#FA Success Ep 346: Moving Procrastinating Clients To “Yes” Instead Of Selling As A Fee-Only Advisor, With Jim Ludwick

Resources Featured In This Episode:

• Jim Ludwick
• Procrastination Junction
• Jim's Course Outline (download) – PDF
• MainStreet Financial Planning
• Anna Sergunina (President & CEO of MainStreet Financial Planning)
• Semi-Retirees Know the Key to Work-Life Balance
• Awaken the Giant Within : How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny! By Tony Robbins
• Influence: The Psychology of Persuasion by Robert Cialdini
• To Sell Is Human: The Surprising Truth About Moving Others by Daniel Pink
• Raving Fans: A Revolutionary Approach To Customer Service by Ken Blanchard and Sheldon Bowles
• $100M Offers: How To Make Offers So Good People Feel Stupid Saying No by Alex Hormozi
• SPIN Selling by Neil Rackham
• Garrett Planning Network
• Kristen Luke at Kaleido Creative Studio
• Sunny Lenarduzzi
• Marcus & Millichap

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

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Full Transcript:

Michael: Welcome, Jim Ludwick, to the "Financial Advisor Success" Podcast!

Jim: Thank you. I'm glad to be here, Michael. How are you?

Michael: I'm doing well. I'm doing well. I'm excited to chat today. You and I go back many, many years. I was trying to think like I think we met almost 20 years ago, and you were, and I guess still to this day, were one of the most successful advisors that I had known in the hourly model, having started very early when kind of the hourly model and Sheryl Garrett's Garrett Planning Network was just getting going. And I know I've always been fascinated by the hourly model because it's one of those models to me that if you could just have a line of clients waiting to work with you and all you had to do was meet with them, give them valuable advice, and charge them a reasonable hourly rate, you can make a heck of a business.

You can scale a big business, you can hire staff. The math works very well. The challenge I find for almost anybody that goes in the hourly model though is that only works if you've got a high volume of clients and most of them struggle at the "how do I get a high volume of clients" part. Like, I'm ready to give the advice and get paid, I'm knowledgeable and have good advice, but I don't know where to find a zillion people to give the advice to in order to get paid and then I have to convince them one at a time to hire me and engage me. And I know you were particularly effective at figuring out how to solve this problem both in where do you source some of the clients just to get enough of a flow to have an opportunity and then even more importantly, how do you get them on board and get them to say yes.

Because a lot of advisors will go through 2 to 3 meetings and might even produce the better part of a financial plan just for a prospect to convince them to work with you, which is fine if they're then going to roll over a sizable account. But when you're paid by the hour, you have to get to yes very quickly and very efficiently because you got to start the clock for getting paid for your time. And so I know you lived this world of how do you serve a higher volume of clients, how do you get a higher volume of clients, and how do you get them to "yes" quickly and efficiently so that you can work with them in this model. And so, just I'm excited to hear more of what that journey was for you in practice and maybe even just some lessons and takeaways for us all about how you get to yes a little more efficiently.

Because I find particularly in the RIA world these days, we don't like to talk about sales. "Sales" is a bad word even if you're charging fees and you provide valuable advice. You do have to convince people to work with you. There is still a sales process that you seem to have figured out better than most.

Jim: Well, when you talk about an iceberg and it looks easy, it wasn't easy, and it took me more than 3 years to figure it out. In fact, giving financial advice was my 4th business that I started and the first 3 all took me 3 years before I knew I was a success at it. It wasn't easy, and so I'd love to share that with you. Do you want to start at the beginning when I found Sheryl Garrett or do you want me to go back even previous to that to figure out why I would contact somebody like Sheryl Garrett in 2002? That's when I met her.

Michael: I think to start, just take us back to the beginning of when you entered financial advisor financial services world in the first place. I don't know if your career-changer in meeting Sheryl Garrett was your entry to the industry or if you were doing other things in financial services and then decided to hang your shingle as an hourly planner.

How Jim Built His Career In The Financial Services Industry [07:41]

Jim: Well, it's going to be the other services first angle and that's what will lead me to what I'm doing today. I had served a full career in the Air Force, first as an enlisted guy who was a disc jockey and public affairs person, and then as an officer, as a hospital administrator. I ended up retiring to Santa Barbara and I got a job as the Number 2 guy at a small hospital. They merged with the bigger hospital; I didn't survive that. And my brother had been in commercial real estate sales in Santa Barbara, but he didn't want me to work with him. And so, I found someone who would train me in commercial real estate. So, that's where I started.

And I had my ups and downs there, but one of the keys to success, which will ultimately lead to why I'm doing what I'm doing today, my mentor told me to just start calling building owners, ask them what their problems are, and see if you can solve some of their problems. And I did, and some of them hired me to sell their building, lease their building, and I was pretty successful, made some good money. And then, I had an end run, happened when I decided to buy a building, which was a big financial mistake. And...

Michael: So, it was fine to sell and lease other people's buildings, less fun when it was your own?

Jim: Yes. And I took a very dramatic course in real estate limited partnerships where I found out that the general partner has 50% of the upside and 100% of the downside, and I was downside. So, after that adventure, my New York...

Michael: I'm going to assume you liked it more for the 50% of the upside part, just unfortunately, you got the other version.

Jim: Yes. So, in giving advice in future years, I told this story many times to prospects or clients, it always looks good when you see the upside, like crypto, but there are some downsides too. You got to think about that. But we kind of glossed that over. So, my New York Life agent, who went to the same church, said, "Why don't you come to work for New York Life? You can make a lot of money there." And by this time, I'm president of the Chamber of Commerce, president of the Rotary Club, I'm on the airport board. So, I'm a visible person in Santa Barbara. And I just invited business people to lunch and about half of them did business with me and the people I was in the professional sales training program couldn't believe what I was doing. And it was...

Michael: What did they not believe? That you were already being successful before you went through their sales training?

Jim: Well, during their sales training, I became the new agent of the year for California for 1994. They were all saying, "Well, how do you do it?" Well, the managing partner said, "You got to make 10 appointments a week." And guess what I did, I made 20. And so, it was a numbers game. Only 1 out of 70 new people are going to be around for a while. Okay, I want to be one. How do you do it? 10 appointments a week. I did 20. And...

Michael: And where were they coming from? Because you already had kind of built this network for yourself from the commercial real estate days?

Jim: Commercial real estate days for owners. I was president of a Chamber of Commerce with 1,500 members, so I had a calling list. I belonged to the yacht club, which had a beautiful building and a great place to have lunch. So, I'd invite business owners to have lunch with me – and I'd never use the word insurance, they had to use it first. And on Fridays, I sat on a boat in the harbor that had a landline phone and I dialed for dollars to make appointments for the next week. And I was just motivated to get appointments because I knew it was a numbers game, and I knew I wanted to help people. So, those combinations worked for me.

Michael: So, out of curiosity, just with this whole I never used the word "insurance" while you were operating as a New York Life agent, what was the pretense for the meeting? What was the pitch when you're reaching out to them and trying to get meetings to do this, 20 meetings a week? What were you doing? What were you saying? How were you getting them to take a meeting without even telling them it's about insurance and that you're an insurance agent?

Jim: Well, I would be more general. But I had met them someplace else. You know when you collect business cards all the time, you say, "I met you last week at the mixer and I thought it might be interesting to have lunch with you. Your car repair business sounds like it's really going places. I'd like to hear more about it. You want to have lunch at the yacht club?" And wait for them to say yes or no. So, I knew something about them and I just said, "You want to have lunch?" They know I'm meeting the president-elect or president or past president of the chamber depending upon what year it is. So, they kind of know me a little bit. They've heard me talk before and make presentations and stuff. So, I'm not an unknown entity...

