#FA Success Ep 255: Using An Advice-Only Approach To Quickly Grow With DIY Validators, With Cody Garrett

Resources Featured In This Episode:

• Cody Garrett
• Measure Twice Financial
• Measure Twice Money
• Measure Twice Planners
• XY Planning Network
• AdvicePay
• eMoney Advisor
• Enrolled Agent (EA)
• Measure Twice Planners
• Jocko Willink's "Extreme Ownership"
• Kitces & Carl Ep 53: Using Financial Plan Proposals To Show Planning Value To Prospective Clients
• Why All Financial Planners Need To Create A Sample Financial Plan
• Joseph Birkofer
• Financial Advisor Fee Trends And The Fee Compression Mirage (Kitces Benchmarking Study)
• Tim Ferriss "Fear-Setting"

Full Transcript:

Michael: Welcome, Cody Garrett, to the "Financial Advisor Success" podcast.

Cody: Thank you so much, Michael. I appreciate your kind invitation. And you have an awesome team there at the Nerd's Eye View, for sure.

Michael: Awesome. Appreciate that. And I really appreciate you coming out to join us for the podcast today. I'm looking forward to the discussion and a conversation about what I'm starting to see as, basically, a new business model emerging in the advisor space - and I guess as part of our conversation, we may even talk about whether it's new or not new, or what's different - but the rise of what I'm seeing more and more of: advice-only firms. You know, advisory firms that position themselves as advice-only. And I kind of think of it relative to the growth of fee-only, which was kind of defined in a very specific way around, we only do fees. It was meant to contrast with firms that don't get compensated through commissions, as a way to talk about differences in compensation, differences in conflicts of interest, differences in standards of care.

And now I'm seeing this rise of firms that are starting to market and hold themselves out as advice-only, with, again, kind of a very specific language that is meant to define a certain characteristic of the firm of, like, “We don't even do the portfolio management. Like, it is just advice. It is advice only.” And I know you are living this model, having launched relatively recently into an advice-only firm, and had very rapid growth in an advice-only firm. And so I'm looking forward, today, to talking about this kind of emerging trend of what does it mean to be an advice-only firm?

How Advice-Only Fees Offer Freedom To Service Younger Families And From Conflicts Of Interest [4:37]

Cody: I really appreciate you bringing me on to talk about this stuff. I'm super passionate and energetic about it. I get on Zoom calls with other planners, like, multiple times a week, just saying, like, how does this actually work in real life. But it's funny how kind of the tranches of movement through the industry have been in terms of fee structure. I know we really have...there's a lot of debates, unfortunately, about compensation models, but kind of the movement has certainly gone from, you know, before I was even in the industry - four years ago, I didn't know what an IRA was, so that kind of gives you a glimpse of how new I still am to all of this - but the move from kind of compensations to, you know, what people defined as kind of non-transparent fees, like they don't really know what they're paying, to fee-only. And then people went kind of a step further and went, "Oh, I'm going to be flat fee." So not tied to the compensation, not tied to the actual investments, and the thing that's out of our control, which is, you know, market performance.

And then now it's kind of going one step further than a flat fee and saying, you know, a lot of consumers, a lot of families want fee-only financial planning, without the expectation, obligation, or even the option to have their investment managed. And really what that means is, they want as much transparency. There's debates right now about, is there such thing as no conflict of interest, right? And I think, at least on the compensation model side, this is what consumers are saying is, like, the most transparent. They're saying, "Hey, you know, I pay you, you give me financial education, financial advice, and that's it." There's no add-ons. There's no commissions. And I think whether you're doing the right thing for clients or not, if a family feels like doing financial planning is just a loss leader or a way to move assets, they're going to feel like they're not getting your best value out of you as a planner.

Michael: Yeah, it's an interesting evolution because as you said, we've seen the growth of advisors with various flat fee models, right? Flat project fees, monthly subscription fees, annual retainer fees. I broadly call that category fee-for-service firms. Like, we charge a fee, we provide some service. It's not tied to AUM. It's not tied to a sale or imputation of a particular product. Like, it's just a fee for the actual service work, or the advice that's tied to the service. And, you know, just if you look broadly at benchmarking studies. And I mean, we see this directly within AdvicePay as well, that there's a really rapid, explosive growth happening right now in fee-for-service financial planning. But in part, it's got really, really high growth rates because it was a really small denominator. Just the overwhelming majority of firms have been charging AUM fees. And most firms I find that are going into charging planning fees, it's an add-on; it's an option; it's an extension. It's “We want to work with some younger next generation clients who don't meet our investment minimums, but we want to have a more diversified clientele. So we're going to launch this monthly subscription thing to work with younger HENRYs, or not rich yet, younger HENRY clients.” And, okay. I mean, get it. When you've only been in an AUM world, it literally limits you to only clients who have assets to manage. So you want to get a broader client base, you want to get the younger client base, you can add it on. If you look at a lot of the industry benchmarking studies, you'll see, like, AUM-centric firms, but they're doing 10% of their revenue in planning fees, or 20%, or 30%. And not necessarily growing a ton as though it's going to be 100% planning fees, and their AUM is going to go away. They're doing it as diversified revenue models.

Cody: Well, and it's funny, just came to my head right now is, what most firms are doing in terms of adding, like, flat-fee planning is, they see it as kind of like a side hustle. They're, like, "Hey, we got AUM. that machine is going." But, they understand diversification, right? We understand diversification. So we go, let's add an additional revenue source. But again, even the attitude toward it is very much like side hustle. Like, “this isn't our main thing, so we're not necessarily going to invest a lot of time or people as well into that part of the business.”

Michael: And what strikes me about this whole structure. I mean, look, I’ve got nothing against firms that are just trying to do more planning work and charge for their planning fees. You know, I always worry a little bit of just… if you're going to do it, make sure you're all in on it enough that you're really going to deliver the value for the fees that you're charging. Otherwise, you're going to roll it out, and clients aren't going to pay for it. But to me, there's something very distinct about seeing the growth of firms that are saying, "I'm going to start charging for planning." Or, like, "I'm going to have two fees. I'm going to have an investment management fee for the pure investment management, and a planning fee for the planning work. And maybe even I'll have a slightly lower AUM fee, because I'm just charging the AUM fee for the investments and just charging the planning fee for the planning work."

So there's all of these blended fee models that are emerging. But there's something very, very distinct and different when you start talking about advice-only, right? That "only" word is super powerful in defining position, in defining what the firm does, what the firm doesn't do, and the focus that creates. You know, I mean, if you look broadly at the industry, just mathematically, the majority of advisors are fee and commission. You know, just the majority of advisors are not in RIAs. They're in some kind of broker dealer or insurance company that has some level of commission compensation, but very, very few are 100% commissions now. You know, just overall majority of advisors and broker dealers are hybrid. They're duly registered as broker and RIA. And so, you know, the majority of advisors now are fee and commission in some varying percentages.

But then there's this segment that's fee-only, that's marketed around fee-only, and that's just for better or worse, has tried to create differentiation for themselves, of saying, but it's different when I don't even have a motive, I don't even have a desire, when I don't even have the option to sell you a product for a commission. Because, like, I literally don't have the brokerage or the insurance license to sell you the thing. And it creates, I think, a certain level of comfort, of psychological safety, for clients. You know, we talk about it in terms of conflicts of interest, which is true. There are some conflicts of interest that crop up. I think, just even in a more pure level, clients can tell when you've got some other dog in the hunt, or not, because it's hard for us to hide it. If at the end of the day, you know, your bread and butter business is the thing that you sell and get the commission on, and the planning works the loss leader.

