#FA Success Ep 375: Running 20+ Client Meetings Per Week By Systematizing The Meeting Prep And Follow-Up Process, With Rob Schultz

Resources Featured In This Episode:

• Rob Schultz
• NWF Advisory
• Albridge Report
• Docupace
• eMoney
• MorningStar
• Royal Alliance
• Osaic
• American Funds
• Amgen
• Gilead
• University Of Colorado In Boulder
• UCLA Financial Planning Program

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Full Transcript:

Michael: Welcome, Rob Schultz, to the "Financial Advisor Success" Podcast.

Rob: Thank you, Michael. Happy to be on with you and thank you for moving forward the profession and seeing planners as professionals.

Michael: Absolutely. I appreciate that. And I'm looking forward to the discussion, I think, around what it means as we increasingly move into these advisor roles and the way that shows up in how we engage with clients. There's this evolution to me that if you look at our roots, we came from a sales-based world, your success was determined by basically how many prospects you were meeting every day and every week. I still remember when I started insurance company, general agent, just his only advice to everyone was, just get out there more. The more people you talk to, the more business you generate.

Now, we live in this world where increasingly, firms are focused more on servicing existing clients and getting some new ones, but you accumulate a certain base of existing clients. There's just a lot of ongoing meetings to do with them, which has created this collective debate I find in the industry of how many meetings should a successful advisor be expected to do in the span of a week? We've done some benchmarking around this on our platform and find kind mathematically, on average, the typical advisor is doing meetings about 25% to 30% of their time. Little bit higher end if they're still in the growthy prospect phase, little bit to the lower end if they're in the client maintenance mode phase. And so if you're working the proverbial 40-hour work week and you've got hour-to-hour and a half meetings, it's something in the neighborhood of about 7 to 10 meetings per week or 2 or 3 a day through Monday through Tuesday, Wednesday, Thursday with some prep on Monday and wrap up on Friday.

And I know you live a very different calendar. You are a meeting-intensive advisor. I mean that in the best of ways. Just I know, you do a lot of meetings. And so, I think, I'm excited both to talk about just literally how you do it, how you maintain a meeting pace, and literally how you do it, the systems or tools or processes that you've created to manage a high volume of meetings. I think to start out the discussion, just share with folks, what does meeting cadence look like for you? How does this work in your advisory firm?

Rob: Sure. And typically, we're looking at about 20 meetings a week, sometimes a little bit more, sometimes a little less if I'm doing...I have a conference or taking a little vacation. But I would say 20 would be, on average, the minimum per week if we look out throughout the year, excluding full vacation time.

How Does Rob Handle A Schedule Containing 20+ Client Meetings Every Week? [06:06]

Michael: How do you actually just schedule and set up 20-plus meetings every week with clients?

Rob: Well, it depends if it's going to be in person or virtual. So if I'm meeting with clients in the office, I try to stack them as much as possible. And then, if I'm doing out-of-office meetings, if I'm traveling down to a specific area that I have a lot of clients, I'll try to cluster them so they're back to back to back. So maybe an hour and a half with half an hour travel time in between. And a lot of times those are on the weekends as well, so I can minimize the amount of traffic that I have to deal with. So that's the out-of-the-office meetings or the in-person meetings in the office. So I'll be at the office seeing those people back-to-back. And usually, I schedule an hour and then a half an hour either just to check emails or write my notes, debrief in between, and then go into the next meeting, grab a bite to eat.

And then on the virtual ones, they tend to be a little bit shorter. So those are about 45 minutes on average, and then I'll stack those just on the hour. And then I end up doing every...maybe twice a month, I'll do a couple weekend meetings, and I will also stack those. But you can get through in the morning, go exercise for a little bit, and then do 4 meetings, and then go on with the rest of your day, and you feel like you've won that day.

Michael: So, is that a weekend routine, this exercise in the morning, 4 hours stacked from 10:00 to 2:00, and then on with the day? Is that the typical during-the-week setup as well for you?

Rob: That's typical in the week, too. I might have some in the evenings as well for those people who are not able to meet during the day due to work schedules. So, I might schedule in a workout in the afternoon, kind of refresh myself, and then go back, take a shower, and look presentable on camera for a Zoom meeting or a couple of them in the evening. And then have some time where I'm blocked out on a Friday afternoon to do some writing, blog posts, as well as preparing for the next week's meeting.

Michael: I was going to ask, is there time that you block out for prep or follow-up or just like other work office activity? Or are these meetings fairly dispersed throughout the week in this ongoing activity pace?

Rob: There's usually one day that I don't have any meetings, but other than that, pretty much every day we're going to have anywhere from 2 to 8 meetings. And then a lot of times I'll do the prep first thing on Monday morning, and I can get through a lot of the prep before anyone else wakes up. It's the benefit of being an early bird. You don't get any calls, no emails coming in that you have to worry about. And the approach is very systematized. So I think that is a big part of it is all the meetings are the same. It benefits me on my prep, makes it very efficient, but also on the clients, everyone has an agenda for the meetings. I don't do meetings without agendas. And it provides a couple benefits. One, the clients are familiar with what the format is, and it's one to 2 pages, depending on the complexity and amount of accounts. But it also provides for me a to-do list afterwards. If there's some action items about reminding them to do certain things, it might be on the agenda, or I'll just notate it on the agenda, and I use that as my follow-up. So when I enter into my CRM afterwards, I just take the meeting agenda and then either assign a task to myself or a staff person. And then what I do is I take my notes, take my agenda, take the Albridge report, any reports I pulled from e-money, I put those all together in Adobe Acrobat and then file them into Docupace, our document management system. And it also creates a really strong compliance file. So, with the requirement that we're meeting with clients and making sure we are doing something for the fee that we're charging, I never have to even have a second thought that if an auditor ever said, are you actually working for your fee that you're billing? There's a nice compliance file there of actual work done for the client.

Michael: So can you give us a little bit more of a walkthrough of what is the standard client meeting? What is your standard meeting structure?

Rob: Sure. We start out with what changed from the last meeting. Just a couple...the niceties, you want to figure out if there's anything important, how their last vacation was. And I'll go through the notes from my last meeting so I can ask them, how was that ski trip that you went on? And really feel like we're just continuing from our last conversation. And then I have some key points on the financial planning topics. Maybe they were saving or needed to do a refinance or finish their living trust. Some of the real meaty things that they need that we wanted to touch on at the beginning. And then I cycle through those. At the beginning of the year, we're focusing more on the tax planning, covering the insurance side of things. And then later in the year, we might be doing more charitable giving retirement planning, making sure we're...our after-tax Roth if we're doing an after-tax mega-backdoor Roth.

Michael: So it is kind of a standardized thing. If this is the month we're talking about living trusts, we're going to go through all the client meetings and touch on, do they have one? Do they need one? Is their current one up-to-date, right? Whatever it is that pertains to them. It's like topic du jour, and then you run that standard through every client.

Rob: Yeah, seasonal, but then there's additional ones. My last meeting was about a kitchen remodel. Not everyone's remodeling their kitchen, but that was on the agenda that they were going to save up from the last meeting to start a kitchen remodel. So it was specific to that client.

Michael: Okay. So the key planning topics, I guess, that may be a blend of just things you're actually working on with them specifically, but then some standing seasonal topic that you bring is kind of the default to all the client meetings and then rotate through the year seasonally. So there's fresh stuff to talk about.

