#FASuccess Ep 086: Mastering Marketing As A Solo Advisor By Simply Sharing Your Authentic Self with Eric Roberge

What You’ll Learn In This Podcast Episode

What Beyond Your Hammock does and who it serves. [08:54]

• How he balanced working as a waiter on the side to make ends meet while trying to get his firm off the ground. [18:17]
• How Eric got away from the traditional advisory business model. [26:40]
• How he structures his initial meetings. [34:21]
• What led Eric to using a blended model of planning, advice, and investment management. [36:58]
• How he charges for his blended model. [38:49]
• The pervasive conflict around the AUM model. [43:30]
• How he implemented a monthly retainer model with his clients despite providing annual planning. [54:40]
• The unique marketing technique he says “pulls people in like a magnet.” [1:04:04]
• Why he’s comfortable publicly sharing information about his personal finances, and how he deals with the criticism that comes with it. [1:06:13]
• What surprised him the most about building his business. [1:16:48]
• The low point of his business. [1:19:22]
• Advice for advisors making a leap to starting their own firm. [1:22:20]

Resources Featured In This Episode:

• Eric Roberge
• Beyond Your Hammock
• eMoney Advisor
• PreciseFP
• IdeaPaint
• Riskalyze
• TD Ameritrade
• "I'm a financial planner - here's why I won't buy a home"
• Creative Advisor Marketing with Kali Hawlk

Full Transcript: Mastering Marketing As A Solo Advisor By Simply Sharing Your Authentic Self with Eric Roberge

Michael: Welcome, everyone. Welcome to the 86th episode of the "Financial Advisor Success" podcast. My guest on today's podcast is Eric Roberge. Eric is the founder of Beyond Your Hammock, an independent RAA based in the Boston area that specializes in financial planning services for high income young professionals in their 30s and 40s. What's unique about Eric though is the way that he's quickly propelled his advisory firm to $300,000 of revenue from scratch in just five years, with a marketing approach of talking about what he does personally in his own financial lifestyle and attracting prospective clients to him who want to live the same way.

In this episode, we talk in-depth about Eric's marketing process, from why he's decided to abandon the standard approach of trying to make neutral statements in the media and always saying it depends, and instead, showing the financial decisions he actually makes. To how he's published articles to share publicly about those financial decisions, including how much he spent on his recent marriage and why he's chosen to rent instead of buy a home living in Boston. How Eric deals with the criticism that often comes back when you make such strong statements in public. And why Eric finds that this kind of marketing is the ultimate differentiator, because anyone can write technical articles, but only you can write about your beliefs to attract prospective clients who share those beliefs.

We also talk about Eric's advisory firm itself. From the financial planning process he uses and the way he uses eMoney Advisor to gather data before meeting with clients, to the way that he's implemented a monthly retainer model with his clients, or as Eric puts it, an annual retainer payable monthly. Why Eric decided to add in a separate AUM service as well and what Eric went through to survive the early years of getting his practice to the point of generating $300,000 of revenue, including spending nearly six months waiting tables on the side to make ends meet while he was getting his advisory firm off the ground. And be certain to listen to the end where Eric talks about how he ultimately figured out the exact type of ideal client he wanted to serve as a way to build his own confidence in communicating his passion for financial planning to clients.

And so with that introduction, I hope you enjoy this episode of the "Financial Advisor Success" podcast with Eric Roberge.

Welcome, Eric Roberge, to the "Financial Advisor Success" podcast.

Eric: I've been waiting a long time for this, Michael. Thanks for having me on.

Michael: It has been a long time. I was kind of reminiscing back. I think we first met five or six years ago and you were working as a, I think a junior advisor in another firm and I was in town for Boston for a speaking engagement, and we went out and did lunch and coffee. And you were talking about [how you were] thinking about going off to do a business and you wanted to serve your peers like 20 and 30 somethings when no one else was serving 20 and 30 somethings. And I think we were even talking back then, it was like 2012, about, oh, yeah, we pay for everything else on a monthly basis, it's just the way we pay for our lives. Why is no one doing financial planning on a monthly basis? And this way before XY Planning Network was a thing. That didn't come until a year or two later.

And you actually went off and did it a year later and are five years in the business now, and in doing a couple hundred thousand dollars of revenue of almost entirely planning fees. And so it's this incredible journey that you've gone through. I remember back when you hadn't even launched this thing yet and you were still just starting to maybe sort of think about it. And now we get to look back and talk about the last five years of this really cool planning practice I think you built working with your young professionals in their 30s and 40s. A group that everybody says you can't serve profitably particularly if you're just getting paid for the advice, but you're serving them profitably and getting paid for the advice. How about that?

Eric: It does seem a bit surreal to try to put myself back in my younger self shoes when we had that conversation before any of this was even just barely a thought.

Michael: Would you have dreamed then of looking forward five years and saying, this is where I'll the five years from now as I go and start my practice? Did you have a vision that it was going to be where it is now?

Eric: No chance. I barely thought that we'd even bump into each other again at that point. I didn't have any idea where to go with it in 2012 and then even when launching in 2013, there were very few clear paths that I could see. Most of them lead to nowhere and I just didn't have that much faith in getting to where I am now. Certainly didn't see it.

Michael: It's funny there's this saying out there that we tend to overestimate the amount of growth or change we're going to have in 1 year and then grossly underestimate the amount of growth or change we're going to have in 10 years. And I'll admit, like, at least for me, the more I've lived my professional world and business world, the more I've grown to appreciate that. I look back at even where I was five years ago, and there was no podcast, blog traffic was a quarter of the size. I had a much smaller speaking business. There was no XY Planning Network and advice panel, all these other things I'm involved with. I had no concept of them 5 plus years ago, never mind 10 years ago, and then here we are today. I think we really do misjudge or get too mired in just what's happening in the short-term in our businesses and I think sometimes really under-appreciate what an amazing business this is in the long run, if you can just look out further at what it all really compounds out to.

Eric: It's true. I feel like it's because we can't really understand how we're going to get to the next level because there is no instruction manual to say, "Well, if you do one two and three, you will produce four." It doesn't work like that and therefore, we're blind to that three steps down the road, even if we are looking forward in the future.

Michael: Yeah. I guess in the truest sense, right, that's the nature of getting rewarded for things that are risky. In the truest sense, you don't know what the outcome is going to be. You don't know what the exact roadmap is in advance. If there was a perfect roadmap, everyone would just do it and then it wouldn't be risky or particularly well rewarded. This part of the nature of I guess entrepreneurship in general and certainly in our world of being an advisor, and especially going out and launching your own business, your own firm, and you're doing this thing where you've got maybe some vision of how you want clients to be served. I mean, most advisors I know that build their businesses don't do it because they wake up and say like, "I just think it would be awesome to build a big business and I just want to be the person that made a business."

Most of us start our own firms because we just have a particular vision or view or idea that, all right, I have been doing this thing for a while. I see how clients are served. It's either not the people I want to serve or not the way that I want to serve them, so damn it, I'm going to go out of my own and do it myself the way I think should be done for my clients, and that's how we go and make advisory firms. And because we're making our own thing in our own vision, as you say, there's no handbook. There's no roadmap. There's nothing that tells you exactly how to do it. At best, you can kind of look at what others have done and then edit and adapt, because the whole point is you're doing something differently than what everybody else does, and you just kind of have to figure it out and hope it works out well, but usually without a really clear vision of exactly how rewarding this can be when it's going well because it's just so freaky at the beginning.

Eric: I think my stubbornness gets me too because then I say, “well, if someone else did it that way already, I don't want to do it the same way. I need to do something different.” I think that drove me to do this because I was different, but still going back to what you said about helping people and it was helping the right type of person. I really did need to find a way to help my peers do financial planning the way that I knew that they could do it.

Michael: So let's talk about that a little bit of, you built this firm because you wanted to help your peers with the planning you felt they needed and that you could deliver. So tell us about the advisory firm as it exists today. What do you do, who do you serve, how does it work?

What Beyond Your Hammock Does And Who It Serves [08:54]

Eric: Well, Beyond Your Hammock today is the same and different as it was when I first started in 2013. The people I serve are a little bit more sophisticated than they were to begin with. So, where back then it was anybody in their 20s and 30s that wanted some financial advice, I would help them with it. Now it's, if you're in your 30s and 40s and you're making $250,000 or more as a household and you're looking to really get after it today and live while also still planning responsibly for tomorrow, those are the types of people that are out there that are looking for Beyond Your Hammock, and those are the people that I serve now. It's really about helping them live but also helping them, a close second is helping them grow their wealth. So I want people to say, one of my top two or three goals is grow wealth.

