#FASuccess Ep 080: Navigating The Path From High Volume Insurance Agent To Focused Financial Planner with Matthew Blocki

What You’ll Learn In This Podcast Episode

• How Matthew built his practice from scratch, and how it evolved from serving retirees to serving retirees and young physicians. [4:49]
• What his staff infrastructure looks like. [17:59]
• Advice for getting through the inevitable rejections when trying to build up your client base. [26:03]
• How Matthew’s motivations have changed over the years. [33:07]
• The networks he tapped to get some initial traction. [33:07]
• How he leveraged LinkedIn to reach new prospects. [41:26]
• Why you should try at least three times before giving up on a prospect. [50:41]
• The unique and non-traditional advice services he provides to his young doctor clients. [1:01:19]
• Strategies and tactics to help physicians maximize their financial plans. [1:01:19]
• Why it’s so important to offer more than what we traditionally consider financial planning services to clients. [1:06:11]
• Key things you can do to differentiate yourself. [1:14:21]
• Tips for establishing credibility in your 20s. [1:40:12]

Resources Featured In This Episode:

• Matthew Blocki - Matthew's Firm at Northwestern Mutual
• Financial Advisor Success - Episode 2: How Ron Carson Built Carson Wealth & Carson Institutional
• Excell Conference
• Alec Baldwin Sales Manager Clip from Glengarry Glen Ross
• Carson Group Coaching (Peak Advisor Alliance)
• Alissa Gauger of Unleash Your Practice
• Kolbe Test
• Million Dollar Habits by Brian Tracy
• What Keeps You Up At Night by MFS
• Principles by Ray Dalio

Full Transcript: Navigating The Path From High Volume Insurance Agent To Focused Financial Planner with Matthew Blocki

Michael: Welcome, everyone. Welcome to the 80th episode of the "Financial Advisor Success Podcast". My guest on today's podcast is Matthew Blocki. Matthew is a 30 year old financial advisor with a niche practice of serving physicians and retirees, and has grown to nearly $70 million in assets under management, and $800,000 of revenue in just eight years since he started his career. What's unique about Matthew, though, is that he's built his financial planning center practice by starting out at a major life insurance company, Northwestern Mutual, but has quickly evolved his business from starting out with nearly 100 transactional insurance clients per year to a hyper-focused practice that's aiming to grow with just 15 affluent clients per year instead.

In this episode, Matthew talks in detail about how he got started and survived in the early years by trying to focus on engaging in the right activity from the start. The networks he tapped out of the gate just to get some initial traction, the way he leveraged LinkedIn to expand his network to reach new prospects, and how he learned the importance of being professionally persistent and always following up with prospects at least three times before giving up.

We also talk about how Matthew differentiated himself as a 20-something advisor working with retirees, how that involved into two niches, working with retirees and young physicians, the unique and nontraditional advice services he provides, particularly to his young doctor clients to distinguish himself and build a connection, and why it's so important to not just offer what we traditionally consider financial planning services to clients, but what it is they are really, truly stressed about that keeps them up at night.

Be certain to listen to the end, where Matthew talks about how having coaches and finding mentors has helped to shape his own career in the early years, the importance of learning about and knowing yourself and finding your own strengths, and why you have to be only slightly better than the competition to come out exponentially ahead in your business.

So, with that introduction, I hope you enjoy this episode of the "Financial Advisor Success Podcast" with Matthew Blocki.

Welcome, Matthew Blocki, to the "Financial Advisor Success Podcast".

Matthew: Thanks for having me, Michael.

Michael: I'm excited for this episode, because...so I've written a bunch over the years about how I think the advisor career path is changing. You know, it used to be that you, basically, you came into a product company, insurance or investments, you learn to sell stuff, and then if you were good at that, later you got to become an advisor and move up and do more. Now, increasingly, it seems like people just don't want to do that. They want to be an advisor from day one. They don't necessarily want to be responsible for business development and getting their own clients, either at all, or at least not from the start.

But you actually followed what I guess I would still call the traditional career path. You joined a major insurance company, you're responsible getting your own clients from day one, and then got your CFP and your CHFC and your RICP later on, and now are eight years in and are running a successful advisory practice, and fall into that classic millennial bucket, where supposedly millennials don't want to do this anymore, but you did.

So I'm excited to have you on the podcast just to talk about that path and that journey of building from scratch, and what that looks like in today's world.

Matthew: Yeah. I really appreciate you having me on, Michael, and I'm excited to hopefully share some value with your listeners. I remember back to episode two, the interview with Ron Carson. Really took a lot of takeaways from that, and have since joined his coaching program and just attend Excell conference, and had tremendous takeaways from that. So this never would have even had exposure to anything outside of my company, were it not for your podcast. So really appreciate it.

Michael: Oh, fantastic. Yeah, episode two with Ron Carson is still one of our more popular ones. I know they've been spending a lot of time and energy lately trying to really build up that Excell conference, which we'd actually put on our Best Conferences list last year for practice management, and I guess it hit well for you on the practice management end.

Matthew: Yes. Very high value content. Overwhelmed by trying to implement all my takeaways, but it's a process.

Michael: Yeah. That's always kind of the challenge, when you come out of those conferences with a good experience. Like, you do that and then you go home, and then all of your team is, like, "Oh, no, no. Please don't go to any more conferences. We can't take it."

Matthew: Exactly.

How Matthew Built His Practice From Scratch [4:49]

Michael: Well, very cool. So, as a starting point, I think, can you just talk to us a little bit about your advisory practices that exist today? What do you do and who do you do it for, and where do you do it?

Matthew: Yeah, absolutely. So I'm located in Pittsburgh, Pennsylvania. Obviously, as you mentioned, I we'll talk about that story in a little bit. End of 2011, we started, and obviously some heavy focus on insurance the first couple of years, but really fell in love with the full financial planning, and just handling every aspect of someone's financial life.

So I found there's really two buckets that I really work well with today, and the first bucket is physicians. So we handle everything you could potentially imagine for a physician, such as forgiveness program on their loans, negotiating contracts based upon their loans if they're not for profit, for profit, and then handling all of their wealth accumulation, insurances, etc. Then the other side of what we do is for retirees. I always use the analogy that financial climbing is kind of like climbing Mount Everest. You spend your whole life getting to the top, and then most accidents can happen on the way down. We manage the distribution process for people that are retired.

I say I enjoy those two niches equally.

Michael: I like that analogy. Financial planning is like climbing Mount Everest, most of the fatal accidents actually happen on the way down. Which is true. Like, the risk, for people who don't know, of climbing Everest is not actually just summiting and getting to the top. It's being able to get back down, not just for, like, literally the treacherousness of climbing back down a mountain, but all the changes that happen to your body as you're adjusting up and down to the altitude.

I guess, you know, you look at it the same way in the world of accumulation and decumulation planning for retirement. You know, we spend most of our time accumulating. It's the equivalent of going up and climbing Mount Everest. Then you get to the top, you get to the peak, which is, you've accumulated all the dollars you're ready to retire, and you're feeling like you did great and you survived the journey, and the reality is most of the bad accidents happen on the way down. Like, the real challenge now is how do you liquidate those assets and come down, and not blow yourself up along the way?

Matthew: Yeah. It's really psychologically and financially...when the plan goes live, obviously, stock market dips and Medicare surcharges, and tax rates changing, if one person dies. I mean, all this nerdy stuff that I call it. Plus, there's a psychological part. You've saved. You saved, you saved, you saved out of your paycheck every step of the way, and then suddenly you're retired. Now just not saving is a challenge for a lot of people that have been good savers their whole life, and then actually having to take money out, I find there's a coaching aspect to that part of the business as well, which is pretty cool.

Michael: Yeah. There is kind of a sad, psychological bias that I find crops out. The clients who are really good at saving tend to just be wired to spend frugally, save a lot, not spend aggressively, and then when they get to retirement, they can't require themselves to start using the money. They spend so long always trying to tend that nest egg and make sure it's safe and growing that they just don't know how to start using it, enjoying it, and the clients who are most likely to be really good at using it, enjoying it, never manage to actually get to the spending part, to that stage, because they don't save and accumulate much in the first place because they're spenders.

So, you know, the non-spenders have trouble starting to spend, and the spenders never save up enough to use in retirement in the first place.

Matthew: Yeah, absolutely. I see that in action every day. It's quite interesting.

Michael: Yeah. It's an unfortunate challenge. So talk to us a little bit more about your practice. So you're under the Northwestern Mutual umbrella. You said you were doing more insurance early on. You're learning more towards investments now. So, like, what does the business look like at this point?

Matthew: Yeah. So for anyone not familiar, with Northwestern Mutual, you're affiliated with them. I'm an independent contractor though, right? So I can sell their products. I can sell outside products. Then my broker dealer, all my advisory assets, are held with them obviously as well. So, you now, starting from scratch, as you said, there was a heavy focus on insurance, obviously, because that, there's more revenue right from the get-go. That's kind of where all their training is.

But now there's a shift where they've really embraced the financial planning and figured out that, if you handle every aspect of the financial plan, it all synchs together very well. So, as of today, I would say actually 80% of our time is on investment, wealth management, retirement distributions, physician planning. Then insurance is very...I don't want to dismiss it, but I mean, it's very simple, right? There's run an analysis -- most people don't have the coverage they need -- then you solve their problem.

But from a time perspective, I would say it's 80/20, and then from a revenue perspective, I would say it's probably 40% insurance and 60% investments. But that's going to continue to go towards the investment side. I would say anticipate that the insurance will go down below 10% within four or five years, and investments will be their primary revenue focus as well.

Michael: Okay. So what's revenue overall for the practice at this point? Like, how much stuff and activity are you doing? What does the firm look like?

Matthew: Yeah. So if we just, if we pause the practiced today for the year, January 1st of 2018 through December 31st of 2018, we'd just be right over $800,000 of total revenue.

Michael: Okay. That's a phenomenal practice. So you're kind of cruising, at least, on track for $800,000 of revenue this year. You said a portion of that is insurance, and then a portion of it is investments. So can we drill down a little bit further, and just, like, what is this revenue look like from the insurance and investment side? Like, are you writing term insurance? Are you writing permanent? IS it a bunch of long term care? Are you doing traditional mutual fund business? Are you doing advisory accounts? Like, what does this insurance and investment business look like for your investment?

Matthew: Yeah. So the investment business, each quarter, I think the gross production is going to be around $160 to $170, depending on what the market does with our next billing cycle. Then, currently, our pay out of that is 73%. So assuming we continue our traction on investments, I believe that'll end up being between, you know, $500 to $600 by the end of the year, and then from the insurance side, we do a mix of everything. A lot of disability insurance because of our physician focus. A lot of term life insurance for physicians that are, you know, graduating residency, and then transitioning to be an attending.