At some point, they notice. And if they notice early enough, they may not even want to engage. You know, and I think the same thing happens to varying extents in the AUM world. And that I think there's this interesting distinction that starts getting created for advice-only firms just to say, as you said, no expectation, no obligation, and no option to have your investments managed for the client that just says, like, "I really just want to pay someone for the advice. I don't want to do it because then they're going to pitch me for the assets at the end. I just really want to pay someone for the advice." That to say, “We're an advice-only firm” is really appealing for that segment of clientele.

Advice-Only Service For DIY Investors [11:28]

Cody: Well, and it's funny how the language works. So, I mean, I've heard so many times people say, "Oh, like, people don't think that fee-only and AUM know each other." Right? They're just like, “Oh, wait, how does that make sense?” Because I think that people think fee-only is synonymous with flat fee. And there's enough confusion right there. But the reason that I shifted entirely to actually launching this firm, I received a call that was a very distinct pivot for me. I received a call from someone who they said they had interviewed over 10 fee-only CFP financial planners, and none of them would offer financial planning without the expectation to manage his money. And he was so frustrated. He's like, "I mean, I thought this was all about helping people make financial decisions, right? I mean, can't I just sit down with you?"

And so the firms that he specifically interviewed, I know, there are a lot of firms that are listening now and saying, "Oh, well, I mean, we would have taken that family on." But there's a certain level of transparency that's missing. And it's also really difficult for... You know, this is changing too, but it's very difficult for families to find what they're looking for on the different search platforms online, whether it's finding somebody in your local area versus somebody who really aligns with not just your niche in terms of if you're a married couple or if you're young, like the HENRYs. But also, if you just have a certain philosophy about money, right? So I specifically work with DIY investors who want to be financially independent within the next five years, right? Financial independence is actually its own very much like a community that revolves around a lot of philosophies - not just investment related, but really about aligning our money with our values. So it's very difficult for families to find the right "niche" for themselves by using more traditional tools.

And a quick thing I wanted to say is, sometimes it's hard to describe what advice-only is without using just negative terminology. Like, you know, describing what advice-only is without saying, without, and what we don't do. So what I tell families is, my role as a financial planner is to provide personalized financial education, to really empower them to make an implement their own well-informed decisions. So the product that I actually provide, if we're talking about products, or selling something. I kind of say it with a smile, the product that I sell is clarity and confidence. And families really go, "Oh, like, there's not going to be the, ‘Oh, yeah, and by the way, here's a..." at the end of the conversation. They know very clearly, and it's also just nice to send them the ADV. The types of clients I work with, they read it probably twice. They look at the ADV and they're like, "Let me get this right. Like, just making sure…”

So the financial independence community, very specifically, they very much go beyond the basics. So they understand compound interest. And I've heard this conversation a lot, of saying, "We understand compound interest. We also understand...” - And there's graphs to show all this stuff. They're not looking at necessarily the financial advisor white papers and that part of their value - but they're looking at is, “What does 1% over time do to my portfolio?” And I specifically work with people who are in their 30s and 40s, who are planning to retire early, and some of them really just going after that kind of the 4% rule of saying, "You know, if I'm doing the 4% rule, that becomes the 5% rule, doesn't it?" So they're very kind of almost ‘woke’ to the compensation models.

Michael: But I mean, there's still an underlying core there, right? And I can envision all the advisors listening, and they're like, "Yeah, until they manage their portfolio and lose 40% in a bear market, because they freak out and panic at the bottom. And then all of a sudden, that 1% fee isn't going to seem so bad anymore." You know, I mean, we all get the impact of the cost of the advisory fee in the absence of any value. Like, I did something useful, like keeping you from selling out of the bear market at the bottom. So, I mean, like, how do you to distinguish... I feel like there's a segment of advisors that would basically say, "Yeah, go ahead and do your FIRE thing for a while. And after you freak out at the bottom of a bear market and lose 30 or 40% because you sold at the wrong time, you can call me back next time."

Why Cody Gives Clients 25 (Or More) One-Page Financial Summaries To Help Clients Make More Educated Decisions [15:30]

Cody: I think the key differentiator in how advice-only planning works is it's very much education-driven. Right? So, kind of a typical advisor relationship, there's a lot going on in the backend, right? In terms of, the client probably doesn't... you might show them reports, but they don't really know what you do. In terms of, like, how you might mention to them, I'm doing tax gain loss harvesting. You can even teach them like what it is, but unless you show them, “Hey, this is how I review your adjusted cost basis. Right? This is how I add up all your different sources of income. This is how I calculate your Roth conversion strategy.”

The families I work with, nothing's hidden. For example, in the traditional office, you'd be sitting across the table from a client, and you'd have kind of your legal pad taking notes, and they don't really know what you're writing down. Since I do 100% remote planning, I screen-share my document with them. As I'm typing, they see exactly what I'm typing. And they can go, "Oh, wow." And there's a certain level of shift that I'm doing in my practice, specifically. I'm trying to make everything I do, especially, you know, working with the families, is really focused on relationships, not transactions. Going back to the, “Go do your own thing until the market crashes” - I'm really just educating. In terms of investments, I believe that the primary gap between risk tolerance and risk capacity is education. Advisors, I think, a lot of them are using the, "We're going to do the risk tolerance questionnaire, right? And then I'm going to kind of meet you in the middle between what I know about your risk capacity and what I know about your risk tolerance."

But I think through financial education, you can really narrow that gap, where for example, when I talk about bonds with clients, The typical general public thinks that stocks are risky and bonds are safe, right? As we know, there are very different types of bonds in terms of duration, and corporate versus treasury versus municipal, right? So instead of just saying, “Here are the bonds to buy,” I have a one-page summary in the financial planning document where I educate them on all the different types of bonds and what they provide. There's really three... You know, just quick educational, what I say is, really, bonds can provide one or more of the following things, which is, income, stability, and diversification. And I teach them which type of bonds provide what they're looking for. Because I've had a lot of clients who say, "Hey, I don't buy bonds anymore." The DIY investors say, "I don't buy bonds anymore because during COVID, my bonds went out with my stocks. Like, what's the point?" Right?

So I show them the graph of saying, “Hey, well, the reason that your bonds went down with the stocks is that you're in high yield corporate bonds.” I've also seen this a lot in terms of not just DIY investors, but I worked with clients who have an investment manager, and they hire me to be a third-party perspective to say, "Hey, like, can you just tell me not just how my advisor’s doing, but can you tell me what they're doing?" Because they're not necessarily getting that level of education of… they know they're in a 60-40, right? They send me their statements, and I know half of that 40% is in high-yield corporate bonds. I'm like, "Okay, well, there's definitely some chasing of performance, really to keep up with expectations of beating benchmarks." And I don't necessarily talk badly about the other advisor, I just educate, saying, "Oh, well, here's the reason the bonds that you owned went down. And here are some conversations that..." I mean, I do feel kind of sad that, you know, they haven't felt comfortable asking these questions of their investment manager, right?