Michael: Okay. Interesting. And so you've kind of shifted to this I guess more upper income tier, although I know you're in the Boston area, so $250,000 in downtown Boston goes a little further than New York City or San Francisco, but not nearly as far as it would in huge swaths of the center of the country. So I guess that's…I know quite where that puts you income percentile wise. That's high income folks but not astronomically high income folks. That's just most dual income professional couples I would imagine in their 30s and 40s who are 10 plus years in their career.

Eric: Yeah. If you're working in the city, you're probably making six figures if you've been there 10 years or so, in your career. So if you put two of those people together then you have the $250,000 right there.

Michael: And are most of your clients couples in practice who are at this level? Like, they really are that dual income professional services couple, one or both making good money?

Eric: Yeah. Yeah, I found that is actually the ultimate client that I help is those couples that are together. They're either married or getting married, have kids or are starting to think about having kids and just growing together.

Michael: Okay. And so, what do you do for them? What you do for someone in their 30s and 40s who makes two hundred fifty plus thousand dollars a year and wants to hire you for something, financial planning advice.

Eric: Well, there's one of two people that come to me. The first one is doing it proactively saying that, "Well, my life is pretty basic, but I understand now that I'm making this money and I don't want to waste the opportunity that's been presented to me. So, take my simple balance sheet and let's figure out how to use the tools that are out there tax efficiently to expand my assets and allow me to still spend on the things that I want to spend on today."

Michael: I feel like there is an essence of that that's kind of, “I've had some good stuff happen in my career, we're suddenly making really good money,” and they're going through this round of ‘adulting’. Like, "Okay, wow, I'm I making a lot of money now, I probably need to figure out how to get more serious about this now." Like, "Jeez, this is a lot of money."

Eric: Yes. Yeah. They look at their bank account they're like, "well, I've never had that much in there before and I don't think that's the best place for it. So, where do I go, who do I talk to and how do I make this different?"

Michael: Okay. So that's one profile. And I guess for a lot of them their trigger really might be something like, "Wow, that's a lot of money in my bank account. I probably should be doing something else with this," as their moment of realization that I'm doing well and I don't actually know what I'm trying to do with my money.

Eric: Yes. Exactly.

Michael: Okay.

Eric: The other is more complex and probably complicated at this point because they have gone past that point. They maybe started to build a family, they bought a house and they, I don't know, sometimes they've been sold a whole life policy, sometimes they haven't. But there's just this complex financial situation going on where they don't have control over it and they really need to wrangle it in because there are very important things to take care of like paying for kids' colleges, getting a bigger house because they're growing out of the one that they're in, maybe somebody doesn't like their career and they're trying to shift to another career, but that gap in income scares the heck out of them and they don't know if they can manage it. So those types of things where it's, we have to unwind several things and then build it back up is the other type of client that I work with.

Michael: And so they've hit some kind of complexity point that I guess a lot of us hit in that stage, particularly if you're making some good money because people start offering to sell you things, pitch you things, some of them some good, you buy some of it, some of it turns out to be good, some of it turns out to not be so good. You've got enough disposable dollars that you could try some of these things and it's probably not breaking you financially, but you just have this realization like, wow, this got complex and I have a lot of stuff, and I don't actually know what I'm doing and I kind of need someone to help me get it all in order.

Eric: Yes. Exactly. And oftentimes, these people have some sort of RSUs or incentive stock options as well and they just don't necessary know how to handle that. One of my clients who was in a company that went public and the higher workforce was treating these non-qualified stock options as incentive stock options because they didn't know the difference. And I was seeing this and I'm like, "Oh my God, the taxes that these people are going to pay that they don't even know they're going to pay is crazy."

Michael: Because they're all exercising them thinking that they're going to get cap gains treatment if they wait for a year and all that and don't realize like, no, no, that was all ordinary income already recognized.

Eric: Exactly. Yes. But luckily, my client worked with me and we didn't do that.

Michael: That would be a really unpleasant surprise if you get that tax reckoning at the end of the year.

Eric: Yes.

Michael: So what does planning look like for these clients? I feel like a lot of what you're talking about – my clients try are making good money and want to save or they've got a lot of complexity – I feel like for a lot of us advisors who say, "Well, yeah, that's what I do. Like, I do a comprehensive financial planning for them and then I show them where all their money is, and then if they've got all these additional savings coming in, we can start investment accounts for them and we'll get them the life insurance they need if they're going to start a family." And like, I think some people would try to make the case this still feels like fairly traditional financial planning scenarios. So, do you do traditional planning just for a particular client segment, or is there something different about what you do and deliver to them at Beyond Your Hammock that makes it feel different than other advisory firms they might hire?

Eric: I think it's a combination of the two because I do think that traditional planning works, and the experience that other advisors have had over the past 30 years is something that I want to take from them and use in my business. What doesn't work is that it's either all focused on retirement and people don't know how to fill the gap with a 30 year old between age 35 and 65. That really doesn't work for my younger clients. So, what I have to do instead is develop more of a planning structure but use more of a personal trainer approach. So, we're identifying right away the important things that they have going on.

What's important in the next 12 months? What do you need to spend money on in the next 12 months, the next 5 years, beyond that? So, we skim through there, try to pick out the things that are very vivid in their mind and then we come back and we just try to figure out, “all right, well, how about living for today? What do you really want to be doing right now?” And a lot of times, it's traveling, maybe starting their own businesses. It's things that they are afraid to admit that they want to do because they think the financial advisor is going to tell them that it's wrong.

Michael: They are things that they want to do but are afraid their financial advisor is going to tell them that they're wrong.

Eric: Yes.

Michael: So we get the rep right or wrong of, no, no, don't do that irresponsible thing. You've got to save and invest all your money. So they're actually afraid to talk about what they really want to do.

Eric: Yes. And I have compassion for that because I did that. I did the irresponsible thing when I started my business because I didn't have an income. I had to work as a waiter. I was racking up credit card debt and there was a gap that I didn't think I was going to be able to make it across at a couple different stages. So, if I was to follow the advice of a financial advisor, I never would neither have attempted, nor proceeded to continue on, down this path. So I bring that empathy into my conversations with my clients and I don't say, no, I just advise them of the risks and then say, if you really are looking to do this, let's see if we can do.

Michael: So, you had a few things in there I want to ask a little bit more about. First, I just got to go back a moment. So, you started your firm and were working as a waiter? Let's talk about that for a moment. You don't hear a lot of, I worked as a waiter on the side to make income while I was launching my advisory firm.

How Eric Balanced Working As A Waiter On The Side To Make Ends Meet While Launching His Firm [18:17]

Eric: Yeah. That happened, and it was a shot to the ego really because I was now 33 years old having graduated from Babson College, worked at State Street Bank and J.P. Morgan and a couple other independent advisory firms. And now I was becoming a waiter for the first time in my life, wearing an apron and serving people food. Nothing wrong with doing that, I just couldn't…

Michael: It wasn't what you envisioned with your Babson degree.

Eric: Yeah. I couldn't explain to my friends what the heck I was doing. I really honestly felt a little bit like Clark Kent and Superman because I would be in a meeting with a client dressed up as much as I get dressed up in maybe a button down and some nice pants, and then fly into my car, change into my waiter uniform, and then run into the restaurant and start taking orders for people's steak.

Michael: So, did your clients know? Did you tell them? Is that a thing you want to be straightforward about or is that a like, I'm kind of embarrassed I have to do this on the side because I don't have enough clients yet.

Eric: Well, I was pretty straightforward with my colleagues or other business partners that were other professionals who I was networking with, to let them know what I was doing because I think a big factor was that I was just sharing my vision, I was sharing what I was doing to get there. So, in a sense, it was very motivating for people to hear and inspiring that I was trying to do this fairly risky thing to get to what I wanted. So that was okay, but I don't think that it felt all that great to share with clients because in this case, it was almost like fake it till you make it and I couldn't tell them that I couldn't afford to live without having a second job while I was also telling them at the same time that I was qualified to take care of their money. And the reality was I was because I had been in the business for five years, I had my CFP, I knew what I was doing, I just didn't have the financial wherewithal to be able to do anything for myself at the time.

