#FASuccess Ep 136: Leveraging Risk Tolerance And Financial Planning Software Upfront To Deepen Conversations With Prospects, with Nina O’Neal

What You’ll Learn In This Podcast Episode

• Nina’s Firm Today [00:03:50]
• The Unique Way Nina Uses Riskalyze With Prospects [00:12:21]
• Using Riskalyze with Prospects – The Second Meeting [00:24:42]
• How Nina Uses eMoney With Prospects and Clients [00:39:19]
• Choosing “Good Fit” Clients from Prospect Interactions [00:42:43]
• Nina’s On-Boarding Process [00:48:22]
• The Client Service Commitment Card [00:51:22]
• How Nina’s Firm Structures an “All-In” AUM Fee [00:53:08]
• The Revenue Mix From Fee-Based And Commission-Based Services [01:08:40]
• The Value Nina Appreciates From Her Broker-Dealer [01:11:08]
• Nina’s Journey Through The Industry [01:13:38]
• Forming A Partnership And Building The Firm [01:19:20]
• “The Juggle is Real” Video Clip Program [01:24:41]
• How Nina Established the Female Advisor Network [01:31:58]
• Persevering Through Real Life Challenges [01:38:21]
• Advice To Young Women Advisors [01:46:37]

Resources Featured In This Episode:

• Nina O’Neal
• Archer Investment Management
• The Juggle Is Real Video Series
• Nina O'Neal 40 Under 40
• Female Advisor Network
• Riskalyze
• eMoney
• Financial Advisor Fees Comparison: All-In Costs For The Typical Financial Advisor? 
• Redtail CRM
• Triad Advisors

Full Transcript:

Michael: Welcome, Nina O’Neal, to the “Financial Advisor Success” podcast.

Nina: Thank you, Michael. I am honored and super excited to talk to you today.

Michael: I’m excited to have you on. I know we’ve really only crossed paths briefly once or twice at conferences over the years, but I’ve kind of followed you from afar. I think particularly over the past year or two, you had done some work with InvestmentNews and this cool video series called “The Juggle is Real”, about all of the stresses of balancing family life, business life as an advisor, clients, kids, and all of those dynamics. And more recently, you launched the Female Advisor Network to try to bring other women advisors together that struggle with some of this.

And so I’m excited to have you on just to talk about both your advisor journey itself, like so many of us, you’ve been through a few different firms and channels over the years and all the shifts that go along with it, as well as some of what you’re building and working on now in creating community for other female advisors.

Nina’s Firm Today [00:03:50]

So maybe to start off, just paint a little bit of a picture for us of the advisory firm as it exists today, the normal day-to-day work, and then we’ll talk a little bit about some of the outside day work as well.

Nina: So right now I have a business partner, Matt Archer. We’re celebrating ten years this year. He founded the company just a little bit before I came on board. We service about 160 to 165 clients across the country, and I believe we’re registered in 16 or 17 states. We manage about $90 million and are hoping to grow that as much as possible as soon as we can. We really have a lot of exciting future vision for doing more things for more families, individuals, and businesses.

Fifty-five percent of our client base is going to be high-income-earning professionals; quite a few of them have two income earners and kids. We’re trying to be their personal CFO in all aspects of their lives, really trying to lead with planning, and then we do the investment management. About 45% of the rest of our book are boomers who we worked with during their professional years, in their transition to retirement, or through a business sale to retirement. Most of them are executives, business owners, or sales professionals. There are a few companies in Raleigh that are located here. We have a tech concentration. And then the capital of the government is here. We have a lot of education and medical work here. So we find that we’ll maybe start to work with one individual or family, and then we get referred another.

I love working with all of our clients, but it’s really fun to work with other entrepreneurs because we talk the same language. We have quite a few business owners. Some of them we’ve worked with from day one, and we’ve really had an exciting experience as we’ve grown our business working with them, growing theirs, and talking to them through people, processes, or planning tools that they would want to implement as they grow, such as tax strategies, things like that.

So that’s a pretty good view of what our firm looks like. We do a really wide range of things. We’re not a fee-only RIA; I have a lot of respect for those, but we really want to use all the tools out there that we can. So we do alternative investments, insurance of all types (as far as life, health, and disability), and investment management. Most of our portfolios are discretionary portfolios that we run in-house. We use a small percentage of SMA managers, but the bulk of our investment management is going to be in-house models.

I run the financial planning operations and oversee HR – lots of the fun things that go with running a business. If we need new equipment, I’m kind of the one that’s going to research that or do project management (we will need to move again). And then Matt runs the investment management and oversees product approval and due diligence on that.

Right now we have three people that work with us. We have a client operations/relationship management person, and then we have a business operations/project management person; we kind of separated the two. And then we have a client and marketing associate. So it’s fun.

And we’re all under 45! So that’s kind of unique for a firm that’s been around for 10 plus years.

Michael: That’s unusual for any firm in general, but particularly when you’re already 10 years in, which means you were all under 35 when you started down this road, which is pretty cool.

Nina: Yeah, actually, my partner and I both started in financial services in our early 20s. I’ve actually been in the business 15 years, and he’s been in the business almost 20.

Michael: Very cool. So tell us a little bit more about your services to clients themselves and what the offering is. You talked about financial planning plus investment management – that’s a pretty wide range. If you put 10 advisors in the room that say they do “financial planning for clients”, you’ll get 10 different versions of financial planning for clients. So what does financial planning for clients and that service offering mean to you?

Nina: Well, we start with the process of really just gathering data; I think that’s pretty typical. We’re getting all the information that we can. I have something I call a “confidential profile” that’s several-pages long, asking about cash flow. We look at money in, money out is what I say; the expenses, the income.

We start to get an idea of what their lifestyle is like. Some people are more thrifty, some people like to spend more. What are their goals, financially? If they’re retirees or looking at retirement. This is kind of an onboarding. Then we try to figure out where they want to live, how many places they want to have, and if they are downsizing (or rightsizing, I guess is really more appropriate).

And after that process, I use eMoney. I start running the plans and the projections. Again, we’re working with retirees or people in their income-earning years where they’re accumulating assets. We like to meet on an annual or semiannual basis and really make sure the information stays correct and that we’re on top of that. In our client meetings, we’ll review a list of accounts, the balance sheet, net worth, all that, and make sure nothing major has changed.

The investment management is typically a core-satellite approach. We don’t believe in either active or passive, solely; we use both. We believe in good managers, but also don’t want to overpay. We believe in really making sure they have a good price for what their performance is.

We do oil and natural gas deals, REITs, BDCs, all the alternative investments. Insurance is part of the planning for us – we want to make sure the family is not over-insured. It’s not something we lead with by any means; we’re not an insurance shop and we have no affiliation with any insurance companies. But we do believe, and this is kind of a personal story of mine, that people should be appropriately insured for disability and life to take care of their families.

And then we do business planning – retirement plans, cash balance plans, buy-sell agreements. We really have a wide range of what we do, so every conversation can be pretty different in client meetings. But our clients are so similar; I think like attracts like. We kind of have two or three main profiles, and so we do a lot of repetitive things.

Michael: So your main profiles are either high-income earning professionals who need one set of planning, or your approaching- or transitioning-into-retirement clients who have different common needs.

Nina: Right, and then the third profile would be, and they sometimes fall into the high-income earning professionals relationship, the business owners. We joke that tax is the four-letter word in our conference room. A lot of times we’re trying to help them control their tax liability. We work in conjunction closely with their CPAs and try to implement whatever we can on our side, maximizing retirement plans, and then making sure they’re not...I know from owning a business myself, cash flow is always something to watch.

Michael: Yup, it’s all about cash flows.

Nina:  Yeah, and we see entrepreneurs – I’m guilty of it, too – who leave money in the business (because you worry about your business), but you need to take care of yourself financially, too. Because we have the ability to help with both sides of the coin, we’re always making sure that they’ve got a healthy balance between the two.

And sometimes there are partners with multifamily situations who we are working with, almost being a financial therapist among partnerships, to make sure that they’re doing things fairly. We give them advice on maybe ways to improve things. But those are the three main categories, I think, pretty much every client would fall into.

Michael: And so from your planning process perspective with the client, you’ll tell them, “You’ll go through the planning process with us, and then we’ll figure out wherever it is the gaps are and whatever it is you need and then we’ll start drilling down further in the recommendation phase” and then, “ Hey, we have some tax strategies to talk about” or “We need to fix your portfolio because it’s all out of whack” or “You’ve got an insurance gap we need to help with”, or whatever it is along the way.

Nina: Right. We do Riskalyze as well. Everybody uses Riskalyze differently, I’ve kind of figured out, and there are a lot of ways that people implement it into their practice.

Michael: So how do you implement it?

The Unique Way Nina Uses Riskalyze With Prospects [00:12:21]

Nina: We do it right in the meeting because I want to read body language. I want to see facial expression. I want to watch the couples argue if we’re dealing with two people.

Michael: So you’ll input their portfolio, pull up the results from Riskalyze in a client meeting and say, “Hey, so what do you think about those results? Your risk number is this. Your risk number is that. Your portfolio is neither of those risk numbers.”

Nina: Yeah, if it’s a prospect, we’re identifying their number first in the meeting, and then we’ll have their data. And so in the proposal meeting, we’re saying, “Here are the planning recommendations. Here’s what we would implement and the changes we would do.” That’s when we say, “Okay, you told us, without us seeing your investments at all, that your number was 65. Were you aware it was actually 98? And are you comfortable with that? And here’s what we would implement that’s more in the 60-65 range. And here’s how that portfolio behavior would look.” If it’s a current client, we establish their risk number before they ever see it. Does that make sense?

So I do that first. I’ve already got it in Riskalyze. It’s almost like saying, “Surprise, we got the right number!” And it’s fine, because, maybe they go through the profile, and they’re 68. And I’m always relieved when I say, “Okay, well, here’s your portfolio with us that we’ve been managing. It’s a 65.”

We’ve used Riskalyze for years, we’re pretty early adopters, but there have only been two, maybe three times, that we have actually been more than three to five points off base from where they established. It makes us feel good that we can actually demonstrate and show them that we heard them. And then we mention portfolio performance, but we really focus on portfolio behavior. I like to speak in plain English to clients, and I’ll say something like, “These are ticker symbols to you, but to us, they’re our babies. And we’ve known them and used them and loved (or not loved) them in moments.”

I know that if I pick up my five-year-old on a Monday after school and take him to Target, he is not going to be well-behaved. And he’s going to beg for treats. And I’m going to be very frustrated because I’m tired. It’s a Monday. And so we know how these investments behave because we’ve worked with them in different markets. And we’re not going to leave something in there that’s not going to behave well and we know it, but also we might not throw it out, because if there’s a change in the market, it could behave better. That’s kind of how we explain how we manage money, and how we’re looking at risk and more of behavior as long as they’re okay with that range that we’ve established.