Michael: I was going to say, so you're kind of known in the community, presumably if they want to do anything further in the community as well, from their end, like, "All right, I don't quite know where Jim is going with this, but Jim seems like a good person for me to know as well because he's already connected in this community, so I'll do this lunch."

Jim: "And he's interested in my business." And people like to talk...

Michael: Business owners love to talk about their businesses. Yeah.

Jim: Yes. So, that worked out well for me. And my wife did object to me spending a lot of time doing this because it was more than 40 hours a week, although I did get to go to mixers and happy hours and stuff like that. But because I got some recognition after that first year, my wife and I were flown to New York City. They put us up at the Waldorf Astoria overlooking 5th Ave, and my wife says to me, "You know, this insurance business isn't that bad."

Now, in my office, Michael, is a picture of Winston Churchill. Many people probably know this story, so I'll truncate it, but he gets invited back after his second stint as prime minister to his primary school, the elementary school in England. And most people don't know it, but he had to go through second grade 3 times. And they asked him to be a speaker. So, he walks in, gets behind the podium, takes off his hat, takes a cigar out of his mouth, looks over the audience and says, "Never give up. Never, never, never give up." Puts the cigar in his mouth, bowler on his hat, walks out.

Michael: That's the whole speech.

Jim: That's it. But that has been my mantra. Just keep working at it. Yes, you'd have to switch sometimes because things don't work, but keep plowing ahead and it'll work out. Woody Allen, whether you like him or not, 80% of success is just what?

Michael: Showing up.

Jim: Exactly. Keep at it. You join a rotary club, I'm in my 5th rotary club, I'm approaching 40 years. All sorts of people join rotary clubs or other community service organizations and they rotate through the stockbrokers, the insurance agents, they come and they go because they're looking for prospects. But all the members know that. All right, here's another so-and-so guy from this organization. He's just looking for prospects. But if you stay around 4 or 5 years, it changes. They find you're a good person, that you're working on these projects, that what you say you'll do, you do, and then all of a sudden, the business comes your way. So, it's not easy but staying with it is one of the keys to success. And so, that's what I've done.

How Working In Insurance And Trusts Helped Jim Find His Passion [16:38] 

Michael: So, I am curious of what comes next, but before we get there, I do want to hear a little bit more about this prospecting process and like 20 meetings a week.

Jim: Yes.

Michael: We're not talking about insurance, I'm letting them bring it up. How did the conversation ultimately get to business? Like the guy who owns the car repair business says yes to the lunch at the yacht club, and so you get to the yacht club and it's lunchtime, how do you ultimately get to business out of this? Where did you take the conversation or how did you introduce the concept when the time eventually came for, "I am hoping to get some business out of this at some point"?

Jim: Well, it used to get around fairly quickly to family, because that's what motivates most people that have a family, it's their family. And so, what's your exit strategy? Are you going to sell the business? Is your son or daughter going to get in the business? So, what are you doing? And then, I'm saying, "Have you seen anybody else sell their business and have do it?" So, I'm asking them to kind of ponder other experiences that they've seen or been in in the past and say, "Well, how well are you set up for that?" So, I'm slowly moving into that area. But it usually was a family-oriented platform and say, "Well, you've built up a business that you might be able to sell for $200,000 or $300,000, but what happens if something goes wrong? What kind of things can go wrong?"

And so, I'm asking them to answer the question to get into insurance rather than me getting into insurance. "Tell me what could go wrong. What have you seen with other people that's gone wrong?" Because they've seen it, they just don't want to acknowledge it. And so, I want them to acknowledge it and say, "Well, that's interesting."

Michael: It's a powerful framing to keep bringing it back to... what's your exit strategy, what have you seen other people do, are you worried that anything could go wrong with the plan, what have you seen with other people where it went wrong? Because it's a good point, right? We tend not to dwell on the negative or the risks per earlier. You hear 50% of the upside and 100% of the downside and you stop listening after 50% of the upside because the brain is already there. But a lot of people are familiar to bad things that happen to other people. Of course, it's not going to happen to me. Bad things happen to other people.

So, if you ask someone, "What could go wrong for you?", they'd be like, "I don't know, I think it's going to be fine," because we don't really want to go there. But what have you seen with other people where it went wrong? It's like, "Oh, yeah, I know a few people. I know a few people where it didn't work out." And just now you can get them to start talking about what they've seen and where the issues might be. So, I really like that framing of taking it not just to like what if something goes wrong, what are you worried about. Like, where have you seen it with other people where it went wrong? That's a really cool framing.

Jim: Well, and that's thank you New York Life for training me that way. Because all away in the occupations I've had, I've always been able to participate in formal sales training and how do you become successful. And I remember reading Tony Robbins' book, Awaken the Giant, early on and he basically said, "Find a model where someone else has been successful and just follow their model." Boy, that sounds easy, doesn't it? But it's not that easy. And I went to a Tony Robbins sales course, and I came back to brag to some of the other brokers in my real estate office and they said, this one guy said, "Well, you know where Tony Robbins got all his ideas?" I said, "No." He said, "Read the book, Influence by Robert Cialdini. You'll find out where he got all his ideas." So, that became really the bible in my life as far as sales went. What ways...

Michael: Cialdini's book?

Jim: Yes, Influence, which has been revised. So, if anybody is going to go out and read it, read the 2021 version, which is a little more updated. But it is the #1 book I recommend to everybody. And one of the things, nobody wants to be salesy, but I was of the opinion you needed to have these sales skills. Anyway, we're back in New York Life days, things are going well, and then I get approached by the Bank of America. The trust department of Bank of America talks to me and said, "Why don't you come be our business development person for Ventura, Santa Barbara, San Luis Obispo Counties? We have about 45 branches. And you've done so well in life insurance, you can make more money and retire earlier."

And I pencil it out and say, "You're right. And I won't have to work so many hours." Hahaha. So, I truncate my New York Life business and I go to work at the trust department at Bank of America. It sounds a little more prestigious, doesn't it, than the life insurance agent? Now I'm the senior vice president at Bank of America. And so, I'm going from branch to branch and talking to people and getting referrals, because that's a way to get business, and things are going along pretty well, and I'm starting to make some really good money. And you know what happens? A merger.

NationsBank of Charlotte, North Carolina decides to buy Bank of America out of San Francisco, and they decide that trust departments need to have the trust officers in charge rather than the business development officers. So, I get axed out. And a week later, a headhunter calls me and says, "City National Bank in Beverly Hills wants you." And what did they want me to do? Well, they wanted me to do the same thing. I knew all the accountants, the attorneys in my swath of influence, and they hired my Rolodex, but they moved it a little bit, Pasadena to Santa Barbara rather than Westlake Village to Paso Robles, if anybody knows California.

They're moving me down a little bit. And they offered me a great base salary, huge money as a base salary. And then I get a fraction of the action of all the money I brought in and I'm making close to $500,000. This is 1999.

Michael: Wow. So, that's a lot of money. I mean, that's a lot of money today, but that's a lot of money 25 years ago.

Jim: I know. And there were 7 business development people for City National Bank, and 4 out of 7 of us made more money than the president of the bank. Guess what they did the next year.

Michael: Change the comp schedule.

