#FA Success Ep 341: Bolstering The Quality Of Advice By Deliberately Rotating Advisors For Each Client, With Thor McIlrath

Resources Featured In This Episode:

• Thor McIlrath
• McIlrath & Eck
• Salesforce CRM
• XLR8 CRM
• FMT Solutions
• INSITE Conference
• Practice Made Perfect: The Discipline of Business Management for Financial Advisors by Mark C. Tibergien

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Full Transcript:

Michael: Welcome, Thor McIlrath, to the "Financial Advisor Success" podcast.

Thor: Well, I'm so excited to be here, Michael. I've seen a lot, and I've even met you before at one of the INSITE conferences. And I've seen so much of your writing over the years, and podcasts. And I'm honored that I could be here.

Michael: Awesome, I appreciate it. It's always good to catch up after Pershing INSITE. And I'm looking forward to diving into the discussion today and talking a little bit about growth and evolution of advisory firms. And this aspect of your firm that I was really fascinated when I had...to hear when I had first heard about it, that I find for most advisory firms there's kind of this mentality of clients are clients for life. When a relationship forms between a client and advisor, it is this holy bond, it is this thing that we treasure, we do everything we can to try to keep clients attached to advisors. You almost never want to switch a client to another advisor if there's any way that you can help it because it disrupts the relationship. Who knows if they're going to bond with the new advisor the way that they did with the old one?

And some advisory firms, I find, ultimately even get challenges because they really don't want to ever change the client-advisor relationship. And in the long run, you can get challenges, like early clients that maybe are not the best fit for the most senior advisor but they're still working together because the advisor doesn't want to rotate the client.

And I know just your firm has sort of an intentional structure that says, "No, we want to rotate clients amongst advisors. We deliberately have clients change which advisor they're working with from time to time, there are more advisors involved." And so just I'm excited to hear where that came from and how that came about. Just because so many firms seem to be of the opposite mentality, that how did you end up in this realm of saying, "We think it's a good idea to start having clients rotate advisors"? How does that come about?

Why Thor Utilizes A Rotating Advisor Structure To Provide A Team Approach [05:28]

Thor: Well, it started several ways. But one of them was, if you could say, a seminal moment, it was 16 years ago. I saw my dad in the hospital at University of Washington Medicine when they cut the entire top of his skull off. And he survived brain cancer and lived another 15 years after that. I saw my dad laying there on that bed and I was just horrified at what was done to him. But when I talked to him shortly after that, he was thrilled that the surgeon that had operated on him always came in with 2 other qualified brain surgeons and it was a team approach. And they had an entourage, I would see him come in the room with an entourage of different interns all the time to pass on this knowledge.

And so, through the years, I have tried to copy some of the things I've seen in professional services. At one time, I had a lot of lawyer clients. And I noticed that there was another trainee oftentimes when the lawyer would meet with a client, that they had a lot of training going on with this other new lawyer out of law school that really learned on the job.

And I saw, too, with accounting firms. I saw that one day I called my accountant for a simple question about a Roth IRA when these were still in their infancy. And I didn't agree with what my accountant had said. So, I talked to one of his partners while he was out for lunch. And if I hadn't had caught him while he was out to lunch, I would have heard the same answer from my accountant and we would have not gone anywhere. But his partner disagreed with him.

And it's the team approach, I think that steel sharpens steel. And we get better information when we have qualified minds from different angles and different insights, but also different sets of knowledge.

Michael: So, I'm curious then how this manifests in the context of the firm. Because does this mean clients always have multiple advisors that they're assigned to in just an overall team context, or literally they rotate and a client will have a different lead advisor over time because they're getting exposure to multiple different advisors in the firm?

Thor: So, right now, there's myself and 3 other qualified advisors. And there's Jeremie, Troy, and Jacob, and not in any order of seniority. And I consider them of equal ability. And when the front desk calls the client for their scheduled review, then they try to get the client to see a different advisor.

Now, through our CRM system... We use a derivative of Salesforce called XLR8. Through that software, it enables us to insert notes if a client is adamant. We do get that. My best guess is it's about 20% of the clientele seems to be adamant to meet with one particular advisor. And when that happens, we still offer an opportunity to meet with a different advisor. But if they insist, which it might be as high as 20% do, then we honor that, we work with that.

Michael: I'm struck it's only 20%. My gut impulse would have been probably more like 20% are willing to rotate and 80% are like, "No, I want to meet with my advisor for my advisor things." So, I'm fascinated that you find it's really 80-20 in the other direction, the majority of clients are fine with this.

Thor: Yeah. Part of that, Michael, is that we set the expectation up front, that it's a team approach. And because it helps to get oversight from somebody else to look at your plan independently of the other advisor. Sometimes when I meet with a prospective client and I explain this to them, I let them know that of course some clients want to continue to meet and they're adamant on this with one particular advisor, maybe his personality or whatever. I do throw that out there with a lot of prospective clients when they come in. But I make it clear that it's such an important thing and it's such a complex, with taxes and estate planning, that it helps me. I explain to them it helps me to sleep at night as the owner of the firm. But it also...the primary focus is always on the client, to give them the benefit of a different set of eyes overlooking all of their finances.

Michael: And so, is that literally the language that you use? I'm just curious. If I'm a new client and I've just started with you and I've been through my first meeting with whoever my advisor was that now I'm going to realize is not my advisor because it rotates when I come in next time. What does that conversation look like, when you have to explain to a client the first time? Like, "So, here's how it works around here..." How do you actually explain that? How does that conversation go?

Thor: Usually, it comes up once the client, the prospective client, asks, "Now, am I going to be meeting with you, Thor, or am I going to be meeting with somebody else in your firm?"

Michael: Okay. And that's often the prospect phase, I find, that they're...someone's surfacing that question. That's not even always after they're a client, that may be before.

Thor: That's correct. That's absolutely correct. So, they come in, they've been referred to us or they've come in through one of our classes. We teach at one of the community...one of the colleges. And it's usually brought up by the client, that they ask, "Will I be seeing you or will I be seeing somebody who works for you?" And that's when I tell them the team approach that I have.

Michael: Okay. But I just want to make sure I understand this. A lot of other advisory firms, when we talk about team approaches, I guess it's a little bit more in the context of what you were saying for your dad and the surgeons. Like there's always 2 people in the room, there's always 3 people in the room, because we serve as a team. So, we have multiple people sitting in the room. But it sounds like your team context is different because it's not like you and Jeremie or you and Troy or you and Jacob always 2-person or 3-person every meeting. It is, "We're a team. That's why you may see any one of us at any particular time, and the one is going to change over time. And, in fact, I deliberately make the one change over time if I can."

Thor: Correct, yeah. So, if the client was being served, maybe serviced once a year or every 18 months or so, it would probably be prudent to have 2 advisors. But the average client is seen 3 times a year, maybe it's 2 and a half. Something between 2 and a half and 3 times a year on the average. And what happens is they have that oversight from another set of eyes going through their financial plans. So, if there's been anything caught on that, then the other advisor can catch it on the review and look at the notes or just flat-out tell the client, "We should take those RMDs and have those go straight to the charity that we know that you're doing. And maybe that can help out with the taxes that somebody had missed," or something like that. So, it wouldn't be good use of time and resources to have 2 advisors there. But having somebody at the next meeting or whatever overlooking it with a different...that would help.

I have 1 example I'm not real proud of. Many years ago, there was a pension that was missed in a plan. And we caught that. And it changed the whole dynamic of it. The client was suffering at work wanting to retire. And somebody had not put in the pension correctly. So, it wasn't catching it in the cash flows.

Michael: And so, a second advisor who came in caught that the first...on a review or something, that the first advisor hadn't actually set this up correctly, and then was able to start the conversation of, "Hey. So, we've discovered something."

Thor: Correct, yeah. So, I think that it's important for the different set of eyes. The clients overall have been led to believe right from the beginning that that's a good approach for all parties involved.

