#FASuccess Ep 391: Improving Efficiency (In A Solo Practice) By Eliminating What Clients Don’t Really Care About Anyway, With Christopher Jones

Resources Featured In This Episode:

• Christopher Jones
• Sparrow Wealth Management
• Morningstar Total Rebalance Expert
• ShareFile
• Joel Bruckenstein
• zCalc

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Full Transcript:

Michael: Welcome, Christopher Jones, to the "Financial Advisor Success" podcast.

Christopher: Thanks. It's great to be here.

Michael: I really appreciate you joining us today. And I'm looking forward to a conversation around...I think of it as the dynamics of how we build our practices or how we figure out what kind of practice we want to build. There's a bunch of different playbooks out there in the industry of how to build a $100 million firm, how to build a billion-dollar firm, how to build a lifestyle practice, all these different playbooks out there. And I feel like there's an irony to it that it presumes out of the gate you actually know which thing you want to go build in the first place, which some of us don't know, and some of us think we do know, and then we start building it, and then we find out that's not actually the thing that we wanted in the first place, and then we have to shift and pivot. And so, to me, there's this natural interlocking of navigating, figuring out what we want to create for our practices and figuring out what we're just trying to create for our lives or do on this Earth as a human being with the time that we've got. And I know you've had an interesting journey around this culminating in at least what I would call an incredibly successful lifestyle practice around you. I don't even know if that's a label that you would use, but I know that has been a journey unto itself. And so, I'm excited to talk about these dynamics, like how you build a really effective practice around the life that you're trying to live, and then just run it efficiently in today's modern world.

Christopher: Yeah, thanks. It's very interesting to me as well, and it's been quite the journey.

Using A 2-Part Fee Structure To Serve Both Affluent Retirees And Working-Age Clients [04:45]

Michael: So, I think to get us started, just help us understand your advisory firm as it exists today so we've got a little bit of a mental image of what the business is, and then we can talk a little bit more about the path and journey in getting here and making it what it is.

Christopher: Okay. Well, today, I live in Orlando, Florida. I work from my home. My only employee is my wife, and her name is Naz. And she works with me in that capacity. And we currently manage about $110 million. We have 68 clients. Our average AUM per client is about $1.6 million, and my average client tenure is about 10 years.

Michael: Okay. And how long has the business been running overall? Just to take an average tenure of 10 years, you've been doing this for a while.

Christopher: Yeah, 23 years. So, I started it in April 2001, and we're just at about the 23-year mark now.

Michael: Okay. So, what does this look like, I guess, from a fee structure end or revenue-wise?

Christopher: Well, our fee structure is twofold. We have a fixed planning fee that we charge. It's typically an average around $3,000 a year for clients that have under $3 million in assets. Once a client hits $3 million, then we waive that planning fee. But we also have an investment fee as well. And on the first $3 million, it's 0.75%, so 3/4 of a percent. And then from $3 to $5 million, it drops 50% to 0.5%. And then on assets over $5 million, it's 0.25%. So, it's a pretty simple fee structure that, I would say, captures the bulk of the revenue on the first $5 million of assets. And it really incentivizes, I would say, larger clients to stay with us. One of my personal, I guess, more painful experiences is losing some very large clients. I had a $20 million client that I lost, and we can talk about that later how that happened. But clients as they get bigger get heavily targeted by all the big banks. And so, it gets challenging with all the competition at that point to keep them. And so, I have a fee structure that really heavily incentivizes clients to not go wandering around.

Michael: Meaning once you get past that certain base level, you're up to a $5 million client. By the time you're at a $5 million client, you've got more than enough dollars to cover the relationship for yourself, and the marginal dollar fee drops off to 25 basis points. So, it's hard for a big bank with a "standard fee schedule." They just get very, very expensive on a relative basis for a client you serve.

Christopher: Exactly. The client has to question, "Is it really worth paying double or triple the fee to get access to some of these perks that the banks want to throw around?"

Michael: On the baseline end, a $3,000 planning fee and 75 basis points on the first few million, if I just start thinking about the traditional million-dollar client, 75 basis point fee plus a $3,000 planning fee, you actually add up to right about $10,000 on a million-dollar client. It's effectively like a net rate of 1%, but you broke it apart into planning fee plus slightly lower investment fee.

Christopher: Yes. And that was very intentional because when I first developed this fee, it was closer to $2,000. So, it was slightly under 1% on a million-dollar client. But obviously, as they get bigger, as they get into the $2 and $3 million range, let's just say $2 million range, it's well below 1% when you average it out. And so, that was my goal. My goal was to have a fee structure that was generally lower than the average, but that got much lower than the average as the client assets increased.

Michael: So, out of curiosity, how do you explain and talk to the client about that? Because I can envision a world where they balk at a $3,000 planning fee plus the investment fee, and you're like, "Well, if you add them all together, it's still a similar 1%." I can also envision a world where you look very, very competitive on the investment end because you're only 75 basis points when a lot of other people charge 1%. It's like, "Oh, and there's also a little planning fee." But people shake that off because they're focused on the AUM fee being "only" 75 basis points. I'm putting only in air quotes. So, how do you explain and talk through that with clients? Where do they raise questions or ask about the fees when you present a structure like this?

Christopher: Well, to be really honest, at this point, the clients that I'm targeting, this is a complete non-issue. In fact, my fee structure is much lower than most who are...and I don't have an official minimum, but I do actively promote the idea that I'm not generally working with people that are clients that are under $2 million. And that's a fairly recent development. So, I migrated to this particular fee structure I think around 10 years ago. I think it was in 2015, so I've actually had it for a while. But at the time that I migrated to this fee structure, I was starting to work with a lot of HENRYs [High Earner, Not Rich Yet], high-income kind of lower asset clients. I started taking on a lot of young doctors. In fact, I had one in particular. He knows who he is, who referred me quite a few of his friends from medical school. They were early in their practice as doctors. And so, I needed...

Michael: Real old-fashioned AUM minimums don't work. They have student loans to pay down and still getting income going. They can't fit that model, but they make enough to pay you advice fees.

Christopher: Yeah. So, the advice fee of $3,000 was a complete non-issue for them because they had low asset amounts, usually just a few hundred thousand. And it's funny how recently this was being only 10 years ago. But it was the perfect fee structure to attract those type of clients because at the time, I actually had a very boutique practice. This was 10 years ago. I only had about 30 to 40 clients, and they were all fairly high-net-worth clients. I think at the time, the average was probably around $2 million, even higher than it is now. And they were mostly getting older. And what I was really concerned about at that point in my career was how do I diversify my client base because I am worried that they're going to start passing away. And I wanted to also just have a more diverse client base that could grow into my practice as it matured.

Michael: And so, that was then a conscious, "I'm not going to have an investment minimum, but I need to get paid, so I'm going to institute a fee minimum. Let's me work with HENRYs, higher earners who don't necessarily have an asset base yet, but I'm going after a segment of doctors because they do tend to have very above-average income so they can fit my traditional model over time eventually. And the planning fee make sure I can do this profitably until we get there."

Christopher: Right. I was intentionally trying to work with younger clients, and at the time I was in my 40s. So, I was excited about working with clients that were kind of more my age who were high-income earners and to diversify my revenue base. And at the time, I had around $60 million in assets. And I only had about 30 clients. So, I had a very profitable practice, but I felt that it was vulnerable to a loss of big clients. And I just wanted to have more diversity to my client base. So, it was a very intentional decision at that stage of my career to attract higher-income clients who would eventually build and grow their assets. And that's exactly what happened. Actually, most of these clients now have several million dollars, and they've been really wonderful clients.

Michael: High-income professionals who get high-quality financial advice early on in their careers tends to work out well for everyone.