Michael: So I want to come back for a moment to this dynamic of using Riskalyze with prospects. Because I think, historically, the process for most firms, if you talk generally about risk tolerance and the risk tolerance questionnaires, was, “I’ve gotten a client. They’ve agreed to come on board. I’ve got a portfolio I’m going to recommend to them. But I need to give them a risk tolerance questionnaire just to make sure the portfolio I’m recommending is consistent with their risk tolerance. Because if it’s not, FINRA or some regulator slaps me for giving a portfolio that was too risky for what the client could tolerate.” But essentially, it tended to get used after you got the client as sort of a check-the-box due diligence way to validate that this recommendation is suitable for them and consistent with their risk tolerance.

And you’re using it in a prospect process, starting with it, comparing it to their existing portfolio, not even getting to the thing you’re recommending, which, to me, is an interesting shift in how risk tolerance assessment tools get used. So I’m wondering if you can explain a little bit further just what the process is. You send them a Riskalyze link before a meeting, you put it on your website before they see it, you bring them into the meeting, and they take it while you pause for a few minutes and you look at results in the spot? How does this work in inserting Riskalyze into a prospect process before they even become a client?

Nina: Right. So in the first meeting, we have just a one-page piece that shows our process. Part of that is establishing the risk and talking about risk. And I’d say, “We just want to stay in your comfort zone, because we don’t want you to jump in and out of the market. We understand behavioral finance, and we’d rather you invest more conservatively and be comfortable than us trying to shoot it out of the park and scaring you to death if there’s a market correction.”

So we talk about that really up front. And I usually just say, “Do you have any idea what your portfolio is?” Nine times out of ten they have some idea. I was relieved and excited to find Riskalyze, and I’m a big fan of it, because I think, as advisors and industry professionals, we say “conservative” or “It’s a conservative portfolio”. All that means is the percentage of the asset allocation to equities and fixed-income, it’s not really relative to what the investor means.

Michael: Right. Conservative means different things to different people from their end, relative to whatever they’ve done in the past. For us, it’s like, “Oh, well, conservative means approximately 30% to 40% in stocks, and 60% to 70% in bonds”, which may or may not actually connect to the client’s reality. They might just mean more conservative than the 100% in that one stock they used to own, which actually means that 100% in a stock index would be conservative and more diversified than what they used to do.

Nina: Right, and my 91-year-old grandfather would probably say he’s a conservative investor, and he owns 100% equities. At 91, that’s a pretty aggressive portfolio!

Michael: He’s conservative because he owns high-quality stocks.

Nina: Exactly. To him, he owns companies that he knows, understands, and that he’s believed in for years. He’s buying brands, really.

And that’s always bothered me because I felt like, from a compliance standpoint, we’re checking a box, but is everybody really speaking the same language? I didn’t think they were. With Riskalyze I feel like it’s translational. We know we’re speaking the same language, I can identify from 0 to 100 exactly what they mean and show them that. I can give them a visual representation that, yes, we hear what you’re saying. Or when they tell us that they’re conservative, and their score comes out to be 89, I have a better understanding, and I can say, “Well, let’s talk about...because you said you were a conservative investor, but really what you mean is...my understanding from this is X.” And we get very much on the same page.

Therefore, when clients come on board, we’ve already established their comfort zone. At the end of last year, it was almost exciting to see when the markets had more significant volatility or even a negative year. We had more client meetings from January to March than we’ve probably had all of last year because we were excited to get in front of our clients! That’s probably not how everybody felt. It was because we wanted to just really face the elephant in the room. The statements are down. The portfolios are down. But show that it was okay because we stayed in their comfort zone. We didn’t have many calls or freak-outs or anything. It was just more of a question, “Do we think this is a sustained downturn?”

We really felt it was important to take that potential negative and turn it into a positive, and it was great. Clients, most of the time, were like, “We’re not really worried about that. We’re not really worried about it. How was your Christmas?”  It’s kind of funny. I don’t feel like we really had many strong conversations. Again, the main question was, “Do you think it will be sustained?”

Then we talked about what our thoughts were in the markets. We had a big client event on an Economic Forecast in February. I think clients have an expectation from day one of how their portfolio should behave. And we stay in that zone, which helps the relationship over time because you’ve set that expectation and everybody established it clearly together.

Michael: So help me understand, though, mechanically how you handle this process? When you’re with a prospect, when exactly do they take the questionnaire, when exactly are you entering their securities, their portfolios, or are they entering it in? Because I know there’s an interface option for that. How does this work through your prospecting process?

Nina: Either at the very end of the first meeting, if we have time. I have tablets in our conference room, and we have a big TV in there. We intentionally have a smaller conference room with a round table. Every piece of furniture, and even down to our office space, is chosen intentionally to feel comfortable. We don’t have what I call the “banker look”. Our furniture looks more like an architect’s office than a financial practice. And we like round tables because we just want it to feel very collaborative.

So, we’re all sitting in a semi-circle; there’s usually four of us. We’re looking at the screen, I’m operating it from the tablet, and we’re all talking through the questions. I get to see how couples interact through that questionnaire. I like doing it in person, and I’ll never send the link to someone (sorry Riskalyze!).

Michael: Hey, we all use it in our own way. So interesting. So you essentially ask them the questions, or take them through the questionnaire process, and let them on the spot, in conversation with each other, decide how they’re going to answer the next question on the screen so you can see not only what decisions they make that hones in on their risk number, but literally what the conversation dynamics are like between the couple as they get there.

Nina: Right. Right in that moment. I can glean a lot from body language. How they’re interacting with each other, I can see ...

Michael: Who’s steering the investment conversation? Is the other one deferring? Is there clear tension because one says, “Well, I think the number is this”, and the other one gets upset, crosses their arms, sits back, and says, “Fine.”?

Nina: Right, yeah. And you can really see who the financial quarterback is in the family. And we usually ask that upfront. “Is one of you taking the lead?” And I don’t see that it's always the male. I’m the lead financial person in my family so I never make that assumption. And if I do see the female quieter or the male, sometimes the male is just like my husband, he would be totally checked out. He has zero interest. But if I ever see a spouse more significantly quiet, then I start asking them more direct questions, because I don’t want them to feel like they can’t give their real opinion. I want them to be very comfortable in our office and in our conversation. So I’ll try to bring them in with some questions.

So what I’ve found with doing it in a more engaging way and being right there with them is that I learn a lot about them quickly as a couple in a setting that might be a little formal for them, coming to a financial advisor and sharing all their information. I love your presentation about it, it’s like a trip to the dentist and marriage counseling.

Michael: Yeah. The financial planning experience can be actually quite stressful for clients the first time, going through conversations they’ve never been through before while baring their money soul, which, for most people, is the most taboo subject left on earth, and while they are inevitably embarrassed about stuff. Because if their finances were perfect, they probably wouldn’t be in your office in the first place. There are mistakes they know they’ve made that they’re embarrassed about, while they talk about the subject that is the most unbelievably uncomfortable for them and doing it with their spouse, with whom they probably have differences that they never realized before or never faced. Awesome way to start a relationship. Welcome to financial planning!

Using Riskalyze with Prospects – The Second Meeting [00:24:42]

Nina: Right. And if it doesn’t fit in in the first meeting, then it comes at the beginning of the second meeting. Now for the second meeting, I have put in their current portfolio and I already know their number. If it happens in the first, I have no idea what they’re invested in, because they’re going to give me that information, and I’m going to input it into the financial planning software. eMoney integrates to Riskalyze. I push everything to Riskalyze and it’s all very quick and easy.

So in the second meeting, I have their number and they’ve not yet seen their portfolio in it. I’ll say, “Okay, here’s your client profile up on the screen in Riskalyze. Remember, you established already that you were 65, and did you know your portfolio is actually, let’s say, an 89 or 35?” Maybe there’s a huge disconnect.

But sometimes they’re right in line, and I’ll say, “Hey, look, from a risk standpoint, your portfolio behavior is kind of already in line with what you need to stay comfortable and invest in the markets. But maybe it’s that, from a planning standpoint, you’re not getting what you need for service.” There’s some reason they’re looking at another advisor, right?

But if there’s a big disconnect, then we start talking about why. Maybe there’s too much fixed income in the portfolio, or we can look at the securities and I use a risk-reward heat map and say, “Okay, these are going to swing more. That’s why your portfolio is an 89, not a 65. It’s got positions that have more volatility.”

Michael: And this to me was the brilliance of what Riskalyze created that, frankly, I think, even though they’ve spawned half a dozen competitors or more, none of the competitors seem to get. What’s so powerful about Riskalyze for advisors that use it this way is the investment conversation that it sets up, that most clients do not have a well-allocated diversified portfolio on their own; a few do, as you noted, but most don’t do a great job with this often. That’s the reason that they’re coming in to see us, because they’re not happy with the results, or bad stuff has happened.

So there’s this natural conversation flow that gets created in the Riskalyze process of, “Let’s go through and understand your risk tolerance and your risk number in Riskaylze’s language. Then, we’ll analyze your portfolio (which has a 90% chance of being wildly outmatched out of sorts with your risk number).” And then I can come in with, “And here’s my well-diversified portfolio that is in line with your risk number.”

It just sets up a fantastic conversation that, because so few clients properly invest and diversify their portfolios in the first place, you can get 90% of the way there on a sales process by just showing them, “Here’s what you said your risk tolerances are, and here’s how risky your portfolio actually is. Would you like some help to make these numbers line up better?”

Nina: Right. We had a young family come in, and they said, “We just don’t understand. We’re just not making any money.” They were coming in because they were having a baby, wanted to do real planning, and ask, “Is our family fine?” They had not really gotten that from their advisor. But I said, “Tell me about your investments. What’s going on there?” They said, “We’re not making any money. We don’t understand. There’s been a bull market. We’re pretty savvy. We don’t want to do it ourselves, but we’re aware of the economy.” She’s a real estate agent.

When we got back together, I said, “Your portfolio is a 35, and you’re 28 years old. What in the world? How was that so disconnected from that advisor?” And we still don’t know why on earth they were put in such a conservative portfolio. I said, “Did you ever say you were a conservative investor?” And she said, “No, I just said I don’t want to lose a lot of money.”

Michael: Well, there you go. Okay, you don’t want to lose a lot of money. Seventy percent bonds. Next client!