Michael: So, I'm just trying to visualize how that works in practice when I'm the second advisor coming in and I'm discovering, "Yeah, my colleague may have done this wrong." So, now, I need to explain that to the client. I need to, at some point, handle that within the firm, that I'm now disagreeing with or overriding or contradicting my fellow advisor on this client and trying not to get the client stuck with it. I guess, just, how does it work? How do you handle situations where either mistakes or even just a good positive context, like advisors disagree about how a client's situation is being handled or how their plan is being done or how the recommendations are being made?

Thor: Right. So, when you meet with a client regularly enough, there shouldn't be a train wreck. If you're meeting with them regularly enough, before it becomes a problem, you can change the course. And by regular meetings, there are minor changes along the way. And by having my advisors together when we make a decision... For example, we decided to reduce as much exposure to China as we could. And so, we...I like to include my advisors together. We use some of the Dimensional Fund Advisors, DFA, funds, have for years. And we...I like to have them together collectively so I'm not just handing marching orders now and, "We need to use this ETF from DFA because it excludes China specifically for the emerging market exposure," or whatever by having a collective.

So, I've always believed in having buy-in from everyone so that the allocation mix and everything is consistent. Plus, I also get from my other advisors feedback, opinions. I want those. I want those…that feedback from a team approach. So, that the message is consistent to the client, but it's also been fleshed out from other qualified minds. Other professionals that can think independently are not afraid to speak out, and won't be ridiculed or they won't have any rebuttal for their opinions and thoughts. So, it's always helpful to have another set of eyes on the portfolios and everything.

Michael: Interesting. And so, it feels like just there's...this is part of the culture and fabric of the firm almost, that, "Hey, we're a firm where we believe one of the values is having multiple professional eyes on something together. And so, just the way it works around here is you're going to look at what other people are doing, whether it's planning recommendations or portfolio, other people are going to be looking at what you're doing. That's not meant to be a bad thing, that's meant to be a... I think as you said, steel sharpens steel. Like, "Let's have good, constructive conversations and make sure that we're getting to the best outcome or recommendation or decisions, because we're a lot of smart people having these conversations. But we do expect we're going to have conversations and we're going to talk about these things and people might disagree, and that's how it's supposed to work."

Thor: Yes. And it seems honorable to take seriously the advice you're giving to clients. So, why would you just have one person being that advisor overlooking it? That could be, I think, potentially not as powerful as having...if they're qualified advisors, having them in the mix, as well, coming over the plan that another qualified advisor just reviewed with a client maybe a year, maybe 6 months ago that I'm talking the total financial plan, and looking at it from another set of eyes. From a liability, it certainly helps me sleep better at night.

I read this book by Mark Tibergien years ago called Practice Made Perfect, if I have the name right.

Michael: Yeah.

Thor: And I sat down and had lunch with Mark in Seattle at a mini conference right around that period. And it shocked me, when I read that book, that the number one way that he feels... the primary reason an RIA will go down in flames will be over a client's money leaving without the client's knowledge. Fraud.

Michael: Right.

Thor: And so, I think having another set of eyes, I can't...this doesn't address the fraud thing, but it does help me sleep at night knowing that the advisors are overlooking each other also in the client's tax advice and everything, whether it's Roth conversions and all that. I don't see how, over maybe a 20 year-period with one client, one advisor isn't going to make one small mistake somewhere in their advice to that client. Maybe they missed a year with a Roth conversion, maybe there was an IRMAA issue. It could be a number of things. Property tax could have been lowered because of the way that this non-tax-deferred account was managed. There's lots of ways this could be handled, I think, by having another set of eyes to help the owners of these RIAs sleep better at night knowing that there are some other additional set of eyes looking at it. To me, it seems so basic.

Michael: Yeah. But, again, I'm struck you don't necessarily do it the way that some firms do, which is, "Well, that's why every client has 2 advisors attached and there's always 2 advisors in the meeting." Because, I guess, from your end, that's too inefficient. Just that's too many advisors sitting in one room at once and limits the capacity of the firm too much.

So, it's not teaming because multiple people are assigned at any time, it's teaming because clients are rotating through the team over time. And if you're doing good work with ongoing service for clients and really meeting with them regularly and talking with them regularly, stuff's going to come up. And if, for some reason, someone got a little off track with the prior recommendation, just it's going to come up because you're meeting with them regularly and different eyes are looking at clients regularly.

Thor: Yeah. There's that. I remember years ago a conversation with a friend of mine and he was talking to me about his firm. And this is many years ago, maybe 10 years ago. Their average billing fee was about $45,000 per client a year. And they always had 2, maybe 3, people in each meeting. But I'm not billing my clients $45,000 a year on average. So, at trying to keep fees fair to clients, very reasonable, and all the cost structures in place so that you don't have to gouge your clients. To me, that just seems like you're going to have to pay a premium in fees to have 2 or 3 certified financial planners in the room all the time.

How Thor Manages And Organizes Client Meetings With Rotating Advisors [21:49]

Michael: So, how does this work for advisors, I guess, from, I don't know, the meeting prep ends? Just how do you get up to speed quickly and efficiently when you're regularly rotating around to new clients? At some point, just once...for a lot of advisors, once the book of clients gets big, sometimes I got to refresh on the CRM just to remember my clients when they're my clients, and I see them regularly. Never mind when I'm rotating amongst a much larger base of clients. So, just it's harder to remember any particular person or circumstances. So, I guess I'm wondering just how do the advisors make sure they're up to speed on each new client as they're walking into each meeting? How does this meeting prep process work?

Thor: Yeah, that's a great question, Michael. We haven't had a problem with that because we've made sure that copious notes are taken. If there's anyone that is bad at it, it's me in meetings. People know when they come across my notes, they're going to be the most scarce detail. It just is the big points. But my advisors, their notes, especially Jacob, he has a law degree, and so he tends to...

Michael: He documents thoroughly. Good lawyer, Jacob. Well done.

Thor: He writes volumes on client notes after a 50-minute or an hour-long meeting. There will be, sometimes, 3 pages of notes. And it's nice, but it's a little more detailed to go through before the client meeting. We generally have about a half-hour prep time, maybe a little bit longer, maybe 10 or 15 minutes. It depends on the complexity and the client situation.

And so, going through those notes is very, very helpful. I seldom ever have to get involved. Where I have to get involved in something is very rare, it may be once a year or something like that. And I go through these notes and it'll tell me the whole story, it paints a good, clear picture for me. And that's with any advisor going through the client before the review meeting, they have lots of good information from all 3 of my advisors, and a little less so from myself, but it works well. Technology enables us to do that.

Michael: What's the technology? And I think you mentioned earlier your Salesforce with XLR8 as baseline for CRM?

Thor: Yeah, I don't know how many advisors out there are using XLR8. I'm not sure if you're even familiar with it or not.

Michael: Yeah. yeah. Just as kind of an overlay, an enrichment for Salesforce. Because it's...Salesforce out of the box is a little rough until you customize it to your firm. So, I know just XLR8 essentially built a template and framework for RIAs that have just the most common, regular things that you're realistically going to do and use in Salesforce, but built out for you all ready to go so you don't have to reinvent the wheel. You can just get, basically, XLR8 working out of the gate to get up to running quickly with Salesforce.

Thor: That's exactly right, yeah. Salesforce XLR8 is very, very helpful in having a team approach. Because somebody can pick it up and they can see a lot of information quickly on the client. And I don't think that's revealing much to advisors, I think it's widely known that a good CRM allows somebody.

So, the other reason for a team approach is if somebody's sick or somebody's out, the client's always got... And we get...we field calls throughout the day, every day, 5 days a week. There's calls coming in with some simple question the client needs an answer to, or would like to just move on with their day and get a short, quick answer. And with a team approach, you can do that. Any one of my advisors is able to answer that client's question. Very likely they'll be able to.

Michael: And just curious, when do they take notes and catch up on notes? Just I'm sort of envisioning the doctor style at the end of the long day of patient meetings, you've got to do your notes, get all your client notes in there before you sign off for the day. Is it a similar kind of thing in your firm, or are you using technology to facilitate this? Just when you're so reliant on good client meeting notes, how do you make the note stuff happen well?