Christopher: Right. And it was also a market that hadn't been served well. And I almost feel like we're taking the cart before the horse here. But I will say that this was all due to the fintech revolution and my ability to actually for the first time in my career serve these clients efficiently. And that's what the fintech revolution did for my business. It allowed me to be a lot more efficient because I couldn't work with these clients before

Michael: So, I want to come back to the efficiency discussion or really the tech discussion in a moment. But first, just I want to understand the rest of the picture of the business. So, do you share revenue of what this adds up to with 68 clients, $100 million and the planning fees, and the breakpoints? Where does this land for you?

Christopher: This year, it'll probably be somewhere between $850 and $900 [thousand] in revenue.

Leveraging Technology To Conduct Annual Client Meetings With Limited Advance Preparation [13:52]

Michael: So, I guess sort of 2 things. What does service process look like for clients? I feel like a lot of us when we talk about what we do for clients, it's basically what do we do for new clients and the whole new client financial planning process. But that's not actually the bulk of your clients work at this point because most are long-term clients. So, what is the ongoing service model look like?

Christopher: Well, the ongoing service model for me in a very mature practice, which I have, would be meeting with most clients on average once a year. We call it an annual review. A large percent of my clients are retired, probably over 60% of them. And so, especially for retirees who have been with me on average 10 years, they're really familiar with this process. And it's a very efficient process that I do very little preparation for because I do it almost entirely in the meeting itself. Since I do it and I'm very familiar with the software, I don't need any type of paraplanner. First, we do all the scheduling using Calendly. So, it's very automated. The client actually schedules themselves. We have a process where...and this is what my wife does. She goes through and uses Redtail to figure out which clients are coming up within the next month or two. So, about 2 months ahead, we send everyone out an automated email that reminds them, "Hey, it's time to schedule your annual review." And then they go into Calendly, they schedule it. I usually have my calendar only schedulable for 2 months at a time. And so, we remind them, "Hey, time to schedule your meeting." They schedule it. Then as soon as they schedule it, she sends them out, again, a sort of email through Redtail that provides them with a document that they can complete to update us on everything that's changed in the last year. Kind of similar to tax preparation documents where they send you out an organizer. We do that kind of thing, too. It's a very short document which they can fill out online.

Michael: So, tell me more about this document. What's in it? What do you ask? How deep do you go?

Christopher: We don't go very deep. We mainly ask for them to let us know... it's actually a very simple document. What changes have occurred in the last year? And kind of giving them ticklers for what those changes might be. "Have you moved? Are you thinking about moving? What are the things that you really want to talk about? What's on your mind?" And then reminding them to make sure that we have their updated taxes. Most of our clients have signed a consent form, so their CPA sends us their taxes. But if they haven't done that, they're responsible to give them to us. They usually upload them through our eMoney vault. So, they're responsible to get us any documents, any new insurance documents, any new estate planning documents. And then during the meeting, I start almost all my meetings with, "Tell me what you want to accomplish. What are you thinking about right now? What are you worried about?" So, that's really how we start is I have a process I go through, but I want to know what are the things that you want to make sure we cover in this m5eeting. And they'll tell me, "Oh, I'm worried about the markets, I'm worried about this or that." So, I prioritize the things they give me over my structured process.

We might spend the whole meeting talking about a few items that they wanted to talk about. But usually, I try to get through a couple key things. Number one, I have a template in eMoney that I use that updates their profile, their net worth, basically, the kind of observations about their financial situation, and any tasks or things that we need to do. And so, we complete that document, and then they get a copy of it at the end of the meeting. And then we also update their financial plan. And their financial plan, we do in MoneyGuidePro. And we create basically a snapshot of their financial plan, and that goes in their vault as well. And that's what we try to cover in their annual review meeting, as well as anything that we need to address, whether it's estate planning issues, or tax planning issues, or any of the other areas of the financial planning process.

Michael: So, when you get into this level of eMoney updates, just I want to make sure I understand, how does the data get in there, and who's inputting it?

Christopher: Yes, that's a great question. It's a combination of us and them. The way that the software integration I use works, most of the investments, all the investments I manage for a client are in Orion. And the data from Orion goes into eMoney. So, all the accounts I manage flow into eMoney from Orion. And the reason I do it from Orion instead of from, say, the custodian like Fidelity is I do have several custodians. So, I consolidate everything in Orion and everything transfers to eMoney from Orion.

Michael: And who are your custodians in practice?

Christopher: Fidelity, and then I just have literally a few other odd ones like TIAA-CREF, 1 or 2 variable annuity companies that are kind of the fee-only type ones that we move variable annuities to that we want to lower fees on.

Michael: So, Orion essentially becomes your in-house aggregator as it were, and so then that's got all investment-related balances to pump into eMoney automatically.

Christopher: Correct. When we originally started using eMoney, the ideal, which I always tend to start with, the perfect ideal is for everything to...the client to enter linking accounts that automatically update. Everything would automatically update. Now, anyone that uses eMoney probably has learned by now that that doesn't work perfectly. And I've gotten to the point that there were really only a few institutions that consistently with no real issues synchronize well with eMoney. So, we've gotten to the point where clients will link in the big banks, Chase, Wells Fargo, those kind of things, and a lot of their 401(k) plans that I don't manage. But if anything has trouble reconciling, I have decided I'm not going to be a customer support department for eMoney. And so, my approach has been that we enter those manually, and we update them once a year because all I really care about is getting an accurate snapshot of their net worth when we meet. I recommend they use Quicken or other tools to really manage their cash flow.

Michael: Oh, interesting. So, I'm almost reading between the lines like it's enough work to support clients when the links break that they're not literally doing it...if they're not using it for their own personal tracking, in which case they tend to fix their own links because they can track themselves. If it's really just for you to do updates, there comes a point where manually getting the data once per year is actually faster and easier than 24/7, 365 support of constantly trying to help clients fix broken links.

Christopher: That is correct. And I can't even tell you the impact this was. This was one of the big changes. I used to have a full-time admin that worked 40 hours a week who my wife eventually replaced, working 10 hours a week. And you know what the other 30 hours was mostly devoted to?

Michael: Fixing money links.

Christopher: Yes. Yes, it literally was a full-time job. And it was a really big learning when I was like, "Okay, what can I do to radically improve the efficiency of my company, lower my costs, and what am I doing this for? Am I doing this for the client or for me?"

Michael: Well, I'm fascinated by the point that you're making here because I feel like the fundamental answer to anything and everything efficiency-related these days is the answer is always technology, it's always automation, it's always linking more things up, and making them more integrated so everything automatically just flows to where it needs to be. And I know you're a pretty tech-savvy guy. I really appreciate the irony that the breakthrough in efficiency was, "Let's just stop using the tech so much, and then we actually need fewer humans to maintain the tech, and that's the cost savings."

Christopher: Yes. And you know how long it takes me to update 2 or 3 accounts that we decided not to link?

Michael: You ask them in the intake form, or you just ask them in the meeting and type in a number and...?

Christopher: Yeah, depending on the client how busy they are. Some just do it themselves. They know. They come to the meeting with everything updated in eMoney, and they're fine using it on their own.

Michael: Because they log in and fix their own numbers.

Christopher: Yeah, yeah. And then you have the clients who eMoney's always expired. Every time you meet with them, they never log in. And so, you know that you're going to be updating those account values. And when you're in the meeting, they're literally on their phone logging into their account saying, "My account value is this, this, and this." And again, that still takes about 2 minutes, one-hundredth of the time it takes to keep eMoney links updated.

Michael: And so, as you update numbers to be able to look at an updated plan for the meeting, are you printing or PDFing a plan output that's part of the meeting, or are you more of a "Put it up on Decision Center, we're just doing it all live"?

Christopher: Yeah. We go through everything, and then eMoney has a tool that I use that allows me to have an automated report that I've already pre-designed. The main things that are in with the report I create from eMoney is the profile, the net worth, the kind of observations they call them, but it's basically notes about the client, and then tasks. And all those things get created as a PDF while we're in the meeting. We go through it, it's like a presentation, and then we PDF it. It goes right into their vaults. If they ever need to see it again, it's there for them.

