feel like and your right out there. No, we literally just had a whole episode about what we do for our clients.

John: 100%. Yeah. Inside look at strategic planning meeting season, what that means. We've talked about effectively surge and mini-surge on the podcast and we primarily are going to focus the content on education and situational stories. We love to share real-life examples of how financial planning actually works, not just focus on reading a manual. But I don't feel bad saying and this is how we do it and this is our philosophy, or this is how we get paid, or if you like what you hear, you don't have to hire us. You could. Or you can hire somebody else.

Another episode was like when's the right time to hire a financial planner. And we talk in that episode about this is where we meet people, 55 to 60 who are ready to retire who have a million dollars or more, this is where we meet you. If you were not that person, you need to find that financial planner who's going to meet you where you are. Divorcing, new career, job change, whatever it may be. So, we're not scared to show what we do at Mason & Associates, we're not scared to say, if you want to call us we have live humans that answer. Test it, 223-9898 and give us a call, a live human will answer the phone.

Michael: And what ultimately, because I know you you did this in the seminar and in radio world. Is there a call to action more directly of how you're trying to draw people into a funnel and into a next steps process?

John: That is not as fine tuned. We know it's working because we know that we fielded 175 introductory phone calls since August of 2022. So, we're certainly getting activity. The referrals are certainly our strongest conversion rate, I think, like most firms. But the podcast and the YouTube channel make us more referable too. So, sometimes it's easy. Like if you're from Seattle and you become a client, it was probably podcast or YouTube. If you're local and you were referred, I'm sure the podcast and YouTube solidified that referral opportunity.

Michael: How so? I mean just in your mind, what does it mean that the podcast and YouTube channel make you more referable and solidify a referral?

John: I think the transparency of who we are and what we do, the credibility, being able to listen to us on the podcast. People get very excited when they call and they're like "I can't believe I'm actually talking to the John, or the Mike, or the Tommy." There's a certain credibility that you get on radio and podcast where I won't say that it's a...we're no Taylor Swift, Michael, but at the end of the day I think people are pretty excited once they've engaged with us and they've listened to a few episodes and our personality comes through and we're laughing.

And then when they call the office and they get to talk to us or talk with us, it's exciting for them. And the podcast and YouTube is also morphed into marketing, but also a client resource library. And we know that our clients are loving it because they'll email us, "Love that last episode," or if somebody is turning 65, I'll send them a Medicare episode that we've recorded with the Medicare insurance sales guide. So, we're using it both for outbound marketing but we also use it a lot for a client resource library.

What Surprised John The Most On His Journey [1:15:09]

Michael: As you look back on this journey, what surprised you the most about building this advisory business?

John: I think a couple of things have surprised me over the years. And one, through the levels of transitions, whether it was hiring or unhiring a third-party asset manager, leaving a broker dealer, a "graduation"…we've been through so many transitions over the years in my 14 years and, I think, the love that I still feel to clients that I'm serving today, the clients that I served previously, the goodwill that we've built in the community. How positive all those transitions were. We knew they would be, but you're always scared they're not going to go the way you think they're going to go.

So, I was very, I would say, pleasantly surprised or although expected surprised at how well all of these business transitions have gone. I'm still very surprised how much my insurance knowledge is still helpful today from from BD days, that still seems like it comes out all the time. And I'm also very surprised how much easier administratively it is to run a firm on the RIA side rather than the BD side. And as we were thinking about leaving the BD, there was always these, "It's going to be so much harder on the other side, you're going to have to do your own compliance," and it has just been such a wonderful surprise in that all of the business is easier when it's only your business that you're worried about.

Michael: It's easier when it's only your business because you don't have to deal with compliance for every other rep under the umbrella.

John: Exactly. And we can make a website update and post it. We don't have to wait a week. Or we can design our own side-by-side fee comparison to document an IRA transfer. We have so much more control over the end product of not only our internal compliance forms, our outbound marketing, and just the technology that we use not being hamstrung to what the BD says we can or can't do, it's just been really transformational. We didn't talk about technology barely at all, but leveraging technology we would have never been able to do what we're doing at the BD.

The Low Point For John On His Journey [1:17:33]

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

John: When I started at Mason & Associates, Michael, I was John Mason Inc., John Mason Financial Inc. And we had commission splits. So, if I brought in a new client, Mike and Ken would get 50%, I'd get 50% of the revenue. And that worked fine for a long time. Probably in 2016 or '17, I started really like, "I'm getting serious with my soon-to-be wife and things are happening and I'm like, I'm not even an owner in the firm that matters."

I had done 100 financial plans, I'm responsible for all the growth. And it's not true, but I feel like I'm the one doing all the work building this business just so I can buy it at some ridiculous price one day. And that was probably somewhat of a low point because we didn't know what the future was, we didn't know would I be an owner, we didn't have a way to document how I would purchase in or how I would get equity and that was certainly a low point because there was just a lot of unknowns.

And then there was another point where we didn't know…John and Tommy thought what if Mike and Ken never want to go RIA? What if they want to stay with the BD forever? Does that mean that we break up with dad and uncle? And that was never really a conversation that lasted too long, but that was certainly, it hasn't been all roses. There's been some scary points where you're like, is this going to work? Is it just John and Tommy to infinity and beyond or is it all 4 of us? And sometimes it gets scary. So those were 2 points that I can think of where it was just we didn't know where we were going and it felt like we were stuck.

Michael: How did the equity situation eventually resolve?

John: We did a new operating agreement and Mike and Ken are amazing founders, amazing mentors, family members. They essentially said sweat equity, John, you own 20%. So, when we redid our operating agreement, it became 40-40-20 and I didn't have to do any physical dollar buy-in at that time. The buy in was the work over however many years it was. The additional purchases, so I bought another 5, Sarah and I bought another 5, and then we bought another 15, bringing us up to a total of 40%. And those have been financed by Mike and Ken. So, internal financing on those.