Thor: Well, that's an important question. The office meeting notes is a template we use. I'm looking at one, actually, right now with an open file on my desk. And we have office meeting notes, points of discussion, quarter 1, quarter 2, quarter 3. And then per plan we'll write notes, like this one it says, "Client is spending too much money." And then a meeting summary will have any summary that an advisor wants to make. Meeting notes. And then meeting tasks, something that goes to the 2 trainee advisors. Actually, 3. My son has earned his CFP. And Oisin and Quinn are 3 young men that are...the 2 are studying for their CFP. And they will...we'll write in here and direct tasks to push it to someone in the office, often 1 of the 3 CFP trainees. And sometimes it's to trade out a certain security, or add, or put some more in cash, or whatever for an impending need. But through these meeting notes, we can add detail and push it out to whoever needs to put it in their tasks to do.

Michael: So, if I'm hearing, there's essentially a meeting notes template for you that's got these areas of a high-level summary of what happened, the detailed meeting notes, and then the meeting task action item takeaways, which I guess you just turn into Salesforce workflows.

Thor: Yeah, it's been from...I've been...one of my passions is flight. I love flying. And I've built an airplane, I'm in the process of building another one, in my evenings and weekends. And what I've learned through the years is one of the things that makes flight extremely safe... It's not safe, by the way, but it helps reduce the risk a lot, is to have checklists. Checklists are very, very important, in my mind. They're one of the reasons why the military has a successful record of hours flown, fewest accidents. And also, civilian airlines, as well. And checklists are a critical part of a safe flight.

And I think, in business, a checklist for stuff that's really important, like personal finance, when somebody is asking you for guidance and advice, and you don't want to miss and overlook things, I think you need to have checklists. And I realized that many, many years ago. And what built it into me was primarily my experience with flight.

So, when I...before I do a flight, I always have a checklist, a couple different checklists, and even 3 checklists if I'm going to fly by instruments, that I make sure I go through and check off inside of a computer in my plane so that nothing is missed. Well, with personal finance, a lot of those things, I have those in place in the office. So, our office is known to be very efficient. And one of the ways to start doing that right away is to have checklists for everything you do. And people, employees, appreciate that.

Michael: So, just what kind of checklists do you have? Just in practice, where does this show up, what are there checklists for?

Thor: Well, thank goodness for XLR8 and the CRM system with Salesforce. Because in there, we have checklists for lots of things, just about anything you can imagine. I've even thought as far as should there be a checklist for, when you walk in the office, which light switch do you turn on first. But it's not that bad. But for somebody new, we even have a checklist for the cleaning lady. And in the office, for all the procedures we have with a client meeting, we have a checklist checked off, "Who was the advisor that saw them? When do they recommend the next meeting?" That has to be put into the CRM system. And then if there's any recommendation for a will update or a trust update, that's checked off for once a year. I'm trying to think. There's basically a checklist for just about everything.

Michael: Interesting. Well, now, I'm struck as well that... I don't know if this has cropped up in the context of your firm. But for a lot of advisory firms, there's always the concern of what happens if an advisor leaves and the dynamics and risks of when clients are really, really tightly bonded to an advisor, you have this eternal challenge as a firm owner. If an advisor leaves, then a lot of clients tend to go with them.

And I'm sort of struck that, indirectly, one of the benefits that comes from the framework that you've got is when clients are really connected to the firm and not any one advisor, because they literally rotate amongst advisors, that in the event an advisor does leave, I would think it greatly reduces the risk and likelihood that clients follow an advisor out the door. Because they don't necessarily have the same connection to that advisor in the way that you would if my advisor is my advisor and I've seen that person every single meeting for 12 years now. Because just you don't even set up that context for them.

Thor: Yeah, there is some of that. I'm not sure that that's really going to be as much protection as an advisor may hope, the firm owners I know you're talking about there. I just thought of another example though. We hired somebody from a firm not too far from us. They're one of the few other RIAs in our area. And they had an implosion when one of their key 3 advisors died suddenly. He had a massive heart attack, they think, on the way home. And anyway, he died in his automobile. And she left the firm, from all the stress and chaos that happened at the death of this advisor, the sudden passing. And that was also a reminder to me of having somebody walking around, like you mention, with all this information and the clients dependent on them.

I remember years ago when it was just me and clients used to say, "What am I going to do when you're not here?" And I would have to say, "Well, we've laid such a great...we have such great planning done and it's all so transparent. All these holdings are publicly traded. You can take all this to Schwab."

Michael: "You just delink us and go to your local Schwab branch, it's totally fine."

Thor: Yeah. But that never comes up anymore. I haven't been asked that question since I could remember, "What am I going to do when you're not here anymore?" That just doesn't come up anymore.

Michael: That's an interesting point, now that question just doesn't come up. So, any challenges? Or, I guess, I'm sure there are some. So, what's the biggest challenge that you had to figure out how to deal with and solve for in this rotating advisor framework?

Thor: It's just so...it seems like it's so smooth that I don't...I can't think of anything. I remember when it...when I decided to pull the trigger on it, I was told by our office manager that, "You better have a meeting with all the clients and you better explain this, what you're wanting to put into practice."

Michael: Because it wasn't even...you didn't found this way.

Thor: I didn't found this way.

Michael: This became a thing you had to roll out.

Thor: Well, it was I can't...yeah, I can't just be the only face that clients see anymore if I'm going to grow.

Michael: Right.

Thor: And so, I said, "This has got to end. I'm just...I'm coming home at 10:00, 11:00 at night. I'm just worn out, the wheels are coming off." And so, I said to her, I said, "We're not going to do it that way, we're just going to do it. And I'm going to...every new person that comes in from now on, I'm going to be adamant that there is going to be a team approach. And if you feel extremely strongly to just work with one person, you can do that. But moving forward, we really want to turn this into a team approach."

But I look back now and I can remember that we also had needed to start adding advisor relationships to the existing clients. And by not announcing it and having a meeting with all the clients or making a big deal out of it, it just became normal operating procedure. It just became normal practice.

How Thor Organizes McIlrath & Eck’s Employee Structure [36:21]

Michael: So, tell us just about the firm overall. I don't know if you measure by assets under management or clients or revenue, but just help give us context for the size and structure of the firm overall.

Thor: So, right... We run a Friday report every Friday. Right now, I just looked at... I was thinking you might ask that question, Michael. So, I looked at last Friday's. And last Friday, it was $611 million under management. And we add right now, it's about, $5 million a month of new assets under management.

Michael: That's with market growth or flows, you're taking in$5 million a month in net new assets, asset flows?

Thor: $5 million a month on average is what we have coming in the door of new.

Michael: Okay.

Thor: Yeah. Year to date, it's 28 financial plans and new financial plans. So, I think that translates into financial plan updates, "FPUs" we call them, and new FPs, new financial plans. I don't have that number in front of me right now, but it's about...I think it's about 10 financial plan updates and almost 20 new financial plans for new prospective clients...for new clients that hire us. They pay us $975, and we do a two-meeting, each meeting is about 2 hours long. And we go through cash flows and give them a MoneyGuidePro comprehensive financial plan.

And the $5 million a month of average new money was the same last year. We had a real slowdown. We were averaging about $100 million a year, up until last year. We've just been living on referrals only the last, almost, 3 years.

Michael: Okay. So, how many clients is this?

Thor: The average household is around $700,000 right now. We have about 970 clients. Interestingly enough, out of 970, there's a bunch of adult children that we don't know, that we just...

Michael: Okay.

Thor: Yeah. Scattered. Even some in Switzerland, 1 or 2 there. They're scattered around.

Michael: So, folks that you accommodated, right? The client says, "Hey, will you set up an IRA for my kids?," and you're like, "Yes."

Thor: Correct. And I believe that's about 300 of that total. So, there's really about 600.

Michael: So, it's a big number. Okay.

Thor: Yeah, it's a big number.

Michael: So, it's closer to 600 to 700 that are really active, actively engaged clients.