But I just take this opportunity... We hear a lot about the one-page financial plan. And instead of doing a one-page financial plan, I do a one-page summary of every topic area. So my typical financial plan is 25 to 30 financial planning summaries. Each of them is really focused on the education of the concept - not just telling them what to do, and of course, not just doing it for them.

The Difference Between Delegators, DIY-Investors, And LIY (Learn-It-Yourself)-Investors [19:25]

Michael: So I guess from a functional perspective, the defining characteristic of just what makes it advice-only is when you get down to the, “I won't manage your money. I can't manage your money.” So I guess, like, you do not have the option for discretion in your ADV. Is that fair as a characterization? Is that basically the dividing line that we're talking about? Because you're still giving them investment advice. I mean, you're pointing out, “these bonds and not those bonds. And here's the issue with owning high yield in a volatile environment.” So you're certainly still talking investments and portfolios, but it just sounds like just literally, you're not managing - it's the lack of discretion and not having to know POA, that is the defining line here. Is that a fair characterization?

Cody: Right. Yeah, I think what's interesting there, recently, I receive about four to five prospective clients per week. And I refer out most of them because I'm at deliberate capacity, which I'm sure we'll talk a little bit about. But really, the defining factor is when I'm looking for people to refer other planners, I say, "Hey, does anybody own an advice-only planner?" And people say, "Oh, yeah, I am. I do advice-only." And when I look it's really that they offer flat fee, but they happen to manage investment. You know, they kind of do a little bit of everything. Like you said...

Michael: Which is sort of like, "Yeah, I do financial planning fees." "Oh, well, why are you affiliated with a brokerage firm?" "Oh, well, I also sell these products." So it's like, "Well, so you're really primarily in the product business, not the fee business, right?” Just that distinction between doing some of each. And, you know, that's fine for some clients, perhaps, that want or need the help across each, but just the nature of the word only, particularly if you're using it as a differentiator, like, ‘only’ means only.

Cody: Right. The only thing you're providing is personalized education, period. And that really means is… that's why I've added the option to manage investments. And I'm not saying that... Certainly, there is definitely a need for advisors to be serving delegators, right? But this is on the other end of the spectrum in terms of DIYers. I think when I talk with planners who are especially about to launch a firm, what usually happens is planners define their compensation model, then they go, "Okay, you know, who am I going to serve and how am I going to provide value?" So what I really urge planners to do is flip the switch on that and say, "Who am I going to serve? How am I going to provide value?" And then now I can say, "What's the most appropriate way for the families I serve to pay for that value?" So I think, you know, if more planners would flip the switch on that, they'd understand kind of that, you know, how the advice-only structure kind of comes about.

And I think personally, you know, if I were looking for a financial planner, even without being a planner myself, this is exactly what I would be looking for. I very much align with the financial independence community. You know, my wife and I are on our own path to FI. And this is very much what I'd be looking for. So it's very appropriate, I think, really, for planners to say, "How would I like to be served? Not just in terms of compensation, but again, going back to, how would I want to be served in terms of value?” To me, I would want... I'm the type of person that if I want to learn about a topic, I listen to all the podcasts at 2x speed, I read all the books - you know, all those things. So I really want to work with a financial planner who goes beyond the basics, has the heart of a teacher, and wants to really provide personalized education. But here's the thing with the DIY - the DIY community is exposed to a lot of dogmatic one-size-fits-all, you know, personal finance media, right?

There's the “always do this, never do that.” “Here are the top 10 things you must do.” You know, even in the financial independence community, there are some rules of thumb. As planners, we also have things like the three- to six-month emergency fund, right? But I'm the type of person, if I were looking for a planner, I would say, well, let's go beyond the rules of thumb, beyond the basics. I ultimately want every part of my financial life to be aligned with my personal objectives and values, not kind of the average person's. They're really looking for that, you know, “Let's take everybody in the world out of the room, but us, and let's just...” And I tell families that your financial planning document, it means nothing to anybody else. It's very much just, like, this is just yours. I create all my own templates from scratch, so that I can specifically serve and communicate the financial education to exactly who I'm serving.

Michael: Well, and I think you make a powerful point of saying, like, look, there's this segment of advisors out there that are serving delegators, right? People who have assets, who would like to delegate that to someone else, and have someone else manage it for them. And, like, that's fine. There's nothing wrong with that, right? I mean, just AUM empirically is a very successful business model. But just not everyone's a delegator, right? And so in the modern environment today, with firms going towards AUM, there's basically two types of clients: good clients who are willing to delegate to you, and bad clients who won't. And we don't work with bad clients. I know some firms that literally, write engagement standards. You know, “If you're not going to work with us with your entire personal financial picture and delegate all of your assets to us, we're not going to work with you.”

Cody: Right. And that's completely okay, right? As long as that transparency is there and that you have really intentionality in who you're serving and how you're serving them.

Michael: Yeah. And just, you know, if you're going to go to that extreme, you're going to get some hyper delegating, I just really don't want to touch this money stuff clients. And that's fine. But just the striking thing to me about how you're framing this is just acknowledging there is this other end of the spectrum, the do-it-yourself investor, the more do-it-yourself client. And I guess, A, recognizing that just because they do their investments themselves doesn't mean they don't want an advisor for anything. It just means they don't want an advisor to manage their investments.

Cody: Right. One of the key phrases that we really help to find together is that, really, there's a misconception that just because somebody is a do-it-yourself investor, a DIYer, doesn't mean they're a learn-it-yourself investor, right? That they somehow, just because they do it themselves, know everything about what they're doing. The people who are DIYers, they're the ones who are in the Facebook groups, they're on Reddit. They're in sometimes the healthy groups, sometimes unhealthy. But really, what's happening in terms of, you know, the metaphor toward medical is, they've gone onto Google, and they've gone on to WebMD, and they've done all their searches for their symptoms and treatment options. But now they're saying, "You know what, like, there's so much information here, I just want to go get that second opinion. I want to go see a doctor who's just going to say, hey, based on exactly your symptoms, and your treatment options, here are..." And it's a little bit different for a doctor because most people aren't going to do their own surgery.

But to me, this is like, advice-only planning is like hiring somebody... Let's say that I have a broken sink in my bathroom. Instead of just hiring somebody to do it for me, I hire somebody to walk me along and say, "Okay, you see this part, so we're going to untwist this part." So not just doing it for them, actually doing it with them and giving them the education to graduate, so the next time they need to fix their sink, they can actually do it themselves.

Michael: Yeah, it sort of reminds me of Forrester, which is a research service that actually covers a lot of industries and channels, but including the financial services industry. You know, has done this research for years around the psychographics of consumers. And one of the things I know that Forrester has long talked about in this context is that historically, we've talked about sort of these opposite ends of the spectrum: delegators who work with advisors and handover all the assets; do-it-yourselfers who just, you know, do it themselves, now probably on online platforms, etrade.com and the like. Right? Like, you're one or the other. And one of the striking things to me that Forrester has pointed out with their research is that there's really a third group that sits in between the two that Forrester calls the validators.

And the idea of validators is, you know, they mostly implement themselves. They want to do their own thing. But they like to work with advisors, because they want an expert to validate that they're doing the right thing, that they're making the right decision, right? Like, “I've done my research, but I'm not the expert, you're the expert. So I don't need you to do the whole thing for me, I've done my research. But, can I just show this to you, and pay you for a second opinion before I go do this thing myself. And, like, I totally value an advisor. I don't need to go hands-off. I'm fine to do it. But I don't want to go expertise-off. I don't want to go entirely on my own. I need someone to make sure I'm doing the right thing here, and then I'll go do it because I'm feeling quite confident and comfortable in my ability to do it.”

