#FASuccess Ep 410: Delivering Financial Planning Profitably To Every Client With A Focus On Accountability Over ‘Just’ Meetings, With Emily Biehler

Resources Featured In This Episode:

• Emily Biehler: Website | LinkedIn
• NovaTrak
• Sample NovaTrak Output For Advisors
• NovaTrak Email Update: Getting Started – Download (DOCX)
• NovaTrak Email Update: Preparing For Plan – Download (DOCX)
• NovaTrack Financial Planning Process: Initial Plan Year – Download (PDF)
• Client Experience Timeline: TrailMap – Download (DOCX)

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Full Transcript:

Michael: Welcome, Emily Biehler, to the "Financial Advisor Success" podcast.

Emily: Thank you, Michael. Thanks for having me.

Michael: I really appreciate you joining us today and what I think would be a really interesting discussion around how we try to help clients actually do the financial planning recommendations that we give them and actually hold them accountable and make sure that they follow through and do the thing in a way that's not so labor intensive that then it's unprofitable to do it in the first place. I find there's this challenge that I see for a lot of advisory firms, I feel guilty of, when I reflect back on how I did planning early in my career, that it felt like there was this phenomenon of if a client came in, a good advisor could find 15 different things that were wrong in their financial life and give them 15 recommendations. A great advisor could look at the same client case study scenario and find 23 different ways that you can add a recommendation to create value in the client's life. And we're just stacking up. "Look at all the value that I'm laying on you with 20 different things that could improve your financial life…" and didn't really have an appreciation that most clients are sitting there going like, "Wow, I just thought I needed help with college planning, and you found 22 other ways that I'm screwing up my financial life."

Apparently, I'm like a hopeless basket case and should just not bother even trying to be financially successful because, apparently, I'm a lost cause. You can really make people quite depressed and despondent if you show them too many recommendations at once or at least don't have some way to break it down for them and help them to take action. The fiduciary in me still has trouble holding back and literally not telling clients all the things that we found that they need to address. But how do you help them actually do it and be accountable for it and not blow your own business up in the process with an impossible amount of time that you spend on each client? I find this just a very practical, very real challenge for a lot of us. And I know your firm has been doing a lot of work in this area of how do we do the accountability thing and not blow up the profitability part. So, I just I'm excited to dive into that today. How do you actually get the clients to do the recommendations that we're giving them?

Iterating To Encourage Client Engagement With The Planning Process [05:43]

Emily: No, yeah, I think, honestly, everything we are creating here is stemming from a frustration of, "We did this beautiful analysis. We found all of these things that are going to change your life for the better. And when I meet with you in 12 months from now and you've done none of it, now, one, I'm redoing the exact same plan basically, but with less probability of success now." So, a lot of what we've created really has stemmed from the inaction of clients. And then as a fiduciary, like you mentioned, I was feeling pretty guilty about that of like, "I need you to do these things. You need to be making these changes because right now, we're headed down the wrong path." For some clients, it's a slight tweak to the path. For others, it's like, "Woo, we need to make some big turns here." So, yeah, I agree with you. It's been a frustrating thing to see that inaction. And so, we've been trying to solve that problem.

Michael: And so, do you have any sense, at least in your practice? Where is the inaction coming from?

Emily: Yeah, for us, it is a couple of things. The first one is if you get clients to engage in their financial planning, most of the time that is when they are face-to-face with you in the meeting room, and they're feeling jazzed about their future. They see the hope of, "We can meet these goals. We can do this." So, you've got that going. And then the second that they walk out the door, they get a call from the school nurse. So now, their day got derailed. They get an email from their boss that they've got to get on the plane and go to this meeting across the country. And so, life just starts happening. When we're in the protection of that meeting room, I think everybody would implement. But it is the fact that we're asking them to implement and squeeze it into already busy lives.

So, I think to your point, there is overwhelm that happens, and we speak to that a little bit of, "Oh my gosh, there's so much to do. I don't even know where to start. How can I get all this done?" So, that is also happening. But then there also is just this major distraction of life. And the back burner is one way to say it, but sometimes that's even like...that financial plan that I used to literally print out, I think you call it "The Financial Plan" with capital T, we used to print that out and that would literally hit the coffee table or the junk pile of stuff and then never get reopened because they're like, "I will do all of this when life slows down, when I get this break." I think that's something we tell ourselves as a busy human. But, "Oh, things will slow down after this event."

Michael: So, basically, all financial planning recommendations would be implemented if it wasn't for the fact that all clients have a life.

Emily: Correct. The fact that we are all humans and specifically all Americans that just try to juggle so much.

Michael: And you’re feeling this yourself right now. And I think all of us, if you've been in business for any period of time, have had those moments of the client you're meeting with for a review meeting, and they come in and it's like deja vu. It's the same problems, and you're giving the same recommendations, and they're saying the same things about how they're ready to tackle it and do it, and then nothing changes for 12 months and nothing gets done, and they come back in again. And it's the same conversation over again. It gets, at best, frustrating, at worst, a little depressing, I think even for us as advisors. It doesn't feel good from the advisor end to keep giving recommendations that clients don't implement, and then watch every year, their plan gets incrementally worse because the time horizons when you're shorter, they made progress on their goals. So, what started changing for you to try to deal with this, to do something about this?

Emily: Yeah, I honestly think it was a little bit of that frustration, and that just like if you're one of those advisors that pulls a lot of purpose out of what you do and how you're helping people…and this was the opposite of help because now, honestly, they have 1 year less to make these goals happen, but they also are now 1 year in paying your fee. So, that was something that they're out now and nothing got done. So, we've walked the entire spectrum of inefficiency when it comes to providing planning. I think some of the things that we started changing is because when I first started doing this, there was no process. Every client just came in. And I knew the things I needed to get the plan, but I didn't even really have a document checklist. I had to create that. So, it's just I ended up having multiple meetings to gather data, sometimes multiple meetings to do a draft plan delivery, and then make the tweaks that we came out with, and do another delivery, and then meeting with the client just because no recommendations were really shared. So, meeting again. And so, I just probably had multiple meetings, really inefficient. So, the first thing we did was add a process and then add a summary of the plan. And so, we got a process, at least in writing, and then we created this 12-page, literally 12-page narrative summary. Now, this did help improve the client's understanding of the analysis. But it was really time-consuming to write. I'm writing this little mini-novel.

Michael: So, help me understand what this was, though? It's before the plan meeting, it's after the plan meeting? It's an executive summary of the plan? What was the 12-page thing?

Emily: It was an executive summary of the plan delivery. So, I would take my, at the time, MoneyGuidePro, and I would just, "Okay, let's break this down into some sections." So, cash flow, risk management, tax planning, and just kind of, "Here's our findings in these areas. Here's what you need to tweak." And again, it really helped fill that interpretation gap. I think I always say that analysis is not actionable. And so, we have to provide, we have to interpret that analysis. So, that was the first step. And it was helpful. It really was much better than handing over the big plan.

Michael: Did this become a substitute for the plan itself, like you stopped giving clients "The Plan", thunk on the desk and started giving them 12-page summaries, or is this more of a post-meeting summary action items like what's next kind of thing?

Emily: So, in the literal binder, I would put the summary on the front and have that on one tab, and then the 100-plus pages of analysis still there. Compliance is the main reason why you would give that to the client. And then I've helped them find, "Okay, here's the Monte Carlo results in the big thing." I'm presenting it on the screen, but when they went home, I wanted them to be able to still go see what I was talking about and find that in the actual document.

Michael: Okay. And so, what did you find was shifting as you went from just the plan to executive summary-style version of the plan? What was working, what wasn't working?