Thor: Yeah. 700 would be on the high, correct. And my average advisor has about 2 meetings a day, 5 days a week, after you take out vacation time and so on.

Michael: Was going to ask just, so, what this adds up to on the advisor end. Because if you've got 600, 700 clients that you're actively engaging with, and I think you said earlier your model is 2 to 3 meetings with clients every year. So, when you got like 1,500 meetings to cover across a couple of advisors, just that meeting count gets fairly high fairly quickly. So, that is a reality for you of 2 meetings per day per all week long. 10 meetings a week is pretty normal for you guys.

Thor: Yeah. And it's even more sometimes. Like right now, we have a philosophy, work hard and play hard. And it comes from my experience, I think, growing up. Troy grew up on a 140-acre farm down the street here. And I grew up, my folks' farm, several hundred acres of apples over in Central Washington. And we both come from farming backgrounds. And I believe strongly in this work hard, play hard philosophy.

And so, what I try to do is summers in Puget Sound are just glorious. I don't know if you've ever been out here in the summertime, Michael, but it's just amazing. And so, I get buy-in here on let's get out of the office on Fridays at 1:00 starting right before 4th of July, or right at...I think it's always been the week or 2 before 4th of July. And then right after Labor Day, we'll start...we'll end that policy. But...

So, wintertime, we try to schedule as many meetings as we can so that summertime... And clients don't really want to come in and talk to us as much either in the summer months, it's so nice.

Michael: Right, right.

Thor: So, we really bunch up our hours. In fact, we do a lot of Saturdays in the wintertime. We started doing that 4 or 5 years ago. I had been working Saturdays for years and...when the kids were grown. And so, the...my main point is that we even have an average of 3 a day during, for example, January, February, March, maybe April, and then back...it starts backing off about now to maybe one and a half on average per day per advisor.

Michael: Interesting, interesting. So...and so then you really do get a 300, 400-plus meetings per year per advisor. Except you can't do 10 a week all year long because you've got vacation and some professional development time and conferences and such. But you're...you really do live a 300, 400-plus meetings per year advisor cadence.

Thor: For sure. Absolutely. Yeah. Yeah. And part of the way to do that is I've always believed that advisors should be doing what they do, and they should be spending as much face time with clients as they can. So, I have everything run in an office so that it's efficient as possible to keep that advisor interacting with clients as much as possible and not time spending scheduling appointments. My advisors spend no time prospecting for new clients. We spend zero time doing that during our workdays. The only one that does that is me going out to college campuses and doing an education program through the adult education at different colleges. I'm the only one that goes out and spends... And I don't spend daytime hours doing any form of prospecting. So, any kind of prospecting for prospective clients is only done off hours and it's only done by me so far.

And those advisors are spent all day long just working on client stuff. Somebody is scheduling all their meetings, taking care of fielding all the phone calls. There's no vendor conversations other than maybe scheduled on an average of every 3 months where we'll sit...all of us formally sit down together and sometimes wipe out half a day with a vendor we want to look at their investment strategies or whatever, or maybe an update.

Michael: So, what does the rest of the staff structure look like just to support your advisors to keep them as client-meeting and client-interaction-focused as they are?

Thor: Yeah. So, there's 3 people in client services, and those 3 people are handling... That's Melanie, Quinn, and Tanya. And they're managing the inflows from what's pretty light to us on an average month now of about $5 million of new money to manage. I don't count any of the growth as anything for the new money, that doesn't count in my mind. Market's up or down, it doesn't have any bearing on that. So, when I say "new money," that's new...that's clients retiring often from Boeing or wherever they're retiring from, new money to manage coming in the door. So, there's 3 people that are doing that. And there's, of course, ongoing distributions, RMDs, and so on. So, there's 3 folks handling that.

And then we have the front-office staff. That's...we got Mindy and Bree. And those 2 are handling fielding all the incoming calls, outgoing calls for client reviews. That's the main points of that job on the front desk.

And then we have Vicki that...she handles, as an office manager, basically the go-to person for ongoing throughout the day to do with office management. And then we need to hire a new person, oftentimes she's the one front-running all that.

And then we have the advisors, Jake, Jeremie, Troy, and Thor. Then we have the advisor trainees that we're trying to pull up. Although they don't need pulling, they're very ambitious and very bright young men. And that's Quinn, my son Dalton. And we have Oisin, I mentioned to you, he's going off to Norway on a full scholarship to get his MBA. And my son Dalton, he wants to work remotely from there. We're going to see how that works. It's a good possibility that might just work out well for all of us. My son Dalton is going to Florida State and getting his MBA. He also earned his CFP right out of college at Central, but he's going to Florida State full-time getting his MBA there in financial analysis. And working remotely, it's surprising how much he gets done. It's working out really well, it's been since last fall.

And then finally, we have 2 other interns.

Michael: So, what do the advisor trainees and, I guess, interns do? Are these folks who are sitting in meetings and helping in meeting notes? Are these more paraplanner types that they're doing meeting prep and financial plan analyses and that stuff? Is it something else? What do they do?

Thor: So, these... My son, Quinn, and Oisin, they are... And Caden I should include in that, too, because they're all working together, except Dalton's working remotely from Florida. But what they're doing is the advisors are pushing through the trades to make through the meeting notes, and they're directing the trades in the client accounts after each meeting to make for both tax reasons, free up more money for income, or what have you, rebalancing, and those sorts of issues that they're handling, the trading directed by the clients. And then that's typically my son and Oisin. And then we have the reports that Caden is being trained right now from Oisin and Quinn to be able to generate the client reports for their daily...for the meetings coming through each day. And those are the primary roles.

Michael: So, these dynamics of kind of 900-plus clients in total, but really about 600-plus active clients across 4 lead advisors, with the meeting count and kind of intensiveness that you've got, how do you think about capacity? Are you feeling near capacity? Do you still feel like you have a lot of capacity left to go? How do you approach that with the volume that you've got already?

Thor: I feel like we're at a good spot. My main role here is to go around and make sure everybody's happy. They're all professionals and they all know what they're doing. They care very much about what they're doing. And I need to keep morale high. I need to find anything they need, help them with it, meet with a client that only wants to meet with Thor, which that comes up. And that's great, I enjoy that.

I also failed to mention that the trainee advisors, they're also inputting data for the new financial plans and the FPUs, the financial plan updates. So, they're inputting that data. And then the advisor polishes it up and makes sure... So, there's a lot of mentoring and coaching going on. It's very helpful. I'm very grateful that these young men have gone through the...they wanted to be financial planners. Oisin's degree is in economics, but the other 3 it's in the certified financial planner program. All 3 through Central Washington University. Now, Dalton's going off in a little different direction with the financial analysis, but they already have a desire to be in that career. So, they're highly specialized in their formal training, but they're really getting...the on-the-job training is really where the rubber's hitting the road.

And so, they're helping my advisors and they're being mentored by my advisors at the same time throughout the day, all day long. So, we're working very closely together. And the advisors don't expect perfection out of them, they are mentoring them. It seems to be going very smooth.

Michael: And out of curiosity, what else is on this Friday report? Just I'm intrigued that you were shooting off a lot of really good "businessy" numbers. So, this is someone that also loves my weekly data reports. What else is on this Friday report?

Thor: So, in the Friday report, we run the numbers, going back about 12 years ago, of the weekly growth rates in assets under management. And we run... Our trend was 30%-a-year growth. It's down to 21%-a-year growth year over year going back. I think it's right around close to 12 years, running average.

Michael: Wow. That's annual rate of what has been growing out over the years?

Thor: Yes. No, that number includes market growth and market non-growth.

Michael: Right, right, right.

Thor: That number is strictly AUM, Michael. And next to it, on the far right, we have number of clients in fine print. And then we have, on the furthest right of the column, the trajectory with a 30% assumed growth where we should be at. And right now, that's right...a little over a billion, not $610 or $11 million.

And we also have another group that joined us from a broker-dealer out of the L.A. Basin area last year. We don't include them in our AUM, but they're growing very fast. There's 2 young, bright advisors, they're both certified financial planners. They've been smart enough to beef up their staff for expected growth. There's 3 client service staff with these 2 young men. And they are at a little over $100 million, just north of that, around $110 million, that they manage. They're not included in that. So, they're under our ADV, under our McIlrath & Eck.