Rob: Exactly.

Michael: So, then what comes next?

Rob: Yeah, sure. Just reiterating some of the inputs into e-money, target retirement age, this always elicits some different responses. Sometimes it depends on the day they had at work, but I just go through e-money screen share and say, here's the assumptions that we have in your financial plan. What has changed? Is there anything I need to update? And that sometimes will spur additional conversations. Maybe I have a side income that we need to add into there. And so it helps the conversation and make sure the plan is up-to-date.

Michael: And so you're putting e-money on a screen or a screen share virtual. You're actually turning it on live.

Rob: Yeah, iPad or a screen share. One of the nice big iPad Pros works pretty well for that.

Michael: Oh, interesting. So you don't do conference room TV-style thing. You give them a big tablet to look at.

Rob: A lot of times, I'm coming to them if I'm clustering out of the office. So the iPad seems to work well for that. And I also like to be around the table. So you're on the same side of the table as someone. So you're working collaboratively, not on the opposite side, or it feels too far away. I have seen some great setups, but I just don't have that in my office. So, I know some people do a great job with the in-office TVs, though. So not a knockout.

Michael: Interesting. Because I was going to ask, had you tried both and you like this style better, or it sounds like because you do a lot of meetings where you go to clients, it also just helps because you can bring the iPad and handle the iPad when you're not in your office with your own screen?

Rob: Yeah. And not everyone's vision is great. That was an issue too. If people are like, I can't see it up there on the screen. And so, it negates that problem.

Michael: Yep. And I'm just trying to envision from a data privacy, just you're logged into their particular e-money account and file, it's a cell enabled so you can be internet connected just directly off the iPad.

Rob: Exactly. So we're not using the Starbucks Wi-Fi, for example.

Michael:So what's changed since last meeting? Key planning topics. Let's look at the plan live, any of these inputs changed. So then, what comes next?

Rob: Yeah, the next few topics are... I just touched on a couple things on what's going on in the market. We don't need to go into a whole economics discussion, but inflation's coming down. Just a few key points. It doesn't need to be an economics lesson, but it's...people like to just know what's going on in the world and my take on it. So, there's 3 bullet points usually, and I call it factors influencing the market, so that we don't spend too much time on that.

Michael: And I'm going to presume just the nature of what we end up doing when it's lots of client meetings, like the bullet points are the bullet points, right? Just what's going on in the markets is you do this conversation 20 times every week.

Rob: Yes, I do that, as well as some of the portfolio changes that we'll talk about in a minute. If I'm making adjustments or some of the models that we use, if I'm making an adjustment for one client, I have a separate Word document up, and I just cut and paste the changes for that particular client. And we can touch in later on my client base, but it's very similar. I don't have a huge dispersion in their objectives, their ages, their occupations. And so a lot of the work I'm doing for one client is the exact same work I'm doing for another client.

Michael: And that becomes some of the efficiency of the practice when I don't have a wide variability across my client base. The whole thing becomes more systematized because they basically all need the same thing if you get the same type of client over and over again.

Rob: Yeah, I've got 20% at one employer. And so it's very efficient in that way.

Michael: Okay. So, what comes after or what's going on in the market?

Rob: Yeah, so this is a key part. It's just one line, but this is where I focus on what I call reverse budgeting. I didn't coin that term, but I really liked it, so I borrowed it, where everyone has a target cash reserve that we set, typical for my household is $100,000. And that is the amount of money that we want to have in bank deposits, high-yield savings accounts, money markets, something that's not stock market-dependent. And so everyone defines that amount for me. And then we see where they're at. And since most of my households are young professionals with significantly positive cash flow, we look at their cash reserves, and then at each meeting, they'll be usually above that level. And we say we have an extra 50,000 above our target level. We'll back out any upcoming expenses like a property tax bill, a vacation, and then whatever is left over, that's money that we discuss where it goes to. And that could either be spent, saved, or given away. So we talk about what their objectives are. And usually, we'll have a trust account and it just gets... The extra money that they're not going to spend gets dumped into their trust account and just rinse, repeat that process over and over again.

Michael: Interesting. I can certainly envision after you've been through that cycle with clients for a year or two, they just get the routine, okay, we're up at 130. We're over the line. We know the conversation is coming from Rob. Let's start thinking about what we're going to do with the next 30K. And then you get to have a good conversation because they even knew it was coming at that point.

Rob: And they reach out to me too. I get an email probably on average once a day of, hey, I've got an extra X dollars in my account. Can we add it to my account? So we'll give them a quick call and go through, is this just long-term planning, or is there some other need that we maybe need to make it more conservative? So they are trained to do that and which is great because it just adds the flow of assets that we're managing and it keeps them from having idle cash on the sideline. But they also know that they have a minimum level as well. And that might be 75, 50 grand or something like that, depending if they have a home equity line that's not being used.

Michael: Okay. So I get the reverse budgeting when you've got kind of high-income, upwardly mobile clients, like as long as inflows exceed outflows in the first place, we don't have to get totally into the details of where your money...where your spend money is going. Let's just make sure we know what we're doing with the excess. So at least if you're going to save it, it's intentional. And if not, we're saving and doing something with it. And you're not just spending what's in your bank account because that's what most people do if the money's just sitting there and you don't have a plan for it.

Rob: It works on the opposite side, though, too. If we have retirees that are living on their investments, they watch. And if it falls to a certain level that's below the target, I tell them it's like we've got all these faucets to keep that bucket full. And we just need to turn on one additional faucet to keep that bucket full. So it does work on the accumulation as well as the distribution side.

Michael: So then, what comes after the reverse budgeting conversation?

Rob: Then it just goes to the accounts. And I start with the non-retirement accounts, so trust account, 529 plan, and reiterate the risk level, the target allocation between stocks and bonds, and any changes that we made. Just to give them an update of what adjustments were made and maybe some other notes if there was a tax loss that we took in a certain account or for gifting some shares for a charity, some appreciated stock. So we'll list out that. And that's really what's my to-do list. So I'll highlight the things that are my to-do if I need to maybe sell something post-meeting. I just did a little highlighter on that agenda point and I don't get rid of the agenda until I have completed that task. And then I shred it and everything lives in the digital world after that. But it's a good place to remind them. The next section will be the retirement accounts, what the new contribution levels are. They turn 50, they're eligible for a catch-up contribution. We're going to convert some of the after-tax contributions to the Roth in December. Those sort of reminders, just a few bullet points, 4 or 5 each account.

And then the last one section is just when we're going to get together. Much like when you leave your dentist's office, you know when you're going to go see them again. And I don't want people wondering, Rob hasn't called me in a little bit. I think we're about due. I really want them to know that July is our plan. And they're not just haphazardly hearing from me. We agree that you should be on a 6-month schedule or annual meetings or occasionally for really top clients that maybe own businesses, it's quarterly. But they know when they're going to meet with me next. And then just a note on any to-do items. So there's a lot of white space at the end of the agenda for them to take some notes of, okay, here's your one or 2 action items that I'd like you to accomplish by your next meeting, implement the umbrella policy or reach out to the estate planning attorney to start the trust process.