Then the permanent insurance, obviously that's one of Northwestern's flagship products, is their permanent, their whole life product. Personally, our philosophy is we've got to make sure everyone's 401(k) is maxed. We've got to make sure their backdoor is done. We've got to make sure they have enough going into 529 plans. Then, you know, for someone -- a lot of our clients are running north of half a million to a million dollars -- we find that's a good, safe...instead of holding bonds in a taxable account where most of their money ends up going anyways because of the really tight limitations on what can go into a 401(k), and a Roth IRA, etc., we really view that as a death benefit need first, but also where their cash accumulation serves as the bond component of their portfolio for all. So the permanent insurance really fits into the maturing doctor that's been in practices for a couple of years.

Michael: Okay. So it kind of becomes a substitute bond holding with the death benefit kicker in a world where, you know, you're working with people with a half a million dollars up of income. So, like, they've already done their 401(k). They've already done their other traditional savings. They presumably have ample liquidity to have some portion of fixed income tied up in a participating whole life policy, at that point.

Matthew: Exactly, exactly.

Michael: So on the investment side, what does that...like, I think you said you were sort of trending at $160,000 to $170,000 of revenue per quarter. Is that advisory accounts? Is that, like, mutual fund commission payouts? IS that other investment products that you guys have in the lineup?

Matthew: Yeah. We actually don't do any commission business. it's all advisory assets under management. You know, I'd say generally we're between 0.5% to 1.3%. All depending on the amount of assets that someone has with us. So it's all advisory assets.

I can't say it's all advisory assets, because Northwestern does have account minimums. You know, you have to get to $25,000 before you can flip to that program. So what we do for our clients, like physicians that are giving us $4000 or $5000 a month in an non-qualified account, we'll start them in a brokerage account. But it'll be a no load fund that builds up until we flip it over to the advisory.

Michael: Right. I guess at the client size that you're working with, like, it literally just takes them a few months, or a quarter or two, to...

Matthew: Exactly.

Michael: ...get to the size that they can flip over.

Matthew: Yeah. But I would say it's less than 1% of the total investment revenue picture.

Michael: Okay. So when you talk about revenue in the practice, so the reality when you're in insurance based world...well, and really anything under a broker dealer environment is, you know, there's a gross amount of revenue that ultimately comes from the client. That essentially gets split. A portion goes to the company. The remainder goes to the advisory in the form of a payout. So when you think about your revenue, and you talk about revenue at $800,000, like, was that gross revenue at the top, and then you're getting a payout on that?

Or do you think of it, like, no, no, this is my net of pay out number, because this is my number. Yeah, yeah, the company got some higher piece. But, like, this is mine.

Matthew: Yeah. my goal this whole podcast is to stay super positive, Michael. So funny my share, yeah. So the total revenue number is much, much bigger than that. But I have the pleasure of being teamed up with a big company, so a big part of that is taken away. Understandably, though. They do the compliance and the technology, and all that kind of stuff.

Michael: Yeah, no. I understand that. Like, the companies provide a service for what they do. At some point, for all of us when we make decisions about what companies we affiliate with, there's always this question of just, you know, here's the portion they take off the top. Is the piece they're taking worthwhile relative to the services that they're providing? That's the tradeoff we all have to evaluate.

But I'm just wondering, as you think about it and as you look at your practice, you don't even think about it in terms of the gross, gross number that went up to them before it got chopped for payouts. You just run your business focused on, here's my net amount after the payouts. This is what I work with, which is 73% on the investment side, and then I guess the insurance products have all their own structures, depending on the line of insurance.

Matthew: Insurance products, generally speaking, with the Northwestern you take half to the first year's annual premium. But then you also get a small renewal, which is actually nice as a business owner. When I talk about my insurance revenue this year, probably the 800 number, again, if we kind of pause the practice and do what we're normally doing, it's probably going to be a little bit higher than that. But, like, the renewal is already over six figures from everything we've done in the past, like, seven years.

So the Northwestern structures is you get about one year's worth of putting in $500,000 to term life disability, long term care. Kind of that whole package. You'll make half of that in the first year, and then you'll make the other half over the next nine years.

Michael: Okay, okay. Which I guess helps to just smooth out the revenue as you're growing. Well, you've got a healthy investment based business as well that's recurring. But even on the classic insurance side, it at least gets you to the point where a couple of years in, when you wake up on January 1st, you're not completely at zero, and just have to find and service only new clients. You got some ongoing trails so that you've got some compensation for the ongoing client questions that still come in.

Matthew: No question about it. Yeah.

What Matthew's Staff Infrastructure Looks Like [17:59]

Michael: So you're sitting at this practice with about $800,000 of revenue that's your piece. So then what does the staff infrastructure look like for you to support this in all the clients that you're working with?

Matthew: Yeah. Well, our goal is really aggressive growth. So, like, last year I believe my revenue was, like, 550. Obviously it's going to be...at the end of 2017 it was, like, 550. So it's going to be a huge jump, obviously, from year over year.

Michael: Yeah. That's a huge jump.

Matthew: I guess when people hear me, and, like, I just turned 30, like, why the heck does he have so much staff? I was talking at the Excell conference, a lot of these people have $200 million dollars under management, have two staff. Right?

We are...the caveat, the one I'm about to tell you, is we are staffed to grow. So we have a director of investments who does all of our portfolio management alongside Northwestern, because they help us do all of the research. We have Grace, who does hybrid. Again, our time is mostly investments. So she does, I would say, 60% investments. Then 40% does all the processing of the insurance. Those are kind of my key right hand partners.

Michael: So what's Grace's role? Like, this is, like, client services assistant to you, or like doing operations across the whole firm?

Matthew: I would say it's three pronged right now, and we're figuring this out, obviously. But one of the first thing is she does a lot of the investment. A through Z processing. So, for example, if we have a client that has $2 million with us, and it's spread between six different, you know, accounts, getting all the paperwork signed and ready, getting the transfers, tracking everything, doing the rollover calls, then doing Roth conversations, typically once at certain intervals, and putting all the reminders in our systems to track all that, on-boarding the client.

Chuck does the same thing on the investments, but then Grace also does all of our insurance, scheduling exams, don't underwriting. I mean, there's a lot that goes into it that I don't see any more, and then the policy is ready to mail out for delivery. Then she also is kind of my project coordinator. So when I get back from a conference like Excell and we have a million things we want to implement, we work together on a weekly basis to get all that stuff done.

Michael: So she's bearing the brunt of this wonderful Excell conference that you had, where you've…

Matthew: Exactly.

Michael: ...with all sorts of Ron Carson infused ideas to inflict upon her? Okay.

Matthew: Yeah, and the same goes, you know, with, like, Northwestern conferences. Obviously we get good ideas as well. Then we have my wife Lindsey, who joined the practice about two years ago. So the quick backstory on that...she was a social worker and I was looking to hire at that time my second employee, my second full time employee. She was, like, "You're paying them how much? Like, that's almost twice what I make as a social worker." So I was, like, "All right, let's try it out." So Lindsey's been great. It's kind of all the love affair marketing that Ron talks about. Birthday gifts on a monthly basis to our top clients, scheduling client events, and all the, just fielding phone calls when they come in. All the day to day stuff that you kind of take for granted for, but the first couple years, I look back and say, "How did I even manage?"

So obviously on payroll and everything, and then...so those are three full time employees. I also share a financial planning team we pay about $1500 a month for. They do all of our financial plans. They're phenomenal. I think I probably underpay them.

Michael: So that's, like, a Northwestern Mutual, like, central resource. For $1500 a month, you can send your planning information to our central term, and then we'll produce the plans for you and send them back out?

Matthew: Yeah, but it's actually, each Northwestern Mutual office has a general agent, and then that general agent, obviously, is in charge of everyone in that territory. I think the new name now is managing partner. So he provides certain resources, obviously, as some of the cut that Northwestern's giving goes right to the managing partner. So he's incentivized to give us good resources, and that's obviously they've been great. They provide all the compliance aspect as well.

Michael: Okay. So it doesn't come from Northwestern home office, but it comes from your...the local GA, the local managing partner you're affiliated with, who does this for all of the Northwestern offices in this territory.

Matthew: Exactly.

Michael: What's the planning software that you guys use to do that?

Matthew: Yeah. That's very interesting conversation. We don't want to get too side-railed here, but right now it's Personal Planning Analysis, like, 2.0, I think it's called, which, you can compare it to eMoney. I really like this, because we've been using so many plans in the last three years. It does all the capability. We need to tailor make a lot of stuff, but is actually developing a...they think it's going to be eMoney, similar or better than eMoney, where people can log into their website. The plans' there, it's live. I'm actually in the forward right now with, like, 10 other advisors. Two deve...I'm not developing. I have no idea how even to turn my computer on, but just with giving them feedback on here's what we want, here's what...so I can tell it's kind of been a struggle.

In Northwestern system, like, I don't know, 70% of the reps are brand new. Reps are trying to get to make it. Then you have the 20% or 30% of kind of a weird hybrid where I would say, age-wise, I'm a millennial, but my planning is probably more just as advanced as anyone else in our area. So that's been a little bit of an interesting journey, to figure out how to make up a plan live, and how to integrate technology and keep the veterans happy, I guess.

Michael: So you've got a core team of three full time staff, sort of the investment side, the insurance side an the marketing side, and operations is shared amongst a few of those, and then an outsourced...I guess call it like a para planner team that helps you do the input and grinding work on preparing plans, that you can focus mostly on, like, the actual client facing part, I guess.

Matthew: Yeah. They would tell you. I mean, they tried to...at some point I was so busy for them. They were, like, 60% of their time was working for me, and then the other 40% was working for the other 15 advisors. My work, at a certain point, was more than all those other advisors combined. So they're, like, "You don't really belong in this program." I was, like, hey, come on. Everyone's doing well. Obviously you're going to like, okay, you're right, but we'll keep you. So that's kind of a blessing in disguise right now.

Then we also have two interns. So we started an internship program, and right now they're both full time, actually, during the summer. Then during the school year they both will go down to 20 hours a week. So I would say that's one full time staff within two interns. Then I have an interesting arrangement...we have another lead advisor on our team who is actually contracted to Northwestern. He is marketed to be 100% of my team, because he is, but he is actually maintaining his contract, and basically the setup is I'm taking he has no overhead. But then we have a revenue shared agreement. So he's using all my staff's time. We're in, obviously, an agreement where revenue is shared. He will maintain equity of his investments, his portion of the revenue of the investments, etc. in the future.

So that was a big win-win for both of us. But that's been going great as we scale up the end of the physician practice. That takes up a lot of time, and that's his only focus right now, is meeting with new positions every single week.

Michael: Okay. So that's your core group? So you've got three on the operation staff side, this planning support team through the local GA, and then another lead advisor on the team that you're building with and splitting business with?