Michael: Sorry, I guess it's one nuance I want to make sure I understand. So, are you preparing this document beforehand and it becomes the presentation in the meeting, or you're doing the planning work live in the software of the meeting and the document gets created as the PDF output collaboratively created by the end of set meeting?

Christopher: It's the second.

Michael: It's not the meeting talking points, it's the minutes commemorating the meeting.

Christopher: That is correct. It is the minutes commemorating the meeting, and we are creating it live. And I think that's ultimately where the efficiency of my whole process is so strong, is that I am so comfortable with all the technology that we use that I can do everything live, including the planning work, almost nothing is done ahead of time. Unless I have a really complex financial plan and I have to do some setup work because I know it's going to take me a while to do it...

Michael: Someone's got a bunch of options that you don't. I can key the update to your TIAA-CREF account live. I probably don't want to load all your options with 7 tranches live. That gets a little tedious at some point.

Christopher: Right. Or if I want to just create a couple additional plans, maybe a life insurance analysis, or something. So, there's rare cases where I do things ahead of time. And usually, in the very first meeting with a new client creating a financial plan, I'll try to do some prep work just to make sure I'm not going to get stuck because I don't want them sitting there while I'm fiddling around. But I can do most things pretty much in real time very quickly.

Michael: So, you don't even have a paraplanner, second in command that's steering the software. Just you're someone who's comfortable to steer the software while also doing the client conversation.

Christopher: Exactly. Yeah. I don't need a paraplanner because I do everything live. And by the way, these meetings rarely take longer than an hour. So, we're talking 68 clients, 1 hour per year. You can do the math on that. And I do have meetings throughout the year with clients, but they're usually about specific issues. "We're trying to buy a house. Can we afford this much?" So, it's a similar kind of thing where we're doing analytical work. It's not a planned meeting, it's something that comes up due to a question that they have.

Why Christopher Only Makes Retirement Cash Distributions Once Per Year [26:04]

Michael: Okay. And so, that's it for meeting an ongoing client service work? Is there other stuff you do or try to do through the rest of the year to engage, get connected, do other things if you're "only" meeting once a year?

Christopher: Right. Well, it's kind of the tip of the iceberg analogy. That's the tip of the iceberg that the client sees. And so, obviously, that's not the only work that we're doing. In fact, I would say the bulk of the work, and even clients ask this question like, "What else are you doing throughout the year?" Well, probably, a third of our time is spent maintaining our education, and our knowledge, and our understanding of what we need to be doing. But then all the money management work and the distributions and things like that, I do most client distributions in January, so that type of work. And I do it once a year. I don't do it on a monthly basis like some firms do. I do client distributions annually

Michael: So, even setting up with clients, "Okay, every year in January, we'll send out 30 grand, or 50 grand, or 100 grand, or whatever it is. We'll free up the cash. We'll put it out to your bank account and have fun spending for the coming year."

Christopher: Yes. My personal view is that it's a lot more secure and just clients feel more comfortable knowing that they have their entire year's worth of money that they need, whatever the difference is between their income and their expenses, this is for retirees, obviously, that they have that money in their own savings. And then if they need to create a monthly distribution to themselves, then they can do that from the savings account. But I try to provide them with a year's worth of income at the beginning of the year in addition to having an emergency fund. And I feel like it allows us to actually take more risk with the rest of their portfolio than you might take otherwise because they know they have a whole year's worth of income that's already available to them.

Michael: Because I was going to ask, at some point, just the sheer investment nerd of me kicks in of like, "Don't you sort of create a sizable cash drag if you're pulling that much of cash out and they're holding that long versus staying more fully invested?" So, how do you think about that dynamic?

Christopher: Well, I don't think about it like that because, again, I actually tend to have higher risk levels with the typical portfolio and retirement than I think a lot of advisors do. And that's how I manage it. I think about the cash that they're holding as a cash position in their portfolio that's a safety net, and it gives people a tremendous amount of peace of mind. A lot of people want to hold a lot of cash anyhow. So, this just gives them a solid reason that, "Hey, here's an adequate emergency fund, here's the money you need for the year, and then we're going to have enough in bonds in your portfolio." I like to see them have somewhere between 5 and 10 years' worth of distributions in bonds. But aside from that, the majority of my retirees have...I would say the average is around 70% in equities. So, I actually keep a higher equity allocation than, I think, other advisors do. And so, I think that makes up for the cash.

Michael: I was just going to say 5 to 10 years of distributions in bonds, a lot of clients end up spending something like 3% or 4% from the portfolio. And if I start mathing that, you end up somewhere in the neighborhood of 30% in bonds, give or take a little...

Christopher: Exactly.

Michael: It sounds like that really is about where it comes out for you.

Christopher: That's correct. I do not base risk tolerance on the traditional thing of 50/50, 60/40. I almost have no clients that are 50/50. And my most conservative clients are 60/40. The majority of my retirees are either 70/30 or 80/20. And it really depends on their distribution needs. But I have found that giving them a year's worth of cash, part of it is an efficiency thing. So, I would say from my perspective, it creates a lot of efficiency with how we do things. And then on the other side, I find that clients really like having a year's worth of cash. And I try to help them not worry too much about the return hit.

Michael: I'm struck just in this discussion. It's another version of things most of us just tend to do naturally as part of the work we do for the business, assume that's just a thing, and then like, "Hey, can we get better tech to make it more efficient to look at all the client portfolios and find the cash to free up because we're doing distributions every month or every quarter," and you're just kind of coming to the table like, "Yeah, I just do it once a year in January, and then I don't need tech to make it efficient every month."

Christopher: Right. Well, there's one other thing. I don't know if all advisors do this, but I do householding. I'm very personalized about how I manage client investments. And so, when I do these distributions, I mean, think of how a lot of advisors do them, they're just probably pulling everything out of the account from the same funds, especially if they've automated it at a brokerage firm. I'm actually householding, and I'm rebalancing the portfolio very intentionally to only pull it out of whatever's done the best. So, it's a fairly manual process. And I use TRX to do my rebalancing, but I still review everything. So, that's more of a starting point. And that's part of the reason I don't like doing it monthly because that would be a very tedious process to do that on a monthly basis for everyone.

Michael: And just curious, as someone I know likes the tech efficiency, so you're using TRX for rebalancing, Orion for the rest of the portfolio management side. So, why TRX versus Eclipse?

Christopher: It'd be a lot cheaper to use Eclipse. So, many conversations over the years with them when they were developing Eclipse. I just didn't find Eclipse to be better, in my opinion, than TRX. And so, when they migrated, basically, TRX out of Orion, I actually purchased Morningstar just to get TRX. I just like TRX better. And I'm not going to say it's because it's better, it's my own personal preference. I felt Eclipse...

Michael: Are there particular just like features, reports? There's got to be some, "I love this thing. That wins me over."

Christopher: Yeah. It was the methodology. I felt like the Eclipse methodology, it was more built for account-level rebalancing. And they tried to make it work for household-level rebalancing, but I don't feel it was designed with that in mind. And the logic of how it rebalances, I just felt wasn't consistent with my own approach. And again, since I do review every single rebalancing, I care a lot about the logic getting me as close as possible to what I would do myself. But I still review it, and I still make changes even with TRX.

Michael: So, meaning like Eclipse would try too hard to draw evenly from multiple accounts instead of just focusing like, "Hey, we can take all the dollars here and swap other trades around in another account if we need to get the right dollars to the right place."

Christopher: Right. And I was already using TRX. The whole time I was at Orion, I started with TRX. So, there was also the...

Michael: So, TRX was doing rebalancing software before Orion built Eclipse in the first place.

Christopher: Exactly. And I was involved from the very beginning. And I was very excited about it until I started testing it.

Michael: Because you really like this household-level asset located tax placements, tax-sensitive liquidations, you're bringing all of that together.