Michael: So a question then around this, when do we get together next? I hear a lot of advisors talk about that and balk at it, something to the effect of, well, do they even know what their calendar is like 6 months out or 12 months out? Can I really pick a meeting date 12 months from now? Are they probably just going to end up rescheduling anyways? How do you do this?

Rob: Let me clarify. It's what month they're going to hear from us. And so if we met today, they would hear from us in July or in June for a July meeting. So we are not actually picking that day because I might not know what I'm doing 3 hours from now, let alone, yeah, in the middle of the year.

Michael: So you have the same challenge, like I'm not sure what my schedule is really going to be 6 to 12 months out. So you just set the, here's when you're going to hear from us next to schedule the next meeting, so everybody knows when it is and it's set right there. And then, internally with the team, you can actually set the meeting when you're a little bit closer to it.

Rob: A couple of weeks before we told them they're going to hear from us, the staff has a note to reach out. Yes.

Michael: Because, bless my dentist. He makes me pick a date 6 months from now. Every time I'm like, oh, I'm going to guess this one. No promises.

Rob: They're the first one on your calendar. So, good for them.

Michael: That's true. He usually wins that slot because then we just end up scheduling around him. So, as you go through this meeting structure, it sounds like how quickly you get through this varies a little bit by meeting format. If you're out of the office traveling to them, it's 90 minutes. If it's a virtual meeting, it might run only 45 so you can kind of stack the meetings on the hour. Is there a difference in the agendas, or does it just come down to, like, the chit-chat just tends to be longer in person and a lot tighter virtually?

Rob: I would say the variables would be some clients are really interested in kind of what's going on in the economic side of things. And then they might have a family thing that they're working through, a change, a lifestyle change, and then the complications. How complex? My clients that are 8-figure clients are business owners and have a whole host of accounts, maybe beyond what just a simple retiree with a trust account and a pair of IRAs might have. So, the business owners is probably the...where I'm handling their retirement plan for the office or someone who's in a public company where we're dealing with stock options, that might take a little bit more time.

Michael: So, from an agenda's perspective, you said you're like...every meeting has an agenda. Is this literally printed, sent to the client in advance? How do you do agendas?

Rob: Sent before for virtual meetings and then handed to them on nice paper. I print mine in black and white on a regular piece of paper and theirs go on a nice just not cardstock, but something with a little bit more weight to them so it feels special and in color.

Michael: Okay. And do you have an agenda input process? We send it to them in advance to ask them to add things or is it more like, here's the agenda we're going to be talking about and you're more directive on it? What does that look like for you?

Rob: The things that we think...that we had on our mind to talk about. And then if you'd like to add anything, please bring that to the meeting or let us know ahead of time.

Michael: Okay. And how far in advance do you send that?

Rob: Just a couple of days.

Michael: Okay. Okay. So, as you go through this meeting structure, all right, so a couple of follow-ons that I'm still wondering. What does prep look like for these when you've got a whole slew like 20 of these stacked?

Rob: Every client has a folder in OneDrive that's my meeting prep folder, and there's a Word document with all the template stuff, all the model portfolio changes, all the market notes, and then the cadence of the seasonal topics and just cutting and pasting from one to the other, coming up with an Albridge report, any Morningstar's, a net worth statement from e-money. The asset projection we use from e-money is usually just live, because we might make some adjustments. So I don't want to print out a four-page color report if we're going to change something on the fly. But we put those documents in the OneDrive folder and each client has their own folder. And then I bring that to the meeting, either virtually or have it up on my screen. And then that all gets amalgamated to one file. When I add my notes to it, that I dictate into Word and save it as a PDF. And then they all just get put together in Acrobat and then put into Docupace afterwards.

Michael: So, I want to make sure I caught that. So you dictate notes into Word. Is that actually like a resident capability in Word? Or do you have a plug-in tool?

Rob: Yeah, there's just a microphone feature. No, the regular Word has a microphone feature, and I hit save to PDF, and then create that PDF in the client folder, and then use the organized pages feature to put them all together in the right order, and then that goes into Docupace. And then I look at that before the next meeting, especially the notes, to remember about some, maybe more of the soft touches that we talked about. It doesn't have to be perfect because these are just internal notes for me.

Michael: Okay. So, how much time does it take you to do the prep? And is it all you, or is there team support on the process?

Rob: So the paraplanner support is the meeting prep and then putting everything together at the end of the meetings. And then I do the Word document that's the agenda. So they do the stuff that's systematized, market notes, those sort of things. And then I'll fill in if I think a position might need to be sold on something that's an advisor-managed account, or if there's something I'm going to add to it. So I take a look at everything before I present it at the meeting and then print it out.

Michael: Do you have a sense, like how much time does it take them to do their setup and how much time does it take you to do your prep? Because I'm just thinking it's 20 of these in a week. Like that adds up quick.

Rob: Yeah. I can do the preparation in under 20 minutes per meeting. Some of the more complicated ones, maybe 45 if it's some of my top clients with lots of moving parts and some changes they need to make. But about 20 minutes to go through the agenda, look at some of the support material, make sure e-money looks correct, and then be ready to go.

The nice thing about being an early bird too, I can get up and do knockout 10 meeting preps. If I don't have anything early on Monday morning, I try to avoid that, get most of it done and then do a few other ones throughout the week in the mornings. But you try to do them at the same time, because you get in this habit of clicking around and doing things very quickly. And if you do them in the morning when no one's bothering you, you have uninterrupted time and you've got everything already pulled up. You've got all the tabs that you need to have pull up. So that really helps versus doing it one-off.

Michael: And then on the post-meeting follow-up, I'm just trying to visualize the steps, you're pulling out the Word doc, you're dictating notes into it or you're...

Rob: Just in a separate Word doc, yeah, just dictating a blank Word document, saving that as a PDF, and then merging it with the agenda and the Albridge report.

Michael: And you do all that yourself.

Rob: The paraplanner. That's the paraplaner job.

Michael: Okay, paraplanner. So is paraplanner in the meeting to help capture some of this as well? Or paraplanner support is pre- and post, but not in the meeting. You're running meetings solo.

Rob: Yeah, correct. The latter.

Michael: Okay.

Rob: Yeah, because the meetings, especially if I'm traveling out, that's a little tough. And sometimes my meetings are...they're not always in an office. Sometimes we do some hiking and go play paddleball or pickleball. My favorite one was on a paddleboard in Newport Harbor. So, I've got clients that kind of look and feel like me, and they like to be active. And sometimes we do have our meetings. I'll still have an agenda, but we'll go out on a hike. And those are great when you have clients that you can go on a bike ride or a hike with and have that part of your day, talk about killing 2 birds with one stone. It gets your activity and some business at the same time. And everyone's in a good mood when they're exercising usually. So, I think they walk away feeling better, both about the planning and themselves too, and that you care about their health as well.

Michael: So, I just have to ask, don't you get tired? Don't know how else to ask it. It's like that many meetings and that much pace. I'm just sort of mathing this. You got like 20 hours of meetings. You got 6-plus hours of prep. You've got another few hours of follow-up dictation, notes takeaways. You can easily get to 30-plus hours of literally just meeting, prep, meeting, and meeting follow-up. It's a lot of hours every day. So is this tiring, or are you just one of those people, you get more energy the more meetings you do?