How Teaching Adult Education Retirement Courses Helped Thor Grow His Firm [51:47]

Michael: Okay. And where does this come from? How do you actually generate this?

Thor: Well, it started really from doing seminars, and then these classes. Doing classes at the local colleges for financial education trailed very closely with what I used to do doing seminars. So, I was invited into the college. I don't know how far you want me to go with this.

Michael: Oh, I'd love the whole backstory. So, I guess even take me further. Well, just because $600 million dollars is a lot of assets and clients. So, where did it all come from? So, it sounds like you started in seminar marketing world?

Thor: Well, I don't think of it as a huge deal. So, it's nice to hear that from you, it really is. Because all I read about is advisors that are billions and billions under management. So, I just don't really think about it. But...

Michael: That's an incredible number at $600 million. So, yeah. So, how does this come about?

Thor: We had...I had an invitation to teach an adult education class at the local college, Everett College. And back then, it was called Everett Community College. And now, a lot of the community colleges don't like to be called community colleges anymore. And so, at first, I turned her down. I was helping her with some statistics class she was taking with some homework. And I just thought, "I'm too busy for that," when she said, "Hey, Thor, you might be interested in doing this adult education class for our college. And the couple doing it work for," at that time it was, "Smith Barney. And they're dissolving their marriage and they're fighting over who gets to keep doing the class. And the class is getting too small. And so, it's just getting pathetic."

Michael: Oh, my goodness.

Thor: Yeah, she said, "Sometimes we're getting 2 people signing up for the class and they're fighting over who gets to teach it." And she said, "It's just not what it used to be." And so, I said, "I don't have time for that, Karen, but appreciate the offer anyway." And then don't remember exactly what I'd said, but I just thought that would be crazy for me to do that.

Then about a month later, I don't know what came to me, but I realized, "That could be really fun, actually teaching an adult education." And I started thinking after work on my drives home what I would teach and what I would say and how I would say it and the things that I saw that just seemed all wrong. And so, anyway, I thought, "That might be kind of fun."

So, I called her up and she said, "Why don't you come down and meet with Sue, the director of the college here? And I'd like to brag you up to her and sell you to her." So, she goes, "Why don't you drag along some material that you think would be important in teaching a class?" And I say, "Okay." So, I showed up and right away they said, "Yeah, let's do this, let's put you on the calendar for these dates. So...

Michael: So, what was the class on, what were you teaching?

Thor: It was on retirement planning. It was retirement planning today, or something like that. And...

Michael: And when was this? Just where...when are we?

Thor: I could tell you. It was in March of 2006.

Michael: Okay.

Thor: And so, I went out there and the class was full, there was like 40 people there. And I remember as I was walking to the class, I heard all these people on the playground and all the things going on at the campus. And I thought, "Jeez, this is just not going to"... Out on the campus, all these young people, and I thought, "This is crazy. Adults coming out to this thing?" It was hard finding parking.

So, anyway, I got there and cleaned...wiped the desks down and got the class cleaned up and people showed up. And I couldn't believe how eager they were to learn, all these people working at Boeing down the road, and some from Microsoft. And they were just so hungry for knowledge. And I just immediately loved it. I just loved it. And it was in a total...it was an environment where I didn't have to buy everyone a chicken dinner.

Michael: And it sounds like Everett Community College is doing all the marketing, promoting, getting people in seats. You literally just have to show up and teach.

Thor: You literally have to show up. They handle the enrollments. Now, what we did is we hired a service to handle the mailing to increase. Because when Karen told me there's not enough people showing up anymore, I realized there's got to be some way to augment this.

And so, I hired a company to handle the mailing, and I bought their books from them. And I found that the books weren't...they were heavy on insurance, but I... So, I just didn't use the book and I didn't use their PowerPoint. I gave the book out because the company wanted me to buy so many of their books. So, I just told people, "We're not going to use the book, but here it is. This is for your own use after the class." And I warned them, I said, "It's heavy on insurance," and things like this.

Michael: Because just the company's deal was like, "We don't charge you a bunch for doing the seminar mailers, we charge you for the books."

Thor: Correct.

Michael: Which were sold at a premium and that was just how they got paid. So, what was the company that you were working with to do this?

Thor: Back then, it was called FMT.

Michael: Okay.

Thor: And I'm not sure if that's what they're still called.

Michael: Yeah, they've had some iterations over the years, but they're still out there as a version of education marketing program.

Thor: Okay. Yeah. So, we used them. There was a guy named Jeff Franz that was talking to me, and everything Jeff said was true. That, "If you hire us to do so many mailings, we send out so many. We'll augment the class by these sizes." And it all happened just like Jeff had... And I found with getting people to attend seminars and giving them a free chicken dinner that the rule was the same, the 70-70 rule. So, you'd have 70% would come in to see you if you did a really good seminar, 70% would hire you. Except that sometimes it just never happened. But with classes, I found that 70% of the people would come in to see me and 70% of those would hire me to do a financial plan.

And they were...I found that people that came in off the street through a couple of years after that, from 2006 to maybe 2008, I found that those people were not good clients, that they didn't believe in our philosophy maybe, or they just...I just can't think of all the reasons. But when we did...when we have people go through one of these 6-hour courses, spread out over 2 Saturdays or 2 Thursdays or 2 Tuesday evenings, what we found was...what I found was that they were much better educated and, in a positive way, brainwashed. In a positive way, they had a good understanding of why it's important to consider diversification as a way for protection, some of the basics in investing, and why tax management is not critical but a good thing to have a basic understanding of such terms as marginal tax rates, effective tax rates, capital gains taxes, some of these concepts, basic concepts, it is not a bad idea to have a basic understanding of those. And estate planning, what a will and a trust is.

So, then we're not having to explain our value equation to every single person. And some of those people are coming in to interview you for a job, but many of them are coming in to learn something. And once they see that there's a lot here to doing personal finance, "After all these years, I may have built up a net worth of a couple million dollars, less or more. And if somebody has got a reasonable price tag to help me steward, manage that effectively, it might just be worth it."

So, the 2 people coming in, I found over the years, to one of these classes are people that are looking to hire somebody, they're like interviewing you. You don't really know that at the time. And there's others that come in to learn something. And after learning some, a lot of different basic concepts in 6 hours of time... Because hopefully you haven't wasted anyone's time. You've hit the ground running in that 6 hours and not turned any of it into an infomercial. That they realize that, "Maybe I should get some help with some of these things."

Michael: So, talk to me a little bit more about how that works. You put some numbers there that are, at least I think, pretty big numbers. I think you said of people who go through the class, like 70% of them may come to you for a follow-up meeting. And then of those, 70% of those will hire you to do a financial plan. So, almost half the class.

Thor: That's about right. It works out about half the class. Yes.

Michael: Half the class ends out engaging you for something.

Thor: Correct. That is correct. Sometimes you'll have a class where 100% of them will come to your office to see you. Other times it'll be 50%. But if you do 3 or 4 classes, or I was doing even more, like 10, 12 a year for a few years there at least, there was sometimes 50%, sometimes maybe 30%. But it worked out to an average consistently over time of about 70%. And that's what I remember Jeff Franz was telling me that. And that was...in the early days of seminar marketing, that was pretty standard.

Michael: Interesting. And so that's how you get to so many hundreds of clients. At your peak, if you're doing 10-plus classes and bringing in 20 or 30 or 40 people in a class and getting 10-plus clients when you go through a class, that adds up to a lot of clients.

Thor: Yeah. No, those are financial plans. And if you're charging $4,000 to do a financial plan, your numbers might be different. I don't mean that to be sarcastic, I just have no idea.

Michael: But just you had a lower price point for yours.