Christopher: Yeah. And I am a perfectionist. That's a theme you'll find throughout this. So, my big challenge in life is always finding the balance between getting the perfect outcome and efficiency. And most of my early career, I was really bad at that balance because I did everything myself. And it was a huge, huge change for me to migrate to the fintech software that came in 2015. I had to kind of rebuild my entire practice. But, yeah, with the TRX thing, I think I still gave into the, "I really want to keep things the way I like them." And I just didn't want to change everything to Eclipse. So, I'm not even sure there was anything necessarily wrong with Eclipse. I just couldn't get comfortable with it in the time frame I needed to make that decision.

Taking A Piecemeal Approach To Building A Tech Stack [34:35]

Michael: So, what else is in the tech stack to run efficiently then? I think you said eMoney for planning, Orion for the performance reporting and the account aggregation, Redtail was your CRM, TRX is your trading, custody is Fidelity, and the select others where we have to accommodate a one-off client into the business. So, what else is in the tech stack to run?

Christopher: ShareFile is a fundamental part of it. It holds all of my data and client files and everything. And as I mentioned, I use MoneyGuidePro, which integrates with eMoney, and then I use Nitrogen. Interestingly enough, they started as Riskalyze. I still like that word better. And I only use Riskalyze for one thing. And that is to create an investment policy statement.

And I used to have a spreadsheet that I still like better, my spreadsheet that was extremely detailed. I didn't build it. It was built by the very first firm I worked for in Boston, Pinney & Scofield. It was basically a spreadsheet that had every asset class and the data for every asset class going back to like 1929. And the thing I didn't love about Riskalyze is it goes back 10 years, which to me wasn't even enough to mean anything. But because it integrates well with everything, and this is part of the big migration that I made in 2015, I did choose efficiency over perfection. And to me, perfection would have been 100 years of data in that spreadsheet to show historical returns and to show risk and volatility of the portfolio. But I basically use Riskalyze to do what I used to do with the spreadsheet, which is to show clients the risk of a portfolio, and mostly to educate them and help them understand volatility.

Michael: And then literally using your tools to craft an investment policy statement?

Christopher: Yeah. They have a tool that helps you create an investment policy. And I like it and it fulfills the legal requirement that we need to have to help clients select a risk level and so forth. But my general view of risk I think is probably different, or at least my perception is it's a little bit different than maybe the way the industry thinks about it. I do feel that risk is something that you can help people to understand and to accept and deal with, and that there are certain financial risks that we have to manage. That's why it's so important that they have enough bonds in their portfolio to cover down markets. That's actually the financial risk of the portfolio. So, that's not something that is innate in them. That's just being smart about how much risk they can take with the portfolio. But in terms of their own ability to tolerate risk, because the way I manage money is passive, I believe that if you have a well-diversified portfolio, over long periods of time, it's generally going to recover. And so, the main risk that you're helping clients deal with is the risk of volatility in the short-term. It's short-term risk. And so, I use Riskalyze more as an educational tool to help clients understand what short-term risk looks like and what the worst-case scenario is. But I do believe that as long as they hold that long-term, that they will not lose money in the long-term. They're just dealing with the short-term volatility.

Michael: I'm sorry, you mentioned MoneyGuide as well. So, I know you said you were using eMoney for, well, originally, some of the account linking and then doing some of the live planning to get profile observations, tasks, etc. So, where does MoneyGuide come in? Where does that get used?

Christopher: Well, MoneyGuide is the tool that I used to do financial planning. I do not use eMoney at all to do financial planning. I would say eMoney is the primary client vault. So, it's the only thing that clients really see. It's how they interact with us and it's how they see everything. So, I really am just using eMoney for the visual login for clients. They don't have any other logins other than the custodian. And all these companies have logins. Orion has a login, I'm guessing Nitrogen has one. I don't have clients log into anything, except for eMoney. And even my Orion reports feed into eMoney. So, I like eMoney, I like the vault. You're probably aware that the MoneyGuidePro integration allows them to actually fully see their financial plan in eMoney and to go into MoneyGuidePro and actually integrate with and actually use it.

Michael: Yeah, well, I know MoneyGuide and eMoney did that integration years ago because they found notwithstanding eMoney often being, well, I think known as a financial planning software, there really are advisors who just use it for the vault and the client dashboard, and they wanted to use MoneyGuide for their planning. So, what makes you like MoneyGuide for the planning so much? You clearly have an intentionality to say like, "I already own the planning software for eMoney, but I'm not using it because I like something more of a MoneyGuide side."

Moving From Custom-Built Spreadsheets To Off-The-Shelf Software [39:50]

Christopher: This is probably a longer conversation, but I basically built my own cash flow-based financial planning software before I even started my company. When I worked for the first firm that I worked, Pinney & Scofield, they had a very elementary version of a cash flow tool in Excel, and I took it and blew it up into a very extensive Excel-based version of what eMoney is now.

I only mention that because the Excel model I built basically became a prison sentence that lasted from 2001 until 2015 when I basically hired Joel Bruckenstein to come in and help me completely change every piece of software I had. I told Joel I was using a spreadsheet to do what Riskalyze does. But it basically took the integration of all these programs to convince me that there was a massive efficiency gain that I could have by moving away from all my spreadsheets. And so, when I developed basically the software palette that I currently use, it was actually with the consulting help of Joel. And he and I had known each other all the way back to '03 when he wrote "Virtual Office Tools."

Michael: And for those who don't know the history, Joe Bruckenstein who I think a lot of folks still know for being an advisor tech guru, he's been doing this for, I don't want to date him, like 20, 25-plus years. His early days of doing technology content for advisors, he did with the partner, David Drucker, who was a practicing advisor as well with a very tech-savvy practice. And so, Drucker and Bruckenstein were together on all of these things through late '90s and into the 2000s and early 2010s before David ultimately retired.

Christopher: Right. And I would say that my financial planning program which I actually maintained for not only myself but for the first team I worked for, they maintained this investment policy spreadsheet that basically does the same thing Riskalyze does, but it went back 100 years. We had a relationship where they maintained the spreadsheet for me, and I maintained the financial planning spreadsheet for them. And the financial planning spreadsheet actually used a software program called zCalc. Have you ever heard of that, Michael?

Michael: I don't think so.

Christopher: zCalc, basically... I'm trying to think of the right term for it. It's a program that links in with Excel. It's like an add-in to it. And it creates a bunch of tax functions. It was more used by big estate planning firms, but it also had every single tax function in there. So, when I built the spreadsheet that I'm talking about, this financial planning spreadsheet... The functionality that we built was a very, very sophisticated federal tax calculation as well as about 5 or 6 states that we had clients in that went out like 40 years. And we used the zCalc because it had all the formulas for calculating almost every line of the federal tax. And it didn't deal with state taxes, just dealt with federal taxes, but it made it a lot easier to actually calculate the taxes.

Michael: Okay. This was an Excel plug-in. That's not kind of like folks that built their own early Monte Carlo tools, bought Crystal Ball and some other plugins to do Monte Carlo number crunching as well. So, this was in that category…

Christopher: Yes, and we had Crystal Ball.

Michael: You had Crystal Ball as well?

Christopher: Yes, we had a built-in. This spreadsheet was...I would say it was... I'm biased, of course, but it was probably, in my opinion, more sophisticated than Integrate. And here's the problem I had, a lot of people asked me,"Why didn't you sell this program"" Because it was too complicated. Most financial planners, that might sound a bit arrogant, butit'ss not so much it was complicated, I didn't want to write the instructions to use it.

Michael: You get a certain depth into how you've made your own things like, "Oh, this is going to take a lot of time to teach someone else how to do things that are just natural to me because I've used the software for 10–20 years, and I built it."