Rob: I do get tired sometimes, especially on the Zoom meetings at the end of the day, if I'm going until 9:00 on a Zoom meeting, my eyes might be glazing over. You got to create those carrots out there. And so there might be a... If I'm going out down to Orange County, California, where I might drive to see a few people, I already know that I'm going to go have a nice meal at a bar at a nice restaurant. So I have these carrots and sticks, or I'm going to go hiking out along the bay or do something that I enjoy. And so I know that I'm...I've got something at the end of the day to look forward to.

And I like the people I work with too. So, if it was... That's one thing nice about us as independent financial planners, everyone that I work with, I chose to work with versus maybe some of the other structures where there's a marketing organization and they fill up your lead book with anyone that you're working on. Everyone that's in my client base, I've said, I want to work with you. They said they want to work with me, which is great, but I've also said I want to work with them. And so it does help when you really care about those people, and they are people that you want to help.

Michael: And is this sustainable for you? I'm just sorry. You're living this pace. Do you expect to continue this pace, or are you living it going, I want to change it a little though?

Rob: I love the flexibility of our work. If I need to see one of my kid's activities, I'm able to schedule it in. I might have to go have a meeting or 2 afterwards, or in the morning before their activity on a weekend. But it's definitely sustainable. I don't do a lot of non-necessary tasks. We've got a great support through our group, and I outsource a lot of things. And then I have the next generation of advisors that bringing on as well, and they're handling some of the new business that comes.

Michael: And the only other thing I'm wondering on this before we move on to the firm more broadly. Do you ever get bored having the same conversation over and over again when you have an agenda and a flow that's this structured and you're doing this many meetings, the same agenda with the same flow with very similar clientele?

Rob: The agenda is part of the meeting, but we're talking about them and every person is different. And so if I was having the same agenda with the same person, yes, that would be mind-numbingly boring. But everyone has their own challenges that they bring to each meeting and their own goals. And so you're talking about new goals, new challenges, new dreams with every person that you're meeting with. And so those are not the same, and that keeps it fresh.

The Broader Practice Environment [35:03]

Michael: So now help us understand the broader practice environment. I guess this is the first question I've got is how many clients is this ultimately that you're working with?

Rob: It's a little over 200.

Michael. Okay. So a little over 200 clients. And how does that size...? And I don't know if you measure by revenue or assets under management, just can you give us some context there as well?

Rob: Just touching up on 500 million of AUM, most of it fee-based management, but not all of it. Some of it is kind of legacy A-share business from some succession plans that we can talk about.

Michael: Okay. And then what's the overall advisory firm look like? You mentioned paraplanner or admin support. You've also mentioned being part of a larger firm. So, help us understand the broader practice that you sit within.

Rob: Sure. This is sort of our Russian nesting dolls of our financial planning organization. So we talked a lot about me, which we can move to now the bigger structure. And I have an ensemble within an OSJ within a broker-dealer. So those are the different layers as they get larger. And they each serve their purpose, but from the next level from just me, it's an ensemble. And when I first started in the business 25 years ago, I was working with a partner who...I had time and he had connections. And so we put those together and started doing some lectures at some hospitals that he had connections with. And there was a couple that he knew some people, they'd asked him to give some lectures. And I took that, let him do the lectures because he was the subject matter expert. And then I did the follow-up because I had the time, the effort, and the drive to make the most of these opportunities that we had. And we just split the revenue from those.

He would guide me, and that obviously tapered off as I became more experienced. But he would mentor me and help me with the agenda, help me with the recommendations, and then I would present those. So that was the approach that we took. And I've been happy with it. I learned early on that a hundred... If you take 50% of something, it is definitely better than 100% of nothing. And as a young advisor, I remember sitting in the office, looking out the window, and seeing all these cars drive down the street and like, man, I wish I could get some of those people as clients. How do I do that? And having a mentor that could help introduce me or at least put me in front of people was a huge help. So, that was one way I started. My client also started 529s had just come out. So I did baby fares, where I would do 529 plans and term insurance. So that Roth IRA, did some cold calling as well. So thank goodness that's really not part of the business anymore. But that was...

Michael: Who was your early BD then? Who were you building with originally?

Rob: It was Royal Alliance. It's been my broker-dealer the entire time, all 25 years.

Michael: Okay. So you're still living in that broker-dealer environment, but your practice has moved from the 529s and the term insurance to the A-shares and all the things that we did then to being mostly fee-based now.

Rob: Yeah, fairly early adopter, which at the beginning was a little tough because you're getting a percentage of a very small amount of money. And when you're doing Roth IRAs in small-ticket items for people, it's a little tough, but the nice thing is I was at the same life stage as some of these young physicians that we were working with and young families. So I could afford to do that. It would not be something sustainable if I was a career changer right now, that just would not work. I wouldn't pay my bills, but for someone starting in the business at 21 years old, it worked because I grew with them. And the nice thing is these people that have been with me for 20 plus years, their high school kids we'll have these discussions, and I was there before their high school kids. And so the longevity is there.

Michael: So now help us understand more what this ensemble structure is or means today. You've kind of talked about this in the context of your 200 clients that you serve. So who are the other advisors, and what's the relation, the client relationship or sharing in this context?

Rob: So absolutely. So Craig, who was my mentor when I started in the business, he's still part of the team. We're partners in our OSJ as well now, but we work together. But now that I'm more at a capacity level, we have brought in a third advisor and then...that had moved on and is actually doing well and is with our group and has a mature practice. And then now we're on the next advisor that's been with us for a few years where we provide the clients. A lot of times, those are through our resident lectures at hospitals, which is 1 of our areas of expertise. Right now, I will be the one that will go in and give a talk to 30 physicians as they're finishing their training. And she will have 20 people to talk to and can cultivate those relationships like I did 20 years ago when I was starting out and was able to take on a Roth IRA client, a disability policy, something that wasn't a 7-figure AUM client.

Michael: And do the new advisors, as they come in, still need to do some of that kind of transactionally-based business to get it adding up, or is she trying to build this fee-based at this point?

Rob: Yeah. So our first advisor came over from a bank branch and so that was a setup where with the payouts being so much higher in the IBD world that just keeping a decent percentage or an okay percentage of the client, you're basically at a wash. And so anything else on top of that is short of some of the expenses, but they're pretty small. It was just a growth factor. And so that was the first situation. The second one had some providing some orphan clients that paid trails, maybe gave some revenue and then just giving some of our clients, sharing some of our clients that they wanted to work with us, maybe those C clients. And so giving them enough money to provide some revenue, as well as hiring them as a part-time paraplanner. So we also did that where they need to produce some...have some money to live on. And so we needed some help with some financial planning work with e-money. And these are people that are either a CFP or on their way to being a CFP. So hiring them to do some of our overflow financial planning work.

Michael: So as they come on board, they end up in this part salary for doing paraplanner work part revenue-based compensation for the initial clients, you see them and the ones that you're introducing to them. And then, over time, as their client base grows, presumably their client revenue goes up. Their paraplanner salary goes away because they don't have the time to do it at that point anyways, as they grow their client base, and they kind of get transitioned into growing client revenue that way.