Michael: Wow. And you mentioned like, and racked up some debt as well. So I take it even waiting on the side, because getting clients and doing the business takes time as well, you've only got so much time to earn money on the side. You were going backwards for some period of time before you got enough clients and revenue to break even and hit critical mass.

Eric: Yeah. When I started as a waiter in the beginning of 2013, I hadn't quite launched my business yet so I was making probably $1,800 bucks a month at best and I couldn't afford…that was less than my cash flow need at the time, and it was just…it was really tough. So, there were certain things that I had to put on my credit card saying, well, I am building towards this goal and eventually I will get there. So, I mean, it was a ton, maybe $5,000 at most on my credit card, and then another... I had left a firm early after negotiating something where I was getting more of the percentage of the revenue than he otherwise would have given me as long as I stayed there for a couple years. So when I left, I owed him back some money. So I had that going on too.

Michael: So it was like a recapture on the revenue sharing agreement?

Eric: Yes. Yes. But I felt like I had to do it. I couldn't not do it because I was sick at that point of convincing people that my ideas were good and that I should move forward with them with their permission.

Michael: And so, you just made your leap?

Eric: I did. Yes. I made my leap. I worked for a couple more months as a waiter and then in October, in Salem, Massachusetts, where I was a waiter, is hopping. Halloween is the ultimate event over there. And November 1st, it's a ghost town. So, when I hit the 31st, I had to stop working as a waiter because they couldn't afford to pay me anymore.

Michael: Oh, because once the crowd leaves the Salem Witch Trials novelty the day after Halloween, that's that. There's no more restaurant business.

Eric: Exactly. So, at that point, I looked out and I said, well, I have enough money in my bank account to make it maybe another three months or so. I have one client who's paying me $50 a month. Let's see if I can pull this off. So I committed full-time at that point to getting it going. And luckily enough, by January, I had brought on another client, and then probably a client a month that first year.

Michael: And so, what were you selling, offering to clients at that point? You had a client who – I guess you said he was paying you $50 a month – when you started getting your first client a month over the first year, what were you doing for them at that point? What were they paying you?

Eric: At that point, I was basically coaching them on cash flow, because the people that were coming to me couldn't afford more financial planning. They couldn't go to a financial planner who did an AUM type offering because they didn't have any AUM. They probably were making under six figures too, so they were just looking for some coaching on how to manage their cash flow. So that was a lot of what we did. And it's not a coincidence that at the same time I was in my own cash flow trying to manage my cash flow too. It was an attraction there. That's where I was focused, that's who I was attracting. So that's the type of service that I was offering on a monthly schedule because, right before I had launched my business, I had worked with a friend who had a small RIA, and he was the investment guy and I was going to be the planner guy. So I was doing these plans for people basically on a transactional basis, charging $1,800 for a plan with the thoughts that I would give them such a good plan that they would find this money and be able to invest with me. And I realized that that was just a sales job of transaction after transaction after transaction. And I knew that that wouldn't work and that's part of the reason I started the monthly subscription to afford my own life while I built the business.

Michael: Interesting. And so even adding one client a month through the first year, I'm going to imagine there wasn't a lot of dollars flowing at this point.

Eric: No. I think the first year I probably made $30,000. So, that was a lot for me making zero before that, but…

Michael: Right. Right. Right. And I guess slightly better than the $1,800 a month you were netting as a waiter. So, making some progress.

Eric: Right. And I could actually say that the next month, I knew that I had something coming in. That was exciting.

Michael: That's part of the appeal because you were doing monthly planning fees from the start. So, the good news of recurring revenue models at some point. Like, you wake up at the beginning of the month of the year and you already know at least something's going to come in as long as you service these clients and do something valuable for them to get them stick around. But you know there is some revenue coming in when the month or the year starts. It's not starting from zero every day you wake up the way it is in purely transaction models.

Eric: Exactly. It was somewhat bittersweet too because I would wake up on the first of the month saying, "Yes, I have three clients paying me this month. So I know that's going to happen." And then right after that thought, I would say, "I wonder which one is going to leave first."

Michael: And were you seeing some turnover as you were working with these people, giving cash flow planning advice at $50 a month?

Eric: Yeah. I think there was some. I mean, there wasn't a ton, but if you have 10 clients and 1 leaves, that's 10% of your client base gone.

Michael: And 10% of your income gone.

Eric: Exactly. So it hurt a lot more back then if one person left. And at this point, I don't think that they're all that many people that leave, maybe three to four per year.

Michael: So, what changed then? Where did it go next? You sort of talked about this retrospectively that you were doing a lot of cash flow oriented advice for anybody that was looking for some advice and they were paying you fifty plus dollars a month. It sounds like you're not quite focused there now because you're working with higher income professionals. So what changed or evolved. What altered the business from the path you were on over the first year?

How Eric Got Away From The Traditional Advisory Business Model [26:40]

Eric: It was the type of clients that started to come in because they were, like I said, the bulk of them were under $100,000 earners that were just looking for cash flow advice, but then every once in a while, I would find a client who was making $200,000 to $300,000 as a family and they had assets, and they had life insurance needs because of their kids, and they had a lot going on, and they didn't have anybody to talk through it with because again, they weren't looking for someone to just take over all of their assets, they just wanted some advice on where to go next. And my offering seemed less invasive, I think. They didn't use that word, but I feel like it was less invasive because they could just talk it out and then we could develop a plan, and I would give them an action list and they would go and take care of it.

Michael: Right. So, just like, it's very literal. You got away from the traditional advisory business exchange, which is, I'll give you some advice but you've got to buy my products, or I'll give you some advice but you have to give me your life savings to manage, when some people don't want to hand over their life savings or buy the product. They really just literally want to pay for some advice.

Eric: Yes. Exactly.

Michael: And so, were you still charging them this $50 a month price point for clients. What did the revenue model look like?

Eric: No. At that point, I think the first client was $50 a month. It was $250 upfront and $50 a month. The second client was $75 a month and $500 upfront. And quickly, I got to $100, and then $125 a month. So, pretty consistently, I would raise that monthly revenue up to probably $125 where I got stuck for a little bit, and it bounced up to $138 and $149 quickly, and then jumped up again. So, it gradually over the past five years has increased steadily.

Michael: It's a striking thing to me. When we did our XY Planning Network benchmarking study last year around, we were three years in the network of advisors that are doing these kinds of fee for service models and just ask lots of questions about how they're running their businesses. And one of the striking things we saw was, by the third year of running their practice, literally, 100% of advisors had raised their fees at some point in the first three years. And most of them were experienced advisors. They weren't literally just starting from zero where you can't charge anything early on because you have no knowledge and no experience, when you get some, you can charge more.

They were virtually all experienced advisors who just decided to go out and launch their own firms and take the kind of leap that you did, and everybody without fail, raised their fees substantially in the first three years in this kind of similar trajectory that you did. Like, just going from $50 a month to $125 a month. It's 150% fee increase. That's not trivial money when you multiply it across a whole bunch of clients. What led you down that path? Was it just you were so anxious to get clients early on that you were willing to take lessen money to get some revenue flowing or was it just you just weren't comfortable charging the fees early on then you got more comfortable charging more overtime?

Eric: I think it was a little of both. I definitely wanted…was more in need of revenues, so I was willing to take it for less at that point. But at the same time, I had a process that was just sprouting and I wasn't fully confident in my process because it wasn't actually a process yet. And although I was giving individual advice to each person as we had the conversation, there was no…I couldn't repeat the process over and over again. So, therefore I didn't feel like I should be charging more than I was.

Michael: There's an interesting point there that part of the value of what you get paid for is the advice and part of the value of what you get paid for is the process. Clients want to go through a process not just get answers. The answers are valuable, but a structured processes is more valuable. So you get one thing for just saying, "Hey, come in and I'll answer your questions, give you cash flow advice, tell you how to pick your life insurance policy," whatever it is. And then get paid at a whole other level and that formalizes into a standard process of what you're doing for them on an ongoing basis where they understand what they're buying and what they're going to get at the end because you can explain that when you've got a process.

Eric: Exactly. Yeah. I was just thinking of the gym. Again, I always compare the gym to the process that I do, and it really makes sense because the process that I have in coaching people guides them through, helps them implement, adjusts, and answers questions along the way so that people don't get this massive list of to-dos. And then, so, first time in the gym, you don't know how to use the machines, you don't know anything about this, but you talk to a personal trainer who knows it and has educated you on how to go in and use it. Now, go into the gym with a packet and try to figure out how to do all the exercises on there without breaking a finger or smashing a toe or whatever else you're going to do.