Cody: Which is funny, it reminds me actually of when financial planners are launching their firm, with XY for example, and they reach out, they consult another financial planner, not necessarily to be... You know, probably get away from... I think that terminology you said is a little bit better than like ‘affirmer.’ That you're just having people hire you to tell you that they're on the right track. But there's very much the same feeling of consulting in any industry of saying, "Hey, I don't know what I don't know. I'm willing to be kind of, like, humble enough, you know, humble enough to back up and just learn from somebody who can teach me something that..." Again, it's very much blind spots. They come in and say, "Hey, like, I know a lot." It's funny, the average family that I work with, in terms of really technical concepts, they know more than probably the average advisor, especially when I'm working with people who want to retire early. They're talking about Roth conversion ladders, and they understand, like, SEPP, 72(t), and the Rule of 55.

A lot of concepts that aren't necessarily...not necessarily really focuses of education in the CFP level, because, again, it goes into that niche. But I have a lot of families tell me that they have reached out to advisors and they say, "Oh, I really want to do a Roth conversion ladder." And the advisor goes, "Well, what's that?" And they're like, "I better go find someone else because this is just..." I mean, and again, it's not the advisor's fault for not knowing the terminology of that specific kind of community and how they view early distribution strategies. But yeah, it's very much a... there's so many different types of communities like that. I'm sure I'm serving just one of them.

Cody’s Compensation Model And Why He Charges Every Client The Same Amount [29:44]

Michael: So talk to me, so on the one hand, like, it's fascinating to me to see this sort of emergence of firms starting to market themselves as advice-only, to really make this distinction. I mean, to me, for the advisor who's either, I guess, a do-it-yourselfer, or call it a delegator - a self-implementer, but willing to pay for advice. I get it, advice-only is just like hanging out a giant shingle that says, like, "I will just give you the advice, and I'm not going to pitch you for your assets." And, you know, if you're a do-it-yourselfer that just wants the advice and doesn't want to be pitched on the assets, like, just thank goodness. Like, just okay, you do what I'm looking for. I don't have to do this and suss it out, and then get to the prospect you had always back, who said, “I've interviewed 10 advisors because I just want to pay them for a financial plan, and none of them will do the plan without an expectation of managing my money at the end of it.”

So just advice-only, even just from a pure marketing differentiation perspective, it's just kind of, like, rolling out the welcome mat for self-implementing validators. And if that's who you want to work with, great to roll the welcome mat out to them. You'll bring them right in. It does strike me though, that it can feel like still, at the end of the day, just I'm assuming you're going to get paid a financial planning fee for your advice. You're going to get paid something for your time that you're giving advice. And I mean, we've had that model for a long time, right? The Garrett Planning Network launched more than 20 years ago, specifically around just giving advice on an hourly basis without investment management. So, do you make a distinction between advice-only and an hourly model that's been around for 20-plus years? Is this just, like, a better way to package it and message it? Is there something else that's different in the rise of advice-only versus the hourly financial planner?

Cody: Yeah. Again, hourly kind of falls, like, actually under advice-only. So advice-only really has three fee structures, which is... You can do hourly, really, which is typically like limited scope, or sometimes not always. It's kind of like a pay as you can afford financial planning. Then there's the retainer model, the subscription of ongoing accountability, certainly. And then there's this, like, project-based, which a lot of us call the one-time plan, right? So I would say that those three are actually compensation models kind of underneath the roof or umbrella of advice-only.

Michael: Okay. And I guess just the distinction, because there are obviously AUM firms and commission-based firms, and others that are doing hourly, or retainers, or project-based as well. But just the distinction is, not only are you doing these, but you're only doing these, right? Just the difference between a firm that will manage your portfolio for a fee but also sells products, versus a firm that only will manage your portfolio for a fee, which is fee-only for us. Advice-only is just the distinction of, “Yeah, other firms might do some of these structures and charge these fees. But this is the only thing we do. So, you can know if you come to us for this. This is the whole thing. This is the only engagement. It's not a loss leader, I'm not trying to do it to pitch you for something else. There's no bait and switch thing here. Just I'm all in on this, if this is what you want, I'm here to do this and only this for you.”

Cody: Right. Well, I would say that it's a little bit difficult. I think that not just as planners, but just generally, people really like to find a title. And we're all searching for, like, this identity of purpose fulfillment, calling ourselves a certain thing. I think whether it's ‘fee-only’ or ‘fiduciary,’ or all the different compensation models. I specifically would love to not have to use terminology to explain what I do. Especially because, you know, advice-only is, in a way, by saying only, people are saying, "Oh, that means you don't do that. That means you don't do that. That means you don't do that." Right? They focus on the second part of advice-only, which is the only. Just like, you know, typically, a lot of financial media, and this is a little side, it focuses on the finance, not the personal part of personal finance. I mean, I don't think that we will get away from it, but I wish that we could get away from titles describing what you do, and just the value you provide. Here's the key differentiator for my business is, yes, I focus on one-on-one, like, providing value to families one-on-one, but I've created a firm that I can specifically provide a lot of one-to-many value.

And that's really serving families who are my clients. And that's actually been the driver of demand for my one-on-one planning. But I think, really, personally, I use advice-only on LinkedIn because I think that that terminology could certainly help families. And I think right now, it's just educating really financial planners, right? Because when you ask if you're advice-only, you know, apparently, some people, they think that just means fee-only. So, I mean, we can come up with all different types of definitions. But I would really love to move forward and say, like, ‘advice-only,’ yes, it's on my LinkedIn, but it really doesn't tell you what I do, how I provide value.

Michael: So talk to us a little bit more in practice about just how do you actually price this? I mean, like, what fees are you charging? What kinds of engagements are you doing that is making this feasible as an advice-only business model for you? Because, right or wrong, I think the perception out there is that hourly firms have struggled to grow and scale beyond a certain size, right? Just if only because when you're charging by the hour, and you're trying to make the income add up, you need a lot of hours. And if clients are only paying you for an hour or two at a time, you need a lot of clients.

Cody: “You're only getting paid for your time. Like, how do you do this?”

Michael: And it's hard to get a bajillion clients on the hourly model. If you spend enough time marketing to get a bajillion clients, then you actually don't have any time to do the advice and get paid by the hour. So it gets limiting. How are you pricing your advice-only model? Are you operating still on an hourly basis? Or are you doing, I think you'd said like hourly, retainers, or project-based. Like, what are you doing? And how are you pricing this?

Cody: So I'm trying to keep not only the model, but my firm, as transparent and simple as possible. So what I say is that every household pays the same fee for the same service and process, period. Whether you're married, you have different financial planning topic areas, you make a certain amount of money, you have assets or don't have assets, every household pays the same fee for the same service. And right now, I currently charge $6,400 for a three-month three-meeting process. And I really think that the... People ask, like, "How is that going to be profitable and sustainable over time?" So my plan in 2022, for example, is to do two plans per month, which is 10 hours per week of financial planning one-on-one work, but that's gross revenue of $140,800, with taking one whole month off for the year.