Nina: Right. So I said, “That’s what I like about our process because we’re really spending time making sure we understand what that means. And your expectation was that you should have made more money. He heard I don’t want to lose money. So I think that’s probably the disconnect.” I don’t think the guy did anything with any ill intention at all. I think it was just a misunderstanding because, without a tool like that, it’s really hard to make sure.

Michael: Well, as you said, if you just throw out some of these words, “I’m conservative”, “I’m aggressive”, “I want growth but don’t want to lose money”, these mean very different things for very different people, right? Because your grandfather might put it like, “Well, I want to have some growth opportunity without making money. That’s why I’m 100% in stocks, but I only pick large caps that I’m comfortable with.”

Nina: And then you just never sell them, because why would you, right?

Michael: Yeah. That might be his version of, “Well, I don’t want to take a lot of risk of losing money” because in his view, large, mega-national brands aren’t going to go bankrupt around a business, “So my money is safe, and I just hope I get some growth when the companies grow.” Whereas, for other clients, anything in the stock market that can have a 10% pullback is a freak-out moment. So their version of “I’d like a little growth, but I don’t want to risk losing any money” means they have to have a 20/80 portfolio to get themselves to sleep at night.

Nina: Right. I think there’s a generational mindset around what risk is and what conservative means. We’re mindful of that based on the generation we’re talking to. We have a multi-generational practice and pretty frequently work with parents and grandparents, and kids that might be in their 40s or even 50s. The language and approach can be very different from a generational standpoint just based on their experience.

I love the presentation you do on the history of the business. My grandfather never really had much experience with mutual funds, and certainly not ETFs. He just started investing in a different time when you bought an individual security and you held it and got your dividend check. We’re just being aware that there’s a different generational mentality around the markets with each kind of family we’re talking to as well.

Michael: And so that becomes a key anchor for the prospecting process for you, then, it sounds like. Ideally, you’re going to get their risk number by the end of the first meeting because you’ll do the Riskalyze process with them on tablets and broadcast it on the big screen in the conference room so that they’re going to leave at least where you’ve got a risk number. You’re then going to get their portfolio information at the end of the meeting, or in-between meetings, so that when you come up for meeting number two, you can now kick off with, “So you said you were 65. We’ve analyzed your portfolio. You’re an 89. Let’s talk about that.”

Usually, it means there’s going to be a change. And so now the conversation is, “Well, here’s our portfolio that would be a 65. How do you feel about that?” And it kind of serves itself up for an opportunity to close. As you pointed out conversely, if they were a 65 and their portfolios actually a 65, at least now you know there will be a different conversation. We have to show how we’re going to add our value in a different way, because fixing your portfolio that’s completely out of whack with your risk tolerance is not the conversation you need to have. You get to find this out, because this is your process integrating Riskalyze in business development, not just for due diligence after the client closes.

Nina: Right. Early in my career, I was at a wirehouse and I didn’t have the same tools. The world has changed from a fintech standpoint. I joke that fintech years are like dog years now. One year now was what used to be seven of the last, which is exciting. And finally, we’re coming into some really great technology in the financial services industry, which typically I think has been behind.

But at a wirehouse, really what you’re doing when you get a prospect is you’re trying to prove that your investment management is better. I didn’t do a lot of financial planning, I felt like. There was a little bit of a tool – they had a Monte Carlo analysis for retirement projections. It was just a different experience. And I hated it, because I felt like I was always living and dying by performance. It didn’t feel like a good relationship. I wanted the relationship to be about me taking care of their financial life, being a coach, and helping with investor behavior; things like that. So I guess Riskalyze helped me find that in prospecting, you can have actual conversations. I don’t know many normal people that want someone to sit down for an hour and explain, “Well, my alpha is better. My beta is better. Your large-cap growth position, wow, that’s terrible...”

Michael: “Check out my Sharpe ratios.” Yup.

Nina: Right. I just remember watching people nearly die of boredom talking to me with eyes glassed over. So we don’t talk about any of that stuff. If someone wants to get into it, Matt and I are properly prepared. We know this stuff.

Michael: Yeah, for the 3 out of 100 clients who take the conversation there because...

Nina: And those are engineers.

Michael: Yup, those are engineers.

Nina: And they will bring in a prospectus, and that’s fine because we can answer those questions. But most people don’t want you to lead with that information. We’re really just using Riskalyze to talk about portfolio behavior, their behavior, and planning recommendations. So it’s been a tool that really moves us away from that contest of “my portfolio is better than the one your guy made for you”. Then if it’s not in one year, which likely it won’t be, you’re going to disappoint somebody, or the market is going to change on you, or whatever – then you look bad.

And when my partner and I started out, we’ve just been really focused on that not being our value-add. There’s got to be a lot more to what you’re bringing to the table. We’ve watched that happen in our industry. The investment management has become extremely commoditized, as we all know, and there’s a lot more competition out there.

Michael: And that ability to have a better conversation than alphas and betas and Sharpe ratios and details in a prospectus, that, to me, is ultimately why Riskalyze can sell a product at three to five times the price of FinaMetrica and outgrow them in the process. Most risk tolerance tools are an overhead cost, like, “Okay, I have to check the box for compliance purposes and give them this questionnaire after they become a client, before I implement the portfolio, to make sure I don’t get in trouble with anything.” Riskalyze, essentially, has positioned itself as a prospecting business development tool. Use this thing well and you will increase your revenue, and it more than pays for itself. And I think it’s part of what has made Riskalyze able to drive such growth.

And the irony to me of so many of their competitors that crop up, who try to come in and say, “Hey, we found a different 17-question process with new data points to analyze to try to give you a better risk score than Riskalyze does.” Academically, I can debate whether maybe they’re right or wrong and that they are better, but part of what makes Riskalyze work so well is it’s not literally about the mechanics of who has the most academically rigorous process to determine whether the client’s risk number was supposed to be 65 or 67.239 if we had a better questionnaire. It’s that Riskalyze gets a number you can show visually and connect to people with a conversation, and it drives business.

Nina: Right. So Aaron Klein is a good friend of mine, he is one of the founders of Riskalyze. I’ve told him I’m so proud of his success, but I really hate it, because it gives me less of a competitive edge the more advisors use it.

Michael: Yeah, I guess that used to be a really unique conversation you got to have as a Riskalyze early adopter, slightly less unique now; maybe the other advisor they’re talking to has already put it on their website and put the client through the process.

Nina: Right. I was like, “As your friend,” and I’ve been friends with many people at Riskalyze, “I’m so proud and happy and cheering you on, but as a user that uses it for competitive reasons, I’m kind of disappointed!”

Michael: “Could you be a little bit less successful??”

Nina: Yeah! But back to your point about pricing, I’ve had this conversation with some friends of mine in fintech companies and other advisors; at this point, technology has become such an important tool for us to invest in, and to be able to do our jobs for the client, but also from a compliance standpoint, and it’s very expensive.

I can track our history of revenue and expenses, and I can gratefully say that we’ve grown exponentially over the last ten years in our revenue, but we’ve also grown exponentially in our expenses. We’ve watched the technology line item grow and grow and grow, but I don’t feel like we’ve added a ton of new things. We’re still kind of doing things the same way. It’s just costing more money.

And with all of these tools that are coming out, I almost wonder if there’s a little bit of a fintech bubble that will happen. Because do you need 8 to 10 Riskalyze-type companies? I don’t know. I’m not adding anything to my company’s technology line item right now unless I can say it moves the needle. It’s either got to for sure help me retain clients or for sure help me bring them on.

I’ve demoed some other stuff, and even if it’s $99 a month, it’s still $1,200 more a year. You really have to, as a business owner, watch that bottom line carefully because those expenses tick up. We invest a lot in human capital. We really want the best people. I say rock stars only on board – that’s where I want to spend money right now, not more widgets for clients. Unless it’s really going to make an improvement or make sure I’m keeping clients, I just really don’t have a justification to bring it on board.

We track our P&L monthly. We watch our AUM every week. We track every platform. I’m big on metrics, and I’ve just painfully watched it grow, but thankfully, our revenue has, too.

Michael: So are there other tools that you use in the prospecting business development process that play a big role as well, or is Riskalyze kind of the driver beyond just the usual, “you need something to analyze and slice-and-dice the portfolio a bit just to understand what they’ve got so you can communicate back to them what you’re going to do that’s different”?

How Nina Uses eMoney With Prospects and Clients [00:39:19]

Nina: Yeah, I kind of joke that eMoney and Riskalyze are my one-two punch. We’re really leading with planning. That’s where we start in the meeting. Then the second part is going to be the portfolio conversation. I also use eMoney interactively on the screen. We’ll use the Decision Center, and we’ll have their total assets up on the screen, or we’ll demo the client website to show them this is a tool that we have available.

Michael: So you’re actually doing this when they’re still a prospect, not necessarily waiting until they’ve come on board as a client to start showing eMoney?

Nina: Yes.

Michael: Interesting. Interesting.

Nina: And for a while with eMoney, the only thing you could put in were new clients. And my feedback for years was that it wasn’t typical that people would put them in, which I didn’t realize, early. They would be added after the fact, in their client system. So we did it the opposite way. Because they’re hiring us for financial planning; that’s why we’re putting them in the system. But we’re also considering them an investment management prospect. Now, eMoney has an option where you can put in leads, so we can keep them separate, and we’ll convert them to clients once they come on board as an investment management client.

Michael: Interesting. So even early on, are you gathering data to start populating eMoney while they’re still a prospect, or are you just setting up and entering a few data points as they go?  Or are you just showing them a sample portal so they can see, “Hey, if you worked with us, this would be the dashboard that you would see.” How does that actually pull in?

Nina: Yeah, so the first meeting, usually, when our clients come in, the meeting has been set. We don’t do any seminars, we do no cold marketing at all. We do social media, but no cold marketing. Our typical prospect is referred, then calls or emails us and makes the appointment. Most of the people I walk into for a meeting I’ve never seen in my life. I know the person that sent them there.

By the time they’re in the conference room, they know who we are, what we do, and what the process is because that’s already been established when the appointment was set. Then we will either have a phone or in-person meeting because we don’t take everybody. We have a very clear idea of who we work with, so when we go into that first meeting, usually, we’ve already kind of chatted on the phone, I’ve followed up with an email with our offering, what a financial plan costs, and what you get for it. So in that first meeting, 99% of the time, we’re taking all of their data. They’re coming with statements and information, and we get our arms around their whole personal financial situation, and what their goals are. It’s a very involved meeting.

And then I take all of their data, put it into eMoney once they’ve confirmed with us and signed the contract that we’re going to do the planning. We figure out what type of planning they need, I put everything they currently have in eMoney, and then run plans and reports that we then, in the second meeting, use on-screen interactively.