Matthew: Exactly, yeah. Then the two interns that have had...I read an article that you did about internships. The interns have been phenomenal. They're brilliantly hard workers. One of them does all four calling now. She's not afraid to get on the phones. It's been great.

Matthew's Advice For Getting Through Rejection [26:03]

Michael: Very cool. So as you look at this practice, you've had I think what most would call a pretty phenomenal grown run, particularly this year, when you talk about lifting, you know, lifting that revenue up about $250,000 in the past year. I mean, just literally, I think you said you're in your eighth year in the business. You're going from 550 to 800 this year. So I guess if we do the math, you're going to grow more this year than you probably did in the first, like, three years combined, give or take a little. So what's, like, where does new business come for you? Where all this growth coming from?

Matthew: Yeah. I read a couple books, obviously. A classic 80/20 analysis, right? 80% of your results come from 20% of what you do. So really just doing an 80/20 analysis on every single thing, and journaling about that every day for a month straight led to several ah-ha moments. So the Northwestern culture, it's very high activity. For the first couple of years the goal is to get 50 new clients. I got, like, over 90. Like, 97, 98. I broke 100. My first three years, I basically had 300 clients. That just was not a sustainable model, and not the right people for full financial planing. Maybe just for insurance planning, that model works great. But the real shift has been, I mean, this year my goal was simply to get 15 new clients that look to us for every aspect of their financial plan, and they have over a million dollars with us.

That's the only goal. When you put your time and energy in that, you know, one client in that category can be more valuable than 30 clients that you're just selling a term insurance policy to, and then call them every year. So that's been the really big ah-ha, or shift in focus, is building out a concierge planning practice. Not just a typical, what I would call, like, Al Granum practice. I'm sure you're familiar with Al Granum's 10-3-1 system. So, you know, it took me...culturally, it's hard to shift away from that. There's very few people at Northwestern that think like...we did it successfully, and couldn't be more grateful for it.

Michael: Yeah. So for those who aren't familiar, say really fast...so Al Granum taught, I guess, sales and business development in the insurance world going back many decades ago, and kind of pioneered what was called the one card system of putting all the client's information on one card. So bear in mind, this is the days of essentially Rolodexes. We're going way before computers here, and you know, Al drove this system of bring everything down to these sets of one cards on rolodexes, and really was one of the first people to teach and emphasize the nature of business development, at the end of the day, is a numbers game.

So his big thing was this 10-3-1 ratio. Like, you're going to call in 10 people to get 3 meetings to get 1 client, and sort of build into that as assume 90%of the people you contact aren't going to do business with you. That's just normal. That's how it works. That's part of what's built into the 10-3-1. It was one of the lessons that was hammered into everybody, particularly on the insurance side of the business. That's, I think, where he got his momentum. So I know he was used...to taught at Northwestern Mutual. You know, I started at new England Life at the beginning of my career, and they taught 10-3-1, and we're still on the tail end of using the one card system.

Like, 10-3-1, 10-3-1, 10-3-1. It's a numbers game is what you learn when you're getting started, because that's just the reality of the environment, at that point.

Matthew: Yeah. I think the reality is, that's a good system for an average college kid graduating, building a business from scratch. Then your primary focus is activity. But the analogy I would use is, think about a horse race, you know? First place maybe wins over a million dollars if it's the big event, the Kentucky Derby, and then the second place, maybe a nose behind first place, but wins maybe a tenth of that, right? So there's not that big of a difference in those two horses, but one gets 10x the results than the second place.

I really try to focus...and I heard that analogy, I think in like a Brian Tracy CD in my first year, which is kind of like sales 101, but amazing thought process and context. So my takeaway is, how can I beat this 10-3-1 thing? I can't accept that...obviously I took a lot of rejection in my first three years with the amount of activity that I did, but how can I beat this ratio? So within my second year, the closing ratio is high 60%, which was kind of dumbfounding.

So then, but the reason for that, I wasn't doing everything by the system. I wasn't just going and talking about insurance. I was helping people with their 401ks, with their student loans, with their credit cards using credit...so you name it, I was doing it. When I was doing that, I didn't really have to ask for referrals. So all of our calls were starting to be inbound calls because of the value provided. Then the good thing was that we grew really quickly. The bad thing, though, there was no control over a niche market. Just anyone and everyone was, like, "Matt is great. his team's great. Go work with them."

So it led into a good problem, essentially, and here we are now.

Michael: I love that analogy of horse racing. Just the realities of, I think, really any competitive environment. Just being a nose ahead of the competition, sustaining at that level, is the difference between, you know, first place wins a million dollars, second place wins $100,000 in the horse race. It reminds me of the old movie "Glengarry Glen Ross", which is a movie about guys that are selling real estate, and there's a famous scene with Alec Baldwin that comes in as sales manager to bring in, like, the home office sales competition to get everybody all fired up. The prizes for the sales contest, you know, number one wins a Cadillac. This was set in the '80s. Like, Cadillac was just the premiere vehicle. So, like, first place is a Cadillac. Second place is a set of steak knives. Third place is, you're fired.

Just, granted, not the best for problematic sales incentives. Not a great movie for ethical selling. But it does kind of drive home just the nature of the unevenness of competition, and that just being slightly better than the competition on a sustained basis produces these extraordinarily compounding, outsized results.

Matthew: I need to watch that movie.

Michael: There's a famous clip for it. I'll make sure we put this in the show notes for anyone who wants to go back and see it. So this is episode 80. So if you go to kitces.com/80, we'll have the video to the famous "Glengarry Glen Ross" sales manager pitch with Alec Baldwin. It's a pretty famous and highly entertaining scene, even if it maybe slightly makes your skin crawl.

Matthew: Yeah. I'm going to say, thank God for the DOL rule. I think that's one of the best things that happened. Whether it sticks or not, just the industry is different now.

The Networks Matthew Tapped To Get Initial Traction [33:07]

Michael: Yeah. Amen. So talk to us a little bit about just this...you kind of threw in a comment thereof, you know, you were very activity focused in the first few years. Northwestern aims to have you try to get 60 clients in the first year. You were getting close to 100 and picked up 300 in the first three years. You know, for a lot of advisors I know who are getting started, like, they're hoping to get 100 clients in their first decade. You got it in your first 12 months.

So talk to us a little bit about what the heck you're doing, that you're getting 100 clients that you're engaging with in any way, shape or form first year out, and being an early 20 something, which, I remember when I started selling insurance as an early 20 something...like, anybody you sit across from, they're looking at you, like, "Aww, you're like my grandson." Which is not the best for building credibility while you're trying to get business done.

So what are you doing in your first year that you're driving this kind of client activity?

Matthew: If it would help, I could hive you a quick backstory -- I think that's important -- of how I got there that first year, and kind of what motivated me that first year versus...

Michael: Sure, sure.

Matthew: ...what motivates me now.

Michael: Absolutely.

Matthew: So I interned...I went to a small college right out side of Pittsburgh College, Geneva College. Less than, like, 2000 people there. So very few...it's a great college, but very few exposure to big companies. So, somehow, there was a connection with one of my favorite professors to Northwestern Mutual's. I interviewed between my junior and senior year, got an internship, did very well during the internship. You had to get from an insurance perspective, and you had to go obtain clients. I was one of the top interns in the country from that aspect, and then I sort of remember this day...one, I think it was someone from my church growing up I was, you know, sitting down at a restaurant with, and their comment, "Matt, you really have at get a real job once you graduate college."

Got up, and said, "Thanks for the attempt," and I left. So I was stuck as a college kid with, like, a bill. Like, $20. To me, that was everything I had in my wallet at that time. It's, like, oh my goodness. This career is horrible. I can't believe it. My parents were extremely supportive. I don't even think I told them that, because it would have created, like, problems in the church. My dad's actually a pastor.

So kept that to myself. I was, like, I can't not do this. This is horrible. I had similar experiences to, like, other people saying, like, "This is not a real career. Sales is the worst possible thing you could do." So I somehow got an interview at Deloitte during my senior year, and auditing, to be honest, is the only class I did not get an A in in college. In fact, I got a C. I barely got a C. I hated it so much.

So I get this interview at Deloitte, and what am I doing? It's auditing. So I ask my professors of ran opinion. I asked everyone except myself for what their opinion is. Should I get that Deloitte? It's so prestigious. "Yes, you should go do that. Yes, you should go do that." So I ended up right out of college going to Deloitte for a year. Could not have been more miserable, and was auditing in this...if you've ever been in a small room in accounts, I think room I was in was, like, West Virginia University. We're auditing there, and the energy in this room was just horrible.

I just remember calling my wife the first day on the job. I'm, like, "What did I get myself into?" But right before I started, I was engaged a couple months after college, during that summer, and we were scheduled to get married next February, right in the middle of busy season. Obviously I wanted to take them...honeymoon. So I asked, I told Deloitte, I was, like, "Hey, I need to schedule this week off. February 6th, I think, to whenever." We were headed to Jamaica.

They were, like, "Well, this is our busy season. Most people, in fact no one, has ever taken a vacation during this time period." I was, like, the one thing I took away from Northwestern in my internship was that independence was unbelievable. Some of the most successful people there, like, they left at 3:00. They had a good job. They were at every kid's game.

So I told them. I was, like, "Well, it's my honeymoon. OF course I'm going to take off." So that was just looked at, I was like despised by some of the partners and people there after I took off during honeymoon. Like, my wedding day, I actually had to work all the way to 4:00 that day. You know, at the wedding. Like, a half hour before it started.

But as I was out the door at Deloitte, I interviewed at a couple of other companies because I really didn't want to go back and sell insurance. I was very turned off by that. I didn't want to have to build it. Everything you mentioned at the beginning of this podcast, I didn't want to have to build it by myself. I didn't want to have to go call on friends and family. In fact, I had exhausted my network just during the internship. So on the way out, a partner says...because remember, I've only been there 11 months. So on the way out the door, a partner says, "Matt Blocki," obviously a couple of expletives there, "no one leaves Deloitte in a year. Who does that kid think he is? He's going to be flipping burgers for the rest of his life. Just wait."

So he didn't say that to me, obviously. But he said it to one of my friends who was part of his audit engagement. That got back to me and just fired me up. I'm, like, "Oh, I've got to prove everyone wrong." So I get to Northwestern. I have probably 100 people from Deloitte that I've met. Obviously I've kept them in an Excel spreadsheet. Like, names and numbers. I'm, like, "Oh, this is going to be awesome. Thank god I've got a good network now." So I start calling every single person at Deloitte, and I get no, no, no, no, ignore, ignore, ignore, ignore. It must have been like wildfire that spread. No one at Deloitte was going to work with me, and to this day, I have zero clients at Deloitte. To this day.