Emily: Yeah, the clients followed along so, so, so much better. They'd make notes in the margin of things that I would say while presenting and then could start, "Okay, here's an action item." But it was 12 pages of words. And so, you would have some clients not fully engaged with it. If you get somebody that is a reader, then that was fine. But I think as we work with clients, we're all realizing we like visuals, we like to see progress, we like gamification, we like all of these things. And so, I think what was working with the 12-page summary is that clients were at least following along and understanding the analysis better. So, we just started interpreting the analysis. But there was still room for improvement because it wasn't leading to action yet. You know, we still weren't getting full engagement.

Creating A Workbook To Better Identify Client Goals And Values [14:22]

Michael: Okay. So, what came next in your plan deliverables evolution?

Emily: Right. I think always we're improving that internal process. For us, it was adding a goals workbook, adding a calculator. So, those things were coming throughout this process.

Michael: Wait, so what's a goals workbook? You got to walk me through this.

Emily: Yes, totally. So, this is something that gives you a framework for collecting the client's goals, but also values. And so, we call it the Find Your Path workbook because we need them to help find the path that they want to be on. It's not just about the destination, as you know, it's, "Okay, how do we want to get there? What are some of the trade-offs you are willing to plug in and play with as far as like if you want to work a year longer and you can travel so much more? Great. Let's let's trade that off." So, that was something that was really important because just sending the clients, "Hey, when do you want to retire? About how much do you need?" Basically, the data input for the planning software. I was trying to go a little bit beyond that.

Michael: So, can you just walk us through further and what is in the goals workbook? Literally, what are you asking or serving up to them or trying to extract out of them?

Emily: Right, right. I do think a couple of the interesting pieces of that are the first thing we start with is debt. "What are your feelings on using debt to reach your goals?" So, you get the Dave Ramsey crew that is like, "Absolutely not. I won't touch that with a 10-foot pole." Usually, it's small business owners that know how to use it and are very comfortable with it and everybody in between. And so, we talk about that framework as like, "Okay, when you are ready to buy that next vehicle, are we using debt or saving up to buy it with cash?" And just get their values out there. And so, that's a unique thing that's not going to be in your standard, "Here's my goals." So, we...

Michael: What do you ask them? I mean, how do you feel about debt on a scale of 1 to 7? Is it like, "Please, write your narrative feelings of how you feel about using debt to reach your goals"? How are you literally trying to elicit this out of them?

Emily: Totally. Yeah. The workbook is pretty free-form. I do ask them to rank how important is this to you. And then we'll just ask, "How do you like to use debt?" And then I have a couple of examples of like, "I like to be debt free as soon as possible" or "I'm comfortable using debt to buy a property, but I don't want to use credit cards or something like that," and just get their feelings on that. And as we get further into our process, we actually have a Find Your Path meeting that follows the clients filling out this workbook because you've got to facilitate some conversation around all of this, especially because you might have a couple. One client puts their notes in, the other client does it separately, and they didn't really review each other's notes. So, we have a whole separate meeting where I'm going to facilitate conversation around their answers and really try to get an understanding of where their values lie.

Michael: So, what else do you cover? Sounds like debt's a big one where you start. What else?

Emily: Then we go into education. How important is it? Envision, "Are we paying for 4 years? Okay, which university and state? Is it the kids get a blank check, or we want them to have some skin in the game? Great. Okay, let's talk about that. Let's talk about what that means." And so, really understanding and a lot of finding out where the clients are not aligned on these goals. Then we go into travel. I actually ask them to describe a trip. "Talk to me about your family's normal travel before retirement. And then what do you envision after retirement?" "Oh, I think we'll travel internationally more." "Okay, great. Describe a trip to me. When you fly over there, are you at the front of the bus or the back of the bus? Help me understand, are we staying in discount hotels, budget lodging, or are we renting a villa?" So, just trying to understand how these people travel. And this is, of course, really fun for the client to do, to talk about. "Oh, I've always wanted to just rent a place in France for a month." And their spouse is always like, "What? Really?" And we just get those things out.

And so, we have that for before retirement, we have that for after retirement. So, we separate things like travel. Another unique thing is I put in healthcare in there. Obviously, that's not a goal that anybody really wants. Everybody obviously needs to have healthcare covered in their lives. But it's something that I like to have the conversation of...have an honest conversation of like, "What's your family health history? Are we looking to have higher-than-average health expenses? Or do you do anything alternative? Are we needing to make sure there's a larger allotment for chiropractic, acupuncture, PT [Physical Therapy], anything else that is not your standard pay my premiums, pay my deductible, move on down the road." So, we go down into some big ticket items. "Are you getting a camper, boat, new cars? How often do you replace your cars? What are we buying?" And so that we can figure out, "Okay, what's trade-in value? What do we actually need to plan for?" The other one we talk a lot about properties, home improvement. All of these have separate categories. Providing care is another one that is sometimes not included for advisors. I think more and more it is. So, all of those we walk through that on the goals front.

And then once we get to the back of the goals workbook, I start getting into behavior a little bit. "When you think about money, is it positive, negative, or neutral, and why?" And ask that for each client. "And then when you have implemented financial goals in the past, did you meet them, and why?" And then like, "When it comes to accountability, do you see yourself needing a lot or a little?" And have that conversation with the clients just to help them get in touch with their money personality and understand when it comes time to implement, what hurdles are we going to be running up against? If you have a financial trauma from earlier in your life, let's go ahead and get that out on the table and let's talk about it because we're going to be throwing great ideas at you to help improve your financial life. But this goes back to...some of the things that people don't implement the plan is because they're just too busy. Sometimes there's a big issue under there that needs to get uncovered. But that all goes into that goals workbook. And this has evolved as we have worked with clients and like, "You know what? I want to ask this question to everybody that we work with." And so, put that in the goals workbook. So, that's been another evolution of how we have improved our process. We're asking everybody the same questions, and so we have very similar data to input. So, I think that helps as well as the efficiencies.

Michael: Well, I can see where you start opening up some of the opportunities to really follow through on implementation, just when you're asking questions like, "When you had financial goals in the past, were you successful with them?" They're like, "No, we keep screwing this stuff up." Accountability, "Do you still see yourself needing a lot or a little?" "Oh, we need a lot." It's like, "Cool." So, totally aligns. I remember points like, "Okay, I feel like I should follow up with the client to nudge them a little bit more, but I don't want to be a pest and feel bad that I'm being a big nuisance to them." And we try to find that line of how much is it okay to push versus not. And now I hear this, I'm just like, "Or you just ask them if they need a lot of pushing. And when they say yes, you say, 'Is it okay then if I nudge you a lot?'" And they'll probably say yes because they know they need it. And now, I have total permission.

Emily: Yeah, the permission's a big one, I think, in the personal services world because...and for me, I think for a lot of advisors, if I don't get that stuff out there at the beginning, then I don't feel like I have permission to keep them accountable because it can be a knock against somebody who is not getting things done because it's almost like, "I gave you my word that I would do this and now I'm not doing it. And now, you're catching me on that." And that's where I think a lot of advisors feel bad about accountability. So, I would always recommend getting that out front and have that conversation with the client, and you can get really busy in meetings and forget to ask those things. And so, that's why I put it in the workbook. So, I always have that conversation.

Michael: So now, help me understand in the broader context. So, how big is this goals workbook?

Emily: So, we have put it in an electronic format, and it almost has a TurboTax-like feel where you start on one page. And at the very top, it tells you, "Okay, you're 10% of the way done." And so, it gives the client this like, "Oh, we're almost done," or, "We're halfway through." I usually, again, set the expectation of like, "This is great to...after the kids are in bed, you guys pour a glass of wine or whatever your beverage of choice will be and then just have this conversation together." It's kind of a fun date night to do. But, yeah, usually, 30 minutes of the client's time because they're just dropping in quick ideas, and then I'm going to extrapolate so much more when we have our Find Your Path meeting.