Jim: Of course. It's too easy for you guys. Well, we had a growth strategy, and our biggest competitor was William Bernstein, which had a value strategy. So, the late '90s, we were knocking them left and right. It was pretty easy for us. But they cut my base in half. So, I had given some family money to an outfit called Fisher Investments, and Fisher Investments knew what I did, and they had talked to me casually about representing them in Santa Barbara. And so, after the City National Bank decided that I wasn't worth as much, I called them up and said, "Hey, I'm ready to take that Santa Barbara job." And they laughed and said, "That's gone a long time ago. Sorry about that."

I said, "Well, you got any other positions?" They said, "Yeah. How about... would you go work in the Mid-Atlantic?" And I went, "Oh, my best friend and his wife, they've been ill. We're back there all the time helping them out. I'll take it." So, I go move to Maryland, and I start going to visit people, and the dot-com bubble is bursting. So, you know what people say? "I'm worried. I can't give you the money now." And Ken Fisher had gone to cash, he had a great story. My family money looked like it was being protected. And then he decided to get back in the market a little early. So, then people saw the wrong track record. Needless to say, my visions of making $300,000-plus went down to about $80,000.

And I said, "That's not really what I want to do." And so, then it came to me... By the way, I'm a CFP by this time because Bank of America wanted all the business development people to be CFPs because they wanted to put the liability on individuals rather than the bank, which I didn't think was practical, but that's what they did.

Michael: Interesting.

Jim: And trust departments were fiduciaries. This is before the word fiduciary became popular and before the CFP credential said we have to announce that we're a fiduciary.

Michael: Right. The first layer of CFP fiduciary didn't come until the 2008, 2009 changing standards.

Jim: But this was the original Bank of America was thinking, "You know, if we have them all CFPs, that'll give them a nice halo. That'll mean they're really trained." But most people at this point, 25 years ago, didn't have a clue as to what a CFP was. The public had no idea.

Michael: Right. CFP Board wasn't doing its public awareness campaign yet. That came later.

Jim: Now I'm with Ken Fisher, it doesn't work out. I'm searching the internet because search is now... It's 2001, 2002, then 9/11 happens. I was in a hotel ballroom with Ken Fisher giving a presentation when 9/11 happened. Ken Fisher and 2 of his lieutenants borrowed somebody's rental car and drove across the United States to get back to Woodside near San Francisco.

Michael: Yeah. Because planes shut down. You weren't going anywhere.

Jim: And I drove home. Like everybody else, I was really shocked at what was going on. But the prospects disappeared, everybody was frozen in their shoes. And so, I had to find other thing to do. Although I had a pension from the Air Force, so I never worried about my mortgage or car payment. That sort of was in my head. I can always cover that. And so, I never had too much pressure I had to make the sale, which is a thing I talk about fairly often. So, I got on the internet, and I'm saying, "What do I want to do? Do I want to go back and sell life insurance? I know I can do that. Do I want to work for another bank? I'm tired of banks. Do I want to work for an investment company? Don't really want to do that. Oh, hourly. Just give advice and I don't have to manage the money. And this sounds interesting."

Why Not Having A Natural Market Effected Jim's Close Rates [29:17]

So, I paid Sheryl Garrett some money. I went out for 3 days of training in Kansas City. And I came back, and I opened my practice, and nobody called. Why? Well, did you do any advertising, Jim? Yeah. I was in the town with Fort Meade, which is the home for the National Security Agency, 25,000 civilians – don't call them spies, they're civilians – and 5,000 military. And being retired military, and a former bank vice president and a CFP, these people should come rushing in my door. And I bought an ad, Michael, an ad that cost me $1,000 a month for 6 months in the Post newspaper that came out every week in this 30,000 alleged readership: half-page ad, $13,000. And do you know what happened?

Michael: I'm going to guess not a lot of phone calls.

Jim: None. 0. 0. Now, we had a communications consultant with the Garrett Planning Network, Marie Swift, you may know her. And she said, "Don't do ads, it won't work. You need to work on referrals and other things and cultivate journalists and get quoted by journalists," and stuff like that. But I didn't really listen. I had 2 Yellow Page ads, but I did get one call. This lady was calling the person above me and dialed the wrong number. So, I've spent all this money and it's not working and I'm trying to get lunch with attorneys and accountants and although I had been successful in Santa Barbara, I'm going nowhere meeting with attorneys and accountants. Nowhere.

Michael: So, what was different now? You just didn't have the presence and community that you had before?

Jim: Well, I wasn't a vice president of a bank where they did business. I was just another broker in their mind trying to steal some money from their clients and they weren't having it at all. They weren't interested. I wasn't an interesting person to have a meeting with or lunch with or a conversation with.

Michael: So, in retrospect, that was part of the driver for why the numbers game worked so well the first time for you in New York Life: like the community presence, the bank backgrounds, the rotary history, like all of those had made you up, I guess, as a more valuable person for them to meet within the community. And when you had to do it cold in a new community and you didn't have that background and presence, then all of a sudden, the numbers game wasn't working the same way anymore?

Jim: That's right. It didn't work at all. In fact, when I was working for Fisher Investments, I was going all over in Mid-Atlantic, I didn't have a base of anything. I wasn't in a rotary club, I didn't go to church. I had nothing as far as roots went. I had no natural groups. When I joined New York Life, you had to make a diagram of all the different groups you belong to, any contact people in all of those groups.

Michael: Your own natural market list.

Jim: I didn't have that. So, I was lucky in one respect, I got authorized by the state of Maryland November 1st, and November 4th was the NAPFA annual meeting in Baltimore. Wow. I think I'll go to that. I did go to that, and I met a lot of people from the Baltimore area because obviously, they had an easy commute to the annual meeting. Their membership person grabbed me and said, "Submit it. Submit your plan, get approved." And I did and I was accepted for membership right at the beginning of 2003. And then I came across a lady named Nancy Bryant who has a practice in Baltimore who had offered to reinstate the NAPFA study group for the Baltimore area. They had one in DC, they had one in Northern Virginia, but Baltimore's had gone into cold storage. And she said, "I need somebody to help me." I've got no clients, I'll help.

Michael: You've got time.

Jim: But I did get a referral from another... my first client was a referral from another Garrett member that didn't have time. And so, he was nice enough to send me a client who I ended up doing other family members with. So, the first client turned out to be okay. But I didn't have many clients at that time. So, a couple of months later, Nancy says to me, "I'm too busy. Can you take this over?" Of course. So, I was able to talk all the time to all the NAPFA people in the area, promoting the monthly meetings. I met a wonderful CFP at T. Rowe Price named Stuart Ritter. That's where we had the meetings, at T. Rowe Price.

I got to talk to all the speakers, and they all got to know Jim Ludwick, including someone named Michael Kitces. And I was the hourly person in the area. Who could they send somebody to that wasn't qualified, didn't meet their limits and stuff? And so, I started getting referrals, and I got lots of referrals. 

Michael: I mean, I remember this time for when we had met and I was getting to know you in the mid-2000s. This was at prior advisory firm at the time, but we were in a big growth phase but we were on the AUM model and had, I think, like at the time, probably was $250,000 minimums that we were raising to $500,000, which was a fairly sizable number in the mid-2000s. And so, we were getting clients and referrals that didn't fit, and we're trying to hold firm on the minimums. And so, I've always been the mindset like I try to hold firm to minimums but my internal moral compass is I can't just throw you back out to the wolves, kick you back out there when I'm saying no. If I'm going to say no, I have to help you get somewhere else.

And so, you were the local Garrett advisor. You don't have minimums, you charge by the hour. It was easy math from my end. It was a very easy referral to make and a very easy way to solve that situation even from our firm's end of, "I need a good place to send these people but I'm trying to hold firm on the minimums." It's like, "Jim does this and he's great for people like you in your situation. Let me introduce you. Jim, got you another one."