Choosing “Good Fit” Clients from Prospect Interactions [00:42:43]

Michael: Okay. Wait, so does that mean, essentially, that the prospect meeting where you decide if you’re going to work with them is also effectively the data gathering meeting for eMoney, or are these separate meetings? There’s a prospecting process, and they say they’re coming on board, and then you do a data gathering meeting to get the data that’s going to go into eMoney?

Nina: We give them the option. Sometimes they really do know exactly what we do. They’ve talked to their best friend who told them, “Hey, it’s this amount of money for the financial plan.” So when they set the appointment, they say, “No, we’re good. Yeah, we’re definitely moving forward unless something crazy happens.”

Usually, if they’ve called or emailed, we’ll say, “Hey, yes, would you like to get on a call just to make sure we’re a good fit and can do exactly what you need us to do?” or “We can do a 30-minute in-person meeting and just make sure that we’re what you’re looking for?” We do that one way or the other.

A lot of times we try to do it on a call, because we don’t want to waste our time, and we don’t want to waste theirs. We can pretty quickly determine if we’re the right fit or not. I was referred someone recently, and in the email where she referred me, it was basically, “She will do this, this will be handled for you, they’re wonderful.” It was very nice. I was reading the email like, “I am not doing that. I will not do that.”

Michael: You’ve kind of overpromised me, but thank you, very loyal client, who I appreciate!

Nina: Yeah, and it was a nonprofit organization in another city that said they wanted a 401(k) plan. They had two employees that made a little bit of money. It just wasn’t a fit for us. What I did, though, is I said, “Hey, let’s get on a call.” He was out of town, so wasn’t going to go in-person, but I would have done this either way.

“Let’s get on a call.” And in 10 minutes, I had Googled where he lived, I looked into some advisors, and I said, “Look, based on where you live, here are three names of firms that look pretty reputable. I can’t really make a recommendation. I don’t know these people, but I’ve done BrokerCheck and I’ve looked into them. I think that’s a better option for you to start with. It’s really not our business model.”

So you hate to do that. And I let the person referring know; I said, “Hey, I helped him out, I definitely wanted to do that, but that particular situation just wasn’t a fit for us, but I appreciate you thinking of me.” So you try to weed that out on the phone. And I know that might be different; I think some people just really want to grow their business. It’s not that we don’t, but we’ve been intentional. We’ve turned away clients that have millions of dollars because they wanted a stock picker. That’s not what we do. Or they were rude, and “Adios, you’re not going to be rude to me and my staff.”

Michael: Yeah, I think there’s a powerful effect there that if you do not on regular occasion refer a prospect to another advisor, you probably aren’t focused enough in who you’re serving. You’re probably saying yes to too many people, or you just have a marketing problem where you’re really literally not talking to anybody new. That’s maybe a little bit different topic. But if you’re regularly talking to prospects, and you’re working with all of them, you’re almost certainly not focused.

It’s one of the trends that I’ve seen over the years, that when I talk to advisors that are having good and successful growth, one of the things I find is they often identify clients that aren’t the right and best fit for them and just refer them somewhere else. He came to you, and it sort of feels good; I do want to help this person get somewhere and not send them out into the wind to get abused by whatever random salesperson happens to reach them.

Nina: Right, yeah. After that call, I walked out of my office and told Adam who works with me, “I’m so glad I am mature enough in my professional life that I’m just fine doing that.” Because there was a time when I had either sales goals or just really wanted to help anybody that came along. I would take any business very early in my career. But then I quickly realized that long-term, that’s a really tough way to grow your company.

Michael: Right. Eventually, you’ll hit a ceiling, because you’re at capacity with all the people that you can serve, you can’t add any more clients, and you can’t really grow, and many of your clients are not actually a good fit, and so you just get stuck.

Nina: And you’re always doing different things. Even though we do a wide amount of things, we’re doing those every day. I could literally draw a cartoon character of each of these three types of clients and name 50 people that fall behind that exact profile. And so when we identify them, we know their needs, especially with young professionals.

My partner and I are living the same life. A new mom sits down with me, and we just start talking. And there’s a connection there. So a lot of benefit of that too is, a male-female partnership, we’re in pretty much every meeting together, for sure on the prospecting side. It’s harder to do, as we grow, in every client meeting. We kind of figure that out as we go. But you just can’t take everybody and think that you’re going to have a business that you love ten years down the road.

Michael: That’s such a good point. You can’t take everybody...How did you say it?  You can’t take everybody you meet and have a business you’re going to love 10 years down the road.

Nina: Yeah, yeah.

Michael: So once people come on board, help me understand the process. You’re data gathering, you’re doing a plan, and at some point they get invested. It sounds like you charge for the plan, they’re also going to have investment management, and there may be some other products you implement. How does this flow out from here? Is it just a data gathering meeting, plan presentation meeting, and then an implementation meeting? How does it work for you?

Nina’s On-Boarding Process [00:48:22]

Nina: Yes. We decide together what the plan is going to be. For one section of our business, which is going to be the younger asset gatherers, they’re building their assets. We’re making a recommendation on cash-on-hand. We find a lot of them are cash-heavy, because they probably, based on age or experience, haven’t worked a lot with an advisor. They may have had a 401(k) rollover or something, but they haven’t gotten into brokerage savings yet. Some have, some haven’t. Generally speaking, we’re looking at cash on hand. What’s the appropriate amount? We’ll give a range and we talk about that together and make that determination. They keep that in a money market for themselves.

Then, we determine what allocation goes to a brokerage account, and what monthly contribution we’re going to make to that. Most of our clients don’t qualify for Roth IRAs.

Michael: Because income is too high.

Nina: Yeah, just the household income is too high. So once in a while we’ll see that, but usually not. And then pretty frequently we’re doing college planning. We’re going to make a recommendation on initial funding and the monthly funding. If they have a 401(k) plan at their business, or whatever they have going on at their business, we’re usually evaluating. Are they taking maximum benefit of all that? We’ll look at their W-2 statement because someone telling me that they’re in their 401(k) at whatever percent…maybe? Are you? I find they don’t actually look, or maybe they had their contributions adjusted and they didn’t know.

We have an OBGYN client that has a very high income, and she said, “I’m in my 401(k).” But when I looked at her W-2, she was in the Roth part, and therefore not taking advantage of the income deduction there that she thought she was. So really looking at all of those things. We usually are doing a life insurance analysis or recommendation for new. We don’t typically use whole life, but we using different types of permanent and term policies. We just believe whatever is the right fit for the client, that’s what we like to use. And whatever the preference is with the client, we like to talk about the differences.

That’s going to be for your younger couples. So when we’re onboarding, there’s all the paperwork that comes along, and there’s a meeting for that. From there, it passes to Adam, where he takes the onboarding relationship and if there’s a question, he’ll come to me and Matt, but usually he’s just handling the account setup process, getting them into eMoney, keeping them informed along the way, confirming transfers in, and getting them into Redtail, what we use as our CRM.

The Client Service Commitment Card [00:51:22]

And then after three months, they get a client service commitment card, which we’ve implemented this year, that just outlines, “Okay, annually, we’re going to meet in the first and third quarter. Here’s what we’re doing for you in the meantime. Here’s our office hours. Don’t text me for advice.” Just kind of our housekeeping rules. “We’re closed on these holidays.” They get that in three months.

Then usually at about six months, we’re meeting again, where we follow the schedule that we established either first and third quarters, second and fourth quarters, or just once a year. So that’s kind of the ongoing process.

Michael: I like that. A client service commitment card. Like a card?  Or like...

Nina: It’s a little postcard, yeah. It goes in an envelope, like the size of an invitation you’d get in the mail. They could stick it on their fridge.

Michael: Okay. “Just so you remember, there’s the best way to work with us, reach us, when you can reach us, how you reach us, what we’re committing to do.”

Nina: Yeah. My thought for that was maybe they’ll put it on a bulletin board or on the fridge, and maybe a neighbor comes over and sees it and says, “That’s different. Tell me...oh, you have a schedule.” Trying to run it almost more like a dental office. Your check-ins are...

Michael: Yeah, yeah, your check-ins. Send them out with the card to remind them of when their next visit is due.

Nina: Yeah, and we have it in our system where it alerts us that it’s time for the next one, because we put in the meeting notes, upload all the documents that went with it, and then it’ll trigger us in whatever month we say. Then Adam reaches out, or whoever is responsible at that time for reaching out, to make the appointment, do the reminder, and then they come in.

Michael: And what’s the CRM system you guys build around?

Nina: Redtail.

Michael: Okay, Redtail. So how does this all work from the business model end? You mentioned early on you’re about $90 million of AUM, but you mentioned planning fees, doing investment management, and there’s some insurance that may get implemented as well, which is obviously a commission outside the traditional AUM structure. So what does this look like from a business model perspective? What do you charge for the planning and the investment management, and how do you handle the commissions mixed in for clients who might have already done planning and investment management? Talk to us about what that looks like.

How Nina’s Firm Structures an “All-In” AUM Fee [00:53:08]

Nina: Yeah, I usually get some kind of pushback or surprise on the way we charge, but it is what it is. We all do it differently. So when they do the plan –  and they pretty much have to do the plan – for onboarding, that’s just what we believe in – we’re pretty low in my opinion on the planning fees, and that’s probably going to get changed. The basic plan is $500, and the retirement income plan is $1,500. Those are kind of our two client profiles.

Once they’re on board as a client, unless something changes, like retirement, or we’re starting totally new with a major event, then we’re not going to charge the planning fee again. That’s just onboarding and the way we want to do it. We consider it part of our ongoing process with them to keep that plan in place unless there’s, again, a major adjustment where we start over, a divorce, or usually retirement business sales, something like that. Conversely, our asset management fees are probably on the higher side than what you see in the RIA world, but we do a lot more than some of the typical RIA investment management companies.

Our fee schedule is tiered and it’s also all-in. If we have a manager on the account, that’s not a separate charge. Does that make sense?

Michael: Yeah. So if you’re using a separately-managed account for something, that’s going to come out of your fee. That’s not in addition to your fee.

Nina: Exactly. And all platform fees come out of that. I don’t like the nickel-and-dime approach. I want to say, “Your cost is going to be X”, and they know that. There are no surprises outside of that. It starts at 1.5% from $0 to $250,000, $250,000 to $2 million is 1.25%, $2 million to $5 million is 0.75%, and over $5 million, we pretty much have kept them at 0.75%.

Michael: Right. So similar, but negotiable maybe at $5 million-plus if it seems appropriate in the meeting.