Rob: Yeah. And I could see us over the next few years just continuing to do that on a 5-year cycle, maybe that's about the time where maybe someone can learn about the operations, the planning process, and managing a practice. Get some clients of their own and then be sustainable where they could be part of the team and still part of the team, not necessarily going off on their own, because a lot of these clients would be joint clients where maybe if we introduced them or brought the client, we would share in some of the revenue. But they would be getting the lion's share of the revenue, but it creates also an income stream for the senior partners as well, sharing that revenue.

Michael: When you try to ramp an advisor up in that context, can I ask, how do you try to break down what salary, how much revenue do you give them? What split do they get on the revenue if you're basically handing it to them, but they gotta service it and retain the client? Are you trying to salary them to the point that it's a full-time job on salary and the client revenue is gravy? Is it more like it's a half-time job and a half-salary?

Rob: We've got a pretty good flow. They can get some revenue through the insurance planning, the term insurance. We might set them up with maybe a 401(k) plan that we need to have help service that maybe we set up, but they need... They can do the enrollment meeting, so they're going to get some revenue from multiple sources. We can get them up to a lifestyle-sustaining income pretty quickly.

Michael: Just on the revenue sharing.

Rob: Just on the revenue side, yeah. The planning side is just... That should not be the bulk of it. If it's a younger advisor that doesn't have any experience, it would be, I'm looking to add a paraplanner now that would be on that track where it would be fully salary and then phasing off of it within 5 years. I think that model would work very well just ongoing. Younger advisor, the last 2 we brought on already had some books of business, so they weren't as green. But someone coming out of a CFP program at a university that knew what they were doing from a technical perspective, but didn't know how to run a business, that they would be a great fit. And I think we could get them to a lifestyle-sustaining advisor compensation level in 5 years.

Michael: How do you set the split levels of what revenue they get and what revenue, I guess, either the firm keeps or the senior advisor gets to participate in? How do you set the splits?

Rob: Yeah. So myself and Craig are the senior advisors in the relationship, and then we split half of it. It's not fair to call a junior advisor because she's...but associate advisor takes the other half. So we bring in all the clients and do the...maybe if it's a hospital, do the lecture, help create the client, be there as a mentor in some of the meetings, especially at the beginning. Go through all the planning recommendations, see if there's any things that we would suggest. And so we just split those back to that 50% of something is better than 100% of nothing mantra.

Michael: And so you and Craig are kind of functionally joint partners on this. So it's like 50% to the 2 of you and then the other 50% to the associate that's servicing

Rob: Exactly, yes. And we've worked together for over 20 years, and just sometimes, I'll be working with the associate advisor on a client and he's not involved at all and then vice versa. And so at that point, you just have a certain level of understanding that everyone's kind of pulling their own weight. And while you're not compensated the same, it all works out assuming you've got respect for everyone and kind of fill in when needed.

Michael: And are you doing this as like, they get a salary that's tied to their revenue and you calculate their revenue on an ongoing basis to figure out what it is? Or is this more directly like a split rep code structure and the BD ultimately does all the allocations?

Rob: It's a split rep code and the BD does the allocation, so we don't have to worry about billing.

Michael: Okay.

Rob: And that's where we want to grow it. We want to grow the client revenue for that advisor and the whole team versus just having them as a paraplanner for life.

Michael: So under this structure, clients are kind of the clients of the firm where you and Craig are the seniors, but the associates may functionally be the servicing advisor with whom the client has the primary relationship. Is that the right way to think about it?

Rob: They're clients of the 3 of us. I would consider all 3 of us as a team. While we're a little grayer, we're all part of the same team.

Michael: Okay. So, you said there's these layers. I think your analogy was the Russian nesting dolls. So there is your practice within the ensemble, then the ensemble's within the OSJ. So talk to us about the OSJ layer now.

Rob: Yeah. So within the OSJ, we are one of the teams. And within the OSJ, some advisors have set it up where they have their own practice. Some of them are teams. We think the team approach works really well. And we've chosen to do it that way. We have right around 100 advisors that are part of our group. And myself and Craig and one other producing advisor are partners in the firm. And then we have one managing partner who's the majority partner and is the operating partner is what I would call it. So, my advisor hat is one. And then I also have a lesser managing partner or operating partner role where I, quarterly meetings on strategy, but I'm not doing the day-to-day.

Michael: Okay. So just of this OSJ that rolls up to about 100 advisors, sounds like there are 4 of you that came together on this, you and Craig, another producing advisor, and then a person who is the operating partner who primarily manages it and is the majority owner of it. But you and Craig and the other producing advisor have some equity stake at the OSJ level as well.

Rob: Exactly. And, yeah, we're a hybrid RIA with our independent RIA as well as a broker-dealer affiliation about 7 billion right now in AUM, with most of it advisory business. And then we span a couple of states, California, Hawaii, Oregon, Missouri, and Texas are the states where we have reps located. So we've built this...

Michael: So really, just those 4 states. It's not like you've got 100 advisors across 42 of the 50 states. You're actually pretty regionally concentrated.

Rob: Yeah, and that's an interesting point because we're one of the top 5 OSJs with Osaic, but we're definitely not the biggest on headcount. But we focused on providing services to higher-producing advisors within the BD. And it's been a really good kind of a unit within the larger broker-dealer because it's the best of both worlds where people within the OSJ, you are known versus the broker-dealer level. It's a big group. And obviously, some people know who you are, but everyone does not. And so it allows us to provide some leverage with vendors as well as some outsource services. So the HR, if they want it, you can have the OSJ be in one of the offices or you can rent your own office if you want. And we have 624s on as part of the firm. So some of the advisors have come to us that were OSJs have actually decided they don't want to be OSJs anymore.

Michael: They roll up as the local series 24 under your OSJ structure.

Rob: Yeah. One of the things, we get some economies of scale, especially with the broker-dealer and custodians. They would have to obviously pay some sort of override to the group, but they might end up neutral because if...and not have to worry about any of the other headaches, because if they're tacking on to some additional leverage that we have, but then giving up some on the override, they might end up neutral. So, it works out pretty well.

How Does The OSJ Structure Work? [53:18]

Michael: So for folks who are listening who maybe are from the RIA world and not as familiar with the OSJ structure, can you just share a little bit more about what the OSJ structure is and how the economics work at the OSJ level, how that layer of the business gets paid and makes its own revenue?

Rob: Yeah, sure. So you bill a dollar, and a couple cents are going to the broker-dealer for their compliance and their back office structure that we leverage. And we can talk about where we leverage them. A couple of cents of that dollar going to the OSJ, but then there should be some value add there from the OSJ. That might be the compliance role. And so we have the 624s on our staff. We have an internal marketing person that we've used to do turnkey events. So if we wanted to do a client appreciation event, we can have that person just have an event for us and we'll pay them maybe a little bit for their time. But they'll go out and do the invitations, the restaurant reservations, all the logistics. So that's nice because I'm not an event planner by any means. So that's nice to have. And then we have marketing and then some other people. Everyone's practice is different. And we have some people that specialize in certain areas. So, I partner and a couple other advisors within our OSJ partner with an advisor who is just a rockstar on qualified plans. And you know that 401(k) compliance is a beast.

Michael: It's a thing unto itself. Yes.