Jim: And I thank you and a lot of NAPFA planners and a couple of Garrett planners in the greater area sent me referrals. But you know what, Michael? My close rate wasn't that good. Now, what, Jim, is your close rate that wasn't that good? Maybe 50%, maybe sometimes 60%. But I had a background of being a better closer and I couldn't think...

Michael: By the time you're in the hourly model, I think there's also sort of an implicit assumption that the close rates should be fairly high. I mean, just like they have a problem, and you charge by the hour. By the time they've called, this should be a pretty good fit already.

Jim: And it's by referral. So, it's not a cold lead, it's a warm lead. Because they can go to the NAPFA website or the Garrett website and find me by zip code, okay, but those are cold. They aren't as good. But my close rate just isn't good and I'm getting referrals, what is it? Well, I had left my sales skills in the driveway, because my home office was on the ground floor. It was the garage, and the rec room turned into the office. But my sales skills had left, and I was trying to analyze what am I doing wrong. Well, I'm assuming that everybody wants to hire me, and they all go home to think about it and half of them won't answer the phone again.

Why Jim Focused On 'Moving' Prospects Rather Than Selling To Them [38:50]

And so, I had to do some internal recognition that I got to get back on track. Remember Cialdini? It's the likability, reciprocity, scarcity, authority. But they were important techniques and traits that I needed to implement. And so, I changed how I interviewed people or they interviewed me. I actually did a video on this that I got... I'm an hour CE sponsor. So, I did a presentation to Garrett planners a few months ago and in the process, I got CE credit for it. But I was giving them my 5 big tips. And it was reinstituting my sales skills, although I don't call it sales all the time.

But internally, I want to tell advisors who are listening to this, we're all in sales. Now you can adopt the magic word that Daniel Pink uses called moving. You're moving people from one situation to another situation, you're not selling them. And here's the book here, I got it out, To Sell Is Human, Daniel Pink, 2012. So, if you don't want to be salesy, be movey. Moving people from one situation to a better situation. That's maybe what you do. So, now I'm with the Garrett Planning Network, I'm starting to get people in, and it takes me about 4 years to be really good at most people coming in the door are going to hire me.

That's my attitude, and I've developed frequently asked questions on the website, but I find out they don't read them. I send emails, I tell them on the phone, they don't read the frequently asked questions. So, about the 4th interaction I have with these people on the I'm going to meet with you in a few days, I put the 5 or 6 best frequently asked questions right in the email. I force them as much as I can to read the frequently asked questions about how we work, what's involved, what it's liable to cost. Everything's in those frequently asked questions. And you know what, I get a fair amount of cancellations. And at this point, what am I thinking? That's another tire kicker I don't have to deal with.

Michael: So, help me understand what you did. So, you had FAQs on the website originally, which a lot of us put out there at some point. You're like, "How do I work with you? What does it cost?" Particularly folks in the hourly model, because you really wanted to find the scope. So, you had an FAQs section on the website but then instead of or in addition to having it there, if I'm understanding it correctly, when you were sending the meeting confirm email to the client, you know, "Mr. and Mrs. Smith, I'm looking forward to our meeting next Tuesday, making sure we're on," like that email, you would then also include, "And by the way, before we meet, here's a couple of other things you should know about working with me." And then you drop the FAQs in there in that email.

Jim: Yeah. Not all of them. Because I think at some point, we had about 20 FAQs. But 5 or 6, I would put in the email because I had to get people to read them. The other issue that everybody has to deal with, if it's a couple, is the other half needs to know what's going on too. Because many times early on, they would be surprised how much it cost, what it took. They weren't on board with what their significant other was driving the ship and they're like, "What? We're going to do what? I haven't thought about this." So, I did my best to make sure and ask, "Please have the other person read this stuff too because we don't want to surprise them because they might get upset with you." I mean, I would say something like that to give them an incentive to tell them ahead of time what's going to happen. But then, I...

Michael: So, I'm struck by this though, just the mindset of if you put this in the email and they canceled on you, this wasn't like... Because I find for a lot advisors, if they put that in the email and then the meeting gets canceled, they're saying something to the effect of, "If I'd gotten a chance to be in front of them, I think I could have explained this. I could have explained my value. I put the fee out there and I scared them off. I should have had to come to the meeting first so that I could talk through this and explain all the great things I'm going to do and why my advice is worth it." I find for a lot advisors, there's this gut impulse of if I can just get in front of them, I might have been able to save this. And so, I'm struck by just your mentality and framing of this of like, "I'm happy I avoided spending 30 minutes with the tire-kicker."

Jim: Yes, because a lot of times, that's what happened. Only 1 of the 2 couple would show up, then, "I have to go home and think about it and explain it to the other half." I mean, they really weren't engaged to begin with. They weren't maybe qualified, they weren't motivated, and I didn't want to spend a lot of time chasing people anymore because, get this: I wanted a work-life balance. I didn't want to have more meetings and less clients. I wanted to have less meetings and more clients. And so, I wanted motivated, knowledgeable about the process people who both had some level of understanding show up on my doorstep.

Michael: I'm struck by how often you're emphasizing both engaged, both ready, share this with your significant other. So, it sounds like in your world, in your experience, the spousal buy-in was a very big or very common blocking point.

Jim: Right. And a lot of times, I'd say, "Well, does your significant other have a driver's license and can they drive? So, if you're sick someday they can drive, right? Well, what happens if you're sick or worse, are they going to be able to take over?" So, I used a lot of medical analogies, everyday metaphors or analogies that I could come up with, that they could identify with and say, "Yeah, well, they certainly know how to drive." Well, this is a big train, this financial life. Maybe they need to be an engineer driving the train in case you can't.

Michael: Interesting. Well, and it makes sense to me at the end of the day that... Different clients come to us for different reasons and different contexts. Sometimes, the reality is like there is 1 spouse who's the financial driver and they do make the decisions including the decision about whether to hire an advisor and who we're working with and the other spouse kind of gets dragged along as it were or just isn't engaged in the process and you only work with 1 spouse. But then, there are certainly other scenarios where both spouses have to be on board but not necessarily both of them are involved in the process up front. You don't see both. You just find out later you got vetoed by the other one that you didn't necessarily have much engagement with.

Or I suppose just the scenario of... the reality is 1 spouse wants to work with a financial advisor and the other one does not. And so, of course, the spouse that wants to work with a financial advisor is the one that reaches out because they want to and they start the process with you and they start taking up your time, but they don't even have buy-in from their other spouse. And so, at some point, you're going to get sunk because they didn't get buy-in from their spouse.

Jim: And you've wasted another meeting.

Michael: Or more than 1 meeting for most of us.

Jim: And you did prep time and everything else. So, you've got 3 or 4 hours invested and somebody vetoes it 20 miles away or the world away if you're just remote.

How Jim Iterated His Hourly Model And Client Touches [48:03]

Michael: I feel like this still is all built on the presumption that you have a healthy flow of leads in the first place. I mean, it's easier to say, "Well, I avoided another tire-kicker, I'll just take the next one," when you have reasonable confidence the next one is coming. If we're kind of feeling scarce on leads, I feel like you get all the more hungry of like, "Well, I'm going to make everything I can of every single one I can because I'm not getting that many." So, I feel like there's some implication here that you had confidence that there was going to be a steady lead flow, that if this one was a tire-kicker, it was better to just move them on and get to the next prospect than it was to fight it out and try to win them across the line.