What John Wishes He Knew Earlier In His Career [1:20:27]

Michael: Okay. What else do you know now that you wish you'd known 10, 15 years ago as you were early in going down this road?

John: I think if I could look back. And this I'm talking to my today self, Michael, and to my previous 10-year-ago self is that, one, it's going to be okay. And it's okay to continue to push for change, it's okay to continue to hit the optimize button, but at the same time you have to take pride and celebrate your wins and your successes, and I'm not somebody who's ever been really good at doing that. I tend to move the goalpost before I even get to it. My today self and my 10-year-ago self I would say, enjoy the ride a little bit more, appreciate what you've built, and identify the problems that need immediate solving and the ones that can wait.

And one of the hardest things I have to live with is once I've identified a problem, I feel like it has to be solved immediately. And it really irks me and it really drives me nuts. I still to this day I'm working on, is this a today problem? Is this something that's going to put our company out of business today? Or is this, our lease isn't up for 3 more years, so why am I spending mental energy thinking about where we're going to be 3 years from now? That's not a problem that I need to solve today. So, I think, that's kind of what I wish I knew and I continue to have to remind myself to say yes to the things that matter.

John's Advice For Newer Advisors [1:22:09]

Michael: Any other advice you'd give younger newer advisors coming into the profession and trying to get started today?

John: Well, you'll love it. Niche. Make sure you pick the group of clients that you want to work with. Don't be scared to market. Whether it's spending money on radio advertising or podcast. Both of those have been so great that the financial planning presentations or seminars was an awesome way to cut my teeth and get me public-speaking experience, which developed into presentations and being on this podcast with you. And so much of my growth is due to having to build a business. So much of where we are is the blood, sweat, and tears that had to go along the way to get here.

You don't just become a good public speaker, you have to practice. And if you do it 22 times a year, you get pretty good at it. So, don't be scared to spend money, run towards those public-speaking opportunities, don't discount the insurance world because there's a lot of opportunities to add value on some really nasty policies that were sold in the '80s and '90s. And people don't know how their annuities work. There is so much value that can be had by understanding that.

And I would say that even from a college perspective, if we're looking that young, Michael, is that I don't think there's enough focus placed on insurance. I think that everybody takes this fee-only RIA path and they don't give insurance the time that it needs. And insurance is one of the only things that we can do that's truly life-changing to somebody. An AUM model isn't life-changing. An annual tax planning could be life-changing over a period of years, but making sure somebody's fully insured and then their spouse dies and they're not destitute is life-changing. And I feel the younger generation and I'm not even old. I feel like that's lost among the RIA community sometimes.

Michael: Yeah. The insurance agency that I started my career at was very proactive in trying to help newer agents who are out go along in meetings, delivering a death benefit check to a widow. And they liked to deliver them by hand, even though you could mail them even then. And there was something incredibly powerful when you actually hand a life insurance death benefit to a widow who's looking at this and saying like now I know how we're going to make it work.

John: I remember, I know you do too. The first client that you had pass away and it's life-changing and life-altering and it changes and it completely reframes everything that we do as advisors and it changes your perspective on everything. And, yeah, I even still feel to this day that now that I'm not the one responsible like I used to be, I would write the term insurance app and make sure they had it. And it was really easy to make sure they had what they needed. It's harder now on this fee-only side of things where it's like, hey, you have to go to LLIS or you have to go to SelectQuote or wherever. And you can only hound them so much and you can't do the forms for them. And you can strongly suggest, but before I could literally just push the paper over and be like, you really need to do this. You can call it sales, but there's not enough commission on a term life insurance app to do anything helpful, but it was the implementation of a good idea that, I think, advisors, in general, need to make sure that when it's a good idea that it gets implemented.

What Success Means To John [1:26:08]

Michael: 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, some different things to the same person as we go through stages of business, stages of life. So, you've built this successful career and successful business and now increasing partner and owner at the business. And so the business is in a wonderfully successful place. How do you define success for yourself at this point?

John: I am very guilty, Michael, of my default answer is to say yes to everything, whether it's a public-speaking opportunity, being on this podcast, hanging out with friends. And you put on your summer reading list this year, "The 80/80 Marriage." But what I loved about that is one of the things in the book. It talked about creating a team name for your family. So, we are Mase Camp, M-A-S-E-C-A-M-P, Mase Camp, like base camp, and we enjoy our RV. We enjoy our family time.

So, we are team Mase Camp. And how I define success at this point in my life is saying yes to my family, saying yes to my health, saying yes to the things that matter most in my life. Ability to travel the country with my spouse, my dog, my son. Eating good food, doing the things we want to do, spending time together. That's the most important thing that I'm doing every day. The tool and the path on how I got here and the business success is all about serving clients on a really human level to where they feel like they're part of our family.

We're delivering a service that nobody else is delivering. We're connecting with our clients like nobody else is connecting with them. And at the end of the day, I hope, whether it's the individual, me, or the Mason family and the Mason advisory firm, Mason & Associates, that everybody we touch, whether it's a direct client relationship or friend or just anybody in the community, that we make everybody feel just a little bit more special. Make them feel like they matter and make them feel like they're getting something different than they're getting anywhere else. Even something as simple as when my son and I were walking throughout the campground today and an older gentleman, he said hi, and my son said, "Hey, how are you?" At 4 years old. I just feel like that him asking a grown up 60, 70 years older than he is, genuinely caring, how are you today? If we can do that at Mason & Associates for the rest of our time, then everything's going to be okay.

Michael: I love it. I love it. Thank you so much, John, for joining us on the "Financial Advisor Success" Podcast.

John: Michael, it was my pleasure. Thank you.