Christopher: Yes. You asked why didn't I grow this big firm and leverage out and hire people, because I didn't really want to train everyone to use these tools, and they were very time-consuming. So, what did I do? I attracted very large clients where I could spread the cost of the depth that I was building into the spreadsheets, who it made sense to use it for. So I basically targeted my practice towards very high-net-worth, and, I would say, sophisticated clients that needed this level of financial planning

Michael: I like how you frame that. Like, "We ended up making a really cool but very complex planning software. I didn't want to sell it to other advisors higher up because then I have to train them. Instead, I just took it to affluent clients who would appreciate it and value the depth of the work that we were doing."

Christopher: Right. That might even be the story I told myself. But ultimately, what it became for me, and this is where it really took someone like Joel to smack my head against the wall and say, "Chris, you got to let go of this thing. It's literally handicapping you." And that was the perfectionism in me. I wanted to do these perfect financial plans. So, how this gets back to the initial question you asked is...the whole thing about why do I use MoneyGuidePro, because MoneyGuidePro really was the opposite side of the spectrum. When I let go of trying to do everything perfectly and use a cash flow-based tool to figure out what clients were spending, it was kind of like having a vision, almost a religious vision of, "There's a much easier way to do this, and clients don't care about that." Most clients don't know their own cash flow. That was one of the big takeaways for me to really understand is I was forcing all my clients to try to understand their cash flow and to enter it in, but what most clients want to do is they want to focus on goals, and they just want to focus on, "How much do I need to save to reach a goal?" And MoneyGuidePro had mastered that. They had the goal planning down to a science. And, yes, eMoney has migrated towards having a goal-based planning tool, but it's just, in my opinion, it's not as well developed as MoneyGuidePro's.

Michael: Because I was going to ask, particularly if you're going back about 10 years ago to when you're dialing back on this very cash flow intensive spreadsheet, at least then your natural alternatives would have been eMoney or NaviPlan at the time because they were the cash flow intensive, more tax-savvy tools. So, I am fascinated that's not where you went.

Christopher: No, I reviewed all of them. Here's the funny thing. You're going to laugh when I say this. None of them compared to my spreadsheet, and I'll tell you why.

Michael: If you have to compromise, anyways, let's just come at this from scratch.

Christopher: You're going to start seeing a pattern here. And that is that I'm not very good in the gray. I'm very black and white. Look, if I'm going to give up being a perfectionist, I might as well give it fully up. But that's really a big part of my story is learning how to find the gray in everything. And I did feel like MoneyGuidePro really did a good job of the goal-based planning, but it was a sense of freedom because...so, my spreadsheet was a lot easier to use than NaviPlan and eMoney because I had already built everything to be ready to go. Like you have to start over every time you have a new client with these programs, even if they have defaults. My spreadsheet had all my personal defaults in it already. And we had so many side little sheets that did everything from literally multifamily properties, rental properties, college planning, they all integrated into this tool. And I still have it. And I still have zCalc. I still have a subscription to zCalc. And I still use it for myself. That's the only person I use it for. I just like maintaining it. zCalc was bought out by Thomson Reuters. And I still pay like 600 or 700 bucks a year to keep it updated, just because I like having the nostalgia of my own spreadsheet still.

Transitioning The Practice To A (Pre-Zoom) Remote Environment [47:55]

Michael: So, what was going on in your practice that drove all this change? I'm piecing some of this together. And I think on the one hand, what I'm hearing was the practice was hitting a wall. You had a manual spreadsheet for planning, manual investment policy statements that you were building. I'm assuming some pain points around portfolio performance reporting as well because this is when you did Orion. You had all this tech that you completely overhauled in 2015. But then I'm going back to earlier in the conversation, and you also said if we go back a couple of years ago, you had 30 or 40 clients, average client was like $2 million. You had $60 million under management on your own, which maths pretty well. And there's only so much time that 30 or 40 clients consumes. So, what was going on? What was the wall that you were hitting or the stuff that was changing that made you say, "I've got..."? But frankly, I think most people would view as a pretty great economics practice with a couple dozen, very highly affluent clients. And you said, "No, I got to torch all my technology and rebuild from scratch."

Christopher: Yeah. I guess it kind of starts back to the financial crash of '08. So, first of all, I started my firm in Pennsylvania in '01, and I lived there for about 10 years. I had 3 kids. And in 2010, I went through a pretty brutal divorce. I had been married about 15 years, so it was a pretty long-term marriage. And my wife moved with all the kids back to Las Vegas, which is where we're both from, where our families live. So, I moved initially to New York. Now, keep in mind at that point, my practice, even though I had built it with clients all over the country, just the way my client base developed, it still had a lot of Pennsylvania clients. It still was a very local practice. And so, in 2010, I was about 2 hours from New York. I'd always wanted to live there. So, I'm single now with no kids in the house. I started going to New York City, and I started testing this idea of working remotely from New York City, and then I would travel to Pennsylvania once a month and meet with all my clients. So, I started structuring my meetings when I was in Pennsylvania, but I wasn't there very much. And that was the beginning of a big change in my firm.

Now, part of it was I was like, "I really need to be in Las Vegas near my kids, but how am I going to move my practice across the country? Who's done that?" I didn't even think it was possible. And then about a year into moving and living in New York City, I actually rented an apartment on 6th Avenue. I got custody of my youngest daughter, primary physical custody. It was kind of unexpected, to be honest. And she moved in with me. And I don't know if you have ever thought about what it would be like and how much time it would take to raise a child by yourself while you're paying child support alimony, but it's a lot of work. And frankly, my daughter is actually adopted, the one I got custody of. She's Puerto Rican. She was adorable, and she had crazy hair. So, I literally had to find someone in the building that could comb her hair every day before I took her to school. And then I would walk her to elementary school, which was about a half-hour walk from Chelsea where I lived, and I would pick her up... I probably spent half of my day taking care of my daughter, between picking her up from school, and helping her with homework, and feeding her, and all the things you do as a single parent. You do everything.

So, it really didn't leave me that much time to work. And it's fortunate that I actually had my own company. You ask what I was doing with the rest of my time, it wasn't work. It was my family. And it's probably one of the reasons why I wasn't that involved in professional associations, why a lot of people don't know me even though I've been around for 20 years, is that a lot of my time during these years was spent with my children as a single parent. And so, anyhow, I ended up testing out this remote working thing while I lived in New York. And I got up enough confidence because my kids were now separated from each other. My daughter was with me in New York. My ex-wife had my 2 older kids who were teenagers in Las Vegas. And I'm from Vegas, and then we're dealing with a financial crash of '08. So, I was in New York 2009, 2010, and then my dad got cancer in 2010, terminal skin cancer. Yeah, it was crazy how many things happened during this period of time. If you talk about a low point in my life, this is it. And then I decided to move to Vegas because I wanted to be closer to my family and close to my dad before he died. We knew he was going to die. He was stage 4.

So, I basically am like, "I don't care what the cost is, I'm just going to move my company. And I don't know how I'm going to make it work, but I'm going to figure it out." So, I moved to Las Vegas in 2011 from New York City with no clients really on the West Coast. And that's when I began really trying to figure out how to run a practice from across the country. And I pretty much had to start over in every way. Even though I'm from Vegas, I had to go out and reconnect with everyone that I hadn't seen in 15 years, and it was quite the experience trying to rebuild my networks.

Michael: Did you leave clients behind? Did you lose them?

Christopher: No. So, here's what I did. I told you I perfected this process in New York of driving into Pennsylvania pretty frequently to meet with clients. And I started preparing them about 6 months before, "Hey, I'm probably going to be relocated across the country. How do you feel about that?" And just talking to everyone and getting their thoughts, "How can I serve you from across the country and make this work?" And there was only really a few clients that basically said, "There's just no way I could see this working." One of them happened to be my largest client who at the time was worth about $300 million. And I managed $20 million, of my $60 million [$20 million] was his. The revenue wasn't quite 1/3, but it was probably 1/4 of my revenue. And I knew I wasn't going to be able to keep him. We met weekly, and he wanted someone local. And so, that's the thing.

Michael: So, you're meeting weekly and you're that immersed into his financial life.