It just doesn't happen and therefore, no one goes into the gym to begin with and the thing collects dust. Same thing with the financial plan and that's something that didn't sit well with me, when someone says, "Well, I have a plan and I just don't do anything about it," because I'm very much a get things done type of individual myself, in my personal life and also for my clients. So, it really is driven by the actions that we take after each individual meeting and things start to open up as they implement because I'm there to hold them accountable.

Michael: So, talk to us a little bit about what this process looks like today. What do you do for your clients at this point?

Eric: I help them organize their cash flow, identify the proper savings rate and then find out where the money should be going. Should it be a bank, should it be brokerage account, should it be Roth, should it be retirement, should it be something different. And then once we lay that out there and set that in motion using eMoney to projecting forward to show them that if they do this, that will be okay, then we can come back in and look at the cash flow again to see where they may be able to get more out of their life today. Whether it's not spending so much on vacations because they're not actually extracting the values that they really are looking for out of it, maybe finding cheaper alternatives, or it is decreasing expenses in certain areas, or not buying – this is my favorite one – not buying the home that is too expensive, or not even buying the home to begin with because that is a huge shift in momentum when someone saves for two years, three years, for a down payment then puts it down on a house and has to start over again with a higher level of expenses. That's a turning point.

Michael: So, what does this look like from the process end for the client? Are you still doing sort of a traditional, first, we do a data gathering meeting, then I analyze your stuff, then we do a planning presentation meeting? Is it still that flow or how do you literally take clients through this process of cash flow planning, and then eMoney Advisor, and then revisiting the spending.

How Eric Structures His Initial Meetings [34:21]

Eric: Well, it's pretty simple to begin with because there is a data gathering aspect of it and that is all through PreciseFP. They put all of their data in there, upload their statements in PreciseFP before we meet for the first time. They fill out a Google doc or Google sheet, cash flow sheet that I have provided them. So I come into the meeting with their financial foundation, their cash flow and their balance sheet as they see it today. I've already pulled that into eMoney because it can export to eMoney from PreciseFP. So, once we check on their goals... and I'm in a room… usually I'm in a room with these people over video... but if I'm in a room with them, I have in a wall of IdeaPaint, so I can write all over the wall. And I'll draw a line and I'll say, today at one end of the line, and then I'll write, end of life or age 100 at the other end. And we build a timeline in there if there is anything to build.

If they have specific things they want to put in there, we put that out there first. And then we prioritize those things based on the time horizons and importance. And then we check the data that's in eMoney. And then we actually run projections the first day in the decision center to see what their life looks like if they just continue to go on the way they're doing it right now and not changing a thing. And a lot of time that scares the crap out of them. So that's the jolt that we need to get things moving and that's when the coordination and implementation comes in.

The next couple meetings, the second one is usually very investment education driven. We use Riskalyze, we go through the questionnaire, we align their risk number with portfolios, we look how those portfolios may have done in past markets, specifically 2008 and 2017 (two opposites), and we start to understand what asset allocation really means, what we need to do from an investment perspective, and then we can say, “do you feel comfortable doing this, client? And if you don't, where do you go for that second set of eyes, that investment advisor, that can help you with this stuff.” So that's a turning point right there too because we go one of two different ways. We could go down the road of, they're going to do it themselves and I'm just going to stick to the rest of the planning, and from a very much a 30,000 foot level, talk to them about investments. Or switch gears and now I become the investment manager, and it does morph into a traditional investment management relationship along with this coaching guidance that I'm giving them.

Michael: And so you do have an option at this point to be their investment manager as well, so to manage the assets and charge an AUM fee and so forth?

What Led Eric To Using A Blended Model Of Planning, Advice, And Investment Management [36:58]

Eric: Yes. And I find that through that education process and the fact that at the end of it I say, "Here are your options. You can go to Vanguard and do this yourself. You'll just have to make sure that you pick the right asset classes and investments that go along with them, rebalance things, make sure you’re adjusting things and not react to market conditions as they come up or I could take that over for you." So, it really gives them the freedom to choose knowing that I don't… I mean, I care, but I don't necessarily pressure them either way.

Michael: And if you're doing it, what does your investment process and implementation look like? Are you building portfolios themselves, are you using a TAMP (Turnkey Asset Management Program)? What does your end of it look like?

Eric: That's been an ongoing series of iterations. I build my own portfolios. I did take a slight amount of time with a Robo-advisor, didn't really work out all that well, so I'm getting back to building my own portfolios.

Michael: Because you didn't like the technology or the service or just you decide you want to build your own portfolios and not have to use what they use?

Eric: I didn't like the inability to change certain things. I didn't like the black box nature of when and why I can do things and when and why I can't do things. And I just didn't like the feel of not being fully involved in the process for the client.

Michael: Okay. So what do you use now instead?

Eric: Now I'm on TDA (TD Ameritrade) platform and I use a lot of DFA (Dimensional Fund Advisors) funds along with a lot of the no-cost or no-transaction cost ETFs on their platform depending on the situation and type of funds and how big the accounts are.

How He Charges For His Blended Model [38:49]

Michael: Okay. And so, how much of the business at this point is the investment management side? Well, I guess let me take a step back from that. How do you charge for this blended model of, you're doing planning/coaching advice and you're doing for investment management as well? Do you literally just charge a planning fee for the planning stuff on an ongoing basis and an AUM fee for the investment stuff on an ongoing basis? They just choose which of the two services or which of the two fees?

Eric: Yeah. That is pretty straightforward. That's the case. And as they increase their AUM, there are decreases oftentimes in their financial planning monthly fee. And at times, depending on how much AUM they have with me, it's completely gone and we just go with the AUM model.

Michael: So, can you talk about how you tier that or I guess like at the starting point, if I'm just doing planning work, what do you charge me and then what do you then charge me to add assets, and where do the breakpoints kick in. Like, how does this flow as I go from all planning and no assets to a big pile of assets.

Eric: In the beginning, everybody comes on board – my ongoing clients anyway – come on board with a $999 engagement fee and a $250 a month charge starting month one. And that's where we can just do the planning and figure things out from there. So, they know that they're not handing over their life savings at that point, we're having conversations, they're getting comfortable with me, seeing how it goes. And a lot of times, they'll like how it's going, so they continue on that process. As we look at investments, anything that comes over initially is going to be 0.95% of assets under management. For the investment management portion, from zero to $250,000 it is 0.95% and $250 a month.

Once we hit the $250,000 asset mark, there's a conversation – it's not always the case; it's not automatic because I have to look at the complexity and the challenges that we're having with the client – but I then most likely will reduce that $250 down to $200 a month and continue along with the 0.95% until they hit $500,000. And then it can go a lot of different ways at that point. Sometimes it will reduce to zero, the monthly subscription and we just go with the 0.95% and then there's tiers of AUM fees from there just like the traditional firms. Or we keep it in place because there is more complexity and there's more of an exchange of emails between meetings and things that are happening, they're very active in their life, they're getting new jobs, they are starting businesses, all these things are happening. So, there's actually more work to be done, and they're two completely different services, investment management and financial planning. It took me a long time to realize it, how to explain it to clients, but I feel like I do a pretty good job of explaining the differences and why they'd be paying two separate fees for financial planning.

Michael: So, I'm wondering, how do you explain it when they get…? I'm sure inevitably, you're going to get some clients, particularly if they've got some dollars already, that are going to come in and say, "The other advisor up the street just charges me 1% on my $300,000 portfolio and they don't have this other planning fee for a couple hundred bucks a month that you have. So, why would I pay you a couple hundred dollars a month when I can give the other advisor my $300 grand at 1% and they're not charging me these extra fees?"

Eric: Yeah. And that's where I say, well, if you're just looking for investment management, then maybe you should stay with that advisor. If you want comprehensive planning so that we can actually bring your money into a place where you can utilize it throughout your life and start to actually take advantage of your cash flow and be able to see the steps to take to go travel, to save for your kid's college, to take some time off during maternity and paternity leave, to understand your company benefits and not things that are just geared towards investment management. I think the biggest one of these conversations I've had is with a client that had a bunch of assets with Fidelity and it was on their investment advisor platform, whatever they have, their in-house version, and through the conversations that we were having, he understood that what I was doing was actually planning, what they were doing was just investment management and advice on how to get more money under management.