Jim: Yes. You remember Blanchard's book, Raving Fans?

Michael: Yeah.

Jim: Well, that's what helped in our business at Main Street. We had raving fans who sent us their family members, their neighbors, their work colleagues, because we really did a good job. We were passionate, we were empathetic, we cared about them, we took good notes, we asked about their family. Remember, it goes back to family in many cases here. How was the graduation from high school, whatever, you had in your notes last time, bring it full circle, because they knew we really cared. And so, when someone else in their sphere of influence had a problem, they referred him to us.

We had to open an office in New York City because we had so many referrals to family members in New York. I couldn't believe it. I ended up doing 2 days a month in New York City seeing people mostly by referral and it came from people in the Mid-Atlantic area referring us to their families in New York.

Michael: So, help me understand how the lead flow, I guess, evolved for you over time. So, it sounded like early on, going out to, you know, the good old ads weren't doing anything and that some of the early flow was getting referrals from other NAPFA advisors or just advisors who had minimums or, for some reason, couldn't take folks that were still a fine fit for you on the hourly model. At some point, it sounds like that shifted to be more referrals from existing clients. So, share with us just, I guess, how that broke down and how it changed over time, how many years it took for that to shift. How did that evolve in practice?

Jim: Well, it probably went from 70% other advisors in the early years to maybe... Well, Anna, who now runs the company, Anna came along in 2006, and that's the first time I had a full-time assistant. And so, we were then working on getting more referrals by our clients by touching them more often. I had another person to help them. In fact, Anna soon became the face of helping the clients with all sorts of things because she had time, and she was really good at it. She really is a caring person. And so, it goes back to my marketing from the '60s, the "Reader's Digest," you got to touch them 13 times before they buy. That was the "Reader's Digest" thing.

And so, we kept in contact with the clients, and we were encouraging them to come back in person once a year and have another follow-up meeting, and that ultimately became the success of the business model, is recurring income. We had them coming back, we talked about their family, what's going on with their parents. A lot of times, they had parents. We got a significant probably, I don't know, I can't estimate this, maybe 15% or 20% of our clients' parents became clients if they were in the area. Because these people that were in their 30s or 40s with little kiddies, they were worried about their parents too because they were envisioning being in the sandwich generation. They had to worry about kids and parents at the same time.

So, we got a fair amount of that, but it was always springing from the family situation. And we had time on these recurring meetings to develop that, to talk about that and say, "Gee, I'd be happy to talk to your folks if they want to do anything." Go ahead.

Michael: So, what was your model, just like overall? I mean, were you straight hourly, it's $X an hour, just ask us what you what you want, and we'll bill you accordingly? Were you more packaged? Was it like a retainer subscription thing? How did it work for you?

Jim: Well, early on, I realized I can't keep getting new people over and over again. I got to see them once a year. I've got to provide value and touch them. And that's where Anna was a key component because I had someone who could help me implement that to get them to come back every year. And I remember, the sign-up was January, which was a great month economically, but November was scary because I was running out of money, and it's can I make payroll. I had this system of contacting people in November, because things were quieter in December, of talking to people and say, "You know, the Congress is meeting. These are the things we're thinking about. We need to take a look at what you're doing. Are you contemplating the job shifts next year?" Just things like that.

I'd have conversations with people, get them to sign up for the following year. And then after a couple of years, I built that into my model, the expectation that they would be ongoing clients. And we were working using our hourly tool to give them a project bid. So, this is about 2006, started in 2003 really. So, by 2006, I'm giving them a project bid and I'm telling them how much it's going to cost for future annual programs with a declining fee schedule, which I probably did for another 5 years until when Anna became a partner and looked at the books and said, "We can't afford to give this big a discount to people every year." But we were...

Michael: So, what was a typical, I guess, hourly rate and project bid for you? Just how did this break down in practice?

Jim: Well, I started off at $150 an hour and Sheryl Garrett kept saying, "You're too cheap. Raise your rates." So, I'm probably, by 2006 or 2007, when Anna's with me, I'm probably at $250 an hour. And I would say, "It's..." I would go through... I had a spreadsheet that I abandoned after a while because most people didn't want to look at a spreadsheet. See how I added up. I just say it's 10 to 12 hours' worth of work over this time period of 6 months to a year, and that'll be $3,000, and we'll take a deposit of $1,000 and then when you're happy at the end, you can pay us the other $2,000.

So, that's how it morphed into that. And the expectation was that they would pay us $1,800 a year for the first 3 years, and then it would go to $1,500, and then after 5 years, it would go to $1,200. And so, we were down at $1,200 a year, and that wasn't enough. Based on our time, we weren't making enough money on that as Anna pointed out.

Michael: Because in theory, the longer they've been with you coming back, the simpler it should be, the fewer problems they should have because you've done good planning work up to that point. So, the idea was that the burden would decrease over time but in practice, either it didn't, or it did but not that much.

Jim: It didn't decrease that much. In the client's mind, "Hey, it's really easy. You've known me for 3 years. Why am I spending so much?" For them to make that conclusion was easy. For us, when Anna said, "Well, look how much we're doing this, we're not getting enough." So, we phased that out over time and basically, it was... And this is when the FAQs, yes, we always will do an hourly engagement because to be a member of the Garrett Planning Network, you have to be able to offer that, but there's a lot of things out there in your financial life that we'll call landmines, and it's the old issue, you don't know what you don't know. And so, we're going to work with you to prevent bad things happening to you because we're going to work on it ahead of time and we'll modify it if the landscape changes. If the Congress does things or the state does things, we'll help you modify your plan.

Why Jim Utilized An Hourly Model To Create Work-Life Balance [58:09]

Michael: So, take me back for a moment. What led you to hourly and doing this model? I mean, you'd been successful in insurance, you'd been successful in bank trust work. Why decide to hang your shingle as an hourly advisor after all of those career successes already? Which is why the shift, why something new and not continue some of the things you'd already done?

Jim: Work-life balance. And in fact, in my interviews, it was the number 1 thing people wanted. All the advisors I talked to, they wanted some sort of work-life balance. And if I managed assets, first of all, I had to take phone calls about why the market was doing this and why they didn't even get close to the S&P 500 index and blah, blah, blah. And I didn't want to get into that situation where I had to defend all the time the investment recommendations of managing, the why did you do this. Because I'd seen Ken Fisher blow it and how that blew up and I didn't want to do the same thing. And I could control my, going back to Cialdini, I wanted to inject scarcity.

When I didn't have enough appointments, I always booked only 3 weeks out. I always wanted to make sure I had time off for my family and that...

Michael: So, even if you didn't have a lot of clients coming in at the time and you had some capacity, if people wanted to meet with you, it was always, "Well, Jim has some time 3 weeks from now."

Jim: Yes. And it gave us 3 or 4 interactions to read the FAQs. Because that was key. I only wanted to meet with qualified, motivated people who then would send me referrals also if I did a really good job. Water their eyes. I don't know where I got that expression but I really wanted to do a good job and they would recognize that and I was a nice, friendly, likeable person. And so, they would send more people to me.

Michael: Was it your goal and expectation to create the kind of income in the hourly model that you'd had in some of the prior because just when you were getting the $3–500,000 a year in 1999 dollars at New York Life and the trust company, I mean, you need a lot of billable hours to get there. You can do it if your hourly rate is high enough but you need a lot of billable hours. So, was the idea and vision to try to scale it up that far or was part of the work-life balance like... I've got a pension, the mortgage and the car payments are covered. I don't need it to add up to that much, and so this model where I just charge for my time and I do as much time as I want to charge for, was that part of the whole point in the first place that just I can control it because I'll just work and bill exactly however many hours I want and I don't have to make it add up to anything in particular?