Michael: Okay. And you see now it's in electronic format with a progress bar. So, I'm assuming you're using some survey software that they go through in order to go through and get their questions with the progress bar.

Emily: Pretty much similar. It's tucked inside. We actually created a software that is built around our entire planning process. As we get further down into the evolution of the efficiency, that was something that we just found like, "Okay, this is an investment, but it's going to save us so much time." And so, we've created this. And so, yeah, from inside that software, we send out a link to the goals workbook and the clients fill it out on their own time, on their own devices, and then we get the results back. And then the way that it spits it back out for us is it has, "Okay, here's the client answer." And then it gives me a box for the advisor notes. And so then when I am meeting with the client to go through that, I just pull it up and say, "Okay, here's your notes." And then I'm able to take my notes to the side of when I facilitate that conversation and really getting a better understanding of what trade-offs they're willing to consider.

Michael: And so, from a process perspective, I think we'll get more into the full process in a few minutes, but it sounds like this comes very early in the process. We're all the way out in the discovery, still getting to know the client phase that you're giving them this. They get it as part of their data gathering, data input process. And then subsequently, we have a meeting where we're talking about the responses that they gave and what that means.

Emily: Correct. Yep, yep.

Michael: And this is separate from the...it's like the quantitative aspects of data gathering. Your names, your dates of birth, your account balances, your insurance coverage, all that good stuff is separate from the goals workbook?

Emily: Yes, yeah. There's a little bit of quantitative stuff in there, but it's more like, "Do you have stock options at work?" Yes or no. And that way, I know to look for that in their documents. I know that that now applies to the document checklist. I need to make sure we get that document.

Michael: And where did just the questions come from?

Emily: I think there's a handful of goal questionnaires that are floating out there. And so, I know in a previous life, we used to use just the MoneyGuidePro questionnaire, and I would print it off and have the client hand write it. And so, I think that was the beginning stages of it. And then, yeah, like you mentioned, "This phrasing is working really well with clients. Let's add that," or, "I really need to spend more time talking about longevity and health. It's an uncomfortable conversation, but we need to talk about it." This is, again, back to that permission, once I get the permission to talk about some of these uncomfortable things, then it's not this elephant hiding in the room anywhere. It gives me a chance to really help them with who they are and where they are. And so, some of those type of experiences have added to creating the workbook the way that it is.

Michael: Out of curiosity, any questions that you tried that didn't go well, like cutting room floor of questions that got tried in this process?

Emily: I think one of the biggest things that we struggle with is with couples that don't communicate well on money. I used to have some people that completed this separately, or ask that they could complete it separately, or have one spouse involved. And that is a big fat failure. So, I do require both spouses in through plan delivery. Once we get into implementation, if there's one spouse that absolutely hates day-to-day money tasks, then I can excuse them at that point, but they're always, always, always in the plan or the goals conversation and then the plan delivery. So, yeah, I think that those have been really big failures of trying to trust one spouse to create it. So, that's definitely something I learned from.

Using A Calculator To Set Fees Based On Client Complexity [29:28]

Michael: So now, help us understand, I think, just the overall planning process that this fits within. I mean, you've talked about plan delivery meetings and Find Your Path meeting. So, can you just paint the overall picture for us of what the planning process is for you at this point?

Emily: Sure, yeah. I think it all starts with client expectations. And the earlier you can set them, the better. And so, honestly, on our website, you're going to see our full planning process. We have the...we call it our Client Experience Journey. It's got a little hiking imagery. We're in Colorado, so we really leaned into that. But we're the guides on the hike, and they have to actually walk the path. We can't walk it for them. So, we put that out there for clients to see that. We put our fees out there, or at least the starting planning fee so that you already are gonna, hopefully, self-police some of the clients that are not going to be engaged.

Michael: And where does that planning fee start for you guys?

Emily: Oh, for us, it starts at $3,000 for the first year. From there, we have an intro meeting. So, they've made it through the website. They call us, they want to have the intro meeting. In that meeting, I walk them even further through that process and help gauge that engagement. It's really important that you have somebody that is ready to engage with their plan because when we get to the accountability conversation, if they're not engaged, you're going to just spin your wheels. And that's frustrating and not profitable. So, this is something that I think with clients trying to understand, "Are you ready to go through this?" I ask them flat out, "Do you have capacity to give me the stuff that I need? Is now not a good time? Great. We'll follow back up with you once school starts again, and you have more capacity." And so, that's a big one is before we even get into our planning process, we really want to hit the clients hard with some of those expectations.

Michael: And we're still in prospecting?

Emily: Yeah, fair. Yeah, get these prospects.

Michael: Yeah, yeah. They haven't even made the commitment. You're literally asking them like, "Do you really have the capacity to do this and go to the planning and implement?" They'll say, "Yay or nay."

Emily: I love that our process self-polices a lot of who we work with in the sense that I don't end up with the blind trust clients, which sometimes those are great, because they're clients that are easy to work with when things are going well, but they're also the ones that didn't sit through the "markets go up and down education meeting." And so then they are sometimes very upset and very loud and hard to deal with when things are not going well. So, we don't really say like, "Oh, we have a minimum AUM to work with clients, but I will always tell a client, "I have a minimum engagement factor. You must be ready to do this." So, we get there. We get into the prospect meeting, the intro meeting, we walk through the process, gauge the capacity, and then we go into, "Okay, what is the cost of this?" We have a cost calculator that we've created, and we customize that right then and there in front of the prospect for their situation. And this is important specifically for advisors that are like me that know what in their minds, what a plan is going to cost based on what you're hearing, the complexity, things like that, but then also feeling empathy for the client and wanting to give it to them at a discount just because they're going through a tough time or whatever. So, cost calculator has helped me charge an appropriate fee.

Michael: Meaning having a calculator makes it easier to actually quote them the full value because you're like, "It's what the calculator says"?

Emily: Yeah, it's my little scapegoat. "This is what it costs to work with us. And I can't adjust that." So, yeah, it definitely gives me that place to point to. But not to mention, it's complete transparency for the clients, and they're seeing that it is getting customized to them.

And so, when we go through in year one, there are certain subjects that are required. I tell the client, "We have to do the comprehensive plan in year one. That means we got to look under every rock, make sure we're not missing things. We're building out the foundation of your plan for your wealth. And you can't build your wealth on something that has cracks or leaks in the foundation." So, we go through that. But there's always some subjects that are optional in our workbook or in our calculator. That's going to be like education planning. Obviously, you are working with somebody that doesn't have children. We don't need to charge them for that, charitable planning, complex work benefits, debt analysis, investment real estate analysis. We do a workshop for pre-retirees that focuses more on the emotional, mental, and physical transition into retirement, not just the financial one. So, sometimes those things apply, sometimes they don't. So, we walk the client through that.

Michael: It feels like a menu of services kind of approach. We're a $3,000 based planning fee, plus this for education, plus this for an investment real estate analysis. And clients start line item out the things that they want and need and each has a line item of cost and it adds up to something? Am I visualizing that the right way?

Emily: Yeah, you got it. And so, the base $3,000 covers the 8 subjects that are required. And then they can add on to it. And it's one of those things that there's no doubt in the clients' mind that they need that subject toggled on. They're like, "Yeah, I do have really complex work benefits. Let's put that on there." So, we kind of get to "Okay, here's all the subjects we're going to be looking at." And then we have a complexity factor. And I have a little rubric basically of what bumps you from complexity factor 1–4. One's going to be the base. That's going to be the people that are W-2 only. They don't need to meet frequently. And it's hard sometimes in the prospect meeting to get this one exactly right. But there are some things that are obvious in the prospect meeting like, "I have variable income, or I own a business, or I have more than two rental properties." And so, those are just going to bump us up on the complexity factor. And that takes the dollar amount that those subjects up above totaled and just multiplies it by a certain multiplier. And that is...