The Pervasive Conflict Around The AUM Model [43:30]

Michael: Yeah. To me it's one of those pervasive conflicts we still have around the AUM model. I know the AUM gets lots of grief I think for its conflicts of interest. Like, oh, if a client has a mortgage, it's in your interest to tell them to keep the mortgage and not pay it down because that would take away your AUM, which is a legitimate conflict and I think does crop up for some client situations. But to me there is a broader one that I think is so broad that we sometimes don't realize it, which is just the whole nature of how the industry... like, financial planning is so ubiquitously tied now to long-term retirement planning that I feel like sometimes we don't realize the… well, the reason we do that is because when we're paid on assets under management portfolios, the most basic level, we only get paid if we can convince the client to save more for retirement. This is literally the way we bill.

And so the whole planning process gets a billed in this retirement planning, savings-and-accumulation-centric nature, even though (as you noted particularly when you get to some younger clients), “If I'm 35 making good money, yeah, yeah, retirement is out there somewhere, but I have a whole lot of things I care about over 12 months and 5 years and 10 years and 20 years. Long before I'm going to get to what I'm worrying about 30 plus years out in retirement, when 30 years ago I wasn't even in kindergarten yet.”

Eric: Yeah. Exactly. And no one knows how to fill the gap because it all going back to, well, just save more for retirement. Who wants that advice when you're 35? It's good advice, but it's only a small portion of what they need right now.

Michael: So, I want to understand kind of the rest of this process. So, walk me through once more. The starting point is, you're doing data gathering up front electronically with the client before you meet them. So you send them PreciseFP and for folks that are listening, if you want to check out some of the tools, we'll have links out to all of them in the show notes. So if you go to kitces.com/86 for episode 86, we'll have links out to solutions like PreciseFP. So you're gathering their financial information in PreciseFP, you've got a Google sheet for them to enter their monthly spending. All that flows into eMoney Advisor for the first meeting. So you sit down in the meeting, you're talking about the data that's in eMoney. You're going through this process with IdeaPaint, which I guess I'm only vaguely… IdeaPaint is basically like a giant wall that is like a whiteboard wall, right? That's basically the IdeaPaint.

So you're like drawing out on the whiteboard wall their trajectory and what they're doing. You're going through decision center in eMoney to show them basically the trajectory they're on, which usually isn't good, so that gives them the jolt they need to realize they need to make a change. Meeting number two is your investment meeting, investment education meeting, risk tolerance, current portfolio design. Is it designed appropriately give them some advice if they say they want to go do it, they can go do it. If they say they don't want to go do it, you can do it for them. So what comes next? Is there a third meeting?

Eric: I think there's a piece in there that is, investor management if they don't have any debt. I think there is…the debt conversation is there too because a lot of my younger clients, all my clients I guess in general, have student loan debt and the conversation about refinancing that debt from federal to private, from private to private, and just the challenges and opportunities that you can deal with in that process is important for clients and to understand how much interest they might pay if they continue on paying the minimum versus take all of their extra cash flow and pay it down much quicker. So, their time horizon shortens, their interest shortens, and for some clients, that makes a lot of sense so they just go full bore at the debt.

For some clients, they say, okay, I've got the extremes, let's go somewhere in the middle, so we still do have other money to save for a home. So we'll talk about what other goals are there too. So, the investment management conversation happens with no debt or no big goals other than investing and growing wealth. If they have something else like debt or home buying on their mind, that's intermingled with this investment conversation because really, we have to figure out what does investment management mean as far as how do we invest money? What does it look like to save for a home? What does it look like to pay down debt? How do I save for college? And at the same time, they're thinking, I don't really know which one is the most important. So we have to have that conversation about what is the priority. What do they truly care about and then back into the order of which we attack and use our cash flow to accomplish these goals.

So, there's a lot of back and forth right there. I mean, that could take several meetings just to figure out what's the best use of their money based on the life that they want to live because they have not had these conversations as a couple, because they don't even know to have the conversations as a couple. So, not only are we talking about it in the meeting, they're going home and talking about it, they're coming back to me and saying, "Well, we thought about this and we like your advice on paying down debt, but we do still want to save for other things right now. So, let's go with the middle ground and now how does that look? What do we do next?" So, there is that incremental progress that we have so that within the first three months, we have a clear path and an action plan that they will actually stick to for the next say, nine months to a year.

Michael: And so you mentioned this may stretch out now over several meetings. How often are you meeting with clients? If you're charging them $250 a month, are you doing a check-in meeting every month? What does the meeting process look like?

Eric: The first year we have five to six meetings depending on the types of conversations that we have. And every year thereafter, it's three meetings a year.

Michael: So the upfront I kind of get five to six meetings of just getting through all the spending conversations, cash flow conversations, implementation pieces that you've got to walk them through from there. When you get in a year or two and beyond, it's three meetings every year. Is there a structure of the meetings? Is it simply, “we're just going to check in every three to four months and do a meeting to see what's going on and make sure you're doing whatever your last action items are and we'll talk about whatever's going on now and just meet to find out what there is to talk about?”

Eric: Yeah. There is that continual process of having the list of to-dos, and when we do them, it's my job to bring them in at the right time so they don't forget about those things. But sometimes there aren't all that many things to do, so I ask them, I say, "Okay. Well, we have X amount of meetings left this year. Are there any big events that you see out there where it makes sense to talk right before or right after those things?" So, because they have kids or they're starting a new job, there might be, "Well, we have a new benefits program because we're changing jobs next month and we have to get in within the first 30 days. Can you help us with that thing?" Or, "Our child is going to daycare and we just don't know how to…should we do a nanny share or should we do the daycare thing?" And maybe that's the time we have the conversation about if one of the spouses going to stay home for a bit.

So, I feel like, if you just think about life and understand what's happening along the way, all of these things that aren't necessarily connected to financial planning should be connected to financial planning and I need to provide that guidance when they come up. What happens with the planning that we do is that people start to realize that there are so many things above and beyond what they thought are related to financial planning that are related to financial planning. So questions that they might have asked their neighbor, or their father, or their sister, or their brother, they're now asking me because they know that at least I can give them an objective answer based on experience and knowledge of money.

One of the things I ask people before we work together is just, think about how many times you interact with your money on a daily basis. Now multiply that over years of your life. Those are the conversations that we have as they occur. So, it doesn't have to be this laid out program where there is all these milestones and we do this on a certain month and this on the next month and we review. It really just follows life and life always produces new engaging financial topics.

Michael: It's a funny thing that one of the criticisms that I heard early on when we started talking about doing financial planning for young folks in their 30s and 40s, we get these questions all the time like, "What do you do for them? What do they need help and financial advice on?" And all I could think was, like, "Well, you work with retired people. What do they need?" You kind of set them up for retirement, I get it, the transition to retirement is complex and there's a whole bunch of choices you make. But then once you get through it, like, retirement's kind of retirement. You tend to cruise it out. Not much changes until basically someone has a health event. There's very little planning to do ongoing. Whereas when you getting the folks in their 20s, 30s, and 40s, it's continual.

“We're getting married. We're buying a house. I'm changing jobs. I'm starting a business. We're having our first child. We're having our second child. We're getting divorced. Got to change house again. I'm starting another business. I've met a new spouse. We're getting married again.” There's this constant drumbeat of life events that have all sorts of financial consequences that to me, like, planning for people in their 30s and 40s, there's a ton of stuff because most life events hit us in that phase. It's really kind of the retired end or once you come through the retirement transition, I think there's not that much to be talking about and doing necessarily. And I see that in even our own firm. We do a lot of planning for people in their retirement transition, but once you get them through, the planning meetings just start spreading out because there's not as much to talk about because their life isn't changing as much, unlike it does for people in their 30s and 40s.

Eric: Exactly. And I think it's important to explain that to clients, though. Also to say, there may be years where we're talking every other month because you have a lot going on. There may be other years where we're having three meetings, but there isn't all that much to talk about. And actually, that's a good thing because that means things are going well, you're on the right track, we don't have to make any major overhauls.

How Eric Implemented A Monthly Retainer Model With His Clients Despite Providing Annual Planning [54:40]

Michael: So do you get clients that then say, like, "Well, can I drop the $250 a month planning fee when there's not much stuff going on and then I'll call you again when things come up?" Do you get pushback over the, “I'm paying you a monthly fee but we're not meeting monthly?”