So people that first year, they think, "Oh, Matt, he went to Deloitte. He had this network. He just everyone at Deloitte." Well, that's just not true. I literally thought I was going to fail out of the business every day for the six months of my career. I don't know how I survived, going from just getting married to giving up a good salary first year out of college, and then going straight back. An eat what you kill kind of model.

So the first year, how I got those clients -- this was a long story, but hopefully a helpful one -- is I started calling all of my alumni from my college. A lot of engineers. A lot of people that worked in, you know, midlevel finance jobs. Just trying to do really good fact finding, and listen to people. Then the rest is history. You know, pretty good at generally asking for referrals. You know, who else do you think this would provide value to? People were open and receptive to that. But there was a lot of adversity to get through that first year. I would never want to go back.

In fact, I don't know if I would. If I knew what I had to do, I don't know if I would go and repeat it, even to get to the success I have today.

Michael: So what did those alumni calls look like? I'm just curious. I'm just trying to visualize this. Like, "Hey, Jim. We went to school together. We haven't seen you a few years. I'm working with Northwestern Mutual now, and I'd love to just talk to you about what you're doing with your finances."

Matthew: Yeah. It was more or less...there's something called red letter language. I never used it. I was, like, the worst employee ever. Or, not employee. Independent contractor, I guess, for Northwestern Mutual. It was just very transparent. I'd tell people exactly why I was calling. "Running a financial planning practice now...would love to just sit down with you and see if there's any value I can provide on top of what you're current doing. I'm sure you've got a lot of this stuff already handled. So kind of took the objection right off the table. But are you open for a free second opinion?" It was hard for people to turn that down.

Michael: So that was how you built? Just going back to the alumni network and offering second opinions.

Matthew: Alumni network is who I called. Second opinions, and then within a couple weeks I was out of that, because I just had to get referred into different networks. So the first year or two is tons of engineers, tons of married couples, young married couples, just doing very basic planning. The getting term life insurance set up, to doing a 529 plan for their kids, to getting their debt consolidated in the correct manager, and then starting, like, Roth IRAs. That was, like, a...I did probably, like, 90 out of 100 plans were just like what I just described my first year.

How Matthew Uses LinkedIn To Reach Prospects [41:26]

Michael: So where are you finding all of these people, though? I know for so many advisers that get started, if they don't have a strong and deep natural network, like, they just literally don't know who to call and who to call on, and how to get them to take your call, or email or knock, or whatever it is.

Matthew: Yeah. So LinkedIn, I did pay for the advanced LinkedIn. You can just search Geneva alumni, and I'd go through every company. We would do tons of research before every meeting. So, you know, let's say I was meeting with you and you were a year or two ahead of Geneva, we'd meet. I'd try to provide as much value as possible, ask the right questions. I'd come back with a free financial plan, have no idea if you'd actually do business for me or not, and at the end of that I'd ask, you know, did you find value in this? Hopefully you said yes. 99% of the time there is a yes.

I'd say, "Well, I think there's an epidemic for good planning out there. I'd really be excited to meet any friends or family or colleagues that you have that you think would want to have a similar conversation," and then wait to see what they see. Typically, a couple referrals would come. Now, by the way, I'm like the right prospector ever. I don't even ask for referrals.

But after they were done giving a couple referrals, typically I would also have, like, a list from LinkedIn. So we would have connected, and there would be 10 to 20 -- depending on how aggressive I felt during the day -- of names of people that I knew they were connected to, and I'd just simply ask them permission. We did some research on your LinkedIn. A lot of people say, "Oh, we have a marketing person that did this."

I would just say, "No, I looked on your LinkedIn. Here's some people that kind of fit the category of the people that we love to work with. You feel comfortable..."

Michael: So you'd actually look at them on LinkedIn, look at their LinkedIn connections, and ask pretty directly, like, "Hey, these five people in your network you're connected to on LinkedIn. I think I might be able to help them. Can you give me an introduction, or can I contact them and use your name?"

Matthew: That's it. Or would you be willing to shoot an email introduction? I hate being on the phone. It was brutal. Obviously, try to get an email introduction. Say, "Would you mind providing an email introduction I can send you a blurb of here's Matt, here's what he does, etc." I found that was the most successful way to do it.

But, yeah. My back was against the wall, right? I thought I just left a salary job. I had what I thought was going to be guaranteed success completely blow up in my face in the Deloitte thing, and I had to figure it out really quickly unless I wanted to fail out and have to go back to an accounting job. The big motivation, really, with the first year, because I did want to quit literally several of times a day for the entire first six months. I'm not making that up. Some days I did quit, and then--

Michael: But it's brutal, the number of nos you got to take.

Matthew: But it builds adversity, which I think is, you know, is part of the journey of life. I just had to figure out a way to make it work. Obviously there was some great mentoring. I remember one of the most helpful people, Ryan McKenna, who is managing director now. He was kind of a mentor at the time. He was there every day. I was probably on the phone with him every single day, and he was someone to listen to, someone that would, you know, "You got this. You got this, Blocki. Let's go get it," and give me suggestions.

So I think that mentorship is extremely important. I will say that's something that Northwestern does. They do build a great culture of mentorship, especially those first couple of years, because I just couldn't have done it. I couldn't have made it past my first month if I didn't have that strong mentorship.

Michael: So how did you look at goals in what you were trying to do in the early years? I mean, did you just hear, hey, everybody else gets 60 clients in their first year, and dammit, I'm going to do 100 in the first year and prove that old Deloitte guy wrong, and that's what you were shooting for? Like, how did you..?

Matthew: Yeah. My first year was an immature...I was, what, 22 at the time. Very immature. Exactly what you said. Kind of lit a fire under my butt what that guy said about me flipping burgers. I just didn't want to fail. I didn't want to be proven wrong, and there was obviously a financially driven, you know...I think Deloitte salary started out at, like, $45,000. It took about, in Pittsburgh, it took over seven years to break a six figure salary. So my goal was to do that, was to have a is figure income in three years.

I ended up doing it in year one, but that was, sadly, the motivation. I just wanted to prove someone else wrong. So after that first year, kind of tabled back, and I've slowly matured. Like, especially in the last three or four years. Money is not an issue. I live a very, very simply lifestyle. We're all about growth, and I think the number one thing that motivates me is just seeing the impact we can have on client's lives, and how we can really do a 180 when they weren't on track for anything, and now we have them saving more than they ever have in their life. They're able to live a present life again. They're not stressed on a month to month basis.

I just can't describe the feeling after you help someone so much. That's really the motivating factor now, but that's the journey that I've had to come through to get there.

Michael: So what was it like for you? Like, calling on alumni and folks you worked with in this insurance sales role? Like, were you just fine as a sales person reaching out? Did it feel icky that you didn't like sales, but here you were, so you had to push through because we just had to prove that old dude at Deloitte wrong? Like, you..?

Matthew: Yeah. The first year I felt like crap, right? Tons of rejection, obviously. People see the success of 200 people, they don't hear about the 200 people that said no that first year, right? Or didn't call me back.

So it was completely a belief system, right? I think when people say no, they're not saying no to you. They're saying no to, they don't want to talk about financial planning. The need that we've uncovered for protect their family, or for saving for the future, they want to live in the now, now, now. So it took some significant coaching, but now my belief system, I'd say, is so strong that a no just doesn't even effect me. It's part of the business. It's expected, and I'm grateful or it, to be honest. If everyone said yes, I think every single person in this world would want to be a financial planner. It's just a phenomenal career path, and if it was easy, it would be...everyone would do it, and if everyone was doing it, they wouldn't have to pay us anything. They would pay us like a social worker, like my wife, and then I would still do it because I like it so much, but I think it's fun to have the revenue, be able to pay your partners, your employee and build an awesome team and a big vision.

That's just kind of a longwinded answer, but it doesn't effect me now. It did back then.

Michael: So were there, like, what did you do to get through it? Like, certain routines, certain things you did? Just sheer stubbornness, and a mentor that just kept saying, "You can do it," while you ground through? Like, what would your advice me to someone who's stuck in this similar situation right now. Like, what do they nee dot be doing to get themselves through it the way you got yourself through it.

Matthew: I think doing an 80/20 analysis right from the get-go. What is the 20% I'm doing that's working, and what is the 80% I'm doing that I'm just completely wasting my time? So with this client builder that we had to fill out, it was all focus on activity. There was a million things that you could focus on, such as, they wanted you to get 80 referrals a month. They wanted you to keep 60 appointments a month. They wanted you to take 20 fact finders, which is just described as a new approach to a new person, just getting their information, the financial goals. So there's literally a million things you can track.

So my only focus was getting the 20 fact finders. I could not control whether someone said yes or no. So this day, if you take a perfect fact finder and you think, "This person's going to be an awesome client," they may be no. The person that you thought went horribly may be your best client in five years. You just never know. So a pure focus on not just activity, but the right kind of activity, I think, is so huge.

I was never worried about one individual case. I think the two primary focuses I had was that first year, and really the first three years, as crazy as this sounds. Just taking 20 fact finders a month, at a minimum, which I did, and always being 25 appointments ahead on the calendar. So when I left the office on Friday, the next week had to have 25 appointments booked. If there wasn't, I wouldn't leave Friday, or I would work Saturday morning until there was 25 appointments ahead. I would call people on Saturday if I had to. So there wasn't any going back.

Michael: Where again are you finding people to set 25 appointments with? Like, I don't know, maybe my social life is relatively boring. But if I set 25 appointments a week with people I know, I would done in a few wekes.

Matthew: Yeah, so--

Michael: And there's, like, 49 weeks left in the year.

Matthew: Thank god not all those appointments kept, right? By the way, my practice today is completely different than what we're talking about in these first couple years. Just to be clear.

Why You Should Try At Least Three Times Before Giving Up On A Prospect [50:41]

Michael: Yeah, yeah. I want to come back in a few minutes to, like, how different is it now? What does it look like? But this end is, like, I mean, this is where we all start when you start in the, like, getting the clients grind. For everybody that actually starts with getting clients, this is the grind. So where are you finding 25 plus people a week to contact just to have a shot at getting 25 appointments set?

Matthew: Yeah. That was always who you want to get 80 referrals, right? I was never able to get 80 referrals, though. I found a lot of people reporting they were getting 80 referrals a month would end up failing out of the business, because only, like, 1 out of 10 people at Northwestern ended up staying past the first year. So it was all feeder list. I mean, I did a ton of cold calling as well, to be honest.

I didn't focus on how many calls, how many referrals I took. None of that was a focus. If I focused on that, it would just be depressing, because I wasn't that skilled, right? I mean, listen, at a certain point, these people knew my number. I wish I had a financial advisory, like, 20 years ago. We didn't have caller ID. So what I had to do -- this is embarrassing -- I had my cell phone, and then I Figured out, after I called people a couple of times, they just stopped answering my calls. So I actually got another cell phone, and I had to flip back and forth between the two.