Michael: Is that literally mathematically what it's doing? Take the total fee, if you're a complexity factor 2, it adds 25%, if you're a complexity factor 4, it as 50%, like that?

Emily: Exactly.

Michael: That's the formula?

Emily: Yeah, yeah. And that is something that we, at the prospect meeting, show them like, "This is what your fee will be for this year because of these complexity factors." And they can see, "Oh, yeah, that jumps me into the next one," because again, it was really hard to charge a client what they needed to pay. Because sometimes if you get a complexity factor 4, that puts them into $10,000-plus. They are using your services. They are absolutely going to be getting their value out of that. But it was really hard for me before the calculator to charge that amount because I couldn't show the client why it was so much greater than my starting fee. So, that has been helpful to, again, make this a profitable thing that we offer.

Michael: So, it's not just this is how I justify my fee and my minimum for $3,000 fee, but this is also how I get comfortable telling a client, "Yeah, my minimum fee is $3,000, but you're 10 [thousand dollars]."

Emily: Yeah.

Michael: "Allow me to explain why you have to pay 3 times as much as everyone else."

Emily: Correct. Correct. Yeah.

Michael: So, it sounds like the cost calculator or the fee calculator for you is, at least as my brain processes this, it's 2 dimensional. So, on one spectrum is the menu of services. "I need education and charitable, but I don't need investment real estate analysis, etc." There's a list of things we're going to cover. Some are required in the core and then some are optional add-ons. And that'll add up to some fee, 3 grand, or 4 grand, or 5 grand, or whatever it is. And then on the other dimension is a complexity factor of overall complexity of their situation, which takes the base menu of services fee and then multiplies it by 10%, or 30%, or 50%, or 100%, or whatever it needs to be to scale the whole menu up to the complexity level.

Emily: Exactly. Yeah. If I'm going to be meeting with your CPA and your attorney and your business manager throughout the year, I've got to account for that time. And I think we've been through all the iterations of cost calculators. We did the packages where you have platinum, gold, silver, we did the subject based, we did the annual income and net worth calculation. And in every single one of those scenarios, there were instances where 1 client was overpaying and another was underpaying, which doesn't feel good. Everybody knows when they're unprofitable with a client, and they're still delivering the service. But you're starting to lose the passion because you're so far beyond what you've been paid. And then there's the other ones that you're like, "Oh, yeah, they paid a lot and it was pretty simple." And there's not really a way to reconcile that. So, we've been doing this for now I think 2 years. And I feel pretty good about it. Sure, there's one client every once in a while that needs regular meetings that I didn't see that at the beginning. But I feel pretty good about how this happens for the first year. In the second year, it's an even more in-depth conversation of like, "What do you have going on this year? Talk to me. Are you changing jobs? Is there a change in marital status? What is happening? Is there something big going on?" And then we can address complexity.

Michael: So, each year, it's repriced. Your menu and your complexity factor can reset for the upcoming year?

Emily: Absolutely. Yeah. And after I show the client what their year one fee will be, I immediately go back up and toggle off some subjects and be like, "And this is probably what year 2 will look like because we are setting expectations up front." And so, we're saying, "All of our clients continue to pay this fee every year. Each fee covers you for 12 months. And then we need to re-up it. And so, if next year there's no changes to your goals, there's no changes to your compensation, everything's pretty status quo, then you'll probably just pay our core, which drops to $1,800 at the next year. So, year 2, the core package, basically, now the starting fee is $1,800. And this workbook...or no, this cost calculator is also kind of client-facing. I can send it out to the client for them to kind of talk about behind my back and toggle some things on, really get comfortable with it. And then they can hit "approve calculator" and it comes back to me through that software of, "Okay, this is what we're going with," which is really, really helpful in years to and beyond because I put in the subjects that I think we need to cover and send it out to them, and then they will say yay or nay on that.

One analogy that I think really helps with talking to clients about paying this fee every year and how it goes up and can go down, depending on what they have going on in their life, so if you're on status quo, expect a low fee. If you've got a lot of transition going on, expect a bigger fee. And the way that I explain that is if you go in for your annual physical with your physician, you run the blood work, everything comes back where it's supposed to be, your physician is probably going to say, "Hey, thanks, see you next year." And you expect to pay one thing for that. But if they uncover some things, there's a diagnosis. Now, there's a treatment plan. You expect your medical bills to be a little bit bigger in that year. And so, that analogy, it's some phrasing that I always like to share because I think it helps clients get it when it's like, "Oh, yeah, if I'm going through a lot, I will want to pay more because I will want advice and handholding through that busy year. But if it's a status quo year, I'm happy to hear that I'm not going to get charged the top level just to implement my same recommendations year over year."

Michael: So, how do you actually price the menu items? I guess I'm both trying to visualize this, in general, how much are they? Is this like, "It's $500 for education, another $250 for charitable, it's $1,000 for investment real estate analysis," it's those kinds of numbers that you stack up?

Emily: Pretty much, yeah. It did come down to doing some math of, "Okay, this subject throughout the year is going to cost or it's going to take us maybe an hour to analyze and put our recommendations and implement." So, as we were building it, we were putting in like, "This is a more complex item. So, you're going to get tax planning priced higher than education planning." And so, those are some things that we as a team put our heads together and came up with. There has been, of course, some tweaks of like, "Okay, yeah, I think that this one's a little bit overpriced." And so, that's how we came up with the base numbers. We made it work to a nice round 3 grand. So, that was something that was important to us rather than being like, "Okay, our base starts at $3,162." And so, there's a little bit of rounding to get where it needs to be.

Michael: So, is there an underlying dollars per hour that you shoot for when you price these in the first place?

Emily: Yeah, I think there's calculators, or any business coach or anything that you talk to, they're going to help you understand what your hourly rate is. And so, for advisors and for my director of financial planning, we did that calculation. For director of financial planning, maybe it's $250 an hour. For the advisor, maybe it's $400 an hour. And then kind of backed into some of these numbers.

Michael: Okay. So, you are actually trying to figure out who's going to do the work, your director of financial planning versus you, and then pricing is person’s hours times their rate.

Emily: Yes, that was really...because we wanted to prove to ourselves that what we were charging is profitable, and that was how we had to do that, how we had to walk up to those numbers.

Michael: And then how do you mark up for complexity? We've kind of highlighted it's a multiplier, but what are the multipliers? How much do you amp up fees to align the complexity as you get to a complexity 2, 3, 4?

Emily: Yeah. So, the jump from 1 to 2 is about a 25% increase. And then complexity 3, which the majority of your people are going to land in 1 or 2, it's going to be the people that they're looking you dead in the eye, and they're like, "Oh, yeah, I need that." And you're like, "Great." So then, that bumps them up to 3 and 4, which gives you...3 is 75% increase, and then 4 is 150% increase from the 1. So, yeah, that's how you get your fees.

Michael: That's how you get up there quickly. And if you're complex, I'm assuming you tend to have more things on the list as well. It's like you need more things, and they're more complex to analyze because they all interrelate more. So, that's how you get to a, "Well, we're a 3K minimum, but based on the menu of services that you picked, it's more like 7 grand. And because of all your complexity factors, now you're at 12 grand."

Emily: And again, they'll look you dead in the eye, and they'll be like, "Yep, I am." All of our complexity 4 clients, nobody has ever pushed back on that fee because...and they're really engaged in it. They see what they're paying, and then they are going to be like, "Yep, I'm going to get my money's worth out of this thing. You watch."