Michael: Wait, wait. Give me those metrics again. Just I'm trying to process that. So, so two plans a month?

Cody: Correct. At $6,400 each.

Michael: Okay. Okay. And then you said...how many hours did you say it's taking you to do that?

Cody: So a comprehensive financial plan, on average, takes 20 hours, including the meetings with the family.

Michael: Okay. And so, two plans, like, just do that math for me, because you're going to have rolling plans that are overlapping. So if I'm thinking about this right, like you've got… plans take three months to go through. So on a rolling basis, if you're doing two plans a month, you’ve got two new this month, two from last month, and two you're winding down from the third month. So there's like six open plans at any particular time.

Cody: Exactly. There are six meetings per month, which is all together, including the back end, you know, the 15 hours of actually doing the planning, and then the 5 hours with the family. It actually comes out to 10 hours per week of doing one-on-one financial planning. So that’s two new plans per month, and each plan is 20 hours, so that ends up being 10 hours per week, on average. I think the average month has 4.3333, whatever, weeks. And then, you know, taking one month off in the year, that ends up being $140,800. And here's why... And I come back to, the pricing is actually a lot less based on, you know... Revenue isn't really the driver of what I'm doing. I think, you know, when I back that out, it ends up, yes, being like $3,200 a month. I launched my firm at $4,200. And, you know, as you describe and study, certainly, like, firms always raise their price. And it's a lot less about what can the client afford. But you have to come back to kind of, like, what is the value of what I'm doing? And I know on previous episodes, talking about perfect RIA, for example, if you're providing what you believe is a premium product, it's okay to charge a premium for that.

Michael: Well, and I mean, I do the math and the aggregate here. So just a $6,400 planning fee for what ultimately is a 20-hour process all in, like, it's $320 an hour. Which is, I think, slightly above average. I think the last Kitces benchmarking study we did, the median hourly advisor fee was $250 an hour. So you're slightly higher than the average. But, as you said, we can choose to charge above-average fees for above-average services, and quality and outcomes, which you can do when you're super focused on who you're serving. It certainly adds up to me in that end. And, you know, I know relative to advisor community out there, you've articulated this as a goal of two plans a month for 11 out of the 12 months a year, at $6,400 a plan, it's $140,000 revenue opportunity. And, you know, for some advisors, like, their income goals or their revenue goals are higher than that, and wouldn't necessarily be satisfied with that.

But as you noted for the flipside, like, you're doing this in 10 hours a week. So, like, you want to make $280,000, work 20 hours a week. You want to make $420,000, work 30 hours a week. And, you know, now you're ending out with revenue that's much higher than the average advisor, and you're still only at 30 hours a week. Like, there's a lot of power that comes from $320 an hour for your time.

Cody: And for one example, I specifically kind of, like, laid these out, because you can actually... You know, let's say you have this model, and you want to be a little surge-y, right? Like, you want to kind of add like the surge element to advising and planning. Like, if I did three plans per month, that's 14 hours per week, that's $192,000 in annual revenue, taking two months off per year, right? You can spin this, you can really make it as... You know, “I'm going to work like crazy for six months out of the year and make over $250,000.” But again, the driver for me is a lot less about revenue. I pay myself $3,500 a month. Right? So everything on top of that, really about a third of the year, in terms of planning, covers my personal and business lifestyle. But I'm less concerned about the revenue. And, you know, the rest just goes into investing to reach my own financial independence goals. But to me, it's that 10 hours per week that's really exciting to me. Because that means I can spend the rest of the week providing one-to-many value to families who are not being served one-on-one by me or other advisors.

The Type Of Clients Cody Serves [40:58]

Michael: So what's the cost of this structure? I mean, just do you have a lot of expenses beyond just whatever you literally pay yourself for doing the advice work?

Cody: So my only expenses right now are XY Planning Network - that's where I launched my firm. And I don't use all the tech stack. I use just a little bit of the tech stack. My primary tech for doing planning is Microsoft Word, Excel, and PDFs. So, you know, outside of XYPN, I pay for Google Voice, and I pay for Adobe Acrobat. And I think that's about it. Oh, QuickBooks. But all in, my total business expenses are less than $8,000 a year, including the XYPN membership.

Michael: So, I mean, even with an income goal of $140,000, like, you're taking home almost $0.95 cents on the dollar. So when you're saying you pay yourself $3,500 a month, that's not because the business is only earning that, that's just because you're just banking the rest to the long term-investing accounts as opposed to personal expenses living account?

Cody: Right. I pay myself 30% of gross revenue.

Michael: Okay. And then you're just saving the other 65% of gross revenue. Because you're living the FIRE journey as well.

Cody: Yeah. It's very much aligned with financial independence. But again, like, none of this is about... My metric for advisor success has nothing to do with numbers and revenue. Again, because I flipped the switch and focus on value, I can provide to families. And then, oh, yeah, and by the way, they'll pay for it somehow. Right? Like, my personal metric for success is how much can I give away without expecting anything in return? And that's more of a core value than, like, a financial planner model. Right? But, like, I think once revenue is taken care of, I really define for myself and my family and my business, what's enough. There's a lot of coaching programs and there's a lot of advisors who are very much trying to reach that... You know, the million dollars in revenue. Like, we got to get to that point. We have to delegate. We have to hire people. But I've decided for myself, like, if I can be a solo firm, if I can... You know, my work for revenue is really one financial plan a month. Actually, not even that, right?

But revenue is taken care of in three months of the year. I can spend so much more of my time providing financial education to families, specifically, with a passion to go beyond the dogmatic one-size-fits-all. Like, I'm actually trademarking the phrase "Keep finance personal,” because my passion is really helping families be educated that financial planning isn't just choosing investments. It's all those other areas that we're so passionate about, that we learn about in courses and otherwise. My passion is really to help families understand that financial planning is truly comprehensive. And then also, by providing education, my hope is that I actually end up referring 10 people a week to other advisors. Like. I'm really passionate about the future of their profession, especially new financial planners, who, a lot of them are reaching out to me through the externship, for example, and saying, "Wow, like, I really want to do this. This aligns with exactly who I want to serve and how I want to serve. And I didn't know this was sustainable and profitable until I saw your model."

Michael: Well, it's just phenomenal. Like, when you get the revenue per client up to healthy numbers, it just doesn't take a lot of clients to make the math work, right? When you're... I mean, kind of getting back to the hourly discussion before, right? If you're charging a couple hundred dollars an hour, but the average client only buys an hour or two of your time, right? If you live in a world where the average client only gives you 500 bucks for an engagement. Suddenly, if you want to do $150,000 in revenue, like, you need 300 clients, which is mind-numbingly painful for most advisors. When you're charging $6,400 a client, and suddenly now you need 24 clients to make the same numbers work instead of 300 clients, just suddenly, the calculus looks a whole lot different.

Cody: Well, it's funny too. A lot of times, you'll hear, "Wow, you charge $6,400 for a three-month three-meeting process. Like, that's crazy." But the average family I serve has between $2 and $3 million in investable assets. So they see this as a complete steal, not just in terms of, like, you know, the fee, but the families I've worked with who have an investment manager, and they hire me to do a onetime plan, they say, "Why did I just pay you $6,400 to provide all of this, when I'm paying somebody else, like, you know, even sometimes more than $30,000 a year to just–” in their mind –“‘just’ choose investments for them?"