Thor: Exactly. In the early days, it was $500 to do a financial plan when I think I frequently saw $1,500. I always heard these prices for a financial plan, but in 31 years of being in this business I've only seen maybe half a dozen financial plans from other people. Everybody says they do financial planning, but I've almost never seen it, Michael. I've asked people to produce a financial plan years ago and sometimes what they'd produce was a proposal for a variable universal life from a New York Life Insurance agent or a Prudential agent or something. But the level...the financial planning that you see in writing is pretty scant still today. But saying all that, maybe the statistics are flawed because you're not going to see them if they had a plan because they're so happy with the advisor. Maybe there's some truth to that, I don't know. But I'm just trying to point out that we were doing a lot of financial plans at $500 back then.

Michael: Was that the whole business for you? Or then you do a plan, and then a portion of those might also end out doing assets under management business with you, and then that's how the AUM base ultimately grew?

Thor: Yeah. So, always, the hope was that they would have money for us to manage. So, we do the plan because I felt strongly we should have a... Kind of like when I learned how to build a house, kind of fumbled through the first custom home we built. And some of that was from buying off-the-rack house plan. And there was all kinds of issues that came up later on from not only the electrician, but the plumber. So, I've had it ingrained in me that a good plan is always...

And being a pilot, it should be obvious to any halfway serious pilot in aviation that they're going to need to have a flight plan to have an expected good outcome to handle emergencies and everything. So, pilots are constantly working on planning for emergencies all the time. I had somebody up the other day and I was just...he was asking me why I was looking around on the ground all the time, because he wanted a visual flight plan. And I said, "Because I'm looking for a place to put the plane down if the motor blows up." And he just looked at me in horror. And I said, "But that's what a good pilot is always doing, is looking for a place to put it down."

So, I was always a strong believer in having a financial plan. And the cost has always been very, very reasonable. Did I cover my time at $500 a plan back then? Yes, I did. Did I lose money? I'm not sure, I don't think so. At $970, was there any profits in it? I don't think so. But at least I got compensated for my time. The planning class now at $975, if we weren't doing a lot of financial plans, maybe an advisor is doing 3 new plans a year. I think that the time involved for the client would be a lot more than what we spend now on doing, I think, a very high-quality financial plan and outcome for a client. We just do a lot of them. We're not doing onesie and twosie, or 3 or 5 a year. We're doing a lot more than that. In most years, we do 150 new financial plans a year, and 30, 40, maybe 50 updates as well as that a year.

So, we've always taken financial planning very seriously. We have a very systemized approach to it. I remember years and years ago, with one of the software vendors, that financial planning meeting was like 6, 8 hours long. And the client, it was just as miserable for them as it was for me. So, we want the planning experience to be meaningful. And when the client leaves, to have actual data and specific advice to act on so that they're empowered to do it themselves if they want to. And what we find is that most of them engage us to do it.

Now, a lot of these plans, when advisors do these the way I do it, is they're not going to get money to manage right off the bat with many of these. They're people that are still working. They're often a year, 2 years away from retirement, maybe 5. And your payday comes when they retire. Most of these people, if you stay in touch with them and keep doing their financial plan updates... We would not do financial plan updates for $475... Do we lose money on it? I don't think so. Do we make profit? Probably not, again. But we at least get...it compensates for the time about right. And what happens is, if you keep these financial plan updates for these people and treat them honorably, is that they'll almost always hire you to manage their money when they retire, they'll want your help.

How Thor Turns Students Into Prospective Clients [1:08:53]

Michael: Right. So, Thor, help me understand how you actually turn this into business. I understand about 70% of the people in the room would come to see you for...I guess for an approach meeting, and then 70% of those do a plan. But how do you actually get them to come and meet with you and just not have that be awkward or inappropriate in the community college classroom context? How do you actually do that to get them to go from being students to being prospective clients?

Thor: I think the first thing to do is to make sure that you're very careful that everything you do is not exaggerated in any way, that you're self-critical. And you're auditioning for a job, potentially, in front of maybe as high as 20 couples.

Michael: Right.

Thor: And maybe there's 45 people in there. That's not that uncommon. And what happens is you're...they're looking at you very carefully and you need to be careful that you do not exaggerate anything, that you're very transparent and very likable. And how do you do those things? In my mind, it's just being authentic and it's trying to appreciate the value in every human being, as corny as that sounds. It's really putting effort into that. And if you do those things, you come across as a pretty gracious kind of person that somebody wouldn't mind hanging around with for 5 minutes at least.

Michael: But how do you do the ask?

Thor: And so, when you do that, you tell them…So, you need to tell them up front that, "When we're over...when we're through this class... I'm going to spend a few minutes explaining some of the ground rules. When we're through with this class, everybody here is going to be invited to my office for a complimentary consultation. I'm off the highway on Smokey Point, and big glass building right off the freeway there. And we'll send you out a packet of information, tell you...we'll put in a brag card, try to make you think we're all really nice people. And we'll want you to bring in a tax return, any financial statements, and make it a competent conversation so that I can give you some specific advice, some specific ideas. In that hour time, you should have some pretty good ideas and things you can use to help improve your financial life. And then if you want to hire us, we have a separate charge for a comprehensive detailed financial strategy." I don't like using the word "plan" much because it doesn't really say a lot. So, a strategy, to me, says some specific action steps, what we should do, and so on.

So, I tell them in just those words, Michael. And I tell them...I look at them all in the eye and I tell them, "When you come in to see me, you'll have some specific advice in that hour. And then if it feels like it's a good idea to hire us, we send you away and you can pay us when we're done with the financial plan, generally in about a month. We'll have a couple separate meetings." So, I explain the process very quickly, briefly. I said, "If you want any more information, you can find it all on the internet on our website. I'm not going to turn this into a commercial, folks." And then I move on. That's it.

And then at the end of the class, I tell them, "Here's a survey from the college. The college needs this handed back tonight." I drop it off in the...at the at the main office. And then, "Answer candidly what you thought of this class. Please answer it as critically as you like. Because, at the end of the year, they give me back all the marks and show areas of improvement."

"And then I have my own. If any of you want to see me, check, 'Yes, I want to see Thor for that complimentary consultation.' 'These are areas of improvement that Thor could utilize.' And if you put my...your e-mail address down here, folks, you're going to forever be slammed with e-mails from me and they'll never end."

And then that's it. I take those. If they checked "yes," they want to see Thor for a complimentary consultation, then immediately in the morning somebody's calling.

Michael: And where does the presentation come that you're delivering for this? Does the college give it to you when they invite you to do retirement planning today? Or did you have to make this from scratch? Or did you find a 6-hour retirement workshop in a box? Where does the actual presentation come from to do a 6-hour class?

Thor: Okay. So, originally, I used FMT for basically the turnkey mailing to get the classes up. Because I couldn't stand the book. And the PowerPoints, I never liked it. So, I just stood up for 3 hours the first session, 3 hours the second session, and I went right off almost entirely from rote memory.

Michael: Because you've done these conversations so many times with clients. "I'm just going to start sounding off on the things you all need to hear about."

Thor: What I did is I always write an outline on the board. And in that outline, I go through 8 topic areas. And it ends with estate planning. Near the end or middle will be investment planning. And tax management and so on, the basic topics. And then, I use that to keep my head focused. And I have lots of handouts I use. So, throughout the evening, or if it's Saturday morning, I'm walking around with handouts, handing them out, just like in a regular classroom. And I have 2 boxes I keep, I walk in with those. And I have them all organized. And I lay them all out on a desk in front of me and I use those prodigiously through the class.

And then, now, I've developed my own books and PowerPoint completely on my own, and paid to have those printed up in a more polished, more professional, and in a way that I could use. So, the old ones were heavy on insurance, annuities, life insurance. We don't find the need for retirees to be bulking up on whole life insurance, and typically not the need for life insurance. And we even find that most long-term care insurance, when you go through the analysis, that a lot of that stuff can be self-insured. So, we see the book is heavy in those things years and years ago and I just never liked it.