Michael: So the number of inbound calls they saw was cut in half?

Matthew: It was unnecessary, no. But for mentally, it just, it allowed me to get a lot of clients I never would have gotten, because I would have talked myself out of it. "No, I've called that person twice. I don't want to bother them again. They haven't returned my call." But this is a new number. Boom.

For some reason it was just, mentally, I was willing to call them a third time. That's what it took for them to become a client.

Michael: Because what magically changed on the third call...I mean, I imagine this person is, like, "Aren't you the same Matt Blocki that called me from a different number last week?" What suddenly puts someone over the third time you call them after the first two?

Matthew: You know, there's been books that have been written of something magic about three tries, or three objections. I think most...if you just read a Brian Tracy, he says, like, seven times. On a typical...when you're approaching someone to do business, the majority of the population is going to say no the first try. The majority of the population is going to say no the second try. But then the third try, there is something statistically that is magical about that third try. So you can't give up after the first two tries.

My belief system was so strong, right? I mean, there's never been someone I've been able to sit down with and not been able to help in some fashion. So my belief system wasn't, I'm annoying person, I'm going to have a bad reputation...no, I was referred to this person. They're probably embarrassed they haven't called me back because their friend spoke highly of me. They should at least accept my call. I'm just there to help them, right?

So with that kind of belief system, you're unshakable. There's no really doing wrong, and the confidence that comes across on the phone, no one is ever going to call you out if you're the more confident person.

Michael: I think there's something really powerful there around just, A, the impact of being confident when you contact them, because people notice pretty quickly when you're not, and just that idea for all of us that have reached out to some potential person about hopefully doing business, and got no response, that if you haven't...if you tried and it didn't work, and you haven't done a minimum of two follow-up attempts, you haven't tried hard enough yet. You haven't even given yourself enough of a chance yet, because sometimes it just takes three times. They're busy and life's going on, and they were distracted by something else going on that day when your inquiry came in.

It was nothing against you. You just have to try three times before you give up on a prospect.

Matthew: My best clients today that have, you know, three or four million dollars with us, they expect that form us, right? They're busy, and if I called them for a review and they never call me back, and then suddenly six months go by, I mean, that's, the liability...or, not the liability. The client is still looking at us, like, "No, this is still your responsibility. We hired you because of your professional persistence for us to reach our goals. We don't like dealing with this stuff."

So even our clients today, when we're scheduling meetings, we don't get. We have tremendous relationships with people, and some people, it's obviously in text or in email, and it's scheduled like that. But some of our busiest clients, I mean, they expect us to reach out several times. They say, "Thank you so much for your team being so persistent. We never get anything done unless we're sitting down in the same room with you."

So I think there's nothing bad that comes from being professionally persistent. Obviously, if we're calling 100 times and we're just trying to force, you know, a sale, it's never the intention...then there's lots of bad things. But I think the intention ash to be right, the confidence has to be there, and you have to be professionally persistent.

Michael: I love that label, that you have to be professionally persistent, right? Like,not annoyingly persistent. That won't work. But professionally persistent, because particularly as you start moving up to folks with a little bit more income and affluence, like, they just may be busy doing a lot of things in their business and professional eyes. Like, you want to call in doctors? Doctors are busy, so you may have to persist. Just do it professionally so they still respect you.

Matthew: The annoying persistence, I went down that route, and I can say, in my first year or two, when I started getting into the doctor market, that actually worked as well. One of my best clients today, she's a OBGYN, and she just wrote me this, like, three page thank you note, and said, "I never would have..." She went from having, like, $400,000 in school loans to having them paid off our years after residency.

She was going to buy this huge house, and I said, "No. I think you're going to feel much, much better if you..." So she sent this, like, three page thank you note. If I had never...I mean, her I probably called, like, 15 times. I really wanted to get into the market. She was so thankful. She's, like, "I cannot believe how professional..." She labeled me as professionally persistent, even after 15 times. I would call that annoyingly persistent, but this, again, was back in the desperation days, the start of year two, where I had made it, but now I nee dot get into a better market quick, or else I'm not going to be able to hire staff, I'm not going to be able to, you know, build the practice I want. So the doctor market.

So there was some of the annoying persistence in there in the early days, which worked out well. It really did.

Michael: Just don't make you feel awkward and self conscious when you did it, and you just said, "I got to do it anyways." Or does that stuff not phase you much.

Matthew: It didn't at the time, no. I mean, thinking about it, I think it should have. So maybe there's something wrong with me. But I guess when a physician...if you're an American physician, there's a 95% chance that you have school loans. There is so much bad advice out there. I truly believe no one knows the loans better than I do. I have just spent hundreds upon hundreds of hours on the phone with these people, and they have to meet me. They have to meet me, and there's no excuse not to.

I think that, again, to back to the belief system, it takes three calls help that person. I think they're really going to be screwed in their financial decision, in their financial life, if they don't. So, yeah. It didn't phase me, to be honest.

Michael: Right. So bring us forward, then, a little bit out today. Like, what is...you said you've gone from the first few years, you were doing this hundred clients a year with just anyone you can do business with. Now you're shooting for 15 clients all year, but with million dollar asset minimums. So, like, what does the practice look like now? I guess, what changed for you over the past five or six years about how you go about trying to grow the business and get clients?

Matthew: Yeah. So the last three years, I've hired a coach. One was a pure, what I refer to as a head coach. Just really helped build out the vision really big. Really helped with the loony beliefs that would pop up on a day by day basis, and really just helped me figure out, you know, what am I building, why am I building it, what's your purpose, all those kind of psychological things. That was extremely helpful, and then since we've gone to more of a technical practice management coach that's been just as helpful, just in a completely different way.

You know, busy to be busy, I think, is the most severe form of laziness. I got that quote from a book. Being busy just to be busy is a severe form of laziness. So there are a lot of people that need our help. There's a lot of people that we can have high impact on. I found that there's certain segments that we can provide about 10 times the amount of help than we can with certain segments, and especially being at Northwestern Mutual with a product suite, we really do well with the physicians and we really do well with retirees. Permanent life insurance policy for someone making a household income of $150,000 to $200,000 just doesn't make sense. They haven't even maxed out their 401ks. They haven't maxed out their Roth IRAs.

So we really just...instead of someone thinking for me, and not saying that was bad, because I was the first couple of years, and Matt, do the activity, do the activity -- I've really taken a step back and thought to think for myself, and you know, one of my biggest fears is just not reaching the potential God has given me. So those two markets, I found, I think, are how I'm going to bring my potential. I'm going to provide the most value to people. So that's just the focus. I'm not saying we're going to do more...we're going to do more than 15 clients, but that's the goal. That's how we're going to define success this year if we do those 15 clients.

Michael: Can I ask, who are the coaches that you work with, or at least if you want to recommend them because you were happy with the results? So who did you work with that you'd recommend to others?

Matthew: So now it's still the Carson Group. They're great.

Michael: So that's the advisor program?

Matthew: I think it's called Carson Group Coaching Now, but it used to be called Peak Advisory Alliance. But, yeah. Previously, her name was Alissa Gauger. She's her own coach. It's called unleashyourpractice.com, I believe. I believe, as weird as it sounds, she only coaches Northwestern reps.

Which I guess you could say, people could say, "She's missing out on the market." Well, I can tell you, she's found a niche, or a 'niche', or however you pronounce it, because there's a ton of people that use her and a ton of people that love her. You know, you could reach out to her. But honestly, I think from a positivity work life balance, enjoying the process as we grow, I credit a lot of that to her.

The Non-Traditional Advice Matthew Gives To Young Doctors [1:01:19]

Michael: Excellent. All right. I'll make sure we include as well, both Carson Group Coaching and Alissa Gauger. So, again, this is episode 80. So if you go to kitces.com/80 and go down to the resources mentioned in this podcast area, we'll have some notes for it as well.

So this evolution of working with physicians, like, can you talk to us about how that came about, and what you do that makes you a, quote, "niche" for physicians versus any other advisors that says, like, "Yeah, I work with doctors too." What makes you special?

Matthew: Yeah. So how we really broke into this market is we started doing seminars for residency groups. So a lot of advisors say, "I don't want to go talk to residents. They're buried in debt, they make no money. There's no revenue right now," and that is 100% true. I lose so much money working with the residents. It's not even funny -- in the short term. In the long term, it's a very mutually beneficial relationship. Very high impact.

So we go in there. Physicians are very academic-focused. So we go in there with an educational mindset, and we're going to educate the physicians on what they should be doing, what their...negotiating contracts, and how they're paid. I mean, physicians are...talk about an eat what you kill model. I mean, most physicians right now are on an eat what you kill model, and there's this thing called RVUs. Just understanding how those work, what those ratios are, how to negotiate those in your contract, can be the difference of a couple hundred thousand.

Michael: A couple hundred thousand of income to them. Just..?

Matthew: Oh, my goodness. I just helped an orthopedic surgeon in a different state negotiate a contract, and his base salary is going to be, like, 400 with, let's say -- I'm just making these numbers up for the sake of the podcast -- I think it was like 6000 of RVUs. We looked at national data and said, "Well, for this amount of income, you should only have to do 5500 RVUs, and you should be bonused on anything above the 5500 at $70 per RVU."

So in that example, that was just a simple one that's 500 times 70, the difference. That's a $35,000 pay raise this first year just from that. Then multiply that over the five year contract. It's pretty big. But physicians just don't know how to negative, or how to ask, or how that works. So that's something that they're drawn to work with, and then I think that's number two, actually.

Number one is their student loans. So currently, knock on wood, there's a program called the 10 Year Public Student Loan Forgiveness Program that, if you work at a non for profit, you have direct loans and you make a qualifying type of repayment for 10 years, your loans get forgiven at the end of the 10 years, and they actually get forgiven tax free. A lot of forgiveness programs actually tax you on the balance, making it not beneficial when you calculate the present value of doing that versus refinancing. The 10 year forgiveness is completely tax free at the end, so we educate clients on, well, when you finish residency or fellowship, you're going to get offers at a private practice or a hospital. If you go to a private practice, you are giving up your own forgiveness. You know, you're maybe three to six years on this and you go do another three years or four years,in some cases...you're going to have your loans completely forgiven.

So what's the break even point for that? What do you have to gross before taxes to get to that difference of what your loan payment would be if you refinanced and paid it off in the same time period? Then we use that analysis and bring it to both employers and say, "Listen, here's where I"ma t. I've got a ton of loans. It's stressing me out. If you're a private practice, we're saying, can you raise the salary to meet what I'm getting offered at the not for profit so my loans are in the same spot four or five years from now?"