Michael: So, like, is that a good reflection of the typical client? Like, just it's people who may have a couple million dollars in assets and portfolios. But again, like, they don't want to delegate, so they're not interested in handing off to an advisor that's going to charge them 1%, or, you know, to be fair, probably a little lower than 1%, with breakpoints there. But, like, they don't want to delegate to someone who's going to charge them an AUM fee on an ongoing basis. They just want to pay once. But when every other advisor is charging them $15,000 to $25,000 a year ongoing, like, writing a check for $6,400 once is not such a big deal. As you said, they view it as a steal of a deal for you to be charging $320 an hour for a three-month three-meeting process.

Cody: Well, and also, a lot of it has to do with the timeline of what their objectives are financially. So not only are they DIY investors who know a lot about what they're doing. My typical family sends me between 40 and 50 documents when we do data gathering because I describe it as, I look at everything in your life with a number on it. Advisors always tell me, like, "How do you actually get them to send you all that stuff?" And I go, "They send it to me within three days." Like, it's already in the Google Drive and ready to share. Like, you know, they've got more spreadsheets than I do on their computers.

Michael: So which I'm guessing is sort of a function of two things. One, you are working with, do-it-yourselfers, and do-it-yourselfers that want to invest in their education, which means they tend to be pretty savvy and on top of their stuff in the first place. And I'm presuming B, just, they know you don't have the option to manage investments. So they don't need to hide anything out of fear you're going to ask them to manage it.

Cody: Right. And a big part of it, I didn't think about this until right now, is that, a lot of times when we're talking about retirement planning, we're focusing on somebody who's about to pull the trigger on Social Security and talking about Medicare, things like that. I'm working with clients sometimes who are in their mid-40s, right? They not only have, you know, a lot of different topic areas to deal with, but they're also very, very bright. A lot of them say, like, "I could see myself having somebody help me manage my investments when I get to those traditional ages, but not right now when I'm 45 and I'm still knocking out the crossword puzzle every morning."

Michael: Right. Just they're feeling young and bright and vivacious.

Cody: Yeah, they're like, "While I have the mental capacity to do this, I'm going to do this. Like, why pay for something I can do myself today?" And it's not just that they... When people ask me, "Hey, should I use a financial advisor to manage my money?" I always say, "It's really if you don't have the time, the temperament, or the talent." The three Ts. A big plug for Joe Birkofer at my last firm - I love that phrase. So, the time, temperament, and talent to do it themselves, that's when it makes sense certainly, to do some delegation. But the families I work with, they have the time, not only because... It's not just because they have tons of time on their hand. They prioritize their time on focusing on financial wellness. That really matters to them. The temperament, again, they've kind of closed that gap between the risk tolerance and risk capacity.

A lot of them very much have a low-cost, passive approach with really saying, "Hey, I know this is like a buy and hold. I'm going to..." They're already doing tax-gain loss harvesting. And then the talent really comes from them just like, yeah, that self-education. And a lot of them spend money to educate themselves. I have even worked with some families who say, "Hey, I want to retire early at 45. And I'm going to go through the CFP education program just so that I can learn more about what I'm doing."

Michael: So I get it, just it's this particular segment of folks that are financially sharp, financially savvy, financially successful, right? Just the reality is, if these were the folks that get whipsawed every bear market and make bad sales at the bottom, like, they wouldn't have $2 million or $3 million by their 40s. And I know we have this tendency in the advisor world to just sort of assume that any investor who manages money themselves is going to be horrible at it and blow themselves up because we've all seen...

Cody: And they're just watching somebody on TikTok sell NFTs. Yeah, exactly.

Michael: And, I mean, to be fair, like, it's because that's what we see as advisors, right? Just like one client after another who comes in, who has a terrible sob story about how they completely screwed things up. And they sold everything at the bottom of the pandemic route in late March, early April of 2020. Or, you know, they dumped in the financial crisis, the tech crash. You know, they've blown themselves up and they say, like, "Okay, I probably really need to not be managing this anymore." Or, you know, "My spouse said I need to stop doing this because it's creating marital strife because I've done a bad job." But I feel like we sometimes forget that there are other people out there who are doing just fine. We just don't see them. They don't call. Like, we have a huge self-selection bias.

The only people who call advisors for that are the ones most prone to blow themselves up. So that's fine. That's why they hire us, and that's why they become delegators, and it's why they're a good fit. But I do think we have a tendency to over-generalize, like, “all do-it-yourselfers are terrible self-directed investors who build themselves up.” And I mean, just mathematically from the market end, it can't be true. Because if it was, there would be a giant pile of alpha on the table for whoever takes the opposite side of all those trades, just if every individual investor was all systematically underperforming by hundreds of basis points every year.

Cody: The families I was serving... So I'll just say quickly that, the families I serve during, if I asked them what they did during the COVID crash, they said, "We were digging in the couch cushion for money to put into the market." Those are the people I'm serving. Okay? Like, these are the people who are, everybody else is running to cash; they're trying to find cash to throw in. So they're very much on the flip side psychologically as well. Which sometimes I would say, behaviorally, that might not be healthy on them in terms of the frugality can become actually a negative, a hindrance on their financial wellness as well. So it's funny, the psychology is still important for delegators and DIYers, but they're just geared very differently about risk. Again, that ongoing education, they're willing to put in the time to know exactly what they're doing and why.

Michael: Which again, I think makes that powerful point, like, just as much as we advisors want to talk about the do-it-yourselfers who blow themselves up and then come to us to delegate. Like, there's another segment of do-it-yourselfers, they're doing fine. They understand that you're supposed to invest when times are difficult. And you're supposed to stay invested, and you're supposed to stay the course. And they do it. They're fine. They actually do it. They just have other financial questions that they want to pay for and get answers to, and they don't want to delegate a portfolio to get there because they're actually doing fine on their portfolio without us.

Cody: Right. Well, so the prioritized topics that come to me aren't the things you can learn. Like, I always say Google is not a financial plan. Like, these are the things... You can't learn on Google how much you should convert to Roth this year, right? Or in terms of your asset tax location between traditional taxable and Roth, you know, this cash flow flexibility is underappreciated till it's too late, especially for early retirees. So it's, like, you can Google that all day long, you can Google how much should I convert this year, right? And it's all going to be rules of thumb, and they go, "Well, I'm the type of person who I want to lay out a long-term strategy. But I want to implement this on an annual basis and understand... Not just use a tax preparer who might look backward, but, you know, first of all, I want somebody who can help me find a tax planner who looks forward." Right?

That's very much why I'm a big fan of the EA - Enrolled Agent - designation for any CFP, because nearly every movement of money has a tax consequence. But the families I work with, they want the answers that are not just ungoogleable, but they're ready to make something that's only specific to their family, and their personal financial ecosystem, and personal values. Those are impossible things to align by going into a Reddit forum or something like that.

How Cody Structures Communication And Early Client Meetings [53:24]

Michael: So help us understand a little bit more now. We've talked a few times about $6,400 for three meetings across three months. But can you walk us through the planning process a little bit more of just, what you're doing in between meetings. Because I'm assuming the meetings are typically an hour or two, which means you got 14 hours outside of meetings, which is actually a lot longer than the time that's in the meetings. So can you walk us through the process? Like, “You've sold me on the process, Cody. This sounds great.”