Christopher: Yeah, exactly. So, I knew that I was going to lose some clients. And I really didn't lose very many, but I lost a few really big ones. But that was just the price I knew I had to pay to restructure things. And so, I moved to Vegas. And what I did is I committed to come back several times a year and meet with everybody during those few trips. And that was when the beginning of how my firm developed into what it is today happened, is I figured out how to work with...and again, I didn't have a lot of clients to begin with. I already had a pretty small practice. So, I figured out a way to meet with everybody that wanted to meet face-to-face during a few trips of the year, and that's what I did. And then the other thing I did in Las Vegas is I began completely rebuilding my firm, and it's almost like starting over. When you move, you have to rebuild all your centers of influence, you have to go out and market and do things to get started again. So, it was a pretty big change. And then the fintech revolution happened a few years after I moved to Vegas.

What Drove Christopher To Rebuild His Tech Stack [56:01]

Michael: And so, I've got questions on 2 directions here, like what you did to get clients as you had to rebuild. But let me come back to that because I'm still curious for what actually drove your 2015 fintech revolution. What actually drove you to say, "Okay, got to rip all this stuff out in place"?

Christopher: Yeah, what drove me was...there were all these pain points because I was still... I actually have a chart right in front of me of my AUM. My AUM dropped from $50 million in 2010, or it was like $55 million down to $32 million in 2011, the year I moved to Vegas. And from there on, it grew very slowly, and I think by 2015, it was up maybe $10 million, so I was at like $40 million. I still wasn't even back to where I was in 2015. I had retained a lot of clients, but they would slowly drop off. Every year, I'd lose a couple from Pennsylvania. And I wasn't growing fast enough in Vegas to recover. And so, I think the trigger was I saw the potential for all the software integrations to make my firm really efficient and the ability to work with, again, higher-income clients that were maybe lower on the asset side. So, I think I saw the potential of that, and I saw the potential to be a lot more efficient, and I just saw the only way to achieve that was to wholesale shift. And I think it would be helpful to know what I moved from and to... we've talked about what my current software base is. But let me tell you how I was operating then and what I migrated from.

So, back then, we had servers and desktops. So, I had a whole server system, and I had a physical office with an employee, and with...it was a traditional setup. And I had interns. I probably had 1 to 2 interns every year, as well as a full-time admin. And we all had desktops that connected to a server. So, I went from that to just having a laptop in the cloud with ShareFile. I went from ProTracker... You remember Warren?

Michael: Yeah, absolutely. I remember Warren Mackensen.

Christopher: In fact, kind of a fun fact here, at one point, Warren wanted to hire me to run ProTracker, which I'm glad I turned down because that was definitely not going to last through the fintech revolution. So, I moved from ProTracker to Redtail. By the way, that was a very hard transition. I loved ProTracker. But Redtail was the top integration CRM at the time. So, I moved from PortfolioCenter to Orion. Imagine how different it was going from ProTracker where you did all of your own reconciliations to Orion doing it all for you costing like 10 times more. The cost difference we're talking, I went from the lowest cost technology ever to...I went from $5,000 a year to like $40,000 a year pretty much overnight. And then I had all my own spreadsheets that were free. And I migrated to MoneyGuide, Riskalyze, eMoney, TRX. I did all the rebalancing before using PortfolioCenter reports and Excel spreadsheets.

Michael: Yep. I remember those days. It was our prior firm as well running on PortfolioCenter, doing our daily downloads and...

Christopher: I know.

Michael: ...dumping data into Excel spreadsheets to calculate rebalancing.

Christopher: So, what I was doing during that time, I would say the first 3 years I was in Vegas, I joined...the chamber of commerce had a leadership program there called Leadership Las Vegas. That was very time-consuming. So, a lot of my time was spent marketing, connecting with people, trying to build my brand, build my company, and my name. And then in 2015 when I migrated the software, it was about a 1 to 2-year process. I did it all at one time, but you know it's a lot of work. And most people don't migrate everything at once. They do it in pieces. That's not really the way I roll. I tend to just knock it all out. It's like a clean slate. So, I did it all within about 6 months, but it took a while to rebuild all of my systems and tools and everything. My entire manual, like I had a little written office manual, or whatever, how to do everything for an employee, that literally became completely worthless. I might as well have just picked it up and thrown it in the garbage. It was completely useless. That's how radical the change was.

But once I got everything set up and I got my reporting and everything reconfigured in all the software, I can't even begin to describe to you the efficiencies that I started experiencing, and it completely changed my firm. A person that had been with me since 2011, she was with me actually for 10 years before my wife ended up taking over her job, but she was with me, and she was training...we had an internship program, so she was training interns that were working with me. And one of those interns, I hired as a full-time employee right during this process. And as soon as I finished the whole thing, he was like, "Well, this is great. I'm going to start doing paraplanning work for you." I remember sitting with him one day. I felt so bad. Really nice kid. His name was Seth. He actually went to...well, some of my other interns came from UVU, but he was from UNLV. And I said, "Seth, I don't know how to tell you this, but I don't need a paraplanner." And this is when I was starting to realize I actually had no role for a paraplanner.

Michael: Because you didn't have to maintain the time-consuming spreadsheet anymore and the tech was strong enough that you could just steer it in the planning meeting yourself.

Christopher: Exactly. Once I created the new system, I realized I didn't have to enter data anymore into a spreadsheet. All of my data in eMoney flowed right into MoneyGuidePro. Once you set all that up, it's literally an autopilot. I was able to work with much smaller clients and be profitable because I didn't have to enter data for everybody into a spreadsheet every single year.

Michael: So, what happened next as you did the tech rebuild and then got your feet under you with tech again?

Christopher: Yeah, what happened next, you can only imagine. Tremendous growth I had never experienced. This was 2015. I was now 14 years into my business. I had $43 million under management. I actually have a spreadsheet in front of me that literally shows the pre-2015 growth rate, new clients per year, and from 2015 to '23 growth rate. And it's like I have 2 different businesses, one that ran from 2001 to 2015, and one from that point on. My AUM, I think, from that point on went from $43 million to $110 million in like 8 years. And that's with maybe adding 30 clients.

How Christopher Reactivated His Client Growth [1:03:05]

Michael: And so, where were clients coming from? Or, I guess, what made this suddenly a magical growth firm for you in a way that it hadn't been previously?

Christopher: Well, first, I was able to start working with clients I couldn't work with before because they weren't profitable. So, like I mentioned, I started working with a doctor who was a young doctor, high-income doctor. He referred me to a lot of other doctors all over the country that were friends of his. So, there was a lot of organic growth from being able to help people that were being underserved. At that time, they were being heavily underserved by our business. I think you guys in the XY Planning Network who have done a great job serving that community were...I don't know where you were at that point, but I'm guessing that was the early infancy for you guys, too.

Michael: Yeah, very early on. XY Planning Network, which is founded around doing subscription models for working folks in their 30s, 40s, and 50s. That launched in April of 2014 and was just taking on its first 50 advisors that year. It didn't really start growing until the next 2 years. So, there was almost no presence for it when you started doing this yourself.

Christopher: Right. Yeah. And it's the same kind of thing. That's what's so, I think, exciting when we look back is that for me, I also was frustrated that it was hard to work with people kind of my own age, that I had age similarities to, and that I could socially maybe do stuff with. So, it was really exciting. So, in 2015, my average client acquisition per year before was maybe 2 or 3 people a year. Like I said, I worked with pretty large clients that I brought on slowly over those years. Starting in 2015, I added 7 clients in 2015. In 2016, I added 13. In 2017, I added 7. 2019, I added 8. So, it probably doubled or tripled my new client acquisitions. And some of these clients were still pretty large. I've always, I think, been attractive to really nerdy kind of I guess you could say engineering types. I have a lot of engineering clients that...and the older ones do have significant assets, or ones that are close to retiring from Boeing, or from Air Products, or places like that.