Nina: Yeah, and we usually are competitive with what they’ve been paying. So we’re kind of matching it. It’s not really been an issue. The largest client we have has around $20 million with us. Our net worth ranges quite a bit in our practice, too, for our clients. Some people think that’s very high, but what we actually net is around the 1% that most advisors charge.

Michael: Yeah. And from the pure top-line advisory fee perspective, it’s at least a bit higher than the classic 1% on a $1 million that’s sort of out there as the benchmark. But there was a study a year or two ago that Bob Veres’ “Inside Information” did that we wrote up on the site as well about typical all-in fees for advisors. By the time you layer in the platform fees, trading fees, other manager fees, and all the other things that you’ve just integrated into your fee in the first place.. by the time you grab all those all-in fees, what you find is, well, actually, median fee is pretty much 1.5% in $1 million.

Nina: Yeah, that’s where we just priced it a little differently. When people say you’re priced high, I say, “I don’t get all of that; that’s not all to me. Other people get a piece of that pie.” I find it very annoying, frankly. I don’t like to be nickel-and-dimed. I like to be very clear on what I’m paying for them and what I’m getting out of it. So I don’t like the, “My fee is 1%, the platform fee is 0.25%, then the manager gets 0.25%.” I don’t think they care – they are paying X.

Michael: And there’s a powerful effect that comes from it, as long as your all-in fee adds up competitively, which I think it does if you look at the industry data around all-in fees your numbers are still in line. But it provides, I think, some rather powerful positive incentives for the client and from the client’s perspective of when it comes out of your pocket, you’re going to look really hard at whether that manager really justifies their fee, because it literally comes out of your pocket to justify...

Nina: And we do.

Michael: ...the value proposition to the clients. You’re not selling a manager. You’re selling your value, and you can pick a manager that you think delivers value, but they darn well better because you really notice when it comes out of your pocket. Ideally, we’d notice when it comes out of a client’s pocket, but there’s nothing quite like focusing the attention by literally paying those additional fee layers out of your own pocket, and then taking a hard look at whether they’re creating value in the sack.

Nina: Right, exactly. We joke with people that we want everybody to get to $5 million. I would be ecstatic if every one of our clients gets to $5 million because everybody has won. And then we also talk about why we charge the way we do. We genuinely want our clients to know that every action we take is in their best interest. And our values and goals are all aligned the same, and that we don’t want our portfolios…and again, we manage most of them in-house...we don’t want our portfolios to go down. Our company revenue goes down. We want our portfolios to grow, our company revenue grows. Well, that means our clients are making more money.

So we’re not making a trade because…and then they’ve got to pay these trading costs if there are some on platforms or whatever.. we’re genuinely making a trade, because we believe that it’s in the best interest for everybody. In those early client meetings this year, I said, “Look, nobody was more upset about the markets then we were.” But not in a way that our clients wouldn’t be taken care of. We knew our portfolios. We made trades. And we did make adjustments. We took an opportunity for tax loss harvesting. It was good.

But I also said, “I took a pay cut in January.” That was the sad part for me, and I’m watching it, going, “man!”  We’re doing everything we can to protect the portfolios, but we’re really looking long-term. We knew it would be all right.

Michael: So now I do have to ask from kind of this best-interest framing and alignment perspective, you do have some insurance-based commission products in the mix of what you’re implementing as well as, I’m assuming, some of the REITs and BDCs, which probably don’t fit into the traditional advisory accounts or have some separate compensation.

Nina: They do.

Michael: So how do you explain or reconcile this for the client? That sounds like, “Wait, you’re saying you’re going to act to my best interest, but you’re still selling these commission-based products.” And not that those have to be equal or opposite, but certainly the media has framed them that way.

Nina: Yes. I just don’t get on board with that conversation. I think that because you get paid a commission, I don’t think that makes you a bad person or have done the wrong thing. I think that we haven’t had a choice. I do not have a choice, the insurance industry chooses how to compensate me. I do not. I’m not going to refer out that business because I believe I do it better than just an insurance salesperson. I don’t need that sale to pay my bills this month. I need the client to be happy and taken care of for life.

And we give them options. We talk through that conversation and we say, “We can’t help how the insurance company pays us. That’s separate from investment management. That’s not necessarily the same thing either.”

Michael: So kind of separate service, separate thing. It is what it is. I’m going to do the work to implement it for you. And here’s how the insurance company does the compensation.

Nina: Yes. So we tell them. The insurance industry has always been that way, it’s not something new. I think most people if they’ve had any kind of awareness of the insurance industry, know insurance agents get paid commissions, whether you’re in car insurance or any type of insurance. That’s not any big conversation or surprise. The alternative investments – that industry really kind of had an upheaval. A lot of alternative investment companies have really restructured so that we can now put some in our advisory portfolios.

Michael: So they’re restructuring with advisory class options.

Nina: Right. They have different share class options now and have ways that they’ve created from a legal or regulatory standpoint to value them so that they can be in the advisory portfolios. Things that are still commission-based we talk about. But if a client has $50,000 in a brokerage account that I’m making annual money on for five years, or we take $50,000 and put it into a direct placement program (we’re doing a real estate development right now), and I get an upfront commission but I’m not paid on it ever again, and the hold is five years…does that matter to you? Is that important to you? And most people go, “I don’t really care.”

Michael: Because they already trust you.

Nina: Right. Well, I’m getting paid on the $50,000 either way. And the upfront commissions have come down on the products that we use, I think, across the board. But what we’re not doing is a lot of upfront commission work like mutual funds. The people that are investing in alternative investments are mostly accredited investors. We work with a lot of highly, well-educated, savvy professionals. They just want a good investment. And not all of them have worked out great. Oil and natural gas deals, that’s just something that’s invested. They get the royalties for life while they’re in that product, but they know we’re not paid on it. It’s just that one-time thing.

But if they’re saving $100,000...We’ve had clients with pretty significant amounts of money there that they truly don’t need. They prefer tax savings. They don’t care how we’re compensated. They’re glad we’re compensated. They want us to do well. So I haven’t seen it. I think that the bad guys out there that the media are talking about are the ones that are...You’ve got a 60-year-old that has a $500,000 rollover, and I’ve seen this a lot and it angers me; they’re put straight into one annuity that they could never get out of. The salesperson is paid up front and never speaks to them again. Those are people that I don’t think are acting in the best interest of anybody but themselves.

Michael: That to me has always been the essence of my challenge or concern around the annuity domain. As you pointed out, well, it’s sort of the simplest case. Look, I can get paid a 5% commission upfront for a 5-year hold, or I can charge you per 1% a year for the next 5 years. The math is going to add up the same. I can either charge 5 times 1 or 1 times 5, but the compensation of the advisor is going to be similar.

The challenge, though, is if I want to get paid 1% a year for 5 years on this client, I actually have to keep doing things for 5 years. Otherwise, at some point, by years four or three or possibly even two, if I haven’t done anything, this client may well go somewhere else, because I’m not doing anything on an ongoing basis to justify the fee. And if I get paid all 5% upfront, frankly, I have an incentive to not bother calling them again for 5 years, because the money is already tied up, and I’ll use the intervening 4 years to call in other new people I can do business with. It doesn’t have the same incentives around ongoing service support.

That to me is just one of the challenge of the dynamic, much less so in a model like yours, because you’re also doing ongoing business with them and ongoing planning and ongoing investment management, and so you don’t “do the business and walk away” like the standalone annuity agent that you were talking about, because this may just be a small slice of an overall portfolio allocation.

Nina: Yeah, and it’s always a slice. So the bulk of the relationship is going to be the investment management and the portfolios. In compliance, we couldn’t even...

Michael: Yeah, yeah, compliance won’t let you do 90% to BDCs.

Nina: Right. And whoever would want to? But so it’s a 10% to 20% allocation. And again, it’s for a much larger portfolio, usually. So it’s people that also want diversification. They want uncorrelated assets. And they want interesting ideas. A lot of times, if we were just doing index funds and not adding value anywhere, I’m not saying only index funds, but you see what I mean. We’re coming to the table with different ideas. Sometimes people understand real estate better than others, and so that’s something they get excited about and think it’s neat, or whatever the case may be.

But we’re not doing it for everybody, and it’s only going to be a small allocation of the overall portfolio that we’re managing, and only if it’s an investment that we think is a good deal. Because at the end of the day, if after five years we have egg on our face from that, the client is not doing another one, or they might not want to work with us anymore. And then the majority of our assets that we make our money on, on an annual revenue basis, are really in the managed portfolio. So we don’t want to lose that.

We do a lot of due diligence around these products, we don’t place people in them lightly. We’ve usually spent a lot of time with the company first to really understand the product, understand the handful of people it might fit for, and then that’s it. As far as the business model, revenue-wise, about 70% of our company revenue is going to be from AUM as far as our asset management fees.

So insurance this year – we’ve really killed it with insurance – we’ve made $721. So it depends on the year. We’re not insurance brokers, but we do believe in it. It’s going to be about 10% of our revenue, maybe 5% to 10-ish%. Then direct product or commission-based products, and that includes 401(k) plans, profit-sharing plans, and cash balance plans that we manage as well, that’s going to be 10% to 15%. Those are all going to range per year. Between 70% and 80% of our annual revenue always comes from our portfolio management. Everything else is an ancillary part of the bigger relationship. Even if someone just wanted a life insurance policy, it would depend on whether or not we would even help them out. I might find a really good insurance person to help them.

The Revenue Mix From Fee-Based And Commission-Based Services [01:08:40]

Michael: So is that revenue mix shifting over time as well, as more as the available product mix goes advisory, then commission-based? Is that percentage that’s on the AUM side versus the commission side shifting for you?

Nina: Well, it’s only in the last year have we put them into advisory accounts. I’m interested to see how that changes. We were watching to see how that should run before we started doing it. And also, share classes had to be approved by our broker-dealer before we could implement some. So there was a little time lag there, but we definitely saw a change in the numbers where we did not do as many direct products when they were changing the regulations and changing share classes. We just kind of said, sit back and wait on this.

And we didn’t have as many products that we were that interested in at that time. A lot of the alternative investment companies had pulled back or had no products available, so we just kind of sat there. But I think we’ll continue to do that model; I prefer it. I would say yes, I think probably that number will shift. I don’t really know how drastically, or how quickly. We’ll have to see.

Michael: So from the flip side...who’s your broker-dealer that you’re under in the first place?

Nina: I’m affiliated with Triad Advisors. That’s one of the five IABs with Ladenburg Thalmann.

Michael: Okay. And under Triad, because you’re doing all this advisory business, are you part of their corporate RIA, or are you a southside RIA but you place the brokerage business with them for the portion that has to be through a broker-dealer? What’s that structure?