Cody: I'll send you an engagement letter, Michael.

Michael: Yeah, yeah. Like, “Sign me up. I'm ready to do your three-month thing.” So, like, what happens? What happens first? How does this actually work?

Cody: So 90% of my inquiries actually come from Facebook DMs. And then of course, I push them off of Facebook onto the website, where they fill out that Contact Me page. So we can probably talk about kind of how those prospective clients find me to begin with, in a little bit. So they reach out to me and say, "Hey, I want to work with you. Do you have capacity to work with me and my family?" So I set up an intro call with them. I think this is very important. My website has the service process and fee all transparently laid out so that they understand all the transactional part of the business so that when we have our intro call, it's all about them. I believe that success is defined by the ability to create and meet expectations. And I want the expectation that financial planning is relational, not transactional. So, when we have our intro call, it's all about them. I start writing this stuff out on Microsoft Word. I do most of my planning, in terms of paragraph form in Microsoft Word. Once we have the intro call, I might have shown them an example of a comprehensive financial plan, if they want to kind of see what the tangibles look like. And DIY investors, you're usually saying, "I want to see what I'm going to get at the end of this."

Michael: Okay. So you've got, like, a sample, you know, appropriately anonymized sample financial plan that you show clients?

Cody: Right. And that's actually a PDF that includes about 40 different financial planning summaries I've created in different topics. And as we're discussing things, they go, "Oh, yeah, you know, we have a mortgage." And I can quickly scroll down and say, "Oh, well, here's my debt repayment summary that I've created for a family." And I can just briefly educate them on, like, “Here's the types of things I talked with that family about.” And they turn to each other, you know, spouses or partners, they go, "Ooh, we want that. We want that." So, showing them real examples of the financial planning, like, the tangible, deliverable, is very important to DIY investors. And this is also a reason that I still send the bound copy of financial plans to families, because these are the families who will read it twice. And they'll literally sleep with it on top of their head. So those are the families that want the tangible.

So I show them examples of that, and we really focus it on... I really want to learn about their family. And I'm going to learn their birthday, okay? It's on their Social Security statement, right? Like, I don't need to go, "Okay, so what's your birthday? So how many kids?" Again, this is very transactional, so I really just focus on, like, really their prioritized financial objectives. Right? And then really just told me about... Really setting the expectation upfront again, that money is just a tool to provide for your desired lifestyle. So it's not about the money, it's about your life. Setting those expectations. After that call, they don't make the decision during that call. I tell them, especially if they're married or are partners, I say, "Hey, you're welcome to just... Like, I actually encourage you to discuss this important decision to move forward. If you'd like to, you can simply send me an email."

Usually, that email comes within, like, the afternoon or the next day. I send them an engagement letter. They pay half of the fee, which is $3,200. Once they submit the signatures and the fee, I get them onboarded into eMoney to do the data gathering. And I send them a data gathering checklist with the list of all the things that may apply to their financial ecosystem. They upload documents and connect accounts typically in less than a week. Once those are uploaded sufficiently, I send them an email saying, "Thank you so much for uploading all this wonderful information." I usually send them three options for meetings. A big part of expectations for me is, I personally don't like using Calendly. Because it kind of creates the expectation that they kind of control your schedule. So one thing that I do is... So to set up the data gathering meeting - and same thing with the intro call - I always send three dates and times.

And I do this manually - I'm willing to put in the time to do this manually - because it's just another opportunity to be relational. So I'll say, "Here's a morning option, and kind of a lunchtime option, and an afternoon option." And there is certainly a lot of, like, limited beliefs that advisors have about being, like, "But what if none of those work for them?" You know, 95% of the time, they just pick one of those times, and it works for them.

Michael: Yeah. Well, then they'll reply and say, "None of these work. Can you suggest another option?"

Cody: Right. And another opportunity to have a conversation, right? Like, oh, man, another way to have a relationship, a collaborative conversation. So we schedule the data-gathering call. So between that, what I do now is, they've uploaded all these documents, connected accounts. I have spreadsheets, I have templates and calculators that I've built an Excel, for example, and Word for every planning area. So I have calculators for pay statements, debt repayment, mortgage flexibility, retirement savings, education, savings, etc. So I create all of these. I review and summarize all of their quantitative financial information. And I make highlights on the Word file of all the opportunities to turn that quantitative information into qualitative conversations. So just a quick example of that is when I'm looking at a Social Security statement, families think that they're giving that to me because I'm going to read what they get at 62 for retirement age and 70. But I'm really looking at page two and looking at their earnings history. I can say, "Hey, Susie, this is incredible to me. I see that you made $2,000 when you were 15 years old? Tell me about your first job." Right?

What's amazing about that, first of all, it gets away from... There's a lot of questions we talk about, like, what are the perfect questions to ask as advisors? A big one is kind of, like, “Tell me about money growing up. Tell me your first memory about money.” But if I can take... You know, I have so much... Like, all these quantitative documents tell a story about their family. I can say a question that only means something to Susie, right? I can say, you know, "What was your first job?" And it's amazing, actually, I've been collecting kind of the first jobs, it's pretty incredible. There's a lot of people who worked in ice cream parlors, for some reason, back in the day. But what's amazing is, whether Susie loved her job or hated her first job, her face lights up, right? Can you imagine that? And so I gather all the quantitative information. I highlight opportunities to have really good conversations and ask open-ended questions. And what's even better is, all of those opportunities I came up with - they're on the screen for the client to see that document.

And they turn to each other go, "Wow, how did he know that? How did he know that?" Right? But that's a perfect opportunity, going back to education to say, "Hey, I learned from your Social Security statement that you started working at age 15." That makes a connection that now the family understands, “Wow, like, I didn't know all that black and white data actually said something about us as a family.” So, they start to actually be excited moving forward, about looking at data in a different way.

Cody’s Self-Created Financial Planning Templates And Deliverables [1:00:46]

Michael: So a couple of questions here, just walking through the early part of this process. The first, just, I'm wondering, like, why half the fee upfront? Like, you could do none, you could do all, you could do 25%. Like, just why upfront and where did half the fee upfront come from?

Cody: So there are two parts of it. One is that, in terms of value, a lot of firms still treat financial planning as a loss leader. And, you know, what you don't pay for you don't necessarily value. So one is that, I don't look at any of their financial documents until they've paid half the fee. But that's two things. One is, it's the value of my time that I put into that, right? Not just the value of my time, but like really my education experience. And also, like, a lot of that emotional intelligence that goes into looking through those quantitative documents and finding conversations out of them. The second is, that really is the commitment for the client to see... —You're going to start hearing me say family instead of client, really, again, going back to relationships over transactions. Like, once they've paid that fee, are they going to send me their financial documents, right?

Once somebody is paying you to do financial planning, they're probably going to move forward with their responsibilities in the relationship. So half of the fee upfront is really that way to show, not just that they're serious about it, but this is, again, we have not just collaborative conversations, but we have collaborative responsibilities. And then the second half of the fee just feels very natural to say, okay, now the work is... You know, it's very much an arc. You know, you pay the fee at the front, you do this arc of conversations and financial education. Once they receive the physical copy of the plan document, then they pay the second half of that fee. And, you know, that's around the time where I help them. Maybe I'll do some screen-share implementation, if they’d like more help understanding their investment platform, for example. But it's very much, like, I just think that fee really helps create an arc for the client.