So, analytical people tend to, I think, like me, and then, of course, give referrals to whoever. And I think there is just a randomness to how you grow, but I've always grown heavily through word of mouth. But I think the other thing for me, and I don't want to go into this too much, but I had a really strong web presence. I was pretty solid with social media, and I had a lot of content on my website. So, I had every newsletter going back to like 2001 on there. I had a lot of content that drove, I think, a lot of Google. I ranked high on the Google searches. And so, I did start getting a lot of clients from the web, from social media, and my Google rankings were pretty high.

Michael: And was that built around serving engineers or serving retirees? Was there a particular specialization, or was this more locally driven in people searching for financial advisor near me in Las Vegas?

Christopher: Most of my clients that weren't coming through social media were coming through referrals. And I think one thing we haven't talked about much is my previous career. That did play a pretty big role in how my original client base grew. So, I was a strategy consultant for a firm called Monitor Company, which was eventually bought by Deloitte. But I mentioned it because a lot of my early clients were actually consultants or their parents. A lot of them referred me to their parents. And I helped build the corporate finance practice at a major consulting firm, so I had a very high level of trust with a lot of the consultants who would refer me to their parents. And so, I had a national client base pretty early on. And around this time, a lot of my consulting friends who went into private equity and most of them went into finance, or they own businesses, or whatnot, a lot of them started hiring me. They had started hitting a point where they had wealth. And so, it was a weird combination of just that kind of coming back around for me and then just a lot of referrals within my client base to people they knew.

Running A Practice While Working No More Than 25 Hours Per Week [1:07:47]

Michael: So, how do you think about growth and, I guess, goals at this point? Are you still trying to grow? Do you feel like you're at capacity?

Christopher: During my peak season, I work about 20–25 hours a week. And my goal is to keep my hours about the same, but to continue to grow strategically. During the summer months when I'm traveling, I work about 10–15 hours a week because during those months, I'm not doing nearly as many client meetings, and I'm mostly just maintaining people's investments and answering questions as they come up, but it's not a super heavy workload, again, because I have an established client base. And because I only take on 1–2 new clients a year, the way that I'm mostly growing is through working with larger and larger clients. And it's the same amount of work generally to onboard a big client as it is a small client. Sometimes it can actually be more work to work with a small client, especially if they're a business owner. So, I work mostly with retirees, and that's another part about my business. I do think working with retirees, it's easier to develop an efficient business. It's frankly just a lot more work to work with business owners. And so, I generally don't work with that type of client. And I have a few, but it's for me. I think happiness for me is not having stress, and business owners can often be very stressful to work with. So, it's not that I don't want to help them, I just don't think I'm the right type of person to help them.

Michael: So, I'm assuming there's still some small natural amount of attrition as well because people move, life circumstances change. So, if you're taking on intentionally 1 or 2 new clients, I'm assuming that means that total client base essentially is just trying to stay flat and even here, but AUM and revenue grow because you're intentionally trying to focus on larger clients when you bring on new people. So, you lose an average client on average, and you take on an above-average client. And over time, the practice continues to grow, but you don't have to add total client count, which means you don't have to add total headcount.

Christopher: Yeah. When I do bring on new clients, they're generally a lot bigger than the ones that I'm losing. And I don't lose clients often to reasons other than death. Occasionally, I do but, usually, there's a reason. And so, yeah, there are years where I'll take on more than 2 or 3. It's very much opportunistic, the way I approach it. If someone's a good fit and I want to work with them, it's not even about how big they are, it's about whether they're a good fit for my client base. And I think in terms of capacity, I do think right now, I'm at about 68. I think I could comfortably work with 90 to 100. I don't know what the exact number is. But a lot of the reason I can work with even that many is because so many of them are almost in maintenance mode because especially later in retirement, it isn't as much work to work with clients.

Michael: Okay. And just you've spent so much time investing in the relationship for 5, 10-plus years just there. This comes a point with a lot of very long-term clients where early on we're doing the regular meetings part is for more active planning as life changes and part is just continuing to invest in the relationship, and there comes a point where the trust is so good that client's like, "Hey, I'll call you if I've got a thing going on, and you call me if there's a thing going on, but short of that, we just really don't need to meet. I totally trust you, and we'll talk when there's something to talk about."

Christopher: Yeah. And I can honestly say that with as small as my client base is, I feel like I could reach to my phone and call any of my clients just out of the blue and be like, "Hey, how's it going?". I really have a pretty close friendship with every one of them. There might be a few that don't fall in that camp, but once they've been with me for that long, 5 or 10 years, you build a pretty deep relationship, and a lot of that relationship is built in the first couple years. And then as time goes on, you don't need to spend as much time, but I'm also very easy to reach. And so, I think there's a really high confidence level that they always know if they need anything they can call me. And I'm not super big on appearing like I care. I'm not big on sending birthday cards because it's their birthday or sending out emails on holidays just to touch them. I prefer to just call them on the phone and be like, "Hey, how you doing?" I'd rather have a personal touchpoint than one that's automated and meaningless.

Michael: So, I've got to ask, though, a lot of advisory firms would like to get more sizable multimillion-dollar clients through referrals and just don't. That's not who comes through. You seem to be getting a pretty steady flow of them enough that you can have the practice move up over time because you're replacing average clients with new above-average multimillion-dollar clients. So, do you have a sense, like what's leading to you being more referable than a lot of other advisors who just aren't getting those upper-market referrals the way that you are?

Christopher: Well, a lot of my referring clients are huge influencers within their communities. I have clients who are presidents of universities. A lot of these were former consulting friends, partners at major consulting firms. They're people that other people look up to, and they're very influential within their social circles. So, I do think it is hard to replicate that. I don't know how to replicate it even myself. I think that's one advantage I have because even in the beginning of my career, my early clients, my very first client was $2 million. I've always been able to bring in large clients even from the early years, and I think it's just the nature of my comfort level with working with certain types of clients that I'm comfortable with it. And so, those people that are influential within their social groups, those are the ones referring. It's a very small percent of my clients that really refer me the bulk of these clients. The other thing I want to say is that I think most of my asset growth right now is coming from within my existing client base. A lot of people who are retiring, or they're rolling over IRAs, some of my biggest asset growth has been very high-income clients saving large amounts of money every year. I have quite a few clients that are high-income that will save half a million a year. And so, even though I actually have a lot of retired clients, the ones that I have that are working tend to be in the high-income bracket where they're saving a lot of money.

Michael: And that was part of your intentional shift to say, "I'm going to have a minimum planning fee that runs alongside my asset fee so that I can serve some of these younger, high-income, upwardly mobile folks because I want a more age, accumulator, diversified client base. And now that you're 8, 9 years into that strategy, it's paying off.

Christopher: Yes. I do think for firms who strategically chose to only target basically wealth that already had been accumulated, like close to retirement people or retirees, I think the downside of that strategy is that, generally, those people are distributing as they retire. So, you've got to have both sides. You've got to balance the current high-net-worth clients that you can draw a larger fee off of with working with younger clients who have that potential, and that may even get there very quickly. That's the part that surprised me the most was how fast these high-income clients grew. I have 1 doctor who has gotten to be one of my 5 largest clients in less than 4 years.

Michael: So, it sounds like part of the key in that context, I feel like a lot of advisors make "accommodations" for clients that are smaller than their usual or below a minimum because we say, "Hey, this person can accumulate and be upwardly mobile." But I guess, to me, part of the takeaway of what you're highlighting is, yeah, but that doesn't have to be a, "Hey, it seems like they're young and savers. Maybe in 10 or 15 years, they'll add up to be a good client." It's like no, no, if you're really working with some higher income saver accumulation-oriented folks, they could be a sweet spot client in 2 or 3 years and a top client.

Christopher: Yeah. The people that I make exceptions for now, if they're below $2 million, they're either a very strategic person in the community that I'm trying to integrate into, or they have to be someone who's saving $300,000 or $400,000/year. The standard I have for if you're at a half a million or a million [in investible assets], which is way below what I'm targeting, then I've really got to see tremendous savings potential, not $50,000 to $100,000/year.