Michael: So, as it's evolved for you, version one, what you were describing, tax management, investments, estate planning, you're essentially just writing CFP board topic list kinds of things and just kind of sounding off in the areas, right? Like if I've got 8 of them and I spend 20, 30, 40 minutes each, plus some questions, 6 hours goes by pretty darn quickly. And then as you did enough of those, you started making your own version of, "Okay, I'm going to make my own PowerPoint. I think I want to include these visuals because I keep describing it and it's coming up. So, I'm going to grab a good visual for this." And the presentation came later or got crisper later.

Thor: That's exactly right. One of the... When Jeff Franz sold the business, FMT, he...they brought out a video crew, the new owners, and videotaped me doing a couple classes. And I noticed the book... They took some of my handouts, asked me if they could use those. I said, "Fine, that doesn't bother me at all." And they started showing up in the book. But it was still...I just thought it wouldn't work for what we were trying to do.

Michael: So, what were you spending, I guess, to do the mailers? Did you have a...did you keep a bunch of metrics on this, like, "We spend X dollars and we get Y dollars of revenue"?

Thor: Yeah. Yeah, that's true. So, what we found was to...we would have, on average, about $2.5 million of new money per class. And each class back then was like $6,000 for mailers.

Michael: Okay. So, you're getting $2.5 million of new money, which can give you $25,000 a year of revenue at a 1% fee for a $6,000-dollar mailer fee.

Thor: Correct.

Michael: Plus, some planning fees that you were charging for separately.

Thor: Yeah. So, the financial planning fees, advisors have reached out to me over the years, and I found that many of them weren't charging for the financial plans. And I still find that today, I get queried every once in a while. And I really encourage them to charge for the financial planning fees. Part of this was a retired partner of mine, Sam Eck, that's been practicing law for about 50 years. And Sam has always been adamant that advisors should be charging fees for their financial planning. Why would an attorney do a will for nothing? That would probably scare the daylights out of people. "Why are you doing this for free?" Why should we be doing financial planning? It's a lot of work. It's a lot more work doing a financial plan for just about any 60-year-old within the middle-income bracket. It's a lot more work than doing a will. So, why should you not be charging for it?

So, I found that with the planning fees, we would cover entirely the cost of the mailing. So, what I was doing was reinvesting that into... That was out of...kind of out of my...at least I'd get my time... I could look at it 2 ways. I could cover my time with the financial planning or I could cover the cost of getting the new client.

Now, through the years...

Michael: Just math-wise. Right. And just $6K on mailers to basically recover, and $6K in financial planning fees. And at the margin, it's your time to do 6 hours of classes to get $2.5 million of new assets. That's a really good ROI on time for doing workshops at that point. That's a couple hours of workshops for $2.5 million new money on a repeatable system where you just keep doing your mailers and doing your classes and a thing you've, at that point, taught a zillion times and can do in your sleep. That's a very honed-in system as that iterates.

Thor: Yeah. One of my friends that has taken my advice and they're using the...we're giving them our books and everything, they just got a client 2 weeks ago, 1 of them, for...with $9 million of new assets to manage, just 1 person.

Michael: Wow.

Thor: And sometimes we would get that, a client with a large investable asset base. And that would skew the numbers way out of the park. But over time, I think that everything reverts back to the mean. And so, I think what we're going to...what advisors, all of them, are going to find is that either do what I'm doing as a systematic approach to getting clients and growing their firms or they're thinking about it as it's always going to be the same if they just do the same basic things. Because some classes are going to be...

I've seen evenings where I would do a class and I overheard someone in the men's room. I went in there and walked out. And as I was walking out, I heard people in there saying, "We got to go see this guy. We can't wait to go see him. This guy's got... This is great."

Michael: That's what you like to hear.

Thor: I've heard that. And, of course, that's when you get the 100% of the class maybe coming to see you. You'll have your evangelists, of course, during a break. They'll go around and tell everybody, "This guy, I think he's really good because he's saying way different stuff than what my guy or my gal is saying."

Michael: Right.

Thor: And so, that's where you'll get some of these really high... But over time, it's going to work out the same where everybody does it just like I do it. They're going to find that it's about $2.5 million of new assets under management. And then as their firm grows, the referral rates are going to start really kicking into high gear.

Michael: Right. So, well... So, and on that vein, you said earlier growth has been slower for you lately and that it's predominantly referral. So, is...are these educational workshops not part of your marketing world anymore?

Thor: They haven't been for several years. Since COVID, it really...it's been pretty much nothing. And so, we're...

Michael: Because COVID just knocked out in-person stuff and it didn't bounce back afterwards, or you just didn't even want to go back and try anymore?

Thor: Well, the college wanted us to do Zoom only. And we did 2 of them last year and it was so unfun to me.

Michael: Yeah. From the...I can attest from the speaking end, as well, just as a speaker, virtual seminars and workshops are really unfulfilling. You thrive off of the audience interaction and the energy of other people, and it's not the same in any way, shape, or form when you're doing it in front of a camera and there's no one else in the room, it's just you and a screen and some faces on the screen, maybe, if they even all have their cameras on.

Thor: Yeah. When I first met you at INSITE, I felt your energy. It was... And I totally understand because I do that myself, and it's so different. And my advisors, they want to start doing it now, too. And they want to do the Zoom. Because they saw all the evenings I left the office at 4:00, 4:30, to show up an hour early, make sure that the desks were cleaned off and that everything was good in the classroom, get my handouts ready. And they saw that in the late nights and they want to do the Zoom. But I was just...we were just talking about it, that it's just, "You guys can do the Zoom. All right? But I'll go out. Everett Community College...Everett College has opened it back up again for live. I'll do that. And you guys can do the Zoom."

Michael: "And we'll see who puts up some better numbers in a while."

Thor: Well, it's interesting. I've talked to advisors that do it the same way I do it exactly. In fact, some of them I've mentored. And they are reporting outstanding...the same with the Zoom.

Michael: Oh, interesting.

Thor: Yeah, they're reporting the same. I've got in different parts of the country. So, a little group of us, we share notes and information.

Michael: So, it's not necessarily that you don't think the Zoom can produce results, but just you just literally don't enjoy teaching that way without getting your in-person audience. So, that's why you want to go back to Everett as it opens up again?

Thor: That's right. That's correct. Yeah. I think that's all of it right there.

The Surprises Thor Encountered On His Journey [1:24:41]

Michael: So, as you look back on this journey, just what's surprised you the most of building your own advisory business?

Thor: Well, I've liked seeing the fiduciary talked about a lot more than it used to be. I remember years ago trying to describe to people what a fiduciary was when I dropped the broker-dealer many years ago now. And it was almost 20 years ago. And trying to explain it, people's eyes just glaze over, it didn't mean anything to them.

Michael: Right.

Thor: But nowadays, people are, of course, I think we all know, are much more keen on that. I'm surprised that it didn't happen sooner. But we...you can see...you could have seen it...you saw it coming though with more of the colleges coming out with CFP specialty programs. There's even a doctorate, I think, in financial planning at a couple schools now. And more people in their early 20s are starting to learn, late teens, maybe 19 years of age, are starting to hear about the CFP career path. And they're very... Where years ago, you had to eat what you kill. You had to be a marketer first. I remember when Merrill Lynch had the program for CFP. And then they...if you put "CFP" behind your name, you were fired. There was some controversy at some of the wire houses of getting CFP.

Michael: Whereas your whole environment now is they don't eat what they kill. You're out...you've been out doing seminar marketing for years. Their job is just meet with a whole lot of clients on an ongoing basis and just be awesome advisors meeting with a whole lot of clients on an ongoing basis.

Thor: Yeah, that's right. And earlier in my career, I just thought it was a shame that so many quality people in our industry... Back then, we weren't ashamed to call ourselves stockbrokers. And so many people in the industry were gone because they couldn't get enough clients. And I noticed that right away, all my peers were gone. And I learned from that that there's a lot of quality people that are no longer around me that are gone, and they just can't get any clients.

And so, I made a decision a long time ago that what I need to do is I need to use my strong work ethic. And I'll be the rainmaker. And I'll bring the clients in. And I'll get these people that would otherwise be thrown out of the industry because they're not a rainmaker or a salesperson, god forbid, or they just can't get clients. But they're great people, they want to serve, they love what they do. And Jake and Troy, they came from that environment. Jeremie, nobody would give him a job, but he was getting his MBA, his second graduate degree. And...