Jim: My personal target profit became $150,000. And in 2006, I had an epiphany. I had hired a woman, a British woman in Sardinia, who had a boyfriend that was Italian. So, that's why she was there. And I had her research, could I get enough American expats who had kids at the International School in Milan and Rome to make a decent living by working 2 to 4 months a year in Italy? Now, I was living...

Michael: That would have been harder for the City National Bank in Beverly Hills.

Jim: So, Carol and I had lived in Italy in the '70s. Our 2 kids were born while we were there. As soon as we kicked the kids out in 1999, we left Santa Barbara because the kids...we were 1 block from the beach, the kids wouldn't leave. So, we left town because I was working for City National, and I had to move closer to LA because I had to go all the way to Pasadena sometimes. So, it was just not practical to live in Santa Barbara. And so, I came up with this wild idea that maybe I could visit Italy and have all these parents pass me around, because they do at the soccer matches and stuff like that, and could I do it. And she introduced me to a technology called Skype. It was a British firm. And I had an epiphany, "My goodness, I wonder if I could get my clients to work on Skype and I don't have to be in the office." So, I started...

Michael: We're talking 2006 here?

Jim: That's right. Yes. 2006. So, in 2007, I went to Italy for a couple of weeks and had some meetings on Skype from clients who could cope with that. And then every year, I expanded and I expanded. So, by the time it's 2015, I'm working out of Italy 2 months. Now, Anna has already bought the company in 2014. So, I'm not running the company, I'm just an advisor who's working to make sure the revenues come in so Anna can pay me. I had a four-year payout. But the clients weren't opposed to that and I put in a little bonus, if you want to come stay with us in Italy for 3 or 4 days, we'll put you up and you can stay in Italy, and we'll show you around. And they did.

I had probably, every year, 3 or 4 clients or 3 or 4 couples would come and stay with us a few days north of Rome. I'd always take them to Assisi, St. Francis of Assisi because it's kind of hard to get to and I had a car. So, I started working remotely and when 2020 came along, I had already moved to Las Vegas in 2016. So, I was working remote from Las Vegas using Skype. I would fly to New York, train to DC, come back to Las Vegas, drive to Santa Barbara, drive to San Francisco where we had our other offices and see people there. But for the most part, I was 80% remote when the pandemic hit. So, to move the other 20%, they already were primed to do that.

And we didn't have any fall off in our acquisition of clients or our recurring income, which by this time is more important than new clients. It's that recurring income because that's the value of the company, is recurring income. That's how I sold the company was demonstrate to Anna and assuring her that I would stay around long enough to her to have enough money to pay me for it.

How Jim Sold His Firm To His Successor [1:05:55]

Michael: Well, I'm struck by that just relative to the hourly model, I feel like how a lot of people frame the hourly model, which is this just relatively transactional, when you have problems, come in and you can pay us for our advice and we'll bill you accordingly. That's the deal. That's the value exchange. That for you, I guess words and language around this evolve over time but it sounds like you evolved into something that looked more like a, call like an annual retainer or like an annual engagement structure so that they were really more functionally like ongoing recurring revenue clients, not transactional hourly clients. You just set the fees by saying, "It takes us this many hours and we charge this much an hour, so that's how we figure out what your fee is."

Jim: Right. That's what we had morphed to by 2006. By the time, when you have a full-time assistant, you had time to look at your business and say, "Can I do this better, smarter?" And when you hire a really smart person to be your assistant, you promote them to planner, to partner, to owner. And so, I had time and she certainly was a big help. And when I talk to other younger advisors, as soon as you can, find somebody to help you so you can focus on the business, not just in the business. And I really...

Michael: I feel like that's particularly hard when you're working in an hourly transactional model in the first place because the moment you hire, it's like, "Great. Now I have to get clients for the first 3, 4, or 5 months of the year just to cover my payroll obligation. I don't even get anything for me until like June at this point."

Jim: That's exactly what happened to me. I wanted to offer Anna $18,000 to be part-time and she says, "No, I want to be full-time, and you got to pay me $30,000." And I went...

Michael: Good for Anna.

Jim: "Are you sure you really want to be an advisor later on and learn this business and everything?" "Yes, I do." Okay, but...

Michael: I mean, $30,000 in the mid-2000s, I may not have my inflation calculator handy but that's...

Jim: That's maybe $55,000 in today's dollars.

Michael: Yeah.

Jim: And so, that was a big thing to swallow, but how do I do it better? And she was so integral to growing the business by having good ideas and giving me more time. So, that was really another key to success. And when we announced in 2014 that she had bought the company, I would say 90% of the clients had a good relationship with Anna because half the time, they just talked to Anna. So, that was the easiest transition I could have made. I didn't think it would go that easy. I thought we'd have fall off, 15% or 20%. I don't think it... I never tracked it because it was so small, of people who said, "Well, I like you and I don't like Anna so I'm leaving." Never heard that. If they left, they left silently, and it was a small percentage.

Michael: So, can I ask, how did you structure the deal and the transaction, the succession plan for Anna, I guess both in the deal and then thereafter? Because you continued for many years thereafter.

Jim: I'll be happy to share that with you. Anna's husband, Yuri, was a CPA with Deloitte and doing auditing and he hated it. He wanted to move to San Francisco because he loved it there and he was going to do importing to Eastern Europe of health foods and stuff. And I said, "Well, how much capital do you have?" "I don't have any capital." Well, if you're going to export health stuff, you need to own it. Otherwise, you're just a manufacturer's rep. I said, "What is it you really want?" He said, "Well, I want to be in sales. I think I'd be good in sales." I said, "Well, how about looking at commercial real estate?" Something I had done for 4 years.

And so, he went to Marcus & Millichap, they hired him on the spot. This is a CPA that speaks 4 languages and is a hard worker, you are hired. And he has done exceptionally well. And Anna says, "I got to go to San Francisco with him. I can't stay here." And I said, "Well, please open an office there. See what you can do." And I gave them both sales training, because they hadn't had really formal sales training and I had all my books and notes and ideas and stuff. And Anna went out there and after the 1st year, she did so well, I gave her 5% of the company.

Well, when you're part of the company, you get to look at the books. So, one day she's looking at the books and said, "Well, when can I buy you out?" And I said, "What?" She says, "When can I buy you out?" I said, "Well, I don't know, make me an offer." The next day, now, her dad's kind of an entrepreneur and he was in the trucking business. And next day, I'm sure she talked to him, and the next day, she comes back and said, "I'll offer you X." And I said, "What?"

Michael: The next day.

Jim: The next day. So, I said, "Well, you can do better than that." So, she upped it about 25% and I said, "We got a deal." Now, which took us less than 15 minutes. So, I said, "Here's what we do. Let's call the accountant, let's call our attorney, and tell them what the parameters were." So, I said, "You'd give me 25% down and 48 payments, monthly payments, and I'll stay around for the 4 years to make sure the revenue stays there, and you've got money to pay me." And that's how we did it. And that was in probably October of 2013, but we announced the takeover and everything went down in January 1st, 2014. And she had joined July 10th, 2006. So, she's less than... So, she joins me at 22 or 23 and buys the company at 30.

Michael: And so ultimately, did you value it like some multiple of revenues or multiple profits?

Jim: Yes. Yes.

Michael: How did you think about valuation on the business?

Jim: We knew that our profit was about 80% of revenues. And this is before payroll taxes and stuff like that. So, we just said...