Nina: We are under their corporate RIA.

Michael: Okay, okay. So you’re dual-registered under their corporate RIA. And so as you look at this trend, I’m just curious, I’ve seen this from so many advisors under the hybrid environment that as product mix becomes more advisory-oriented, revenue mix becomes more and more advisory over time. Do you see yourself with a broker-dealer in the long run? Do you see some point where the commission-based portion comes down so much you say it’s just not worth it? How do you envision the future of your business as a dual-registered advisor now?

The Value Nina Appreciates From Her Broker-Dealer [01:11:08]

Nina: We’ll see if I listen to this podcast in ten years how I feel…I would be very surprised if we ever dropped our broker-dealer relationship, because the value there is not just, “Oh, I can process commissions for commission-based business through these people.” We are within a broker-dealer that we get a lot of value from. I would prefer to use their compliance department than outsource somewhere else or build my own. They’re very easy to work with. There’s a lot of knowledge base.

Michael: You don’t hear a lot of people that are like, “I like my broker dealer’s compliance department.”

Nina: I know.

Michael: It’s an interesting testimonial for Triad or any BD. (Not testimonial, we don’t want to get you in trouble! I guess we can testimonial them, your clients just can’t testimonial you.)

Nina: Okay – is that the rule?  I get nervous around that word. So, yeah, we genuinely get a lot of value from them. I think they’re unique in the business, and I tell people, when we were looking for broker-dealers, the consistent response was, “I love them!” You don’t hear that.

Michael: So for all those who are at broker-dealers they hate and can’t stand their compliance department, this is episode 136. So if you go to kitces.com/136, we’ll have a link out to Triad, because I’m going to guess some people are going to want to call them after the way you’ve been describing them. Again, I do not hear a lot of, “I really like my broker dealer’s compliance department and would happily choose them over an outsourced alternative.” That does not come up very often.

Nina: Yeah, at the executive leadership team, the advisory department...I couldn’t rehire that. I think I’d have a very hard time replacing it by outsourcing. The payout is extremely fair, and I’ve been very happy with that. I think if you have a bad relationship, then, yeah, you should probably consider that. We feel we’re getting value for what we’re paying.

And the commission-based things, as long as they are in the world that they’re in and not able to go in advisory... it’s like oil and natural gas deals, or we’ll see whatever happens with the opportunity zones; I don’t know if we’ll do that, but we’re looking at it. I just would be surprised as ever being advisory type products, because they’re hard to value consistently. They’re tools that we’re not willing to give up. So it’s kind of my opinion as well at this point. But I do get a lot of pushback in the industry on why we’re not our own RIA or why we still have a BD relationship.

 

Nina’s Journey Through The Industry [01:13:38]

Michael: So talk to us about the journey through the industry that you’ve had in the first place. How did you get started? Were you a financial planning undergrad, got your CFP in school, came straight in the industry, or did you career-change in later? What’s been your journey down the advisor road?

Nina: Oh, I’m an accidental advisor that’s made a series of happy mistakes is a way to sum up my career.

Michael: An accidental advisor who has made a series of happy mistakes.

Nina: Happy mistakes. So I started in New York City in Fashion PR in 2003. I graduated from UNC Chapel Hill as an English major, Creative Writing minor. I’d already published one book and was taking the world by storm, in my opinion, as a naive 22-year-old, and moved to New York. And I realize after about a year that industry really wasn’t for me, and had a lot of friends that worked on Wall Street. I did some pretty cool stuff in Fashion PR. An experience I’m glad I had, but I realized I just didn’t want to continue a career in that way.

Michael: It’s nice to have the opportunity to get the experience to go, “I just figured out something I totally do not want to do for the rest of my life.”

Nina: Yes. I tell college graduates all the time, “Go get a job if it’s a good opportunity, but you may find out what you don’t want to do”, which is what I did and then pivoted to something I never thought I would do. I hate math. I love people and relationships. And now I understand the industry more and I love what I do.

So I quit that job, got in touch with a recruiter, had a short temp job in an Australian investment bank. I went back to her and said, “Yes, I love this. Place me.” That was the end of 2004. So that was the last quarter of 2004, and then I said, “By January 1st, I really want a permanent position in finance.” I started working with an institutional asset manager and was the liaison between the client and the firm managing 80 client relationships representing $89 billion in AUM.

Michael: Oh, holy cow, okay.

Nina: Yeah. And never thought I would be in finance, period. I had never had the self-confidence as a girl in rural Eastern North Carolina. I didn’t even know what a financial advisor was. I thought maybe I could be somebody’s secretary possibly, and I found myself in my early 20s working on Wall Street, and I’m like, “Holy crap.” And I really genuinely loved it.

Then in 2006 I’d been in New York for three years and was kind of burned out. I really wanted to move back to North Carolina to be closer to family. I got an opportunity at a wirehouse to be an advisor, and in 2006, I went to the retail side and found that I really loved it. I was there from 2006-07.

Michael: So which wirehouse did you end out with?

Nina: I was with Merrill Lynch in their Durham, NC office. I live in Raleigh, but I commuted. That was where I had an opportunity. I was in their training program, very well defeating every odd that there is for a young female on her own, at that point, 25 years old, and doing well, meeting my hurdles. I cold called one day and decided that that was terrible and knew that that wasn’t what I wanted to do.

So I created a different strategy where I knew I’m better face-to-face and I really liked to present and educate people, so I started trying to speak to women’s networking groups and formed a couple of my own. I started cold walking, or I called it cold stalking. I would do a lot of research on a business and a business owner, print their 5500 and went to areas that were less served. I would go right outside of Durham or Raleigh to some of the more suburb areas that might only have a couple of advisors in the area or less competition because Raleigh and Durham have a lot.

And so I would go into these offices and just say, “Hi, I’ve printed some information about your company that I would love to discuss”, highlight a couple of things on the 5500, and mention some regulation changes in the 401(k) space.

Michael: So Form 5500s are the public reporting form that goes to the Department of Labor for anybody that’s got a sizable qualified plan. And it’s public information, so you can find 401(k) plan business owners and some information about their plan, and at least a little bit of information about them, by pulling the 5500s and then figuring out who you want to call on, which is cool from a prospecting perspective, but tough because it’s public data. So everyone has it as well, which was why you went to some more rural suburbs where there maybe were going to be fewer people who pulled that 5500 to call on the same business owners.

Nina: Right. I thought I’ve got to get smart because I statistically probably won’t make it. So I had to find ways to get...

Michael: A little depressing.

Nina: I was kind of given that message in that environment too consistently. So I was constantly told I needed gray hair at the table. And I’m proud to say this year I got my first two gray hairs after 15 years. And for many, being an advisor and running my own business, I haven’t needed gray hair at the table. But so I thought, I’ve got to get smarter. I’m going to lose my job. I’m not going to make my hurdles. So I thought, how can I give myself more information off the bat and decrease my competition? And so that’s what I did. And getting in front of more people.

And it worked. I was doing really well. And then Bank of America bought...the financial crisis happened. It became harder. I became very depressed. It was a very difficult job. I got engaged and found out like a week later that they terminated my training program as of December 31st, 2008.

Michael: And you were still in it because you weren’t through the three-year window yet?

Nina: Right. So I think it would have been up in March or May, somewhere in there. It would have been the next year.

Michael: Okay.

Forming A Partnership And Building The Firm [01:19:20]

Nina: So fast forward to during the time I was at Merrill. I had been friendly competitors with my current business partner. I’ve always really loved getting advisors together, I love collaborating. I don’t consider competition, because I believe...and I know this is your mentality too – I think sharing and learning together makes our industry better. There’s plenty of money to go around. So he and I had coffee periodically and had gotten to know each other. And he was already independent.

We ran into each other after I left Merrill, and I really wanted to be out of the business. He was like, “No way, that cannot happen.” “I can’t see another young person. I can’t see another female.” He said, “God, you were so good at it. You were so passionate about it.” And I was like, “No, it’s terrible. I hate it.” And I said, “I’m over the corporate mentality. I’ve got really beaten down. I’m very uninterested in this business. I don’t like it. I don’t think it takes care of the clients.” And he said, “No, this side is different, and not everybody is bad.” And I said, “I know, not everybody is a bad guy.” But just at the time, I was really down.

And he said, “Well, if you could do anything, what would you want to do?” And I responded, “I want to do the right thing for the right reason all the time, not because I need to make production requirements, or the client might be too scared so I just send him to cash because I don’t know how to handle it, or whatever. And I want to be a business owner and really help business owners.” And he said, “That’s what I already do. Work with me.” And in 20 minutes, I said, “Okay.” And we’ve been together for 10 years.

Michael: So was Matt originally in the Merrill program with you? Had he broken away and gotten independent a little bit earlier, and then when your training program got terminated, suddenly you were in conversation to go out and join him?

Nina: No, Matt has been independent all along. When he started his own firm, he left, I think, a group of other guys and went on his own, but he was always independent. He had an assistant at the time and himself. And so we decided to partner.

And our partnership has been unique. I’ve had a lot of people ask what made it successful. How does that work financially? And so from day one, we did not revenue share. His book was his book. My book was mine. I didn’t have many assets I could bring over from Merrill just because of what was going on at the time and some proprietary things. And honestly, I didn’t have the confidence yet to go back to my old clients. I felt bad about what had happened.

Michael: Right. There is an awkwardness of “Why did you change firms?” “Oh, well, I was still a trainee, and they wouldn’t even keep me as a trainee.”

Nina: Right, and then, “I have this brand that you’ve never heard of, and the senior partners are 28 and 32.” So we really worked hard. I think, when I say happy mistakes, at the time, I was devastated by that. Because I had worked hard at Merrill. I built a book of business, did well, and I was very proud of myself. And then, I felt like I just was on the chopping block. And I’ve always said I’ll never cry for something that can’t cry for me back again. I felt devoted to them, and then felt I just got axed. But the mature me knows that that wasn’t the case. Nobody hated me. It was a corporate decision.

Michael: You just got corporated.

Nina: I got corporated. And so, again, a happy mistake. Or if you want to call it a mistake, or hindsight is 20/20 – so grateful for that. And we built a vision over 10 years of exactly what we wanted. That’s gone well. I think that put a fire under me too. I no longer had the Merrill value-add from the brand and the resources. I needed to make sure that we did.

So I spent time working really hard on systematizing everything operationally, creating efficiencies. At the time he was less advisory. From day one, I said, “We’re an advisory business. We will do the commission stuff that we have to, but we need to be an advisory-focused business.” So we started to transition to that conversation, and then started to build mostly through networking groups presentations to current clients, events – in the early years we did 10 to 25 events a year, more than we had the money for, but we had some support. That’s how we built.