Rob: For me, it's watching paint dry. I do not enjoy that at all. And so what a lot of us do is we go to this advisor in our group that has some staff that are great at this as well, and we just split the business with them. And I get to do the things that I like to do, which is having the enrollment meeting, meeting with the individual, plan participants, that's where I shine. It is not knowing when the compliance testing needs to be done or I just do the fun selection and meeting with people talking about their lives. So that's a great role that we have just someone that does that. Or there might be someone that's great at long-term care insurance that I might want to outsource some of that too. So that's a great tool. And then also on the succession planning, 2 of the succession plans that I have done have been internal through the group. And so with 100 advisors, you're going to find someone that works as a good fit within the group, most likely, because there's enough people there that... These retiring advisors can say, I really get along with Jason over here. And we do an annual conference within our OSJ where we all come together and a lot of the staff come, some of the BD people come. And it's a really great thing because everyone gets to network and communicate together, and you kind of feel each other out and say, oh, I'm thinking about retiring. I've known you for a couple of years. I feel like you'd be a good fit for me. And by having these small events, you create those connections.

Michael: Can you give us some neighborhoods of how the math breaks out? Just you said you bill a dollar, a few cents goes to the broker dealer for their kind of back office and platform layer, a few cents goes to the OSJ for their services and value ads. How many cents are we typically talking about of what these splits go to for, again, I'm just thinking for folks that have only lived in RIA world and are not used to what typical splits and payouts are.

Rob: The money to the advisor, it depends on your production level because you've got your relative percentage and then your absolute dollars. So my absolute dollars are probably more than most of them, but my percentage that I'm paying out is going to be less, so you might go anywhere from 80% up to 96% that you keep from the revenue that you bill. And then the other 2 parties would get the rest of it.

Michael: And of the other 2 parties, is it a similar, the way that you and Rob split 50-50? Is that a 50-50 split as well, or does the home office get the bulk of it and the OSG only gets a little, or the OSJ gets the bulk and the BD gets the small slice?

Rob: Back to my role, it's more strategic on the OSJ. And so that's negotiated depending on if they're providing office space, they might get a little bit less, but there's a discount on rent. So kind of depends on those things. If the broker-dealer provided some financing to come on board, but I don't know if I want to get too detailed because I might speak out of turn on that.

The Clientele And How Rob Built His Client Base [58:56]

Michael: So now help us understand more around the clientele you serve and how you've built your client base. You've kind of mentioned a few times working with higher-income physicians, like the lectures you did early on with Craig with the residents. So help us understand a little bit more about your clientele and the path to growing your clientele over the years.

Rob: Yeah, so there's 2 different... Besides the initial baby name, cold calling, which some of those are still clients today, which is fantastic. And I'd never leave those people, even if they're not my typical client today. But I have an incredible allegiance to them because they help me stay in the business. It's been twofold. So it's the residents growing to bigger and better things from residency through their retirement and then succession plans. So, I've completed 5 succession plans, both individually and with Craig, and then also helped some other advisors on their own succession plans. But 5 that have been clients that I've acquired through succession plans. And then the residence ones. But yeah, learned a few things throughout the years on the succession plans.

Some of them worked out...all of them worked out well. Some of them worked out better than others. So, happy to share a couple of the things I've learned from those succession plans.

Michael: Yeah, I guess I'm even just trying to understand context. When you say succession plan, for some advisors, that essentially means I acquire their clients and they transition out for others. It's like I'm their associate, and I run sidecar with them for 3 years and transition their client base over time. So what does succession plan mean for you in this context?

Rob: They've all been people who are no longer at the firm and have transitioned out of the business.

Michael: So these are typically advisors that basically come and say, I'm ready to retire, Rob. Will you buy my clients and give me an exit? Right.

Rob: Yes, and it's a great way for the retiring advisor to monetize their practice, take care of their clients too, because that is just a really important part after sometimes 40 years in the business, how important that is. They want to make sure that their clients are looked after because they're family. Yeah, so I've done a couple with Craig and then some individually. So, it's an earn-out is the way I've done most of the larger ones. And that's worked out relatively well. It puts everyone on the same side of the table. If you just rough math, do a 2 times revenue with some growth, it ends up to be a little bit more than 2 times revenue. And the first year, the retiring advisors introducing you to everyone, kind of getting you up to speed. The second year, they're there. Occasionally, third year, same thing. And then the fourth year, they're really only...you talk to them a couple of times. At the beginning, you're doing all the work or you're doing all the work. They're helping out a little bit and then it slowly becomes all you, but they're still getting paid something. And if the business continues to grow, they're going to get a little back end on it in that fourth year as the business has grown.

Michael: So help us understand mechanically how this works. Is this essentially just a, we're going to do a 50-50 split for 4 years? 50% of your revenue for 4 years is 2 times revenue. Or that's how it comes out.

Rob: It's going to be more of an upfront 90/10, 80/20, something upfront. That first year, you're really going to put in the time as the acquiring advisor if you're not putting a down payment down where you're giving them the bulk. They're almost making what they were making before and doing much less of the work. Then splitting maybe 50-50 2 years and then a back end with another 20% or so. And we've always included the option for that retiring advisor to stay on if they wanted to. Some have taken it and some have not. Depending on the size of the practice, there are some costs to stay licensed, so maybe that 20% is worth it. But it gives them the flexibility of not having to hang up their 12C or be out of the business, or if they just want to attend the conferences, it gives them the optionality. And we don't care. We give up a little bit of money, but it keeps them in the picture. And that for 20%, I'll take that.

Michael: So what would the typical rev-share earn-out be over this four-year sequence? I'm just trying to visualize how this works.

Rob: 80% retiring advisor, 20% acquiring, and then year 2 50/50, year 3 50/50, and then 20 to the retiring advisor, 80% to the acquiring advisor. Just done through a joint rep code. So at the beginning of every year, you change it and the BD figures out what that dollar gets split up.

Michael: Okay. So makes sense. And so then if I add up 80% plus 50% plus 50% plus 20%, it adds up to 200% of revenue. But since you're billing as you go, as you noted, if the practice is growing, you're getting these percentages of a growing pie. So if I...in practice, it will probably add up to more than 2X revenue spread out over 4 years. How much more depends on revenue and market growth.

Rob: Yeah, you would hope so. And the person acquiring the practice is probably pretty motivated and looking for other opportunities there, adding new services potentially that could generate additional revenue that the retiring advisor would participate in.

Michael: Right. And then, after 4 years, typically, they're winding down and out. It's your client now. They're retired. Have a great retirement.

Rob: Yeah, but if they want to stay in the picture, we had one advisor that stayed on for several years at the 20% number and occasionally would bring in a client here and there, and that would pay for their 20%. They didn't want to leave the relationship.

Michael: They want to stay in the game. Yeah. Yeah.

Rob: Yeah, one point of emphasis, though, is you do have to be clear that this...even if they stay in the game longer, Rob or Craig are now your new advisors. I have retired and I gave you one last recommendation and it was to work with these gentlemen. And please take that recommendation. So that is sort of their parting thing. I want to talk to you about how you're doing your kids' life goals, your vacations. Rob's and Craig are going to make the recommendations for you.

Michael: I like that framing. My last recommendation as your advisor is to work with these gentlemen as your new advisor. This is a good... It's a nice closure to the relationship. So how do you evaluate from your end who's a good fit that you want to do this deal and structure with?