Michael: So, like the old label of EBOC, like earnings before any owner compensation came out was 80% of revenue, so pure overhead was 20%.

Jim: And so, we said, "Okay, let's take 80% of 80%." So, say 20% drop off, because I was worried about people dropping off. And so, let's take 80% of 80%, and that's how we came up with the number. It wasn't some sort of magic formula. I never asked anybody. I just said between the 2 of us, well, say the revenue is $250,000, let's take 80% of that and then we have some drop-off, so let's just take 80% of that. And so, that's the number we came up with.

Michael: And so, that was the valuation. So, if you had $250,000 of revenue, you end out at $160,000 if I'm doing the math right.

Jim: Yeah. It was close to that.

Michael: And so, that gets paid out over 4 years, so...

Jim: 25% down and the balance over 4 years. Because I didn't want to break her. I wanted her to be able to pay herself. And then we had to get an assistant and help both of us.

Michael: And then how did it work for... Because you stayed around, I guess both I'm wondering like the 4-year interim and then the time thereafter, were you also getting a salary or a portion of payments of revenue that you're doing client work for? Was there other dollars coming to you for the work that you were doing the business or was the idea your 48-monthly payments, like that covers your time?

Jim: We had me on a salary of $12,000 a month, okay?

Michael: Okay.

Jim: And then there was profits at the end of the year.

Michael: And so, that's part of the shift. When she buys the business, you're on salary now because she owns the business and has to pay you a salary. That's how it works when you buy the business. So, you went to salary, she paid you, I guess, functionally she paid you a salary for the work you're still doing in the business and then the 48-monthly payments of the purchase price. And then everything that drops the bottom line after that, she is now earning as a business owner that's taking the risk and doing the deal.

Jim: And I think in the early years, Year 1 or Year 2, I was tracking how much money am I bringing in or responsible for and I wanted to be around the $20,000 a month level. A couple of times, I came close to saying, "Boy, it's been dry for a couple of months, why don't you just give me $6,000." I never had to say that, but I was prepared to say that. But then something happened and we had the money. So, it worked out okay. But again, I've got work-life balance, I'm now operating out of Italy from 2:00 in the afternoon to 8:00 at night to accommodate East Coast and West Coast. The clients are happy. They're getting their answers. I'm able to touch them. The other things that we're doing are working out and we're doing more YouTube videos and stuff like that. And so, it's fun at that point. That's why I stayed around. It was fun. I didn't have to worry about bureaucracy.

Michael: That's Anna's problem when she buys it.

Jim: Yeah. But she was good at that and she handled a lot better. Ultimately, I think we're in 9 or 10 states at this point. 

Why Jim Founded Procrastination Junction To Help Advisors [1:17:00]

Michael: So, I'm struck just by the overall career timing of this journey for you because you said you had a full career in the Air Force, then transitioned to the years in commercial real estate, and then the years at New York Life before ultimately hanging the proverbial shingle in the hourly model. So, can I ask, how old were you at the point that you launched the business?

Jim: 55. And I thought I would do it for 10 years to take me to 65, and it'd be good way to earn some money and I could do things because I was taking care of relatives, I was taking... I had to go north... I was everybody's trustee or executor in my family because you know how to do it, Jim. And my kids were on the West Coast and we're on the East Coast and now they're starting to have grandkids and stuff. And so, I was happy with the model because I could control my schedule and then essentially control my income. So, I didn't have to make as much money as I made before but I didn't have to spend as much time at it either.

Michael: And then in practice, you went almost 20 years. I mean, I guess you sold almost exactly 10 years in, just a little over, but then you stayed around almost 10 years more.

Jim: Yeah. It's like 2002 to...so 12 years, owner, 8 years, having fun helping people. I love helping people. It's hard to retire. Your article, The Atlantic article that you put in this past weekend, I hope everybody reads these summary articles or everything because 2 out of the articles I had already read because I'm in retirement now. I can read more. Anyway, I didn't want to leave this business and I was trying to figure out what do I do in retirement. Well, I read some articles and books and so I said, "Well, what am I really good at?" I'm not good at plumbing or electrical or fixing car... All these skills, I don't have but I'm good at sales.

Oh, sales, it's not sales, it's moving. Moving people from one situation to another from bad to good or whatever you want to call it. But I said, "Okay. I was also good at getting people to stop procrastinating. So, I'll come up with a little side gig called procrastination junction and I'll tell fee-only advisors, 'send me your procrastinating clients. I'll talk them off the fence, because I'm not an RIA, I'll send them right back to you.'" Great model. Great idea, Jim. So, I did it. And guess what? Everybody said, "Well, that's nice but if they're procrastinating, that probably means we can't get a hold of them either, how are you going to get a hold of them? How are you going to do it? So, I tried this for 6 months and said, "This isn't working. I need help from an expert." So, that's where I went to Kristen Luke who does niche...not niche market...

Michael: Yeah. Helps advisors frame up their marketing when they're trying to focus on a niche. I guess sometimes even help frame up their niche, you're trying to figure out how exactly they should focus it.

Jim: It's reverse engineering. She works with all these RIAs that have problems. Help me solve their problems, okay? And she said, "Well, you're doing the wrong end. Why don't you help these people that are always complaining to me that their younger people don't have the sales skills, the sales cycle is too long?" So, she's articulating all the problems. And she said, "That's where you ought to focus." And I went, "Oh, okay. I got it. I'll help advisors who might be struggling with their sales skills." But nobody wants to be salesy. So, how am I going to do it? Because I'm now...

Michael: Help them with their moving skills.

Jim: ... I'm now 76 years old. How much longer are you going to be around and do this kind of stuff? Maybe 5 years? Okay. Well, I'm a YouTuber, and I watch a lot of other people's YouTubes. And there's a lady named Sunny Lenarduzzi, Lenard and uzzi on the end. She's out of Vancouver, British Columbia and she's on the internet. And if you watch all her videos, she gives you everything you need, but I've paid her a lot of money to figure out how to help my target market, which are fee-only advisors with less than 8 years of experience that might be having some difficulty in their close rate or their communication skills if you want to talk about it that way.

And so, that's what I've done. I'm helping the younger generation. I've approached some universities that have CFP programs about sales training for CFP students. I'm going to do some YouTube videos on that. I'm a CE sponsor, so I can even give people credit if I give webinars and things like that.

Michael: So, client communication counts.

Jim: Yes. And behavioral finance, H.65 through H.69 in the CFP topics is where I'm focused as far as CE goes.

Michael: So, what's the program at this point and what do you do or how do people engage?

Jim: Well, I interviewed 52 people because that's what Sunny demands that you do. And it's usually 20 to 30-minute interviews, and what are the real problems, not what you think, but what is the marketplace telling you? Work-life balance, imposter syndrome, too many meetings, too long a sales cycle, and I'll have to think about it and other objections. Those are things that came through to me in the people that I talked to. And so, I had to develop a series of lessons, 19, that I offer over a 7-week weekly session, and trying to get them to practice these things so they can improve their communication skills and have less meetings and more clients.

And I came up with a quirky title based on a book I read called $100M Offers by Alex Hormozi. I don't know if you've read that book or not but that is a really good one. And he's saying, "How do you develop a business?" Now, I don't want $100M business, I want work-life balance, like everybody else who's told me that, but I came up to "8 Weeks to Free Fridays." Because if you can have better skills and get more clients with less meetings, then you can take Fridays off. And sometimes you're going to get a 4-day weekend because Monday, you're closed for a holiday.