Eric: That one I don't get pushback on anymore because I get right up front with that and say, "Listen, this is an annual retainer. You're paying me so that we can plan annually. We just happen to meet three times a year and the charge is monthly because it does fit into your cash flow cycle like your gym membership, like your cable bill. It's easier to understand. It's easier to manage if it fits into normal cash flow cycles." And they totally get that and they don't expect monthly communication or ongoing anything per month.

Michael: So it's not a monthly planning model, it's an annual planning model for an annual retainer, payable monthly, because that's just easier to pay for when your cash flows monthly in your 30s and 40s?

Eric: Exactly.

Michael: So remind me again what pricing looks like now. I think you said you're at a thousand dollar engagement fee or $999 engagement fee, $250 a month, and then an AUM component if they decide to do assets for you. If it's a large portfolio, you may start trading off planning fees for AUM fees. Is that still where you're sitting going forward in the business today?

Eric: Yes. That's how it's going to be for the foreseeable future.

Michael: And so help us understand then, how many clients do you have in this system? What kind of revenue does this add up to for the business doing all this ongoing retainer fees and upfront fees and a little bit of AUM? What's the business look like overall financially?

Eric: Well, I have 62 clients that I work with on an ongoing basis. Twelve of them actually pay me solely through assets under management and the other 50 pay me through either a straight monthly subscription or monthly plus AUM. At this point, it's funny because I was kind of hoping that I would have a good split of revenue streams in the business to protect myself from, I don't know, market changes, regulations, who knows what, and it's kind of turned out that way so far. So, right now I have about I would say $100,000 coming through AUM and about $115,000 coming through monthly subscription models. That's the recurring revenue is probably around $215,000 right now plus engagement fees, plus quick starts, things like that that happen throughout the year?

Michael: So, the business all in and out, because I'm assuming you've got a steady stream of those, if you have 62 clients, you're taking a client or 2 a month on average at this point?

Eric: Yeah. I think this year I have 31 new clients, about 16 from quick starts and 15 from ongoing.

Michael: Can you describe this quickly? What are quick starts?

Eric: Quick start is anything that is one, two, or three meetings. There are clients that either do not want ongoing planning, but they do need a plan, and there are clients that just aren't in an income position to afford the ongoing planning and they don't get the value out of it. So, I'll do a meeting, usually it's a two hour meeting, two hour planning meeting with the client and that's it.  

Michael: Okay. And what do you charge for that?

Eric: So, the two hour planning meeting ranges from $799 to $999. If there is a couple extra meetings along with it because there is a little bit more complexity, that could range from $1,200 to $3,000.

Michael: Okay. So the idea of these is they're standalone and not ongoing, except then it turns out a bunch of your ongoing clients actually came from that anyways?

Eric: Not really. No. Most of the people that do the one time keep it the one time. There have been a few that have converted over after doing the planning because they realized that they wanted me to manage their money. But that's not the initial set up. I'm not looking to do the planning so they can become the ongoing. I'm looking to do the planning because that's what it looks like is the best bang for their buck.

Michael: And it's a healthy… I mean, when you're charging $799 to $999 for a two hour meeting, that's $400 or $500 an hour, billable rate. I imagine you've got a little bit of prep time, but that's a very cost effective meeting for you for people that say, "I just want to buy some hours of your advice," and you say, "Fine." But you're not saying, "Okay, I'll meet with you. It's $400 an hour." You say, "Okay. I'll meet with you. It's a quick start meeting. Here's what we're going to cover, and it's $799 for this package."

Eric: Yeah. Because part of the process, and people don't understand how valuable it is for clients to actually go through a process on their own. Part of the process is them doing a lot of work in the beginning organizing, collecting statements, doing their cash flow. They do all of that beforehand. It doesn't take me time to do that, but it really helps them clarify what's going on in their life. And one guy – actually I did one today with him – and he said, "By going through that process, I realized that my home insurance was way too high and I got a different carrier and I saved like $500 bucks just by doing that." I didn't do anything. I just told him to look at stuff. So, that's the power in having them do something beforehand, and then we have the two hour meeting. And I do say that if they have any specific questions to clarify what we've talked about, they can email me for a couple weeks afterwards. I bet 20% even take advantage of that.

Michael: So I'm just trying to do rough math, like, you've got two hundred fifteen plus thousand dollars in recurring fees, thirty plus new clients that are either paying thousand dollar engagement fees or $799 all the way up to $3,000 for a quick start session. So, gross revenue for this year overall, you're projecting out at $250,000 to $300,000?

Eric: Yeah. Actually my high goal at the beginning of the year was $285,000. And quickly into the year I said, let's make that $300,000. So, I'd ultimately like to pull in $300,000 this year through the end of the year. And if I hit $285,000, I'll be very pleased.

Michael: So talk to us about that trajectory. I just find that's an amazing thing. Six years ago, we're sitting down in a coffee shop in Boston near the Prudential Center talking about, wouldn't it be neat just to work with people in their 30s and 40s or 20s and 30s because no one does that and that's where you were, I guess I'm doing the math back. You must have been 27 or something at the time. You went out on your own a year later, had to wait tables just to make the cash flow while trying to get to $30,000 grand of revenue after a year. Now five years later, you've gone from $30,000 to $300,000. So, what did that growth trajectory look like? I mean, you just added steadily in a straight line every year and you just accumulate enough clients that it's going to get up to $300,000 of revenue, or was it more uneven than that?

Eric: It was more even. I have the numbers right in front of me here. Total revenues for 2014 were $29,900. '15 were $76,900. So that was, I like to say it was 157% increase. It's easy when it's that small. And then 2016 was $124,000, so that's another 61% increase. Seventeen was a less of an increase, so it was only about $155,000, 25% increase. And then I looked at that number and I said, well, I'm hitting some sort of plateau here and what I realized by the end of 2017 was that, I wasn't fully confident that I could handle more clients because I wasn't fully confident in my own process. And once I got through that challenge from December to January of 2018, the floodgates opened up again and I did realize that I can really hit it out of the park this year, so that's where I set that goal of $300,000, which is a 93% increase year-over-year.

Michael: So talk to us more about just what's changed that… It took you four years to grow the first $150,000 of revenue and one year to double it, give or take a tiny bit of rounding here. Talk to us more about what's changed. Does it just to come down to, I got more confident my planning process and figured out that I really can do this for more clients, so I went and opened the floodgates and in came the clients or was there more to it?

Eric: Well, there's definitely a confidence that has progressed over the past year as far as not only who I am as an advisor, I think I had that, but who I am as a business owner and that my business is legitimate and that I can see it growing over time. Like I had mentioned before – I didn't mention it actually, I was thinking of it – when I had 20 clients, I was racking my brains trying to figure out how I could ever produce a six figure revenue for the business. I didn't see that it was possible, and I was stressed because I just didn't know how to make it work and also provide good advice. At this point, it's proven that this business can grow and now it's just about taking the actions necessary to pull in people that can support that growth, which at this point in time I have an opening for a paraplanner, hopefully, part-time to full-time because I do need that support.

The Unique Marketing Technique Eric Says “Pulls People In Like A Magnet” [1:04:04]

I think it's that confidence that has allowed me as a business owner to push forward, but I think secondarily and just as importantly, is the type of marketing that I do for my business now is very much pulling the curtain back and revealing who I am as a person, how I use my money, and telling people and sharing the strategies about that. And I think that has really been powerful because it's no longer me trying to protect myself or tell people what I think they want to hear or say things in a very mediocre kind of on the fence standpoint, like, "Well, you could do this or you could do that." I am out there now saying what I do and telling people what I believe that they should do if they have the same goals as me. And I think that's been really, really powerful in pulling people in like a magnet.

Michael: So, that's a really striking thing I want to understand more. I think we all get trained in this idea that you have to be a neutral professional, never say anything controversial, the answer to any question is, it depends on your personal facts or circumstances, that's why we have to do a financial plan for you. And it's very much not a telling people what to do, it's, well, first, you have to gather all their information and then you can give them some advice that maybe they can consider. And now you're talking about this I feel like very opposite and approach of, no, no, you're just going out there and telling them exactly what they should be doing (if your goals are like mine), so that you don’t just give blatantly wrong advice to people that don't fit the situation. But it seems like a very straightforward thing and absolutely unequivocally what we're all sort of taught and told in the advisor culture you're not supposed to do. How do you reconcile that? I don't even know what my question is. How do you do that and not commit blasphemy in our advisor world?