Rob: Sure. Well, the way they conduct their business has to be a fit. That's a non-negotiable. You couldn't deal with someone who was just targeting people doing equity-indexed annuities, merging them with a fee-based advisor using ETF models. That would not be a good fit. So style of business, personality has to be somewhat similar. One area, though, that was an interesting change that an advisor who I had a wonderful time with the succession plan and really was very successful was, it was a female advisor. And had grown up as kind of the outsider, because she was a female in the advisory world. And she felt like she needed one of her tribe to be her successor. And she had a terrible time finding the right fit that was a woman. And eventually, over time, she said, Rob, you are a perfect fit for me. It's more important that you're the right fit than that we are the same gender. And that was an interesting revelation because she definitely was...that was her number one criteria.

And I made some adjustments because I realized I am not going to talk to clients the same way. So I included my female client service manager in more of the conversations to put a little softer, more female touch on the relationship. But that worked out very well, but that was an interesting kind of realization, I believe, for her. But it was a great succession plan.

Michael: So, have you had any that didn't work out? Didn't work well?

Rob: I would say so that...I had 2 other kind of models of ones that I've done. One of them was just too small and drawn out. We started a succession plan on the advisor's 82nd birthday. And Michael, you're going to...

Michael: Just to be clear. This is the story of the drawn-out to slow succession, where we're starting out with it begins on the advisor's 82nd birthday. Okay.

Rob: Concluded on his 90th birthday. And this was, to his credit, someone who was 20 years younger than his driver's license said that still it was a decent lifestyle practice, but it wasn't big enough for Craig and I to go in and buy it with 2 high-performing advisors taking over an okay-sized practice that was more of a lifestyle practice. And that was something I learned that it was too small, especially for 2 advisors, because you still learn. We took over half the clients each, even though they were part of the same rep code, we took over half, but we still knew the other clients because we'd all had the intro meeting with all of us putting on the team front. And that he was a fantastic advisor, serviced his clients like you wouldn't believe, but it's just not realistic for someone where we're at to have quarterly meetings with what we would maybe categorize as like a third-level client in terms of their revenue. And when I looked at, I can't take you to lunch every quarter. I just have completely eaten up all my fees if we're going to lunch every quarter.

Michael: So was the problem literally the size of his practice for how much clients and revenue he had or was the problem the average size of clients, the revenue per client was challenging to map on to your business economics?

Rob: It was that and then the service level that they were accustomed to.

Michael: Okay. So how would you have approached differently in retrospect to head this off?

Rob: I would say a revenue per client and not do an 8-year succession plan, but I would have a minimum revenue for client to make sure that post-completion of the plan that it met your target revenue per client.

Michael: And where would you set that target? Is $2,000 of revenue per client viable for you? Does it have to be 5? Does it have to be 10? And if I look, just you said earlier closing in on 500 million of assets and 200 clients. So, that's an average of almost 2 and a half million per client. Obviously, there's big ones, small ones in the spread. But where would you set that threshold now?

Rob: Yeah, I would say you'd need to get somewhere in this 500 to 750 or so per hour of my time.

Michael: $500 to $750 per hour of whatever revenue it's going to take divided into however much time you spend, which from your end is the client meetings plus prep? What else do you put into that hourly calculation?

Rob: Yeah, and then a small factor for maybe 150 or so for the paraplanner assistant time, similar to a law firm. But there's definitely a difference between those people that are... Some of the clients that we took over had A-share assets that just didn't make sense to transition to a fee-based environment. And so while they might have a couple million dollars more than another client, the profitability was the same. So you have to look at the revenue versus just the overall assets.

Michael: Right, which is a big deal if you're in a brokerage world where you can have clients at 1% advisory fees and clients at 25 basis point a share trails. That's a really big revenue difference for what might be the same asset level.

Rob: That being said, though, if you have a trail on a decent-sized account that's just in a moderate-growth portfolio at a place like American Funds, for example, you're not doing anything on the investment management side there. So you're not taking a lot of time for that. So, I don't mind that. The age of the client matters too. If you've got $100 million that you're bringing on, and maybe a third of those people, the retiring advisors, they tend to look a lot like their clients, right? So if you've got a third of those clients taking 5% a year, you're losing $1.7 million client a year. That's a drain. Whereas I'm at the place where my clients from the physician planning typically are in my same demographic. And so they are the growing clients. We always hear about those studies of the transition and the money moving and money in motion. I love those numbers because I'm dealing with 40 and 50-year-olds and they are the ones that the money is going to. And those are my clients. Those studies scare the hell out of some people. I love it. I'm like, that is my opportunity because I built that relationship with that next generation. And so I'm looking forward to capturing the whatever trillion dollars of new assets or my slice of that.

Michael: But it sounds like the acquisitions you're doing are not necessarily physician-oriented clients. That's where you built your organic client base, but not necessarily the acquisition.

Rob: Yes. And that's one of the other negatives to doing acquisitions is your dilution of your target market. It is really hard to find all those other matches and your clients in the same profession. So that is absolutely a negative.

Michael: So is there a point where those become less appealing because it's too much dilution? Or is that more appealing because it's a diversification thing?

Rob: Well, I would say that the... It matters less on the specific occupation for those retired clients. One of the efficiencies that I have is an expert in a certain hospital system, like the Kaiser system. Or an employee at Amgen or Gilead or some of the areas that I have several people at, my efficiencies are during their working life, not in retirement. There's less of that efficiency when they're...everything's rolled over to an IRA and they're just taking distributions. Whereas on the acquisition side, knowing the employee stock purchase plan, the RSU schedules, the pension plan, that is much more important for those younger clients. So the efficiencies are more pronounced in the growing physician market.

Michael: It's actually striking to me because I feel like for a lot of advisors, they kind of view it as the opposite, my retired clients are my bread and butter. I've got my standard portfolios. I got my standard distribution set up. It's the younger clients that pull me all over the place because they got different jobs, different circumstances, different planning conversations. So I guess I'm struck, yours is like the 180-degree polar opposite. No, no, no, my physician clients, it's a relatively small number of employers. They're the same age, same dynamics, same needs. Those are the systematized ones, and it's the retiring ones who are less efficient for you.

Rob: Yeah, but they're adding tens of thousands of dollars to their investments and really growing your AUM base. So, yeah, maybe if they're pulling you in some directions with job changes and things like that, but that's a rollover IRA or a signing bonus that needs to get invested or some new activity that occurs. So, I'll take the getting pulled around a little bit for the new business.

The Most Surprising Thing On Rob's Advisor Firm Journey [01:17:31]

Michael: So what surprised you the most on this journey of building your advisory firm?

Rob: Sure. Well, I started out doing my CFP. Actually, maybe a little bit...a step before that, actually, after I got out of the University of Colorado in Boulder with a kinesiology degree, I thought I was going to study for the MCATs and go to medical school. And I got out of college, was on a cruise ship and left my MCAT book there on the cruise ship. Didn't bother to bring it home from Florida. And I realized I didn't have the same passion for some of the material as I did the profession of medicine. And so I transitioned to studying accounting. My dad was a public accountant. I said, I've got some familiarity with that. Why don't I start studying that? But then there was a disconnect because you've got this knowledge, but you aren't having direct impact on a life of a family and where you would maybe in medicine. So, that's where financial planning is an incredible profession because it's this combination of the technical skills with direct impact on people's lives.