Michael: Sharp guy.

Thor: He is very sharp. And Jake and Troy. Jacob worked for AXA Advisors, he was top of his class at law school. And... But he couldn't get enough clients to stay in the business. And Troy worked at Waddell & Reed, very bright guy, always does the right thing for clients, and always will. And he will put other people before himself, and he'll suffer as a consequence if that's what it takes. And this is the kind of people that you want. And there's...I've seen people like that come and go. And it's just like, "Let me go out and be the rainmaker. I'll go out and I'll bring the clients in. You just have to help me take really good care of them and you focus on being the best, greatest advisor you can." There's a lot of firms growing that way, that people don't have to eat what they kill.

Michael: So, what was the low point for you on this journey of building the business?

Thor: Well, I remember in 2008. I'm sure you do, too, Michael. Those were tough times. Seeing people's portfolios down 25%, 35%, maybe even 40% at the lowest bottom. And those were low points, when you had political leaders that didn't really have anything optimistic to say. And it was very... You saw people losing their homes. I remember I had a guy that helped build a house for me, I had to move his...I helped his family move out of a house when they lost it to the bank. And now he's thriving as a builder again. But those were hard times for a lot of people. And that was, I think...

Michael: How did that show up for you in the business? Where was the business at that point?

Thor: At that point, we had about $40 million under management. And Troy was working at Waddell & Reed. And Jake, I hadn't met him yet. Jacob Blukis is another one of my advisors. His parents had just become clients right after that. And then they suggested I meet their son, that he'd be a good addition to my firm. I'm very glad they did encourage me to meet with their son. And Jeremie was the same thing, it was his father-in-law that wanted me to meet him. But... Nobody would give him a job at the time in our industry.

So, those...that period was pretty dark. But we had about $40 million at that time, it was just me and my partner, Sam Eck. He was very involved in the legal entirely, the wills and the trust. And we worked side by side, but doing different...very different things.

Michael: Right.

Thor: And we thought that we would have a great advantage with referring clients back and forth. But I had so much growth from the classes, essentially, that we didn't have any time to take advantage of any opportunities from all of his years of practicing law, it just never came to fruition. But we just mainly worked together because we liked each other, we love each other. We just work great together, we wanted to be around each other. Sam Eck, my retired partner. But those were...that was a period that I don't want to relive again. But it was...it's been good, solid, steady growth ever since.

The Advice Thor Would Give His Former Self And Newer, Younger Advisors [1:31:49]

Michael: So, what do you know now you wish you could go back and tell you from 15-plus years ago when you were getting going in the independent channel?

Thor: I would encourage anybody in our industry to make sure, as a prerequisite, a basic, that you get the CFP. I love the Certified Financial Planner program, big fan of it. And that you always become a prolific reader in anything to do with history, it has a lot to do with finance in a lot of ways. You understand all things about personal finance and people. And be careful about trying to help every single person that comes in the door. Because one thing that we found over the years was that people that came in that I felt sorry for them, bad things that often, when you look back, they had done to themselves through poor decisions and so on repeatedly, they can be a real drag on you.

So, we have a very, very pleasant clientele, because I think like a lot of advisors have been selective in who they want to work with. And one of the things when we add a new team member here, they almost invariably bring up, is that, "It seems like the clients here are so nice." And it's, "Well, they've been selected carefully. We've been careful in who we've selected.” We don't tell them that, but they've been carefully selected to be our client here.

Michael: So, how do you handle that for the ones that aren't a good fit? Because it's one thing to say, "Be careful trying to help every single person in the door," it's another to actually reject said people when the time comes. Right? It's hard to turn people away who are in need, who seem to be in need. So, how do you actually tell them "no" and turn them away and make that work?

Thor: We have a great relationship with another advisor in the Seattle area and we have given him several referrals. Several...all 3 have been pretty big clients. And they were just...one of them was...had just fallen into a massive amount of new wealth. And he was so mean to everyone in the office, and I had heard it repeatedly. I decided to take it more seriously and look into it. And when I heard that he demanded a special report every week, and that he was asking for more and more that was unreasonable, I called him up and I said, "I need you to move your accounts out. I need you to find somebody else to work with." And he didn't even ask me why. But I let him know that he wasn't welcome here anymore. And he asked me how much time he had and I said, "Take all the time you need, we just don't want to work with you anymore."

And I had a couple other experiences like that over a couple decades where they were just mean people. One of them wrote me an apology letter after I asked him to go somewhere else and said he was on some medication. And he worked for the CIA for a number of years. But the damage had already been done to the relationship.

And one of them was an accusation of sexism to Troy. And I looked into it and found out that, no, she was grossly...had exaggerated something that nobody could construe as sexism in a comment. And... No reasonable person. And so she seemed to understand that it was we didn't want to work with her anymore. And what it did is it showed Troy that I valued him as an employee and as a friend, and that I would choose him over somebody that decided to, more than once, take their bad day out on an employee.

Michael: Any other advice you would give younger, newer advisors looking to come into the industry today and get started?

Thor: My advice has always been consistent, Michael. Get that...start on that CFP. Learn a lot about history, people. A lot of what happens repeats itself. And understanding a little bit deeper than the average consumer about administrations and prolific spending and how it can affect gyrations in money supply and how that can affect when growth rates pick up, inflation, and how...have a good...be able to explain something at any given moment that is probably pretty accurate. Just because you have taken the time to learn about your craft, and learn it well, and not just the obvious stuff, like the latest changes in the tax codes and taking an interest in those things, but also history. And... Because it does...like I said, it does repeat itself. And if you can't get clients, go work with somebody who can. And then you'll stay very busy. And always focus on the client.

If you... And number one, probably, exceed expectations. If you exceed expectations, you'll have a built-in marketing plan right there. But you have to exceed them. And sometimes that may mean go to the office Saturday morning and open it up for somebody who's panicked about their job doesn't look secure right now and the world's changing for them, suddenly some event happened, and be there Saturday morning for them if that's what it takes.

I think being flexible with people and making it fun, having a good time.

What Success Means To Thor [1:38:17]

Michael: So, as we wrap up, this is a podcast about success. And just one of the themes that comes up is literally that word "success" means, sometimes, very different things to different people. And so you've built this wonderfully successful business, by any objective measure. The advisory firm's in a great place right now. How do you define success for yourself at this point?

Thor: Well, the way I define it, some may look at it with contempt and some may look at it as right on. And I define success as a life God-honoring, is honoring God. And at the end of the day, everyone's going to give an account for how they live their life. And being...turning 53 last year, I can tell you I don't...the years just fly, time goes fast. At least for me it has, I'm sure you would say the same. And at the end of the day, I want to be that good servant that was God-honoring in what I did, knowing that I'm not perfect in an imperfect world. But I give credit to my creator, God, who created me. And I take in all people that I may not agree with, but that's not my job to judge them. And I just want to be God-honoring in what I do throughout my workday and do the best I can with it, and use the talents I've been given.

I've learned through the years that I have been given a talent in personal finance and empathy for people and compassion. And using those skills combined as I look for those traits in people that I hire. I want a trait of empathy and sympathy for people, but also somebody who's not entirely intimidated by numbers and has an interest in personal finance. Those are traits I think necessary to thrive in our business. But that's...I think there's a lot more to this life than just having career success. I know many have had far more career success than myself. And I don't spend any time thinking about it. And it's trying to exceed expectations. But at the end of the day, there's a lot more to this life than just career success, there's far more. You'll have an empty life if that's what drives you. At the end of the day, that's just not enough.

Michael: Amen. Amen. Well, thank you, Thor, for joining us on the Financial Advisor Success podcast.

Thor: It was an honor, Michael. And I'm so honored that you would invite me here. I've been a fan of yours, I've appreciated your style and the way that you've grown yourself. It's been... And there's a lot of very positive things people say about you in the industry.

Michael: Awesome. I appreciate that, thank you.