Why Eric's Comfortable Publicly Sharing Information About His Personal Finances, And How He Deals With The Criticism That Comes With It [1:06:13]

Eric: So there's a difference between telling people what to do and showing people what I do in my life. And if I look at my life, I like to think that I am pretty successful in business and in living because I get to enjoy myself while also creating a career that I love. And if I can show people how I do what I do, how I live my life, how I manage my money to afford me to live my life that way, and how I run my business to a broader extent, because I'm not talking to a financial advisor necessarily, there's an attraction for people who want to live the same way. So instead of saying, "You should live this way, person who I don't know," I say, "This is how I live. If you'd like to live the same way, please let's talk and I can show you." And that's where there is sort of a magnetism that attracts not everybody, some people hate it, but there are a lot of people that really like it and those are the people that I want to work with. So if I can just scream that from the mountain tops, I'm going to get all the clients I'll ever want.

Michael: I think there's something really striking there. You say this is how I live, and if you want this too, then contact me and let's talk. And as you said, you're not going to attract everyone, you probably have to piss off some people who just don't agree with your style, or philosophy, or you're too frivolous, you should save more, whatever. But the people who actually are attracted to that and want that, are attracted to that and want that. And they're going to come to you and say, "How do I do something that's like you. I want to live that lifestyle. I want to pursue that journey. I want to have that experience." And you attract them in. I guess in some way it's, there's always been a thing out there in the advisor world that we tend to work with people like us. It's just a general style. We get along well with the people that are like us, usually similar age, often similar backgrounds and cultures because it's just the people we get rapport with. That to me you have kind of the ultimate version of that which is just to put out there, here's exactly what I do and how we live our lives and what we enjoy about it. If this is what you want, contact me and I'll help you.

Eric: Yes. It's actually invigorating in a way because it's also scary because like we said, some people don't like it. Even sharing…we shared about how we budgeted for our wedding to the amount of money we spent on our wedding. So, some people are probably saying, "Well, they're cheap. They didn't spend enough." Or, "Wow, that sounds great. Let me figure out how to do that for me." I mean, any number of people are going to say any number of things and I can't constantly try to please everybody because that's what I was doing before. I didn't want to say anything out of line because I didn't want to upset anybody, and I wanted to make sure nobody liked me. And as much as I'd like people to like me, I don't need people to like me and that's something that I realize and it's coming directly into my marketing.

Michael: So it's an interesting framing of, you can't please everybody anyways, so you may as well just be really pleasing to the people you actually want to work with who are like you and attract them in.

Eric: Yes.

Michael: So can you talk about, I mean, what does this look like in the real world? You mention one piece which is, you shared how you budgeted for your wedding and what you spent on it. What else sort of falls in the style? I mean, is it mostly blog content, you wrote an article that says here's how we did our wedding and if you're interested, talk to us and we'll help you too. What else are you doing to put this out there?

Eric: I'm looking at an article right now that I just wrote for "Business Insider." And this was probably the scariest one of them all because it was admitting to folks that I don't own a home and I actually rent my apartment in Boston. And that to some people could be like, "Wow, a financial advisor who doesn't own a home, irresponsible."

Michael: How are you not building equity, Eric? Haven't you heard, homeownership is the key to long-term financial success?

Eric: Exactly. Exactly. So, I wrote this article that says, I'm a financial planner, here's why I won't buy a home. There's 78,000 views of it since last week. There's just a lot of people are either enraged by it or they really like it. I mean, I'm not even making this up, the minute before we got on this call, I got a message from this woman who's a baby boomer and she read the article and she said, "I'm considering selling my home and becoming a renter. I find that with most material I read on this topic, including college level personal financial management courses, home repair, upgrade, maintenance sometimes are not even mentioned. It's mentioned but maybe only a little bit. Your article gave it some importance and that's what it deserves. Many of your points, while going against popular belief were absolutely correct. It's easy to see the wisdom [from her perspective, she's saying because she's owned a home for 30 years], but it's impressive coming from someone who has not yet experienced all the ‘joys’ of home ownership."

Michael: Joys. Yes.

Eric: It's just these people... and I got another message from somebody else saying the same thing. "We're committed renters, we're forty somethings, we're committed renters, we're moving to Boston soon, we want to talk to you about financial planning." It's this type of thing that people come out of the woodworks when you can say something that people believe, they're going to ask for more information. But if you hold it back because you believe it and you're embarrassed by what you believe or embarrassed by what you're doing, then that's not going to help you or anybody else.

Michael: So, I've got a few questions there. First, I guess, how do you make the leap to doing that, right? For a lot of us, like, “yeah, I know I hold some views that are different than everybody else, but it's freaky to put it out there and get potentially crucified in the media,” particularly when you literally write it as an article on a media platform. How do you get to that point?

Eric: Well, I am lucky enough to have a very supportive and fantastic marketer as a wife. Kali Hawlk, now Kali Roberge, is my guide to getting some of the stuff out there. And she really does give me a kick in the pants to put it out there even if I'm uncomfortable doing it, because it needs to be heard.

Michael: So the best path forward is have a third party that kicks you in the butt and tells you to make the leap. There’s something to be said for that.

Eric: I think so. Someone that can actually see who you are, authentically speaking, and know that you are committed to something that actually makes sense and then have you go out and tell the world that and maybe even help guide you and write things for you too. But really just that is something that you need to do because if you hold it in, what good is it going to do? And what's the worst thing that can happen? A couple people say, "Oh, man, you're an idiot." I got I got some Twitter post on that one said like, "Dumb ass. Stupid." Just childish one word responses. Oh, well.

Michael: Yeah. At some point you just have to accept that sometimes people on the internet will say bad things about you and move on because you can't really change them anyway. And so is this style shift of just putting out there more of, you should do this rather than here are seven reasons why a Roth is good and five reasons why a Roth is bad, neutral middle of the road articles. Is that what you attribute is the thing that's driving all this growth now?

Eric: I think so. And Kali said it best the other day. She said, "Anyone can write about technical stuff, but only you can write about your beliefs and what you practice in your life and teach in your business." So, that's all over Facebook, Twitter, LinkedIn, my blog, "Business Insider," "Forbes," "Kiplinger," that's where I write and that's all over it.

Michael: And do you get just self-conscious or wigged out about how much personal stuff about your financial life you're sharing? I mean, money has always been the great last taboo topic. I mean, imagine if I just asked a room of people, "Would you be comfortable sharing with others what you spent on your wedding?" Most people would say no, never mind writing an article about it and publishing what they spent on their wedding or their decision to rent versus own and the rest. Does it get uncomfortable for you just the amount of personal stuff you're sharing?

Eric: No. I don't think it does. There is discomfort sometimes before something goes out, but once it's out, like I said, it's energizing because it's now out there and people will respond to how they respond. And sometimes people will learn from it even if they don't agree with it. They could say, "Oh, I never thought about it that way. I don't actually agree that…I wouldn't do that, but I would do this." So, if they didn't see what I was doing, they couldn't say that they would do the opposite. So it's just, I don't know, it's just... It's something that gives me energy and if…I'm not going to lie, I like attention. So, if I'm in the media getting attention and it's for something that is just me being who I am and not me trying to get attention because I'm who knows what saying something off the charts to try to have someone look at me like I'm a crazy person and then bring me on their you know CNBC show or something. It's just authentic.

Michael: That's a good way to frame it. It's just authentic. It's not about trying to be out there to say a particular thing or be a particular thing. It's just literally about putting out, “I'm me and this is what I do and this is what I believe in. If you believe the same thing, let's talk.”

Eric: Yeah. Yeah. And if you find yourself saying, I'm going to be authentic now. The next thing out of your mouth is going to be inauthentic. You can't say it like that. You just have to do it, just be yourself. Be yourself, share yourself, and the rest will follow.

Michael: That's be yourself, share yourself, and the rest will follow?

Eric: Yes.

What Surprised Eric The Most About Building His Business [1:16:48]

Michael: All right. So, as you look back over this explosive five year trajectory of the business, what surprised you the most about building the business? Like, where it's gone versus maybe what you expected originally.

Eric: Well, I think one of the things that has surprised me is that I am developing a decent amount of AUM along the way. It's not anything to write home about if you were running an AUM practice, but it's significant for me starting out with a planning structure, where I'm charging a monthly subscription with no assets under management to begin with. So, I think I'm at $11.5 million right now and I think that will be upwards of $14 million by the end of the year. So, it's starting to develop into something legitimate and it looks from that perspective, like it's growing into a traditional financial planning firm, but all that I do and all that I've learned along the way is not a traditional financial planning firm. So, the combination of the two is a surprise to me.