So really just high value stuff. Once they...along with the loan planning, I'm not going to get into politics right now, but obviously the loan program has been talked about, even in the Obama administration, of getting rid of the program or capping it at about $57,000, and now under the Trump administration they're talking about getting rid of it altogether. So there is a big fear of what happens if it goes away, and our research shows that participants that have filled out the right paperwork would be grandfathered into the program.

But regardless, what's a better motivation to start saving money than backing up your loans? So we say, well, if you overpay your loans, you're just wasting money, if you end up do getting forgiveness, pay the payments that they're asking, pay the minimum, and every dollar you have in your budget, let's put into a mutual fund account. Let's shoot for the same rate of return to allocate. Get 6% to 7%, and if your loans get forgiven, you have a couple hundred thousand dollars that you can use for college or retirement, or for a down payment on a house. If your loans don't get forgiven, you don't have to lose sleep at night, because we're just going to take this money and wipe out the remaining balance at the end, anyways.

So those are some of the strategies and tactics to help a physician maximize their financial plan but there's, like, if you want me to, I can go through everything. But there's, like, eight other things.

Why It Is So Important To Do More Than What's Considered Traditional Financial Planning [1:06:11]

Michael: I guess I'm just curious. The mere fact that there's eight other things, can you at least just share some more of them, of other things that you're doing? I mean, I'm struck by this. You know, helping, well, clients in general, but young doctors with student loans, helping them negotiate employment contracts. Like, these are basically not things we do as financial advisors. Not that they're financial, but they're things we traditionally don't get paid for, so they just usually traditionally were things we don't do.

But you're doing them for your physician clients. So I guess, A, I am curious to hear what other things you're doing for your clients in this category, and then secondly, how you think about it or justify it to yourself of all this work you're doing for stuff we traditionally don't get paid for.

Matthew: Yeah. So 1 out of 10 people we're going to help, you know, they have an uncle that's in the insurance business or the wealth management business, or they're do it yourselfers. You know, they just ask us for free advice. There are people out there in any profession that would do that. But, you know, 9 out of 10 you sit down with people, and...I'm a fee based planner. I do do fee based planning. I find residents who can afford fee based planning. I explain that to them and say, "Listen, I'm going to invest the time in you. We're going to grow together. I pay assets flat fee, I'll grow as you grow. Going to invest the time up front in you and create the blueprint, and really get your life in the right trajectory for the future."

So a fee based plan is not going to help my business. I mean, honestly, if I were to charge $2000 or $3000, it's not 50 plans this year. An extra $100,000 I don't need. I think of it actually potentially getting in the way of accelerating all of the residents, because a lot of people who wouldn't afford that, or would say, "No, I'm not going to do this." So we took the risk. We take the time upfront and justify it in the fact that we're going to create a long term relationship, and be the quarterback of their financial plan. I mean, that's our goal, that's our why, to be the quarterback, and CPA is the attorneys...they come to us with permission.

I don't ever want to be in the position where I'm seen as a financial advisor or as an insurance guy, and the CPAs tell me what to do. I won't work with a client like that. Either we're the quarterback or we're not. So to create that coveted spot in the financial life of a client, I think it's easy to do that from day one, if you're there along the way, when they know you're not getting paid and providing all that value. We've created some lifetime relationships with that. So it maybe the worst, like, revenue model ever. I can tell you it's the best relationship and long term model I've come up with.

Michael: So out of curiosity, do you ever think about trying to generate some revenue out of it? Do you even have the option under the Northwestern umbrella that, like, you could charge them $500 for a quick start plan to help them review their employment contracts, or $1000 for a student loan analysis and review of their hundreds of thousands of student loan debt, or you can still give advice that gives them an ROI on the $500 or $1000 they spend on your planning fee? Do you think about that stuff?

Matthew: Yeah. Northwestern doesn't like...yeah, I do. I have all the time. We go back and forth on it. I found it hasn't been necessary yet, because when we do this most of them are becoming clients, and then we...you know, they're buying disability, they're buying term life through us, they're buying...and right there it's usually $1000 or $2000 of revenue right there. That's note even breaking even for us, with all the staff I have. I mean, we're at a high number from an overhead perspective. But, really, we're just looking to engage in a wealth management relationship with them, and have them invest all their money outside their 401(k) with us.

That eventually becomes very mutually beneficial or the client and for us. I have toyed around with that. Northwestern doesn't like us doing the contract review or the loans, so they definitely wouldn't let us charge a fee for that specific reason. We would need to provide, charge a fee, for the financial plan, and then just provide that on a case by case basis, from an advising standpoint. Not actually doing the paperwork on the contracts or the loans, etc.

Michael: Okay. Well, I guess it just kind of gets right back to the core point. Like, these are not traditionally areas advisors work in and get paid on, which I guess also means not traditionally the area that Northwestern compliance folks are used to doing compliance reviews, to figure out whether you're giving new advice that's going to get them in trouble.

Matthew: Yeah. There's a big back and forth. Errors and omissions doesn't cover this. Actually, I hired a second opinion to see. It actually was covered. Federal ones are covered. Private loans are not. So I was allowed to do it. So it's kind of been a gray area, to be honest. The whole student loan advising.

They're blessing that I do it because of the success, but they don't want me charging a specific fee for it or actually doing the paperwork. It's more from an advisement perspective of, what payment should you be on, how's analysis going to look, hypothetically...there's a huge decision on whether clients file taxes together or separately to keep payments lower or higher. That can make a lot of people's head's spin. I've just been around it so much that you can come at me with an orthopedic surgeon that makes $400, and an internal medicine physician makes $200, and they're married, exactly what they should do and why, and what's going to be more beneficial -- the taxes they save, or the loan payments.

It is a very complicated thing. So I can see why Northwestern doesn't want to open that up to the whole field, and say...because there's high stakes. It's easy to mess up.

Michael: So from that end, like, how did you build your own expertise to do this? Like, if you decided, hey, I'm doing stuff with these physicians. They have some dollars. I think I like working with them. I want to go deeper with them. Like, where are you learning about doctor employment contracts, and how RVU negotiations work, and the rules for PSLF when you want your student loan forgiveness?

Like, where are you getting all the stuff you need to know to actually be able to give advice in these areas?

Matthew: Yea. The human brain is so crazy. I mean, if you would have looked at my Deloitte says, I was the worst employee ever. I didn't know anything about auditing. I couldn't care less. Oh my goodness. I can't believe I...I mean, obviously people and clients love me. I was, like, "How did they not fire me?" I was, like, the worst. Right? They had to show me how to do things, like, 10 times over.

So what I found in the financial planning, actually, is that I'm able to learn stuff and engage so quickly because it interests me so much, and I always joke that my brother, who is like a PhD at Carnegie Mellon, post doc, perfect top of his class, perfect grades, he kind of stole the smart genes from my family. I just kind of fell out after him.

But -- and that is the reality-- but if anyone finds something they're passionate about, I think it's really, really easy to learn. So I wasn't originally passionate about student loans or passionate about contract, but I really like good people. So what I found when sitting down with physicians is that I was asking these questions, and Northwestern trained you to ask good questions, but then they'd say, "Here's my life dreams," and you'd come back and you'd show them an insurance illustration.

Like, how is that helping with their house they want to buy next year? So I took it upon myself to do the entire plan, and physicians. We were stressed out of our minds. Like, I can't even sleep at night, because I have $500,000 of school loans. So I just married that. You know, I want to take all that stress away from my clients, so I had to learn it. So that first year, end of 2013, beginning of 2013, I offered to get on the phone with probably 100 different residents and figure out how to do their loans.

During that process, I find you learn when the fire's right under you...is you can learn stuff 100 times quicker than actually going to read it, where you have to learn by case, actual cases going through it, and these residents new I was just new. They said, "I want to really help you," and they were so grateful for it. Then after seeing so many examples through, and then I did read a bunch, that I just learned it from scratch, to be honest.

Michael: Just dive in. Doing nothing like experiential learning to go deep.

Matthew: That's it.

Key Things You Can Do To Differentiate Yourself [1:14:21]

Michael: So how does that get reflected today when you're out, like, doing business development and trying to differentiate yourself in a crowded space? Like, how are you talking about getting referrals and differentiating, and getting clients onboard now?

Matthew: For physicians, I mean, it's all the same stuff. Luckily we have really good word of mouth, not only Pittsburgh, but nationally. So these seminars are really good. A lot of times we'll have inbound calls. "You know, Matt, we've heard great things from X, Y, Z over here. We'd love to work from you. Are you still accepting new clients?"

That's obviously why my colleague is the lead adviser on our team. That's his primary focus. That's really gaining headway now. But, yeah. Just helping people with what they're stressed out about, I think, is our biggest differentiator. We're not going in and leading with, we're trying to sell disability insurance, we're trying to set up an investment account. We're really carrying them out and giving them an educational approach to guidance.

Michael: Well, and that, to me, is always one of the powerful things of just, you know, you said it so well. It's just about helping people with what they're actually stressed out about, which, you know, I guess a lot of us in the business in our traditional products, like, I wish more under-insured people were up at 3:00 in the morning worrying about their lack of life and disability insurance. But generally not the case, unless they are unfortunately already sick or ill. Then they're not going to be able to get the insurance.

Like, healthy people don't tend to be up at night worrying about disability and life insurance. Frankly, most healthy people don't tend to be up at night worrying, like, I'm concerned I might have a 7% overweight to large cap, and maybe I need to rebalance my portfolio. Like, these things that we do...and it's not that they're not valuable and important in what we do. But these don't keep people up at night. Nor does, like, I don't know anybody that ever wakes up at cold sweat at 3:00 a.m. It's, like, I have to get a financial plan. I'm just going to go online right now at 3:00 in the morning and find someone who can help me create a financial plan.

Like, it's just not the stuff that people actually stresses out about. I'm in student loan debt up to my eyeballs? Like, that stresses people out. They're up on that at 3:00 in the morning trying to figure out what the heck they're going to do.

Matthew: There's pushback, obviously. When I first started doing this -- and now there's no pushback because of the success that's happened -- but there's pushback where, "You're not focusing on the right stuff. You're going to confuse people if you go over too information..." But what I found happened is, actually, if you're really interested in engaging with people and helping them with their problems they have that they clearly told you, and not ignoring them, and making that the central focus of the financial plan, and then you're extremely transparent about all your...you know how your fee structure works.

If those two things are present, the third thing, I guess, take an educational approach...you're going to get to the same point on all those other subjects. The life, the disability, the wealth management, the maxing out Roths and 401ks. All that stuff is going to happen, but instead of it being an hour conversation, I find sometimes it's the 30 second conversation, and say, "Matt, just tell us what we need to do." You need two million dollars of term life insurance. Okay, let's do it. Here's a company to do disability with. That's great.