So, that's what I've titled this course that runs over 7 weeks, but I also offer weekly coaching and a weekly, and this is what I stole from Kristen Luke was Ask Me Anything Fridays. So, Friday at noon, I have Ask Me Anything, Wednesday is coaching. And even when you finish a 7-week program of improving your skills and me helping you practice and me being your accountability person, I'm there for you at least twice a week for as long as I'm around doing this.

Michael: And what does it cost to go through the program?

Jim: Millions. It's worth it.

Michael: Good ROI.

Jim: So, end of 52 interviews, I had more than 30 people give me a number. If I can help you get just 5 or 10 more clients a year, what is that worth to you? And I got numbers between $1,000 and $20,000, I eliminated those. And it came out somewhere $3,500 to $4,500 on average, they told me, and it's a 1-time fee. It's not an ongoing thing. There's no subscriptions here. So, it's $4,000 but I only take 5 students each session. Why only 5 students, Jim? You should be doing this to everybody. Well, I'm working on that. But at the moment, it's only 5 students because I found in small group coaching, everybody feels like they can participate and they can help other people and there's not so much being a wallflower opportunity and sitting in the background and not being engaged. And that means you're not going to improve. And I want to help people improve.

We're tracking their meetings and I'm encouraging them to videotape, whether it's Zoom or Google Meet or whatever platform they want to use with their prospect meetings, and I'll help them go over that and we can see how they're improving. They can look at themselves and figure out if they could do a better job. So, I've instituted those kinds of things. Does that give you an idea?

Michael: Yeah. Yeah. Yeah. And so, just for folks who are listening, if you're curious, this is Episode 346. And so, if you go to kitces.com/346, we'll have links out to Jim's program and the outline of what it covers just if you're curious to go down this road. If you too are a...what was it? A fee-only advisor with less than 8 years of experience...

Jim: That's usually...

Michael: ...with some challenges in your close rates or your communication dynamics with prospects.

Jim: Or you just want to talk to me for free for 15 minutes. If you go to my website, the top line, there is this "Book a Free Meeting." I want to help everybody. I'm working on evergreen programs that include CE to help people but I think the helping people practice and being an accountability person is key to success. If you want to be a great golfer and you know who the great golfers are, they go out and practice every day, sometimes twice a day. These skills need practice. You can't just read a book and improve in my opinion.

The Surprises And Low Points Jim Encountered On His Journey [1:28:27]

Michael: So, as you look back on this journey, Jim, what surprised you the most about the path of building an advisory business?

Jim: That it took the same 3 years that it did when I started other businesses. That surprised me. I thought I could do it quicker. I thought I knew it all because I had been successful before, but this is a different kind of business and you've got to work at dealing with qualified, urgent prospects who are ready to move ahead and not waste your time thinking, "Oh, they'll come back in a year or so and I'll let them think about it for a year and I'll drip on them." I don't think that's a good way to be successful.

Michael: Yeah. I've always been struck by just this dynamic that it takes 3 years. I've seen the same thing having started a number of businesses over the years as well and it's the same for every single one. The darn thing just starts getting traction in Year 3 and basically, no matter what I do to try to make it faster, it's always not until the third year that it really starts ramping up.

Jim: And then I'd encourage everybody to have an exit strategy like those business people I used to meet with in New York Life days. You should be asking me, "Well, what's your exit strategy on this one?" Because I have one.

Michael: Well, what's your exit strategy on this one, Jim?

Jim: I'm glad you asked. I am going to find the most motivated successful student that I deal with who I can track their track record and I am going to give them the company. I'm not going to sell them the company. I'm going to give them the company. They're going to help me revise some things down the road or whatever but they're going to be part of it and they can share in the profits and then I'm just going to give them the company. 

Michael: So, what was the low point for you?      

Jim: The low point was being in Italy working remotely and my assistant, who was the daughter-in-law of my best friend quit while I was in Italy. That was the low point. Can you imagine? You got somebody handling your business and they call up and say, "I got to quit."

Michael: I'm assuming with relatively short notice as well. Like, "I need to leave." You're getting 3 months' notice.

Jim: No, no. The next day. Yes. And I've got like 5 or 6 weeks left in Italy. That was the low point. Never hire...

Michael: What do you do at that point? Or yeah, what's your takeaway from that?

Jim: Well, I called the lady who was helping us be a paraplanner and she wasn't full-time. She was just helping out on occasion. I called her and say, "Can you do..." Because she's in Chicago, at least she's on a better time zone. So, I had her help me a little bit and then I just came back, I don't know, I truncated the trip a little bit but not much because we had other things planned. So, but that was the low point because, you know…but that was pre-Anna. That was pre-Anna. So, I wasn't 2 months there, I was only like 3 or 4 weeks or something. It was not as long but I called the paraplanner and said, "Can you help me?" That was a low point.

The Advice Jim Would Give His Former Self And Younger, Newer Advisors [1:31:59]

Michael: So, what do you know now you wish you could go back and tell you 20 years ago as you were getting started?

Jim: Don't advertise. Advertise gets you nothing. The other thing that I would do differently is I would spend more time earlier on in the project, lessen the hourly and more on the project and recurring income. It took me a few years to really focus on the recurring income was critical. And that came about because I had to have payroll. I had to pay people and stuff. So, I had to have some assurance the money was coming in. So, I would have started with a model that was I'll do hourly but the best for you and for us is to be on a project in recurring basis. I should have done that 3 or 4 years earlier.

Michael: So, I know you've said you're kind of a big reader of all the various books on sales training. So, what book recommendations would you give to younger and newer advisors that want to get going down this road? Where should they start because there're so many out there?

Jim: Influence by Robert Cialdini, 2021 edition, number 1. Number 2, to overcome the I don't want to be salesy, would be Daniel Pink's To Sell Is Human. That's a 2012 book. And then there're so many others. But those are the first 2 to get started. SPIN Selling is another one. That's the situation, the impact, the plan, and the need payoff.

Michael: So, for folks who are listening, and this is Episode 346, so just if you go to kitces.com/346, we'll have links out to all these books so you don't have to scribble it down in your car or while you're driving or wherever you may be listening to this.

What Success Means To Jim [1:34:15]

So, Jim, as we come to the end here, this is a podcast about success and one of the themes that always comes up is just the word success means very different things to different people. And so, you've had the successful path of building and then ultimately selling and exiting the advisory business and now on to the next adventure. So, the core businesses has gone well. How do you define success for yourself at this point?

Jim: People look at you as an authority. So, I want to be known as an authority in that little narrow area, that I did really good in hourly and project fee-only advice, that I did really good in sales and moving people from a current situation to a better platform, better phase of their life, where they have some more satisfaction that they're on track to achieve their goals, whatever those goals are. So, that's really what I like to be known as.

Michael: So, I guess ironically, to me, you're doing the ultimate meta version of that because you're moving advisors who need help moving clients. You're helping sales skills for salespeople that need to sell it down the line. You've got many levels to it now.

Jim: Yeah. But it's really about helping people. I just want to help a little narrow segment and niche, if you will, who feel like they need help and they're motivated to seek me out to get some help. And I'll help them either for free or for pay depending upon how extensive it is. But I think the accountability and the practice is worth a lot because if you're going to be good at golf, you need to practice all the time, or tennis or whatever else metaphor you want to use. And so, that's what I want to do, is continue helping people in an area where I have a lot of experience and how I can put that experience to use. That's what I want to do.

Michael: Oh, man, I love it. I hope we get to help spread that word and share a little bit of that mission here. So, thank you, Jim, for joining us on the "Financial Advisor Success Podcast!"

Jim: Thank you for having me.