Getting Clients To Complete Their First Action Items [47:11]

Michael: All right. So now, take us back to the process that we're going through. I think we're still in intro meeting. We're doing great. This is awesome. We're still in the intro meeting. So, you've talked about services. You're showing them the cost calculator so they understand what their fees would look like. So, how does the intro meeting wrap up, and then what comes next?

Emily: Yeah. So, I usually, after we've talked about what the client needs, go through the calculator. We go through the expectation setting and the client experience journey. Then I put it in their court. They decide to move forward. We start with our Getting Started email. And sometimes I ask the client ahead of time, or usually I do, that is, "How are you with the next steps? Do you want one step at a time? Do you want to see the whole process? Where are you going to find yourself to be more quickly to get it done?" Some people get the big one, and then they're overwhelmed, and they're like, "Oh, I'll do that on the next day off that I have." And then that delays the process. So, our next step email, though, is 5 steps. And it is, "Okay, you're going to get an email from eMoney. You're going to go set up your website, start linking in your accounts." There's a video that we've recorded explaining that to them and how to do that. There's a document checklist. We put that document checklist in the shared documents folder that the client is going to be dropping documents into in the portal. So, like, "Oh, you want to know what documents you need? Great. Go over here and find it," so then they know where to put it.

Michael: So now, they have to practice using eMoney to get in, to get to the portal, to get the document checklist, so they can do their thing and check themselves out.

Emily: "Please don't email me your documents." And so, that's been a nice little nugget for helping the clients use that a little bit better. And then we have the question in there of like, "How do you want to pay?" We use AdvicePay. And then it's like, "Do you want to pay quarterly, monthly, annually? Here's your fee."

Michael: Oh, interesting. So, you set the fee based on the internal cost calculator on an annual basis. But they just flat out choose from a cash flow perspective, "Are you an annual pay? Are you a monthly pay? Are you a quarterly pay?"

Emily: And honestly, we don't penalize people for choosing the monthly one. In fact, sometimes I'll tell a prospect that I encourage it because of the additional accountability and engagement that it'll bring. You know, if they see that fee draft every month, that might be just the thing we need to say, "Oh, I'm supposed to send Emily my taxes. Let me do that right now." And so, I will sometimes be like, "Hey, behaviorally, go ahead and choose monthly, especially if you're somebody that knows you're going to need extra accountability." I use the the analogy that if I'm paying a personal trainer and I see that coming out of my bank account every month, I'm hopefully going to be more inclined to get up and go to the gym at 5 a.m. than if I don't ever see that come out of my bank account.

Michael: I feel like most of us are concerned that more frequent billing makes clients sensitive or adverse to the fee. Your framing is like, "No, no, no, this is what reminds them they have planning things they were supposed to be doing. We can lift engagement by reminding them like, "'You're paying for it. You should probably be using this."

Emily: And no matter how much money we have as humans, when we see that we're spending money on something and not getting value out of it, it's definitely something that we are frustrated by or more determined to get the value out of it, which leads to engagement, which leads to moving the needle on their progress. So, that's why we certainly encourage that.

Michael: So, what else on this initial process, like, "Email for me to get set up, document checklist, wink, wink, nudge, nudge any money? How do you want to pay? And I guess set up your AdvicePay account?"

Emily: Correct.

Michael: So, what else?

Emily: And then it basically will end with, "Schedule your Find Your Path meeting. So, here's the link to my calendar, schedule your Find Your Path meeting." And so, the first two stops on our client experience journey are client action items. So, as soon as they say they want to move forward, they got to get going on it. And so, those are the things that we send that Getting Started email, and we have a template, of course, of that email, and we customize 1 or 2 parts of it for the client. But all the language is pretty straightforward. The video we recorded, of course, is generic of how to walk through eMoney and link things. So, that's an easy process for us. You basically have to put in client names, and the fee, and then basically everything is the same and good to go.

Michael: So, what comes next? So, I guess they're also getting part of their document checklist is do the goals workbook, and they're going to work through that because the next meeting is the Find Your Path meeting.

Emily: Correct. Yeah. That is one of the steps on there is here is the link to complete your goals workbook. So, all of those 5 steps include that. So, go ahead, pay your fee, and then here's the link to go ahead and do the goals workbook, schedule your Find Your Path meeting, and then from there, we go into that meeting.

Michael: Is it one email with all these different things and steps, or are you sequencing this out for them?

Emily: That depends on the client. That's when I ask upfront like, "How are you? If you get an email with 5 steps in it, are you going to do that, or is that going to overwhelm you and you're going to immediately close that email and get back to it when you have the 'time'?" And again, that never happens for us. So, I ask that. And if they're like, "Yeah, I need the baby steps," and then that's a little bit inefficient for us, but it at least is going to be more efficient in the long run because they're going to move through the process once I can send them, "Okay, go set up your eMoney. Okay, go link these accounts, go do this, go do that." I would say most of the people, though, say, "Just give it to me all at once and I'll get through it."

Leveraging Custom Software To Guide Clients Through The Planning Process [53:32]

Michael: So then, next is the Find Your Path meeting?

Emily: Mm-hmm.

Michael: So tell us more about what's in that meeting, what's going on in that meeting?

Emily: So, we start with a little bit of housekeeping, Because when you link things into eMoney, sometimes you get 3 different checking accounts. And so, I need to know, "Okay, who is this? What's it for?" So, we do a little bit of housekeeping of cleaning up eMoney, noting the things that they haven't given me yet. And so, that is a little bit of housekeeping before we start the meeting, before we get into the goals workbook.

And then in that meeting, though, that's when we walk through goal by goal, what they wrote, and then I ask them again to describe in more detail, "Okay, if you want to buy a second home in Costa Rica, how close to the beach are we? How many bedrooms and bathrooms are we looking at?" And then it's kind of fun for us. We vicariously go shopping for them on Zillow and find, "Okay, what does this cost?" So that I can actually plug that into the plan appropriately, and not just them saying, "Yeah, I think it probably costs $300,000 to buy a condo in Costa Rica, and then have no idea that it's $550 [thousand]. So, we go through that and just really facilitate the conversations. This is my favorite meeting. I really enjoy it because you get to know your new clients so well. And you also get to see where their values are and what is a non-negotiable in the plan versus what is something that they're like, "Oh, yeah, this would be really fun to have that." So, I really like that. And this is my longest meeting. It usually is about 2 hours by the time I complete everything.

Michael: And so, again, what's happening that takes 2 hours? Is most of that just going all the way through the goals workbook and just all the conversations around the different things they're articulating, the different preferences, and trying to drill into what that means?

Emily: Yeah, I'd say we do maybe 20 minutes of housekeeping, going through the goals and having the conversation, depending on the client, can be 30 minutes or it can be 90 minutes. And then this is also the meeting where we do the risk tolerance questionnaire, which involves a little bit of investment education of why we're asking these things. And I talk a little bit about behavior as well.

Michael: And what do you use for risk tolerance questionnaire?

Emily: Right now, we're using Nitrogen/Riskalyze. We're using that questionnaire.

Michael: Okay. So then, what comes next?

Emily: So, after that meeting, assuming they've provided us everything we need, which happens pretty shortly after that, or sometimes even in that Find Your Path meeting, they log in and give us whatever we're missing. So then, we go, we do the analysis, and we crunch all of the numbers. We end up using a handful of software. eMoney is amazing and really in-depth, but we also are using Nitrogen. We're also using Holistiplan. We're also sometimes diving into a different analysis that is specific to whatever the client is needing.

Michael: What else shows up in the more specialized bucket?