I'll pull you out and illustration, and say, "I don't need to see that. Just tell me what to do. I trust you." That would never happen, though, if I led with that and said, "You're really uninsured. We really need to talk about this." Then they're going to view you as a salesman, and not the quarterback of their plan, not the trusted advisor. So I think the approach is so key that I couldn't be more convicted about that today.

Michael: It's funny, I remember I think, like, relatively early on in my business, MFS, mutual fund company MFS, was really actively promoting this tool I think they literally just called What Keeps You Up At Night. It was this questionnaire tool process that you would go through with clients to literally just talk to them, like, what keeps you up at night? What actually is worrying you and keeping you up at night so you can start facilitating having some of these conversations?

While being young and early in the business at the time, I remember looking at and just sort of thinking, like, "Oh, god, that's a whole bunch of stuff that I don't really get paid to do. Like, can we talk about the stuff that I nee dot do to qualify my contract," because, you know, that was the reality when you're in your first year or two in the business. You know, now that I've done planning for a whole lot longer and work with clients and whole lot longer, it's really drove home, that's actually the only thing that really matters. All the other stuff that you do, like, yeah. Clients need some of the other things as well, and eventually I hope to get them there and get all the dots, all the boxes checked and the Is dotted and the Ts crossed.

But you have to start with what clients actually care about and are up at night about. Often, it's not the things that we are offering. Not that they don't need what we're offering. But if you start with what you're offering instead of what they actually care about and keep them up at night on, you know, you have to start with what matters to them if you actually want to connect and engage with them.

Matthew: I'm familiar with that brochure. It's a great brochure.

Michael: So I'm curious from the broader perspective now, you know, Northwestern is a company that's taken a lot of flack from the industry over time. You know, I don't have to tell you there are some Northwestern agents who do not take the highroad that you do around client-centric planning. To be fair, that's true at a lot of companies. But the sheer size of Northwestern means they tend to get more visible by the volume alone.

So, like, how do you look at it or think about it, as someone who has become increasingly planing centric at a company that's still, at the end of the day, like, they're an insurance manufacturer. That's their primary business line. They do some of this other stuff as well, but that's the root, and where they're built. Is that just a comfortable environment because that's what you've grown to? Do you view it as, no, I still like the strength of having Northwestern's resources behind me, and I just deal with the fact that there's some other agents at my firm who happen to be knuckleheads? Like, how do you think about the large firm environment?

Matthew: That's saying it politely. The knucklehead is saying it politely. Yeah. To be, you know, completely transparent, it is a struggle, right? There's blogs especially that are focused on physicians that are not happy with Northwestern Mutual, and certain practices. So it's, at certain points, it's been mentally a struggle to say, "Well, could I build this twice as quick if I was my own RIA?"

Maybe the answer is yes. I don't know. But my thought process right now is it's not about money. I think I could do much better if I was getting a 100% payout versus a 73% payout. I think the Dalio said it really good in his book, "Principles". He found out that the most meaningful life was, if you have meaningful relationships with good people, and you do meaningful work. I'm able to do meaningful work here, and I also have very meaningful relationships with certain people. So I can't say there haven't been struggles. I can also say that there's been a tremendous support system. I don't know if I could have built from scratch at other firms.

You know, in other firms you start as a junior advisor, and if you do it that way you end up in a good spot, but you don't have the equity, you don't have the control, you don't have the autonomy of building the practice exactly like you want. So that's something...I think the autonomy, and being able to do exactly what I do is important. I think the other advantage here is the disadvantage that you just mentioned, which is a true disadvantage -- there is no question -- is also an advantage to and for me. So, for example, there's a lot of older reps that are insurance agents. They're not credentialed. They're tremendous guys. But they just grew up in a system where it was insurance only.

But they have, surprisingly enough, some of their clients view them as the most trusted part of their team, because the system is you go meet with them every six months, whether there's a sale or not. You develop the relationship. So these relationships I have cultivated with some of the really good people here, they're now taking me on to some of these top clients that their insurance needs have been solved for 10 years, right, but they've still been meeting them, and now we're talking about taking over the investments. So we've been able to do that at a very high ratio, meet really, really good people.

So I would say that's the main advantage that I can think of, is you know, partner me with some of the other reps that have traditionally just done insurance. Now they're asking me to come and help their clients out from the full financial planning spectrum, which is pretty cool.

Michael: So one of the virtues of being the more comprehensive planner in a firm where not everyone is comprehensive is, essentially, you've got a bunch of internal referral opportunities now from other agents of the company who just don't want to go do what you're doing, but you want them to do what you're doing for their clients in a joint capacity.

Matthew: Exactly, exactly.

Michael: So, you know, I've got to ask, because it just is so out there in the conversation these days...you know, the world of DOL fiduciary and conflicts of interest. You know, you had commented earlier that you thought DOL fiduciary was a positive step forward. Much of the industry, in particularly much of the larger firms, have not. You know, the major terms companies were all working together with NAFA in lawsuits to try to stop DOL fiduciary.

So as someone who has built a planning centric firm within an insurance agency, like, do you feel like there are a lot of conflicts to be a financial planner in that environment, or does it just not impact you because you're doing enough business, they leave you alone, or--

Matthew: All the above. Again, there's no route to go other than transparency. Hopefully this impacts people in a positive light. But, you know, I feel like I think the DOL is the best thing that ever happened to the industry. The activity I've done, I've seen a lot of bad planning out there. I've seen a lot of things I view should be lawsuits. So I think the, getting rid of the commission based on anything investment related is huge. I couldn't be a bigger advocate for that. I pray that happens for the insurance side as well, because right now I have to explain to clients, any insurance planning were paid in commission by the company that we go through, whether it's Northwestern or not.

We do enough insurance business, because obviously physicians need a lot of insurance, that hitting minimums, I mean, we're 10 times over those. Right? So we never feel like we have to sell something. But there's always going to be enough business on the table.

I can tell you, from a grid perspective of how you're building your investment grid, that is now tied to the insurance. Some people at Northwestern are a big fan of that. I personally am not a big fan of that. It's positively effecting me right now.

Michael: So, functionally, the pay, like your payout rate on your investment side, is partially tied to how much insurance production you're also doing?

Matthew: Exactly, exactly.

Michael: So in a world that you happen to have a niche of young physicians who both start accumulating money and actually need at least some term life and some disability, and may actually find it appealing to add in some whole life as well, because they really do have the disposable dollars to add to that with half a million plus of income, like, that happens to fit for you. But I guess may be a problem if you end up being even more financial planning and investment based, and less insurance based, at some point down the road.

Matthew: Exactly right. Yeah, exactly right. So I think the...I haven't thought it through 100% yet. That concept makes me feel a little bit uncomfortable, because I think there is a conflict of interest there. As you said, the company, it's flagship. They've been an insurance company since 1800s, right? So alto of people have found the investments have been so successful that so many people are just focusing on that now inside of the system. We have a lot of producers, you know, nationally recognized in the Barron's Top 400, or whatever that's called. Financial Times Top…

So they're like, "Wait a second, we're not making much money off this. We need the guys, which used to be a big insurance producer, we need to them still do a minimum amount of insurance." I think that's what they're trying to do. Obviously their prerogative. But it's obviously a frustration with an advisor trying to build out a planning centric firm, as you mentioned.

Michael: So from your perspective, like, it's not as though there's a bunch of, like, direct pressure from managers of, like, sell more company product, sell more company product, sell more company product. It's just, hey, we've got some compensation grids, and designed in a way that kind of nudges you towards at least a certain level of company product, and that may or may not be an issue.

Matthew: Yeah. It's a case by case basis. You know, like, I could have been 5% higher...instead of 73, I could be at 78 right now if I had placed a lot of insurance business inside the Northwestern system. But we find it was in the best interest, because certain clients were older, that we did some very big cases outside of the Northwestern system. So I think that could have been a conflict of interest if we have said, "Let's place those policies inside just so we can get a higher grid."

Well, no, we looked at what was in the best interest of the client. So I think that's where I had a little bit of hesitancy, where I think that grid could be a conflict of interest. Because of that, I'm looking at that and I'm kind of shrugging my shoulders. 5%, who cars? Right? I live a simple life. I pay my staff very, very well. They're tried into the upside of our business, so they're all happy. I view them as partners, not staff. I shouldn't say staff.

But, yeah. Long term, I think that could become an issue.

Michael: I mean, it's an interesting tension for even the insurance companies. I know on the one end, like, their core business and their bread and butter is manufacturing, distributing insurance products. So at some point, if the majority of your advisors that are supposed to distribute your product, don't distribute your product, it kind of messes with your business model. But...

Matthew: Right.

Michael: ...you know, they do participate in your insurance business. They are a broker dealer as well. It's a growing segment of their business. A bunch of you guys have very large investment based practices now. Like, your capitalist in me still looks at this and says, like, "I don't think they actually want to drive all of you away if you're not also doing a certain amount of company product."

I'm sure you're still reasonably profitable for them, I'm going to bet.

Matthew: They're figuring that out. I mean, some of our top producers have left. When I started, the top guy went to LPL. So, you know, that's happened. Mass mutuals recruited heavily. Like, why would we train people when we can just pay Northwestern reps a big upfront number and get them over here?

So, yeah. They're figuring that out, of how to keep the best people around.

Michael: So having gone down this path of starting at Northwestern Mutual sales role, and then kind of building your depth and your expertise over time, and we hadn't really talked about it much along the way, but I know, like, you have your CFP marks and your CHFC, and you did the RACP program. So you've gone pretty deep compared to most advisors on just the training and education side to move into this full scale financial planning activity that you do with clients now.

So as you look at it, as someone that's on this path, do you still think this is the right path for how you bring people into the financial advisor world, or should we be doing it differently? Like, would you recommend your path to others, having gone down it successfully?

Matthew: I would recommend it for someone that needed a personal journey like I did. I've been through, you know, a lot of adversity in my life, as everyone has, you know? But I think that it was extremely healthy for me to develop as a person, to go through the amount of adversity I did personally, and then also, obviously most of that was professionally. So I think that was good.

As far as, is everyone going to keep people with the best interest -- and that's something I strive of every day -- no. I think that the best path moving forward is going to be for the best talent to join established practices and build up their book like that, get the designations before you go talk to 100 people by yourself, shadow people. So the answer is, if it was we're expecting our first child in October. I'm just thinking, you know, hopefully she'll be interested in joining this field, because I'm very passionate about it. But I would want her to have a completely different experience than I did.

I think joining a team and building up the credentials, building up the knowledge base, building up the...is important. But I still think there should be some fire thrown under, especially the, you know, millennial, because they've gotten enough of bad wrap. I guess, technically I just turned 30, so I'm a millennial...I think there's a certain part of it where it's healthy to feel pressure. It's really healthy to get on the phone and call people out of the blue. It develops a lot of personal skills. But at the same time, we need to make sure that, as you develop, that every advisor in the industry is incentivized to do what's in the best interest of the client as well.