Michael: All the numbers of the accountants and all the service of the doctor.

Rob: Yeah. So I moved at the UCLA Financial Planning Program, from the accounting to the financial planning and completed the CFP requirements. And then I took the test 3 years into my practice. And as far as things that surprised me, maybe I learned was one advisor, he told me you could be the smartest advisor out there, but if you're not going to make enough money to last, you're not going to help anyone. And so it's that balance of the soft touch, the counselor part of our role, and knowing the technical side of things. And that's why I think it's such a hard industry to bring people into, because you've got those engineer types that can go through a calculation, a spreadsheet, a CAD drawing, and just they are whizzes. And then you've got some of those psychologists maybe that are great at talking and relating to people, but someone that can do both is really a hard thing to find. And so that was the thing I think that was... To answer your question in about 5 minutes, the most surprising thing is how much of the soft skills are required in our world. Because I would say I probably talk more clients out of saving than spending because they know they need to save, but they don't know they need to spend. And that's back to my reverse budgeting approach.

The way I presented to clients is, you're on this path, and if we can quantify through the e-money plan that you're on the path to meet the adult things in life that you should be doing, getting your kids through college, having enough money to be financially independent so you can retire if you want to retire, not always the best thing, but if you do want to retire versus scaling down, that if there's extra money, that is money that you can make your life better with. And that's, I think, the most surprising part is where we act as counselors to people as opposed to technical specialists.

The Low Point For Rob On His Journey [01:21:29]

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

Rob: Yeah, at the beginning, it was just looking out the window and seeing the people driving down the 405 freeway, not knowing how to get those people to work with me. I would purchase a baby name list. This was in the early 2000s of people who, I think, had signed up for Parenting Magazine. And I got their phone number and would see if they wanted to start a 529 plan. That was tough. I'd call people. I had some success, which was one of my mentors was surprised that I had some success, but I'd have a few successes. And then I'd literally cry in the office for a little bit because it was so hard to get told no over and over again. Thank God I didn't have a family I was supporting at that time, because that would have been tough. But I didn't have a lot to lose. So I had less overhead. That was one of the hard parts at the beginning. Now the hard part is actually the opposite, is telling people that have told you that they want to work with you, that you're not the right fit for them, even though they're very happy to pay you. And finding really being true to what you said you want your business to look like. That's a hard thing.

Obviously, when we lose a client, both when they leave and it happens to the best planners in the world that clients do leave and that hurts. So that's absolutely one of the low points. And then when you lose clients, they become more than numbers, and, yeah, that's a tough thing. I had one of those this week and it's really a tough thing. And we're usually one of the first calls and thinking back to choosing a life as maybe a CPA or something else. I don't know if the CPA is the first call when someone loses someone, but for the financial planner to be one of the first calls.

What Would Rob Go Back And Tell Himself From 10 Or 20 Years Ago? [01:23:46]

Michael: So what else do you know now you wish you could go back and tell you 10, 20 years ago when you were getting started on the career?

Rob: Yeah, to some of the systemization and I fought some battles that I didn't need to fight. Looking at, I remember calculating whether an A-share or a B-share made more sense and doing a spreadsheet about which one would be more cost-effective for a client. That's embarrassing at this point, knowing where I'm at now. I think that was...

Michael: Embarrassing why?

Rob: Just that it was effort that wasn't needed. They would have been perfectly fine with either a fee-based account or an A-share. The idea was they just needed to do a Roth IRA. But I wish I would have... I get asked this a lot and it's hard because it wasn't available, but the systemization of model portfolios on the investments, whether you create your own models or do a third-party asset manager, having more systematized investments would have been one thing that would have helped. But to give myself a little bit of a pass, in the early 2000s, there weren't these great TAMs or ETF models that you could outsource to. But I guess dovetailing on that I think presenting myself as the person that was the investment specialist over the financial planning and the framing, focusing on the investments ahead of the other bigger, more important things, I think is something I would have changed the perspective and started talking about the big picture things ahead of the, here's what the S&P did and here's what we did. Some people care about it, but most people care more about, are they going to be okay? That's always like the first thing that someone who lost a partner asks, am I going to be okay? And I think that's a lot more important than what your alpha, your beta relative to the S&P was.

What Advice Would Rob Give To Younger Advisors Coming Into The Profession? [01:26:05]

Michael: So any other advice you would give younger, newer advisors looking to come into the profession now?

Rob: Yeah, find people who you respect their practice and emulate them because you don't need to recreate the wheel and work with them, learn with them. As long as you're not getting taken advantage of, use their knowledge and do some work for them. And if you get a couple dollars out of it, fantastic. The knowledge will probably be worth more than that. But yeah, have a mentor, have community because it can be lonely out there. So having a network of people, even in larger groups, like…

Michael: How do you find that when you're younger and newer?

Rob: Yeah. With Osaic, there is a next-gen panel that does monthly meetings. And these are some... I am so impressed by these advisors. I was on the board at one point. I must have aged out of the group, but they do fantastic calls. And these are people that are excited about planning. They're doing great work for clients. And these advisors, maybe they're 25 to 35 years old. But, man, I trust these people with my clients. They are really thoughtful advisors looking at building better businesses and doing better work for their clients. So, within even the larger groups, like an 11,000 advisor broker-dealer, there are subgroups within that, like a next-gen group.

How Would Rob Define Success At This Point? [01:27:50]

Michael: So, 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. So you built this wonderfully successful practice as you're crossing half a billion dollars. And so the business is successful by any objective measure. How do you define success for yourself at this point?

Rob: Well, I am a financial planner and we love checklists. So, it can't be one or all, but I think it has...you have to have all of these things because if you just have one of them, it's like having a chair with one leg. It doesn't stand up. So, kind of in order, you've got to have your health. And I see a lot of advisors that...and I know you had a guest recently that talked to this on your podcast, that transition from being healthy and poor to rich.

Michael: And not healthy. Yes, the big swap from one to the other.

Rob: Yeah, the big swap. Exactly. Thank you. That is one. And that is definitely something... I love that I've got young active clients that I go play pickleball with and having that as part of something you schedule. So being able to have your health, whether it be your family or friends or people that you want to be with, have clients that value who you are and what you do for them and tell you that they do, because that is the best thing. And then a practice where you feel like you're driving the ship, not just reactionary, putting out fires, but you're creating the path going forward. Because if you're just dealing with fires every day, your work-life balance is going to be terrible. That's where you try to be proactive, tackle things as they come. And then it doesn't have to be an absolute revenue number because not everyone has to be a 7-figure producer. But where you can get to the point where you don't have to take a client that wants to hire you if you don't think it's a good fit, if you can say no to people. So if you have all those things from your health to the client fit, I think that would be a successful person. And I sure hope I'm there.

Michael: I like that framing, it is getting to the point where you really actually feel like you can choose your clients and say no to the ones that you just don't want to work with because you don't want to work with them.

Rob: It's hard going from not having anyone to talk to and no one to pay you to literally telling people, I'm sorry. Let me find a better fit for you.

Michael: It's quite a turnaround. It's quite a turnaround. Well, thank you so much, Rob, for joining us on the "Financial Advisor Success" Podcast.

Rob: It was great. And thank you for all you do for our profession.

Michael: Thank you. Thank you.