Emily: Some of it is creating a specific debt snowball or running multiple cash flow analysis, which a lot of that we do with just some Excel documents that we've built. So, it's not just necessarily plug it into eMoney, get the results, and then go from there. So, I think a lot of advisors are doing that, but it just gives us a really, really in-depth. We've looked at everything, financial plan, and then we're going to put this all into this software that we've created. It's called NovaTrak, and it's something that we have built to help advisors take all of that analysis because we know analysis isn't actionable, and so to give it a place to go for the interpretation for the clients. And so, we build all of that out and then we go into plan delivery.

And our plan delivery, we break it into oftentimes 2 meetings. I find that when you're going through the comprehensive review, almost everybody glazes over at about 90 minutes if you make it that far. And some people you get through overall plan health and maybe cash flow and then they're done. And so, we're always trying to work with engagement and seeing when the clients disengage. And so, for that one, typically in my first plan delivery, we do overall plan health, which is, "Are you on track? What's your probability of success? What are the tweaks to get on track?" And then cash flow, which that's a big one because it's not only budgeting, it's how much needs to be saved where, how much extra needs to be going to debt payments. So, it takes the hub of the client and their finances and then shows all the different spokes of where these people need their money to go in order to reach all their goals at the same time.

Michael: And then second plan meeting is your insurance, estate, those pieces. And what are you coming into the meeting with? What's the output or the deliverable? Because it sounds like you're not necessarily using the Nitrogen output, the Holistiplan output, eMoney Decision Center, and such. You're loading it into your own deliverable, into your NovaTrak deliverable. And that's what the clients see?

Emily: Correct. Yeah. So, we will walk the clients through the deliverable because it gives them that summary, that visual of, "I have a progress bar on there" of like, "Okay, your nest egg total goal is $4 million and you're at $400,000." So, yay, you're 10% of the way there. And so, just giving them that visual. So, that's part of why we stay in the NovaTrak document. Now, if there are questions or tweaks or anything like that, or they have a question on how we got to that, I will hop over into the [eMoney] Decision Center. I present with the actual cash flow report sometimes, if we need to drill down into a number and see where something's coming from. So, I don't shy away from that. Same with Holistiplan, I'll hop into the software. So, that still happens in the delivery meetings, but we always come back to the NovaTrak and go through the analysis, the findings, and then very, very clearly, there's the client recommendations in there.

Michael: And is that how the plan output in NovaTrak is built…analysis, findings, and action items?

Emily: Yes, yeah. So, you basically have a tab for all of the different areas, the subject matters that the client said, "Yes, I need." And then we go through and look at the findings, look at the reason why, do some education, and then here's what needs to be done. And as we go through that, again, we've got the client in the meeting room, so life is not distracting them. And so, this is really important, I think, to get that buy-in because I love a 1-page financial plan. And in fact, we finish with a 1-page document, but if you don't go through that translation period and that interpretation period, sometimes the 1 pager, there's not the buy-in, there's not the deep understanding of why. And so, we take the analysis, which isn't actionable, go through this translation period, and then finish with what we call our OneTrak. And it breaks down this huge financial plan with the 25 findings that we were talking about at the beginning and puts it in a 12-month action plan. Not, "Here's all your actions for the rest of your life." "Here's what you're going to do over the next 12 months." And that's what I can hold you accountable to because that's realistic for you to implement.

Michael: Okay. And so, in this context, NovaTrak is the planning template that you built for the deliverable that you present. Am I thinking about that right?

Emily: Correct. Yeah. We call it our Planning Command Center because it holds all of the infrastructure. It's where the cost calculator is, the goals workbook. But, yeah, the summary of the presentation, and it is the presentation, so it's the data entry and then the presentation.

Michael: And how is it built? Did you hire developers to make a custom app?

Emily: We hired a developer.

Michael: Okay. And can I ask what does it cost to get a developer to weave these parts together?

Emily: Yeah, we did some research on that. And there are some that have a base app, and then you can just build off of that. We actually had this entire deliverable in a manual spreadsheet that we had already created. And that's what we were using for years before we started, which was...it kind of looked pretty good, but your formatting would get off, and then you would pull your hair out. So, we decided to go this route. And I'd say it was on the more expensive side because we took our custom spreadsheet and made it into a custom software. So, it was definitely an investment on our part.

Michael: Like tens of thousands of dollars, hundreds of thousands of dollars?

Emily: Tens of thousands of dollars. No, not hundreds, but tens of thousands of dollars. Yeah.

Sending "Accountability Personal Podcasts" To Communicate Efficiently Throughout The Year [1:03:21]

Michael: Okay. So, what comes next in your process after you get through plan presentation and the NovaTrak output?

Emily: Yeah. So, typically, once we get through the second delivery meeting, there are no more tweaks or changes to the plan because we got through that between meeting 1 and meeting 2. So, usually, at the end of the second meeting, we have a plan that feels just like the client, something that they feel comfortable implementing. And so then, we often will have an implementation or an onboarding meeting. We don't require assets. We've priced our planning services that were profitable without requiring assets, but it is still oftentimes what happens is they want to use us for AUM as well. So, we go into the implementation onboarding, and that's usually a 30-minute to an hour phone call or video call, where we get started on some of the action items with them. Some of the big ones like, "Okay, let's roll over that 401(k) to this one." And those are some things that I still want to do the 3-way call with because I've had a client accidentally, they were managing their own investments, and they followed our recommendations and consolidated their 401(k) and accidentally put it in their Roth. And so, those are some things that I just want to still handhold on that. But updating beneficiaries and things like that, that's on the client to do. I'm not going to sit there and watch them do that. So, we cherry-pick a few to tackle in that implementation meeting, and then we're really walking through their action plan and how we're going to keep them accountable for the rest of the year.

Michael: And then, how does it actually work from there? What fills in the rest of the year after you get through implementation onboarding assets move? So, I'm assuming that we're 3 or 4 months into the year.

Emily: Yeah, about 90 days in, and they have walked through this whole process, and now they have finished the planning process or this section of it with their OneTrak, which has, "In the next 12 months, my debt should be at this level if I'm doing what I'm supposed to be doing as far as the added extra payments they recommended. My cash flow or my emergency fund should be at this level if I do what I'm supposed to do." So, it kind of gives them an end number. So, if they get behind middle of the year, they know what they need to do to catch up. So, it has those targets on there. It also has the 90-day action plans. And so, for the next 90 days, they have 4 actions that they need to do. And in the software, I can toggle through and be like, "Okay, this one's a get it done immediately. We got to get that spouse added as a beneficiary." And then some of the other things are like research your auto insurance and try to get a lower cost. So, those can be lower importance. And so, they can be later in the year. But we break it down to where there's 4 or 5 things per 90 days. And then at that 90-day mark, I go in and I send them a quick 3 to 5-minute video of getting back into their action plan, getting back into, "If I need to go point back to that recommendation, that analysis, I'll toggle back to that. But, okay, here, it's open enrollment, it's time to apply for this much in life insurance, or consider adding the disability coverage this year." And those are things that we are able to keep bringing that back to the client's front burner. And we're doing it in a 3 to 5-minute way.

Michael: But it's one way. You're recording and sending them a video. So, this isn't a meeting or even a call. This is just you giving them a educational video plus nudge.

Emily: Yeah, yeah. It was so challenging and so expensive to offer accountability when I was trying to calendar meetings with people every quarter. And they didn't want it. I didn't want it. We had to get through some inefficient things. Like, "Let's talk about the kids. Let's talk about the weather. Let's do this, let's do that." But good things, but also inefficient in the sense of when we're trying to keep people accountable, it's the nudge and the reminder that matters and the fact that somebody is watching kind of, like there's somebody that will be expecting this of me. And if I don't do it, I'm technically letting them down. Of course, I'm letting myself down. But that as humans, most of us care about outward expectations more than inward ones. I'm happy to not get up and go to the gym at 5 a.m. if it's just me working out. But if a friend is meeting me there, I'm going to get up and go because I don't want to disappoint them.