So I think there's a happy medium between the two.

Michael: So where does it go for your advisory practice from here? You've said you've got this focus on growth. You're staffing for growth. You're already having this phenomenal growth year, adding almost $250,000 of new revenue for the year. Like, where do you look going forward from here? Where are you trying to get to next?

Matthew: I guess the question you're going to come back to this is, you know, how do I define success? At this point, my simple lifestyle, I could sit back and just, let's keep the people we have in place, and let's keep the clients we have in place. Let's do, like, a lifestyle practice. I have zero interest in that.

I'm very wired -- as you can probably tell, the way I'm talking, how animated I am -- there is nothing I like more than impacting other people and growing. So I've been trying to figure that out. But the goal we have right now that we're very clear on is getting to a billion dollars under management. That's not to be able to have a big ego and say, "Oh, we've got a billion dollars under management." I just view that as very few advisors are able to do that. In fact, at the Carson Excell conference, I think just over 600 firms in the country have that. So I think that's a very good market.

I think the reason we want to get there is not for revenue. It's not because of, we want to be compared to other people. It's simply because if we're doing the right planning for people, and we're focusing on the clients first, that is the minimum we should be able to do in 10 years. We should be able to go 30% compounded growth year over year, for 10 years, which is going to happen of anyone that's truly keeping clients' best interest at heart, and truly keeping people's stress off the plate.

That people are going to themselves. They're going to tell you friend and families. I think that billion dollar market is just a good litmus test that we're doing good planing. So that's the vision in the next 10 years. That'll put me at 39 at that point. Right before 40, that's the goal.

We want to have every person on our team, outside of a coupe administrative people, to have the CFP. So now is the...the main insurance guru, the main investment guru, he is taking his CFP next month. He's already passed one of the classes, and then right after that he's starting his CFA. Grace has already started her CFP and is taking a CFP test soon. So we want everyone to be CFP and more credentialed, and just have a good kaizen environment. I think that's a Japanese term for continuous self improvement.

Michael: Very cool. Are you continuing to commit into this physicians and retirees niche? Like, do you envision going all the way to a billion in just these core two niche areas and just going deep into them? Are you going to go broader at some point? Are you going to go narrow, or even to some subset of them?

Matthew: We're never going to turn a client away just because they don't fit in the niche. I mean, we obviously have some big, bigger clients, like over six million, that don't fit into that category. But I think we ought to get there just with the physicians and retirees, just because if we look at the dollar cost averaging that's happening with the physicians, I think it's over half a million dollars a month right now that just physicians are contributing to.

There's no better thing a client can do, I think, than just save money, save money. Build that discipline. So that's occurring. We'll get new physicians that will commit monthly dollars, and then the retirees is really just a matter of, you know, maintaining their principle and their peace of mind while they enjoy their best life. I have a couple -- if we have time -- a couple key things I think you can do to differentiate yourself with retirees that, especially of someone in their 20s, because this is when I started working with retirees, of how to attract those kind of people to work with you.

Michael: Yeah. I'd love to hear it. I know we focused more on the physician end, but how are you differentiating with retirees as well?

Matthew: So we've used the Mount Everest analogy. The other analogy or study -- I heard this at a Northwestern meeting, it was very helpful -- apparently there's a study of, like, 20 kids put on the playground, that it was just a wide open field. There was no fence around the playground. What they found is these kids, because it was so much space, they stuck to the playground. They went within, like, a 20 foot radius within the playground. That sit. Then a different test group of kids on a playground, there was, like, 100 yard radius fence around it, and what they found with these kids is that they explored every square foot of the playground in the yard. Right?

Because the fence was there. They felt comfortable exploring those boundaries. So that's the analogy I love with retirees, because a lot of people, we talked about the saving, saving, saving, and just the physiological aspect of not saving is hard enough, let alone using the money they have saved. So we try to create...we first obviously do a stress test and look at it. Are you okay?

We second then do a second plan always. We always do one plan of here's where you're at today -- I learned this from the CFP -- if you never met us, here's how you stand. The second plan is, okay, if we're in your shoes, here's what we're doing. Here's why we're doing it. Then beyond that, we're trying to create that fence for them and figure out, well, you said you wanted to live off this much. But unless they want to die the richest person in the graveyard, we would encourage you to explore more. Here's why we think you can do this, and instead of gifting when you die, you should be gifting while you're living, when you can control good habits in your children.

So that's one of the analogies we use to kind of frame the whole process. But some of the big things, I think most advisors at these big...not to pick on any firms. Like, a lot of firms like Merrill Lunch and UBS and Morgan Stanley, have been tremendous advisors on the accumulation standpoint. But when I meet with these people in their 60s, I say, "What's your philosophy for distribution? What fail-safe do you have in place if we have a 2008," and they just give me blank stares. Like, we never talked about distributing money. I don't even know if my advisor does that.

I say, "Well, most advisors don't, and the average age of a financial advisor is 57. So you're going to need someone that's going to be here for you during the most important time of your career." So in that second plan...that's just kind of framing, opening up the minds of the client to be open to a conversation, and then how we provide value is, typically, we find most money is inside of pretax environment, whether that's a profit sharing, a traditional IRA or a 401(k).

So let's just use an example, if someone has three million dollars. A million in a non-qualified account, and then two million in a pretax environment. Let's say these kind of clients want to life off of a $100,000 a year. So a married couple has asocial security of 50 a year. We're telling them, obviously, to delay it as long as possible, unless they have health concerns. One of the ways we differentiate is we know every strategy there is around social security, claim now, claim more later...if you've been widowed, if you've been all that kind of stuff. I think that's the biggest way you can differentiate yourself, and just know your social security and Medicare inside and out.

But going back to my example where you have over two million qualified, one million non qualified, and they want to live off of $100,000, well, that person, once they turn 70, if social security is giving them 50 and let's say they've had a pension giving them 30, hats 80. Their 401(k) is probably worth three or four million dollars by the time they reach 80. The RMDs off of that is going to jump to 120. So now they're at 200. They don't need 200, but they're showing 200, and now they're kicked into a higher Medicare bracket, a higher tax bracket. If one of them dies, their tax bracket jumps 8% or 10% depending on what their total income is.

So I found no other advisor is talking about these, the Medicare tripling, if they show too much income, or their taxes going way up if there's a widow situation. No one talks to them about the required distributions, and the market could be jumping up and down. They could be forced to sell at a low point. So huge component of when it makes sense to do some Roth conversions, obviously, which offset all of the risks I just talked about, and that doesn't make sense for everybody. But we find that's a conversation that hasn't been had, that a lot of people in the retirement, if they're retiring at 63, they have seven years. They're going to be in their lowest tax bracket that they've ever been in for the last 20 years, and doing some slow Roth conversions could solve a lot of these problems.

So that's our way in the door, and then a lot of times after that, we show the value proposition not only on the technical side, but also on the coaching side. Kind of the fence analogy I just used. We've been able to create some good partnerships with clients in that regard.

Matthew's Tips For Building Credibility In Your 20s [1:40:12]

Michael: So with young advisors that are coming in today, right, and going through these similar challenges of how do I differentiate, how do I establish my credibility, as someone that did that through your advisory career through your 20s, any advice to other advisors in their 20s about, you know, what they should do, or even things you see them do that they probably shouldn't be doing in this challenge of, like, how do you get credibility and differentiate as a young advisor?

Matthew: Yeah. Take a Kolbe test. That's what one of my first coaches help me with, Alissa. Figure out how you operate. What's your modus operandi? I'm a high fact finder, a high follow through, for those that are familiar with that test, and set up that environment so that you're able to thrive, right? But a lot of advisors aren't going to be quick starts. Are you familiar with the Kolbe test, Michael?

Michael: Yeah. Yeah, I'm very familiar.

Matthew: Okay. So most advisor quick starts. So my advice would be, you're going to be miserable if you try to go super technical like, Michael, you do. I mean, you're probably the highest fact finder in the world. I mean, it's amazing, the content you put out.

Michael: Yes, I am a very long fact finding the Kolbe test. Absolutely.

Matthew: I could have guessed that. So you thrive in that environment. Most advisors aren't. So my advice would be, if you're a fact finder and follow through, set up your environment and go learn this stuff. You're going to do so well if it's something that you're really passionate about. If you're a quick start, though, be a really good relationship person. Be a really good prospector, and don't try to do this by yourself. The stakes are too high.

The worst thing you can do is miss these details and not do what's in the best interest of your client. So partner up with a good fact finder. Partner up with a good follow through. Ideally, someone who has both of those in the financial planning world. So I guess two different sets of advices. Figure out what you are, be true to yourself, and then let yourself thrive.

Michael: And find a partner or another person that does the other part of whatever you're bad at, I guess, is…

Matthew: That's opposite of you.

Michael: Yup.

Matthew: Exactly.

Michael: So as we wrap up here...this is a podcast about success, which means very different things to different people. So you've alluded to some of this already, but as someone that's built this incredibly successful practice through your 20s, now coming up into your 30s to grow from here, but have said, you know, it's really not about the money and the revenue at this point. How do you define successful for yourself?

Matthew: It's a very good question. I've pondered that ever since episode two, because you've asked pretty much every person that you ever interviewed, which, I've listened to most of the interviews through your podcast. So through a lot of thought, I think success is reaching my potential. You know, the God given potential that has been given to me, while enjoying the journey.

During that process is also drawing others naturally to reach their potential. So I think, you know, someone like a Ron Carson, he inspires the industry, right? Someone like you inspire the whole industry. So not only reaching your potential, but doing it in a way that you inspire others along the way. There's a concept of drive and draw. You can drive people to action, or you can draw people to action. So I want to do that in a complete draw environment, where people are inclined to take your advice. They're inclined to view you as the ultimate guide, Michael, of, like, financial advice.

That's my practice, and who I surround myself with and my clients. It's just everyone around me, reach their potential. That's how I define success. But doing it in a work-life balance. So obviously I'm not running a lifestyle practice. I work very, very hard, but instead of running at 80 to 100 hours a week, you know, 60 hours a week, for me, working, is like I'm on vacation. So I think that's a good...keep boundaries for myself and for those around me, is we need to enjoy the journey and not just put our head down too much.

Michael: Well, amen, and you know, especially now that you've got a little one coming on the way in October. You've got a whole different stage of that journey in finding a work-life balance. I have lived that challenge myself over the past couple of years. It's a different stage of the journey, but a very good one.

Matthew: Couldn't be more excited. Yeah, I agree.

Michael: Well, thank you so much for joining us and sharing this story and path on the Financial Adviser Success Podcast.

Matthew: Thanks for having me. Thanks all for what you do as well. This has been phenomenal, listening to all these podcasts you've done. So thank you very much.

Michael: Well, thank you. Happy to be of service. I hope it helps.