What Surprised Christopher The Most In Growing His Business [1:16:53]

Michael: So, as you reflect back on this path, what's been the most surprising thing to you about building the advisory business?

Christopher: Almost like what we were just talking about, just how I was very scared early on that...I was so young. I was 28 when I started. In fact, I didn't have the CFP yet. I had met all the requirements for it, but I had the 3-year experience requirements, still had a year and a half left. So, I thought, "Why would anyone trust a 28-year-old with a million dollars?" And I think what was surprising for me...it is like the Kevin Costner statement in "Field of Dreams." "If you build it, they will come." But I do think what surprised me the most is that I was able to actually step into the unknown by starting a firm with no clients and no revenue. And I was able to attract clients and build a company. And once you get a taste of that, I think it's very hard to ever go back.

Christopher's Approach To Handling Personal And Business Challenges [1:17:53]

Michael: So, what's been the biggest challenge for you to navigate through this project?

Christopher: That whole period I mentioned back in 2009 to 2011 where basically the market crashed, so my assets were down 40% for 1 to 2 years, lost a $20-million-dollar client, went through a divorce, took on being a single father, and then my dad passing away, all within about 2 years. And then having to kind of reinvent myself in Las Vegas, and eventually was able to come out of all of it. But what I took away from all that was that it's not what happens to you in life that really matters, it's how you respond to it. And the best way I think to respond to those kind of events is to just dive in and focus on the future instead of dwelling on the past. It's easy to get stuck in the victim mindset like, "Why did this happen to me?" But I think the key is to focus on what you love and what you're passionate about. And I tried to do that during that period, and I was able to get through that.

Overcoming Perfectionism By Outsourcing [1:19:12]

Michael: So, are there other parts you know now and wish you could go back and tell you from back then, give advice to younger Chris from where you are today?

Christopher: Yeah. I'm not sure younger Chris would have been able to appreciate it because he thought he knew everything. But I think that's part of the irony of learning, and one of the things, I guess, I've learned is even a parent is...the way most people learn is through failing, and then, hopefully, when you fail, you learn from that failure. But if I was open to listening back then, I probably would have wanted my younger self to know the importance of letting go of perfection. I think that's the big takeaway for me in life. Perfectionism has benefits, but it can be a jail sentence like with my software stuff. And so, I learned that I really had to outsource anything that I was either really perfectionistic about or inefficient. And so, today, I hire people to do everything that I get stuck on. I can be very OCD about things. And so, I don't do anything that triggers that. And so, I try to either use software, or I basically hire out that sort of stuff.

Michael: All right. So, I've got to ask. Maybe, again, I'm channeling too much myself here, but the things I get perfectionist about are the things that are the hardest for me to outsource and delegate and let go of because no one can do that as well as I do. I would delegate the things I'm not as concerned about whether it's perfect because good enough is good enough. So, I'm fascinated by this like, "No, no, the things that you were getting that you feel the most perfectionism about are the things that you most try to let go of." How does that work, and how do you get comfortable with that?

Christopher: Well, I'll try to give you some examples. The software is the biggest thing. We've talked through all that. Most of letting go of all my own software tools and using the "canned software" that we all use now that integrates, it was a choice over efficiency, efficiency versus having the perfect cash flow model that gives you the right answer. And part of it is just knowing materially, "Does that small, better result have an impact in the client's result?" I think I came to realize that it's more about ballparking things, not about having the right answer. And so, that helped me a lot to let go of it if I could see a reason. And then part of it is just, again, with my personality, I get stuck on things.

When I was in college, all of my recommendations actually came from writing professors. And the thing I hated more than anything was writing, but I actually did very well in writing because I wanted the A. So, I would write and rewrite and rewrite and end up with the perfect paper that these professors would keep and use for future classes, but I absolutely hated writing. In fact I tried to find a career that involved no writing because it was such a pain point for me. And even that, ironically, I have outsourced. I found a firm that has my same identical investment philosophy that does and writes all of my quarterly letters. For any of my clients that might be listening to this, they're going to find this out. They probably think I write them all. But I basically start with a template from another firm for my quarterly letter, and then I modify it to fit...I make some small changes to it to reflect all of my views. But for the most part, it's ghostwritten by another firm. And that's because it's a pain point for me, not because I'm not good at it, but because I know that I will sit and stress over it. And my goal in life is to be happy.

The Advice Christopher Would Give To Younger Advisors [1:23:09]

Michael: So, what advice would you give to just younger, newer advisors looking to navigate the profession today and coming in as a financial advisor?

Christopher: I think it's a hard question because, again, everyone's different. And for someone who gives advice for a living, I've definitely come to appreciate the fact that the more I learn, the less I know. So, I think the best advice is just try to soak up everything you can and try to get a lot of different perspectives, which is why your podcast, I think, is so valuable, Michael, is hearing different people's perspectives. But if their goal is to own their own firm, I would encourage them to work for a smaller firm where they can understand how everything works. I only worked for a small company for about a year, but I learned everything I had to learn in terms of how to run my own company. And then you use the community, like the XY Planning Network or other communities to fill in those gaps. And then the other advice I'd give is don't stay too long at one firm. If you are working for a firm, you can learn almost everything you need to learn in a firm, I think, in 1 to 2 years. I don't think you should be there any longer than that unless you want to stay there forever. And I do think in the early years, advisors should work for 2 or 3 different companies to learn different ways of approaching it before they go off on their own.

What Success Means To Christopher [1:24:31]

Michael: So, as we come to the end, this is a podcast about success, and just one of the themes that comes up is even that word success means different things to different people. Sometimes it changes for us through our own lives and careers. And so, as someone who's running what anyone would objectively call very successful $100-plus million practice, that the business is in a wonderful place now, how do you define success for yourself at this point?

Christopher: Well, for me, I've never defined success as an AUM target. That's really never even been on my radar. It's always been for me about finding, I guess, my version of happiness, which, for me, is defined mostly as not worrying quite as much, hard to do because I have a lot of anxiety. It's probably what makes me a good advisor. But aside from that, enjoying my life is a big part of what I define as success, but even enjoying the process of working on goals, creating new ones. To me, success isn't really a destination, it's a lifestyle. And so, for me, success is really about getting up after you fall. It's about reinventing yourself, constantly changing, improving, and just enjoying the journey.

Michael: You make a striking point to me that there's this effect that the anxiety and conscientiousness we have to make sure that clients are served well often makes us a good advisor and also makes it really hard to let go of the business and the client work and stop worrying and live our own lives because it's really easy to get sucked into that against...it can make us a good advisor. It can also make enjoyment of life a little bit difficult at the same time. So, I'm struck just by how you're trying to, I guess, I don't know, create some lines for yourself about what's good enough to serve clients really well and then just lets us worry a little bit less and enjoy our own lives again.

Christopher: Yeah, for sure. It is hard finding that balance. And I found with having anxiety, I don't notice it as much personally as other people seem to notice it around me like, "Chris, you seem worried." No, that's just the way I am. To me, that's normal. But then there are times when I notice the anxiety. And whether I'm worrying about revenue dropping or I'm worried about something, one thing that's helped me with that over the years is to just remind myself it's just money. If I can find a way to quantify something into dollars, I know that I can solve the problem pretty easily. And so, yeah, it is hard, though, to find that healthy balance. And so, I think it's one of the reasons why I could never work for someone because I'd be too concerned all the time about making them happy or meeting their needs instead of trying to find a healthy balance, which I think I can find better when I am only accountable to myself.

Michael: I like that. I like that. It's easier to find a better balance when I'm only accountable to myself.

Christopher: Yeah.

Michael: Very cool, very cool. Well, thank you so much, Chris, for joining us on the "Financial Advisor Success" podcast.

Christopher: Well, thanks for having me.

Michael: Absolutely. Thank you.