Michael: You don't want to be that friend, the other one going.

Emily: Yeah, exactly. I don't want to be the flake.

Emily: And so, that really is all that we need for accountability. And if I take 5 minutes throughout that video, they have the capacity to respond back to me, whether through that email or another way of just saying, "Hey, yep, got it done," or, "I have this question about it." So, sometimes it leads to another follow-up item. But very, very often it is like, "Yep, got it done. Thanks for the reminder," or something like that. And we do that.

Michael: What if they have questions and they want to talk, or the reality is a lot of them actually don't? They just needed the nudge, and they're going to be fine, and we're putting too much on ourselves.

Emily: That's what we're finding out. Yeah, it's like we tried to do this calendar. And we work with a lot of just busy professionals in Colorado. Sometimes they have kids that have hockey, all the things. And so, it was really hard to get their attention for a 30-minute phone call. But if they can, after the kids are in bed, and they can watch a 5-minute video together, and then they can say, "Okay, you call the CPA in the morning, I'm going to go update my beneficiaries right now," we're getting way more progress. And at the end of the day, that's what matters. It's not how often did they have a touch point from me, or how meaningful was it that I was on a phone call with them. So, that's what we're tracking as our success gauges.

Michael: Do you literally have a tracking of how many action items got implemented per year? Are you trying to metric that?

Emily: At the beginning of the plan year, we always like to celebrate the wins. So, we go back and be like, "Look, this is what we accomplished last year. And because you got your estate planning done, you don't have to pay for it this next year. That one is a subject matter we get to toggle off because you had that accomplishment." And so, that is a win for the client, which then reengages them. So, we're trying to always have that gamification, progress tracking, all of those things to maintain that engagement beyond the first year when it's usually the highest.

Michael: Interesting. So, for folks who've been listening along, if you want to see a copy of what this looks like, Emily's team was kind enough to share a version of what the client experience journey, like one-pager looks like. So, this is episode 410. So, if you go to kitces.com/410, kitces.com/410, we'll have a link out in the show notes to what this journey looks, just in a visual roadmap, a very nice hiking-oriented digital roadmap because you're in Colorado and it absolutely fits.

TrailWise’s Client Experience After The First Year [1:10:58]

Michael: So then when you get to out of the first year and into subsequent years, I'm presuming...so, you've got to update the situation and fee calculator. So, I'm presuming there's an annual meeting to update like, "Here's what's going to cost this year, reset goals of what we're working on this year." Is that just all packed into an annual review meeting?

Emily: Yeah. So, we start a lot of that conversation in our Plan Update email to the client because, yeah, in the first year, they're happy to pay that big fee. In the second year, they're expecting a little bit of a lower fee, which means we need to be more efficient. And so, I'm not going to have 4 meetings in the subsequent years. It usually is a progress tracker tweaks for, "Oh, they got to pay raise," or, "Oh, they have this new benefit." So, we have a Plan Update email template that we use. And this one requires more customization than the Getting Started email template. But we go through and we put the cost calculator together, put that link in there so that the client can then go in and approve the fee or make changes or anything like that.

And then quick review of the goals, if people have a ton of goals, we usually will cap it to the next 5 years of like, "These are things that are really coming up,"' and then make sure that they get the meeting scheduled so that that calendar link is in there. We also ask for updated pay stub, updated tax return. So, this is our chance to gather that as well. So, that goes out to the client. And a lot of the clients will get it, approve the calculator, and get the meeting scheduled. And we call it our Trail Marker meeting. Again, we're hiking, we got to make sure that we're watching for the blue blazes on the trail that we're not getting off track. And so, that is something that we are always saying, "Okay, this is just to make sure you're still on the right path." And from there, honestly, we go into data analysis and prep. And our first meeting with them is the plan delivery.

Michael: Like an updated plan delivery.

Emily: Correct.

Michael: And so, nominally, you're doing an updated plan every year.

Emily: Yeah. We have the 4 core subjects we require are overall plan health, goal envisioning, cash flow planning, and then investment strategy.

Michael: Wait, what are the 4? I'm processing through that.

Emily: Yeah, overall plan health. So, the Monte Carlo, what's your probability of success? The goal envisioning, so, what are your goals? Have things changed? Cash flow strategies, so, where does your money need to go once it comes in? And then the investment strategies. So, again, we don't require assets. So, sometimes that's important to help people specifically that have their assets elsewhere.

Michael: And then do you go into the same cadence, like meeting at the beginning of the year, video check-ins every 3 months thereafter, and then at the end of the year, we go into the cycle again?

Emily: Typically, Complexity 1 just gets the annual meeting going forward. They still get the action plan. They still get that with the 90 days and things like that. But unless there are some...unless I note that there's some big accountability needed, complexity 1 is just going to get the annual meeting every year. Versus complexities 2 and beyond, they're going to get more of those accountability podcasts, which is what we call the video, the quick check-ins.

Michael: Oh, you call them accountability podcasts.

Emily: Yeah, accountability personal podcasts and clients like that. It's just something that's like, "Hey, I'm going to cast out to you, just you individually, the things that need your attention on your plan."'

Michael: And I guess I'm just envisioning from the internal firm perspective, once a quarter, you have video recording day where you just sit in front of the computer and knock out a whole slew of these 5 minutes each, like one after the other?

Emily: I have tried it that way. The way that I am liking it is I just put them on my calendar 10 minutes here and there. And so, every week has 2 or 3 of them, and I'm able to...

Michael: Oh, interesting. So, you didn't like batching them. It's too much.

Emily: It was a lot because I got to keep it all straight. And so, that was kind of the problem with batching it is these are so individualized that I was feeling overwhelmed with, "Oh, shoot, which glide path am I on?" So, I prefer to give it my attention on the individual.

What TrailWise’s Business Looks Like Today [1:15:53]

Michael: So then, just help us understand what this adds up to, just the firm as it exists today of clients and revenue or assets or however you explain, like overall size and scope of the business.

Emily: Yeah. So, we currently are sitting around 200 households. I would say about 30% of them are planning only, meaning they do not engage us for assets under management, which is important that you really got to make sure you're profitable if you're going to not require assets. And so, our assets, though, they're bouncing around that $80 million mark. And then our revenue for the year is on track, probably somewhere between $820, $850 [thousand] for the year.

Michael: Okay. And how big is the team?

Emily: We currently have 2 full-time advisors, a director of financial planning…she's amazing. And then we have a paraplanner that is starting with us here shortly and then operations assistant.

Michael: Okay. And the 2 full-time advisors is you and second advisor?

Emily: Correct. Yeah.

What Surprised Emily On Her Journey [1:17:08]

Michael: Okay. So, as you look back on this journey, just what surprised you the most about path of building an advisory firm?

Emily: I started out in a bigger firm and an ensemble practice. And I think what surprised me there was that hard work and sweat equity are not a guarantee to move up and get into the role you want to end in. Don't get me wrong, they are still 100% required, but it isn't, "Oh, I put in all of this hard work. They'll give me what I am really hoping for." So, that was, I think, a surprise for me, something that I learned.

Michael: And so, can you explain to us a little bit more? Just what happened?

Emily: So, me and Nick, my business partner, we were on track to buy out one of the branches of this ensemble practice. But this ensemble practice had great processes and systems already in place. And Nick and I are over here in this one branch wanting a really planning-focused...planning is required for every client. It is our bread and butter for our firm. And I think a lot of advisors know that trying to establish that in an already existing practice is really difficult to do. And so, it was truly just a misalignment of future plans. And so, our succession plan failed, and we were on a succession plan track. It wasn't like, "Oh, you might be the future one day."' It was like, we were looking at numbers, talking about contracts and things like that. But it came down to it that we just were not aligned in what we wanted to do with our practice and what their existing practice was.