Michael: What led you to do the blend and move into a more hybridized model? You started out planning fees only and not AUM. What led you to add AUM or led you to add AUM as opposed to saying like, it's $250 a month but if you want me to manage your portfolio, it's $400 a month and just flat fee the portfolio the way you flat fee the planning advice. Why add an AUM fee and why add it as an AUM fee?

Eric: I think, I mean, there's a portion of it that is, go with the flow and make it easy for me and for the people who I'm supporting.

Michael: Meaning every everybody else charges AUM, people get AUM, so let's just do what they are already get and are familiar with?

Eric: Exactly. I mean, there's nothing wrong with doing what people are familiar with if it works. And as much as people say, AUM is going away, I don't see where it's going. There are changes, and people are doing things differently, but AUM isn't going anywhere right now. And I do have both models out there, so I can be very flexible and dynamic and change the direction of my revenues any time I want to. And when it comes down to it, it's not about how I get paid, it's that I give you the value that I say I'm going to give you so that you can feel good about paying me what you pay me.

The Low Point Of Eric's Business [1:19:22]

Michael: That is a powerful way to frame it. So, what was the low point along the way?

Eric: I think the one that just popped up was, it was right around…I think it was right before the XYPN Conference in 2015. I was headed there, I think I was on a panel or two, and I lost four clients in a week. And in 2015, that was an enormous deal.

Michael: That's like a year and a half in. So, you only had 20 or 30 clients and you lost 4 clients in a week?

Eric: Yeah. I think I went 25 to 20 or something in a week and I thought the doors were coming off, the business is crumbling, everything is just going to hell in a handbasket. And it didn't. It's just, it was a regrouping. It wasn't all me, it was two people, one or two people lost their job, someone else, they moved and they just didn't want financial planning anymore. And then maybe one person said that it just wasn't a fit for them. So, it was a number of different things. It wasn't anything specific, but it all happened at the same time. But on average, it made sense because I hadn't lost anybody up to that point in the year, it just happened that they all went out in September.

Michael: And what did you do?

Eric: I had to reflect on what happened and why. And I think this is where I find a lot of power in looking at a situation and whatever happened and looking at it for what it was, like, what actually happened. All that happened was clients are no longer working with me. So, what does that mean. It may not mean anything about me at all but I could take it as that, I could blame myself and make myself wrong for it or I could just look at it and say, "What could I have done differently in this case to have changed the outcome here?" And that gives you…asking that question about anything in life gives you a lot of control over that point in time. And it's really what we need to focus on is what we can control because there are so many things that we can't control out there that we can get lost in the myriad things that are just popping up all over the world that are motional, that are tear jerking, that are just driving you crazy, but you cannot change for the life of you.

So if we just dumb it down and focus on what we can control, there's so much power in that and a lot of things open up and actions are very clear on what to do next. So, long story short, I looked at what I was doing in my business, said, "If I did X, Y, and Z differently, maybe that would change things, so I'm going to go do X, Y, and Z differently." I think I probably reassessed my process, made it clearer, defined more of my opening statement when I was talking to clients to lay out the groundwork on what they should expect, and it went from there.

Advice For Advisors Making A Leap To Starting Their Own Firm [1:22:20]

Michael: So, looking back on this now, what advice would you give new advisors or I guess, experienced advisors making the leap for starting a firm today? What do you know today that you wish you knew five or six years ago when you were making the leap that maybe at least someone else can hear and benefit from the wisdom of experience?

Eric: I would know that if I feel confident in helping a certain type of person, that there is certainly a way to help them and make it work from a business perspective. So that there's that piece there, and then there's the, “well, how do I make the revenue work for my business too?” And you've got to figure that out. So, you got to commit to the type of business you want and try it out because only by trying it out, do you realize that it's going to work or not work, and when you fail, you're going to learn more than if you succeed. So, just do it and see what happens.

Michael: I think there is an interesting angle there to say it, like, this approach of, know who you want to serve first and then figure out later how to make the revenue work as opposed to, “all right, I'm going to do a monthly fee model, I'm going to do an AUM model, I'm going to do some model. Okay. Now I got to go and find some clients to serve who will pay me for this.” So you would kind of start from the other end, like, who do you want to serve, who do you enjoy serving, and then you can figure out a way to charge them as long as they've got some kind of financial wherewithal, they can pay you somehow.

Eric: Great. Talk to those people in everything that you do and that's where your passion is going to come out, you're going to be authentic, you're not making things up and trying to pretend that you like the people that you're looking to work with because they're going to give you the money you need to grow the business. That's garbage, that's backwards, and it's going to show through and people aren't going to buy into you. So you've got to do it the other way around.

Michael: I think there's a good point there. When you're serving who you want to serve and like to serve, the passion comes out. One of the things I've long observed for advisors that, I'll say generally, struggle with sales even when selling is, like, they're not selling product, they're selling themselves because they're charging advice fees. If you're not excited about what you're doing and who you're doing it for, it shows through. And when you are excited about what you're doing and who you're doing it for, and you really believe you're providing them value, selling, it's remarkably easy because you basically just talk about what you do in an excited manner and the people who respond to that respond to it.

Eric: Yes. That's how I started my business. Share, share, share.

Michael: So as we come to the end, this is a podcast about success and one of the things we always observe is, success means different things to different people, sometimes different things to us as we go through different stages of our careers in the business. So as someone who is building what I think everyone would objectively call an incredibly successful business trajectory on a $300,000 of advice fees in five years… as you look forward from here, how do you define success for yourself? I know you're on a good business trajectory, but how do you define success for yourself?

Eric: Being able to create something in a way that allows me to be able to step back from it and manage it from the bigger picture while also giving myself free time to enjoy the life that I have now with my new wife. I think that's really success for me because it was me that had to create the structure to generate some sort of revenue, and doing it around doing it for people that I loved, but being able to keep that engine in motion and not have to be the technician doing it. Right? So that's expanding the business in a way that allows other people to come in and do the work based on how I know the work should be done because I know that it works for my clients and then being able to step back and manage that from the higher level.

Michael: So it's that fundamental shift from not just being the doer in the business that does the work with the clients, but expanding the business so you can hire people who do the doing and teach and train them how to do it your way and your vision, the way you think clients should be served.

Eric: Yeah. Yeah. Recently, I've had this…actually the other day, I was hiking with Kali, and I had this very vivid vision of an office for Beyond Your Hammock that I had never thought about or had before. And it was this white walled multilevel office building that had…it was basically like, you walk in and there was a cylinder of air up. Like, you look up and you see open space but around it is there is these windows and offices and there's hammocks. I don't know what the heck it was, but it was just this very vivid vision of this thing and I just thought, you know what? I want to be the person that's doing planning three times a week and the rest of the time, being a visionary, trying to expand into different markets and different strategies, and just doing things differently because that in itself is like a hobby which also relates back to a business. And I just win in all aspects of that because I then have free time for myself as well.

Michael: And so as we wrap up, I've just going to ask this one final question. Where does the Beyond Your Hammock name come from? What's the deal with hammocks and an advisory firm?

Eric: I think the word hammock wasn't something that I necessarily wanted to link to the advisory firm. The initial thought was get a name that doesn't sound like an advisory firm because I was so sick and tired of saying, "I'm a financial advisor," and then the person would say...

Michael: Roberge Wealth Management.

Eric: "Oh, yes. I know five of you. They work for this company, this company, this company." And I'm like, "No, that's not what they do. Those are salespeople. I'm not. I'm a financial advisor. Let me back you out of that tunnel you went down and rebuild." So, Beyond Your Hammock was a way for me to start fresh in the beginning and explain what I do to people.

Michael: Very cool. Well, it certainly seems to be serving you quite well given the growth and the trajectory of the business. So I'm excited maybe we'll revisit this in another five years and do another milestone call and see what it looks like by then.

Eric: Wow. I feel like I'm back in 2012 because I have no idea what it's going to look like at that point.

Michael: I know. We'll just have to fast forward five years and see when we get there.

Eric: Sounds good to me. I'm on board.

Michael: Excellent. Well, thank you, Eric, for joining us on the "Financial Advisor Success" podcast.

Eric: You're welcome. Happy to do this any time, Michael.

Michael: Thank you.