We really believed that both of us providing education and being face-to-face was the way that we best operated. And we wanted to create a business that fueled itself. We didn’t want to always feel like we were in a sales role all day long. So we intentionally created that ideal client type, the type of revenue that we wanted, how we would make sure that we could annualize that and budget from that, and then how do we create centers of influences and referral partners so that the engine feeds itself. And we did that.

And so that’s where I was saying people are referred. They call in. I likely have not met them before unless they attended an event or were in a networking group. But that’s been delightful because we don’t have a business where we’re constantly trying to figure out how to get a referral. We track them every week, but we bring on about 20 new households a year.

“The Juggle is Real” Video Clip Program [01:24:41]

Michael: So I got to ask, in more recent months, you’ve gotten into, I guess, kind of a new category and direction of stuff. So you did this “The Juggle is Real” program with InvestmentNews. So for those maybe we’re listening and haven’t seen it, can you talk about what this was or what this is?

Nina: Yes. So for years, I’ve really been vocal about my struggle as a young mom building an advisory business, or just a working mom in general, and two working parents. And so I would use this hashtag on social media, and I’m very active on social media, called #thejuggleisreal. And a lot of it was putting out my bad days. And just the “oh my gosh” moments, it not all being a shiny picture every day.

I remember a text message I got from a friend that said, “Man, you really have it all together. How do you do all these things?” She was pregnant at the time. And she said, “You’ve got these amazing kids and all these things. And you have this and that.” She’s like, “You’re very real about it.” And I was like, “I don’t have it all together. I’m literally crying right now receiving this text message...I’m in shambles. So I really appreciate this. But, Maggie, I had a bad night with a sick kid, and I’ve got this big presentation tonight, and I don’t feel prepared.”

It’s funny, I’ve had other working parents over the years come up to me and say, “Your posts are hilarious. I feel like I know your kids. You’re just very real.” And The Juggle is Real was just a tongue-in-cheek on the struggle is real. Because mine… it’s a struggle, sure, but more than anything, it’s a juggle. It’s just the working parents having to always feel like they’ve got to be somewhere else or feel pulled.

So Matt Ackerman, for those who don’t know, is one of the most wonderful people. He is just the nicest guy. We had had a relationship at InvestmentNews where we did a different video series together and had always said, “We’d love to film together again.” We just had a blast. And he and I, we think the same way, I think, with some of the production. We ran into each other in Florida at a conference, and we started talking, and he said, “I’d love to do The Juggle is Real. I just don’t know if I can get it done at InvestmentNews.”

And so fast forward to September/October, I got a text message from him, and he said, “Hey, if I could film you in New York next month, could you do it?” And I said, “Absolutely, let’s do this thing.”

Michael: Well, I wasn’t really ready to drop everything to come to New York next month, but, hey, the juggle is real, so...

Nina: The juggle is real, I got it, yeah.

Michael: ...we’re going to just juggle and make it happen.

Nina: Yeah. And so he said InvestmentNews gave him the green light. And then Triad came on board as a sponsor. Our goal with it is to take it to another series, we’re discussing that right now, series two. The goal is to highlight a struggle or a situation that happened to me, or may have happened to someone else – we’ll probably expand it a little bit – and then kind of the funny out of it that I’m able to see now and what it taught me, or whether it’s mom hacks or life lessons.

But in those moments, they probably didn’t feel like they were life lessons, they felt like bad days at the time. Really, the message was that I felt very lonely through a lot of my career being a female advisor, and that goes to the Female Advisor Network. All this has been happening at the same time, both with the same intention of creating a message, in different ways, obviously, that you’re not by yourself. I don’t care what anybody puts on social media, nobody has all good days. There are no 365 good days. And if there are, I want what you’re taking, whatever medication that is.

Those concepts were really just, in my mind, for females, but what I love out of The Juggle is Real is I’ve also had many men approach me – I had an Excel conference in Chicago, where I saw you, where I had an advisor come up to me who I didn’t know, and he found me and introduced himself and said one of the nicest things I’ve ever heard, which was, “I love The Juggle is Real. If my two girls could be anything like you, I’d be so happy.”

And I thought, Oh my gosh, are you sure? Then I said, “Thank you so much. I’m a very anxious, stressed out person. Maybe they could do something a little lighter.” But, no, I was just joking with him. He loved the video, but it related to him as a working dad. And that was an unexpected kind of delight as well that we’re talking to both parties creating these.

If any female in general found some comfort in what I was doing, or I improved their professional life, or they just knew that they weren’t by themselves, that felt like I was making a difference.

Michael: So we’ll include a link out to The Juggle is Real videos as well for people who want to check it out. So again, this is episode 136. If you go to kitces.com/136, we’ll have some links out in the show notes resources area. But for people who are listening, can you just describe what it is? What do people see? What’s the deal of watching The Juggle is Real videos?

Nina: Yeah, so The Juggle is Real, they’re around two minutes on average. They’re very short, funny. The first couple of episodes we filmed in New York in studios. It’s really setting the stage about things that have happened to me. There are some pictures of my kids, just showing that there is no perfect family;  let’s shatter that image. Matt Ackerman and I, and the team we produce this with at InvestmentNews, our idea was that anyone could watch this and know that I can share my stuff too, and then maybe eventually that FOMO kind of starts to go away for everybody. Or some people are legitimately depressed now over social media because they have this...

Michael: Yeah, all you see is all the good stuff of everyone else’s life, and you live the bad stuff in your life because we all have some bad stuff we tend not to broadcast about. We go for only the good stuff. And they get stuck in this rut like everybody else’s life looks glorious, and my life is feeling less glorious, and it gets depressing. I talk about that as the iceberg illusion in our industry. We see everyone else’s success and all of our own challenges, and it feels like our business is harder than others. But it’s more than just a business context. It seems like everything in the social media realm just amplifies that disparity.

Nina: Right. And I had a friend whose father passed away. And she had to actually disconnect from all social media because it was affecting her grief and her depression. Because if she saw someone with their dad or family picture. I thought, gosh, I hadn’t thought about it that way. So The Juggle is Real – they’re fun to watch. I have had such a huge overwhelming response from friends, industry people. It has been an incredibly successful for InvestmentNews as far as viewership and response. So I think most people like it. Take a look if you’re listening. They’re quick. They’re fun. And I hope we go to season two. We’ve got some funny stuff out there about that.

Michael: And then you’ve mentioned this Female Advisor Network as well. So what is that?

How Nina Established the Female Advisor Network [01:31:58]

Nina: So throughout my career, as I said, I’ve had a male business partner when I went independent. We were with a very small broker-dealer that didn’t do any events, so I didn’t know anybody really nationally. I knew a couple of advisors locally. I created a couple of kind of loose networking groups for just women business owners, like to grab wine. But I really didn’t feel like I had a network of female advisors that I knew.

And at Merrill, when I was starting out, I’m sure there were some in the program. I only knew maybe one or two, but I would have found a lot of value in a community of support that I felt I could go to and say, “Either this is working, or isn’t working, or help me.” I had some older advisors that were female in my office, but they had already built their business valuable relationships in a different way. The cold calling days were really over, in my opinion, and they had built their businesses that way I was trying to do it different; I was trying desperately to just keep my job and to continue in a career path that, at the time, I really liked unexpectedly.

So in my mind, this had just been going on for years, trying to find the community. I was just determined that, surely, the community is out there, that there’s some sort of group of us. I have had study groups. I’m currently in a male and female community, we call ourselves Dangerous Minds, but it’s some awesome advisors I’ve met on Twitter. And then I have a women’s study group that formed out of the Ladenburg Thalmann Institute for Women and Finance. They’ve been very influential to me.

One day I thought, I really can’t find the “by advisors, for advisors” community I’d been looking for. There were some broker-dealer conferences. There were some diversity initiatives. InvestmentNews has a women’s summit that’s fantastic that I’ve been to. This is not to knock those, because I want to work in a complementary way with them and I think there’s definitely room for both, and maybe more. I wanted to create more of a community that wasn’t just around going to a conference, and then if you can’t go, you don’t see that person again, but something where there was more consistency with the conversation. It really became personal and professional-growth-driven, practice management.

I keep joking that there won’t be a conference call about the muni bond market. There will be a webinar about maybe marketing strategies for your practice. I really felt strongly that it should be affiliation-agnostic. I’m interested to see how the broker-dealers respond to that. Some have already been very on board.

Michael: So meaning not specific to whether you’re an RIA, or a broker-dealer, or who you’re affiliated with?

Nina: Yes, exactly. Because I think there’s a lot to learn all around. I’ve been on both sides, and they’re very different. I don’t know if some broker-dealers will worry about us stealing their people, but I can hardly imagine that would be really the case.

Michael: Well, good broker-dealers would, in theory, hope that they were going to get to recruit people, not lose them.

Nina: Right, exactly. And that’s kind of for my mentality as well. This will be good for your advisors. So, yeah, it’s got a lot of different programs in it. We’re building it out. The industry response, as far as some of the large organizations that want to be a part of it, has just been really exciting. And it made me feel very validated that this was needed, and that people do think it’s a good idea. I’m hoping it grows and helps us retain some of the advisors. I think that...as you know, the numbers just haven’t been good.

Michael: Yeah. And so can you help people understand just what does it mean to join or be involved? Is there a cost? What do you get for it? How does this actually work?

Nina: Yes, so it’s a national membership organization, just like an industry association. It’s $199 a year. There’s a student membership that is $49 a year. So female students can join. Right now the only requirement for joining… and that’s been something I’ve had a hard time with. I’m having to now put membership under review. And I just had a discussion with one of the founders of Women in ETFs. For women out there listening, that is a great other organization in the ETF industry. But they’ve kind of had the same problem. We don’t want recruiters in it. The intention right now for the organization is female financial advisors. So you have to be a producing female financial advisor. We don’t really want people in there pushing sales and things like that or recruiting. So that’s going to turn members away. And I know I don’t like that and wouldn’t appreciate it.

There’s a partner marketplace within it, that’s where a lot of my industry relationships or companies have come to me and said, “We want to be a part of this” and they offer promotional pricing and discounts...The promotional pricing might be like one month free. The discounted pricing is usually on their monthly subscription models. I’ve been thrilled and grateful and overwhelmed with all the people who are in that marketplace. And we’re growing that.

I’ve basically been on a call every single day with somebody that we’re discussing on being a partner or a part of this organization in some way, shape, or form, so that’s been very exciting and time-consuming. The membership also includes a retreat, and that is a workshop-led, relationship building deep dive into yourself and your practice and how you can improve it, and that we partnered with Orion for that. That’s in September at a very luxurious retreat-like utopian kind of place called The Inn at Serenbe. It’s 30 minutes outside of Atlanta.