Michael: Because they were more of an investment-oriented firm, and you wanted to be more of a planning-oriented firm, and you couldn't just buy it and steer it where you wanted it to be because you were one of many partners?

Emily: Correct. Yeah, it was many partners. We're talking about a cruise ship over here versus I was trying to turn part of the cruise ship. That's not going to work. And so...

Michael: But it's a good analogy. If you're one part of the cruise ship and you try to turn a small part of the cruise ship, it's just literally not turning.

Emily: It's not. Yeah.

Michael: The cruise ship's going to keep going where a cruise ship's going.

Emily: Exactly. You're not going to make the difference you want to make. So, that was a hard realization for me, to be honest. Had to put that ego down and be like, "Oh, this is actually not... I don't want to be on this cruise ship, I guess. I want to be on a smaller ship that I can do what is needed to be done. The technology that's out there, I can really efficiently deliver this to my clients, and I don't have to go sell it to the leadership board of why we need to invest in X, Y, Z software."

The Low Point Of Emily’s Career Journey [1:20:05]

Michael: So, what was the low point of this career journey for you?

Emily: Absolutely that failed succession plan. In the throes of it, it just sucks. But, of course, it's kind of that necessary catalyst. You look back at it, you're like, "Is that the low point, or is that the high point now?" Because it allowed me to create something that is truly me and what I want to offer to my clients. Wish I had known a little sooner, but I think it all happened the way that it was supposed to.

Michael: So, was there a particular moment when you realized like, "This isn't going to be saveable. I think the next step is out and not resolving the conflicts that are here"?

Emily: Yeah. Honestly, the leadership team told me that you're no longer who we want for this succession. So, that's why it was such a low point. It was...

Michael: Oh, so this wasn't even...not to make it lopsided, but you didn't reject them, you pushed back and they rejected you. Sorry, I don't want to make that harsher than it is.

Emily: No, I went through it. We're okay, Michael. I'm okay. But that's why it was so harsh is I just was...I emotionally felt that blow because I was now unwanted. They, of course, still loved me and wanted to keep me, but they wanted to keep me in a service advisor role instead of taking over as the leader of this branch. And so, that was where we had a hard look of, "Do we want to stay and be on this ship and be an excellent crew member and still do good things for clients, or should we just go get our own boat?" When we decided to leave, we tried to look at bolting onto other branches or other...not branches, but other RIAs that are out there and things like that. And even then, it still felt like I was boarding another cruise ship. And so, we just decided, "No, we have these ideas, and I think we need to just go do them." And so, that's where we landed. So, it wasn't mutual on day one, but on day 3, it definitely felt mutual for me…I was able to take the ego out of it and see where the misalignment truly was and what needed to happen.

Michael: It feels like what you're framing up is, ironically, they realized that you didn't want to actually be part of the cruise ship before you realized you didn't want to be part of the cruise ship, which is why they rescinded their offer to be a successor because they could see what was playing out even from their end.

Emily: Correct. That's a great way to phrase it. That's pretty much what happened because I'm a serial optimist of like, "Okay, so they don't want to do this idea, but they'll come around." So, yeah, they needed to make that call for me, I think.

What Emily Wishes She Knew Earlier In Her Career [1:23:09]

Michael: So, what else do you know now you wish like go back and tell you 10-plus years ago as you were getting into the industry and going down this path?

Emily: A couple things, I think. Yeah, I mentioned that the hard work and sweat equity is required to move up in this industry. You've got to just care. You have to care about the clients. And then that leads you into...as you're working with whether it's your boss, your clients, anything like that, you can put yourself in their shoes. And the more that you do that, you'll understand where they're coming from, which will help... It helps how you respond if it's a internal person or if it's a client, it helps you build out a plan that fits them better because humans are messy. And so, you just got to know, like once you put yourself in their shoes, then you figure it out. And it's really amazing to cross through something like that and work with somebody on a deeper level.

The Advice Emily Would Give To Newer Advisors [1:24:10]

Michael: So, any other advice you would give younger, newer advisors coming into the profession today as they're trying to figure out, navigate their tracks?

Emily: Yeah, I would say when you are joining a firm or a "cruise ship," the good ideas and the things that you have, the more you can talk about those expectations upfront of what you want your career to look like, the better it's going to be. Because if you talk about maybe a hurdle that you know is coming at the beginning, when everybody's really excited and happy to be working together, then it's easier to talk about than when you're actually at the hurdle and having to try to navigate that with all the emotions that come into play. And so, I think the more you can be upfront with your supervisors of where you want to go, what are your dreams, then you know to exit the cruise ship sooner or later, you know what I mean? Or stay on the cruise ship, I mean.

Michael: So, this is with respect to conversations, like, "If you want to be a partner someday, have that conversation up front. If you want to build your own client book someday, have that conversation up front." Are those the kinds of conversations, expectations that you're talking about here?

Emily: Correct. Yeah. So, some people come in as paraplanners, and they want to stay as a paraplanner or move up to a financial planner. But others, yeah, have really big aspirations as far as owning a branch, maybe having their own podcast or a marketing sleeve or something like that that...or be a CFA and just be the one that does the portfolios. And so, just knowing that upfront because you may not fit on that same cruise ship forever. And so, it's nice to have that upfront. And then that way, you don't feel like you have spent some sweat equity, and then didn't really truly... I think you always benefit from sweat equity, but not benefit from it in maybe the traditional sense.

Michael: Well, I think there's an interesting framing to what you said that everybody's in the most optimistic high hope state when you're getting the hiring process and these relationships going. And so, if it's an awkward conversation then, then it's definitely not going to be better when you're at the hurdle in real time, trying to sort through the stuff when everyone is more emotional, when there's more dollars at stake.

Emily: Yeah. And maybe you don't know exactly what it is on the day you're getting hired, but as soon as you do, that's when you need to bring it up. Don't wait because, yeah, sometimes it's better to have it when you're still in the honeymoon phase rather than down the road when everyone's stressed and life is busy and things are chaotic and you're just not going to get a better result, I don't think.

Michael: Right. And imagine, at least we're framing expectations. It's not like, "I'm getting a new job, and I'd like to be partner next year," or just like, "I'm joining your firm. Is there a path to partnership someday on this earth?"

Emily: Yeah. Or, "Are you open to using more technology or some things that if you've got dreams, talk about them."

What Success Means To Emily [1:27:23]

Michael: Yeah. So, as we wrap up, Emily, this is a podcast about success and just one of the themes that always comes up is the word success means very different things to different people. And so, you've had, I think, a really cool journey around building in a firm on your own and then building a larger firm, going out on your own. TrailWise is now closing in on a million dollars of revenue and 200-plus clients. The business seems to be in a great state of growth and momentum. How do you define success for yourself at this point?

Emily: I think I have my professional and then my personal side of that. But professionally, it's still living with purpose. And for me, that is helping clients truly improve that trajectory of their lives, but then being able to do it with complete control so that I can customize that experience for the client. So, I feel really successful now because I'm in control of this client experience and can get them more engaged and therefore get them doing more positive progress on their plan and therefore change that trajectory of their overall livelihood. So, that's professionally something that I would say is a success. And then on the personal side, to me, I always just say successful people are balanced humans. They have figured out how to have balance in their work, their family, their social-emotional, their personal care regimen. That is somebody that is successful. And it's not that they're the busiest or they make the most money or anything like that. That to me is something that I'm striving for when I try to gauge my success as a human.

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

Emily: I really appreciate the opportunity. Thank you.

Michael: Thank you. Thank you.