I think women don’t always disconnect; we can often be responsible for a lot of people and things and I wanted to create... Selfishly, I wanted to go to this beautiful place where they can really unwind, it would be over a weekend, untie from the devices, and really focus on yourself. And I think when I’ve done that three days has helped the next year. So I’m excited for the partnership with that and the opportunity for me to recharge and do the same thing myself. I know I don’t do it with two little kids and business.

Persevering Through Real Life Challenges [01:38:21]

Michael: So as you look overall at the journey over the past nearly 15 years now, what has surprised you the most about building your advisory business?

Nina: That I’m still here. It’s been hard. I really don’t sugar coat that. Some days have been unbearably hard. Being a business owner and a mother, my pregnancies were difficult, my maternity leaves were a joke, and it’s been very hard. And I’ll tell you, I was reflecting, it was around 10 years ago that Matt and I started working together every day. It was about July or August of 2009. And this morning I was reflecting, looking at my calendar, and it said, “to be on your podcast.”

And it was so surreal. I got very emotional because I’m very proud of myself for the persistence because there are a whole lot of days when there wasn’t a lot of money being made, and there was a whole lot of liability, and there was a whole lot of miss from my kids. And there was just a whole lot of work that I don’t think people saw.

And to have the network and the people who I know who encouraged me, has been moving, I guess, to say the least. 10 years ago I was in a very different place. And I’m very surprised. But I’m glad. It’s been a rewarding career, to say the least.

Michael: So, Nina, talk about how it’s hard, and some days unbearably hard. Is that the advisory business itself? Is that the stress of clients? Is that the pain of trying to manage a business and family all on top of each other? Is that just the brutalness of going out and trying to market, just helping your clients in a very competitive environment? What’s the part to you that that just makes it so hard and so rough?

Nina: It’s really all of it at the same time that’s difficult. And I’ve told males in our business who are advisors, whose wives stay home, “I don’t mean this to be rude, but I do your job and your wives’.” And I don’t always have the ability to have the same time allocated to the birthday parties. I do that at midnight. In fact, I my son just turned eight in July, and he hadn’t had a birthday party, I just realized. I promised him one.

Michael: That’s life.

Nina: That’s life, yes. So it’s not one thing. I do think our business is difficult. I think that a lot of the regulatory change, and the entrance of some of the competitors, hasn’t affected me that much, but I worry about the future a little bit, how that kind of shakes out. But I think the hard part is trying to get in 24 hours all that needs to be done.

And what usually what gets sacrificed, for sure, when my kids were even younger...So we were discussing before we started recording, my children are two boys, five and eight years old. I’ve had this business 10 years. And my son is eight. Well, I had to have him...I was pregnant for nine months before that. So for nearly the entirety of building a career, I was pregnant, nursing, had a toddler or was changing diapers. Sometimes I was pregnant and had a toddler and was doing all these things at once, trying to build our business where it was profitable, marketing that, having so many events, and dealing with daycare. So what would always got sacrificed was me and my needs.

And I think that’s why the Female Advisor Network… I just envision if it could have helped me at the time, I think I would have been better off. I would have had a little bit more of a lifeline to people that could tell me, “It would be all right” and maybe give me a little more support and resources. But, yeah, it’s not one thing. It’s just being on top of all of it all the time, being the lead parent. And that’s what came out of The Juggle is Real too.

So both of those came out of my experience from that. I don’t know that “grateful for” are the right words, but I’m hoping that some good helping other people came out of it. But it’s tough. And I think most of the females in my situation that I’ve heard on your podcast kind of say the same. I hear a similar story to a degree, but it’s everything all the time.

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

Nina: Well, this is where my story was similar to the advisor in Oregon that you interviewed. We realized that the small broker-dealer we had was limiting us. I did not love that broker-dealer. Nice people, but they really started to fall apart. They’re no longer in business. But we realized it was too small and that our business had grown to a point where we had to make a change. We had avoided that, because it is painful, for probably too long and went through the process of finding a new broker-dealer.

We were also about to launch Practice Makeover with InvestmentNews. It’s a series we did a few years ago. And at the last minute, after it was all done, the broker-dealer was saying they didn’t approve it anymore, and it was just a nightmare. And so we decided to change broker-dealers, found Triad, we submitted the resignation, started the onboarding process, and I had a one-year-old and a three-and-a-half-year-old. And our lead operations person, the only one that was really experienced in operations, who was supposed to run that project, left us.

She moved. And I understand her decision. It was just horrible timing for us. And I just remember thinking like, I quit. All I wanted to do was just quit. I don’t make enough money for this nightmare. I want to be home with my babies. I wasn’t sleeping at night. I had a teething one-year-old. I had a toddler that was going through kind of some night terrors. I remember lying on the floor of my nursery, holding my one-year-old’s hand through the crib, it was probably 2:00 in the morning, and just sobbing my eyes out to the point I couldn’t breathe, just thinking, I can’t take it.

And luckily, we had two people,  one person that was new. That’s Adam who has been with us and has been amazing to us for four and a half years now. But he was able to step in and learn quickly. He and I got it done together, and we did it well. But truly, that night, I just thought it wasn’t worth it. I can’t take it anymore. I quit. I was just never going to show up again. But again, I’m glad I had persistence because I thought I got to pick my head up, and this is a good chance, and I’ve got people who rely on me, and this is what we have to do. So I made a plan, and we did it.

Michael: What pulls you through this when you’re going through those moments?

Nina: I’m just passionate about what we do. I’m dedicated. It’s my company. These are people that rely on me. We’ve become very close to most of our clients; we care about them a lot. There is a lot of mutual respect and like. So there’s a commitment factor, but there’s really an underlying passion and drive. But, yeah, it’s tough.

And friends. I’ve had an incredible partner. I don’t think I’d do this by myself. I would have no interest at this point doing this by myself. But some really amazing industry friends and peers who I could go to that I intentionally found and developed over time. And I know now that for right now those are the people who really get me through it. And they know I lean on them.

Advice To Young Women Advisors [01:46:37]

Michael: So what would your advice be to young advisors, maybe young women advisors in particular, that are looking at coming into the business or going down this road and are struggling with some of the same fears and challenges that you’ve been through?

Nina: I would say join the Female Advisor Network so that you have some community immediately. Find your people. That really was important to me. Even when I was at Merrill having coffee with Matt Archer – who knew that three years later he would become my business partner, and now 10 years later still be partners in a thriving advisory practice?

I think understanding that other advisors can add value to you and not looking at people in a competitive way, but really finding your tribe that can support you when you have those bad days. Because they’re going to happen. Even the most successful advisors have some stories that can be very poignant on some of the really hard times that you would have no clue they had those days. I think just finding as quickly as you can some people that you can really connect with and lean on that are in this business. I’ve got some great friends, but they don’t always understand this business and some of the trials that I go through. But also to be able to learn from them.

I have always had relationships with male mentors and friends, female mentors and friends, some are in fintech, some at broker-dealers. They kind of run the gamut, and in media. I’ve always tried to introduce myself. I’m fearless with that. I introduced myself when we were in Nashville when you were a keynote speaker because I genuinely believe that I’m a connector, and I think I can make introductions to people that would help them. My network has benefited me more than anything.

Nobody has given me anything other than support, or maybe made some introductions thinking, you can get some value out of this person. It’s not like I asked them for favors, but they’ve been a support system to say, “Hey, I’ve been there. This is what I did or how I handled it.” And that’s been beneficial, and vice versa.

I have a lot of people that look to me. And I think it’s funny, the Female Advisor Network, kind of the epiphany was, one night, recently before I launched it, I was sitting on my patio, having a glass of wine, and I realized that my last 10 text messages were from some of the most influential people in the business. And I was just like joking around with them. Our conversations didn’t have anything to do with work. We’ve become great friends. I thought, oh my gosh, I’m not that little girl at the wirehouse beaten-down anymore. I’m where I always hoped I would be. And more than anything, as far as opportunities, I’ve been able to write for “Financial Planning” magazine. I continue to do that.

So the opportunities I’ve had have been through just introducing myself and being very genuine. I think that’s the other thing, is being genuine and offering to do things for other people, because power of reciprocity is huge and I think people genuinely want to help other people. So that’s my couple of things.

Michael: So as we wrap up, this is a podcast around on success, and one of the themes that always comes up is just that the word success means different things to different people. You’ve had this successful path persevering over a lot of challenges, a lot of family balance challenges along the way. As you said, the juggle is real, and getting to, I think, what anybody would objectively call a successful firm now as you’re closing in on $100 million under management with a partner, and still have decades literally to grow from here. So I’m wondering, as you look at this from a personal perspective, how do you define success for yourself at this point?

Nina: Success for me really means that I have influenced or improved somebody’s life. I’ve never had a drive around money. I’m an entrepreneur, and certainly, I understand that and I enjoy our company revenue, seeing it grow and things like that, but that doesn’t drive me. That’s not what drove me through bad days. It’s that being successful. And if I step back and ask, “Am I successful today?” Yeah, I think we’re improving people’s lives, and I think I’ve influenced some people in a positive way. And that’s why I think I’m successful. At the end of the day, when we close the door here, or I go to bed, that’s what fulfills me. And that to me means success.

Michael: Very cool. I hope, then, we get to help amplify that platform for you a little with this podcast in sharing your perspective with, I think, a few people who want and need to hear that message that this stuff is hard, and it’s hard for everyone, and it’s okay if you feel those moments to cry a little when tough things happen in the business. But then, as you’ve shown, I think, then you pick yourself up, and you figure out how you’re going to persevere, and you work through it. And you do. And that to me is ultimately what really defines who ends out being successful or not.

As you said earlier, there’s this social media effect that’s amplified where it looks like everybody else’s life is happy and cheery and only yours has difficult times, and that’s not really what happens. I think you give a much better reflection of it, which is difficult stuff happens to everyone. And then it makes us all emotional and stressed from time to time. The question is, have your moment, whatever that challenge is, but then what are you doing to pick yourself up and persevere, and what support system, or entire network, do you have to help with that?

Nina: Yeah, and I really just want to thank you so much for having me on here and letting me share about my projects, passion projects, really, but also just to share. Hopefully, some advisors can learn from how we do business. And I’m happy if anyone wants to reach out to me and expand further on our process or how we use different things. It’s been a treat for me. And I’m genuinely very, very grateful for the opportunity to talk to you today.

Michael: Absolutely. Well, thank you, Nina, for joining us on the “Financial Advisor Success” podcast.

Nina: Thank you.