Michael: And then you said, I heard both a data-gathering checklist and eMoney, it sounded like for account-linking and portal. So just can you talk a little bit more about just what this is, how it comes together? It sounds like you're very built around eMoney's portal as an anchor for this.

Cody: Yeah, it's kind of funny. You know, this is something that I ask myself all the time. And a lot of other financial planners are, like, "Well, so why do you have eMoney again? Like, you're just using it to gather..." So I'm pretty much just using eMoney to upload documents and connect accounts at this point. And there's a discount with XYPN. And I spent three years using eMoney. So that helped with the transition of launching a firm.

Michael: But you're not doing any... I guess it's the wrong way to say it. Like, you're not doing any planning in eMoney. Like, it's the portal, and the aggregation, and the document vault, but then all the actual planning stuff is happening in the Excel templates you built yourself.

Michael: Well, so here's the thing. So I believe that financial planning software like eMoney or RightCapital, they're great tools to use while planning, but they don't create the financial plan. So what I mean by that is, I'll use eMoney to even sometimes just conceptualize, right? I think planning software is great for just having a broad conceptualization of like, "Oh, yeah, RMDs exceed expenses in retirement." Right? Like, that's all I needed to know. I didn't need to know the chance of that happening or how much your electricity bill is going to be in 40 years. Right? So I use it conceptually as a tool. But I don't use any reports from eMoney. Because again, it's very templated. It's really an impersonal vehicle that I probably have to spend more time kind of undoing how impersonal the reports are versus just creating my own process from scratch, where I can make every topic area summary perfectly aligned with how I'm communicating to that specific client.

So I created all of my own process for doing the data-gathering analysis and developing the plan and certainly the formatting of the plan presentation. So the only page right now in a financial planning... like, let's say a 40-page financial plan right now, the only page that's from eMoney is the balance sheet, which I could probably just as easily just create in Excel. So I don't use eMoney reports to deliver content. I just use it as a tool for conceptualizing some very specific things, maybe Roth conversions, or just kind of seeing the impact of RMDs.

Michael: And so, again, so why not? I mean, as you said, like, you frame that as eMoney is a great tool to use while planning, but they don't create the financial plan. I do know a lot of advisors literally print the eMoney output as the financial plan. So just distinguish this for us more. Like, what do you think of, or call, or characterize as the financial plan that you feel eMoney is not creating?

Cody: Well, so I'll just say that... Typically, we're using those softwares for, like, cashflow planning. Like, retirement cash flows, right? Which is just one topic out of 30-plus topics that are included in my comprehensive plan. So it's just that, you know, it doesn't do... I've created a template for helping people understand. I show them how to read their pay statement. Like, how to understand your earnings deductions and taxes that most people... You know, it used to be called a pay stub. Now, people don't look at their pay statement. So, I can't you're... Like, planning software - you know, maybe soon, right? Maybe shortly. At some point, you're going to be able to, like, throw in somebody's pay statement or summary plan description, and it's going to give you a report of the summary of that. Right? So I just think, yeah, the 30 or so financial planning topic areas that I like to educate clients about aren't yet in financial planning software reports.

Michael: And so can you talk a little bit more about just what are those areas? I mean, you've kind of mentioned a few here, like, earnings, pay statements, and Roth conversion ladders, and asset location. But can you talk more about just, like, what are all the things that you're putting in and covering in your financial plans? I guess, like, what are all these templates that you've built in Excel that become your financial plan output?

Cody: Here, I'll just do a quick rundown since it's in front of me on my whiteboard. So these are the typical summaries for a comprehensive financial plan. So there's the balance sheet, right? We all know what a balance sheet is. And, you know, a balance sheet - I mean, I won't spend this much time on every one, certainly, but a balance sheet... So it's funny, most families and even a lot of financial planners, we focus on net worth. We focus really on the numbers. I completely avoid looking at the numbers on the balance sheet, which sounds goofy. Like, well, what's the point? So a balance sheet to me is a way to educate about asset tax location between qualified and non-qualified assets. You know, and really the cash flow flexibility and control of each. And then also talking about estate planning, account titling, and beneficiary designations on accounts.

So, the balance sheet is really, asset tax location and account titling. And then the rest I won't spend that much time on, but that's just an example of how I view these things differently. Debt repayment summary, mortgage flexibility summary, estate planning summary, which is either if they have documents already drafted, it's a one-page summary of all their documents in one place, that they can share with their successor, executors, and agents as well - or just have it in front of all their documents at home. But I have a summary about all their investment accounts individually, and then as a total portfolio, and investment funds or securities. And education about diversification. So, like, what is diversification? I call that diversification review. There's asset allocation examples. That's where I give them specific investment advice. Charitable giving options, education needs, education savings needs, child savings options, pay statements, and employee benefits. I'll go down the laundry list. Life insurance, health insurance, long-term care funding…

I teach them how the income tax, really, brackets work. How they work corresponding with IRMAA and Medicare premiums. Property and casualty insurance, retirement savings needs, retirement savings options, summary plan description details, Social Security analysis, Roth conversion strategy, accumulation order of operations, distribution order of operations, retirement spending plan, income tax review, executive summary, and a measurable action plan.

Michael: And so every one of these is just, like, an Excel one-pager basically, that just has some education stuff, some inputs and some output. Like, am I thinking about that appropriately?

Cody: Right. So every one of those that I described has a Word file, and some have an Excel file or a calculator, like, kind of title along with it.

Michael: And so the output for the clients, like, the financial plan is just the list of these one-pagers, whichever one specifically applies for them. Because some of them, obviously, won't do the education savings one if you don't have kids, right? So, like, you've got this giant list of a few dozen of these, whichever ones apply to the client or the ones that you do, each one, you input their stuff, you get the output that comes from that. That becomes the client presentation and the plan delivery, and just you're walking through and teaching to each of these one-pagers.

Cody: Right. And what's really nice about having this process from scratch, is that it's not just that I don't just say, "Okay, like, which ones of these that I've created do they need?" Every financial plan, there's usually an opportunity to create a new summary. Right? So I have a summary called, like, mortgage in retirement. So the facts about, like, you know, can you get a mortgage in retirement? There's a lot of misconceptions about getting a mortgage once you're not working, right? So I have a, call it a credit card hacking summary, where I show examples of credit cards that would actually help them achieve some of their travel goals moving forward. So every client has very... Like, as I'm having conversations, I go, "Ooh, I should create a summary for that." And then of course, moving forward, I go, "Oh, yeah, I created a summary. All those are now templated, and now I can just apply it to that specific client."

Michael: And I was just going to say, just building all these sounds fairly time and labor-intensive. But I guess that's the point. It's not like you went out and said, "I'm going to go come up with my 40 things." It's, you got a client, you made some. And then you got another client that had some different needs, and you made some more. And then you got another client that had different things, so you made two or three more.

Cody: Right. Over the last two years, exactly.

Michael: And so, now, cumulatively, you've got a library of these.

Cody: Right. And what's funny is, I've shared this library... Like, for example, next year, I'm actually sharing my entire comprehensive financial planning process with both DIY investors. So, like, I have Measure Twice Money, which is just a financial education. So I'm going to create a video course on how to create all those documents for DIY investors. But then so many financial planners have asked me, "Hey, like, I want to learn how to do that too, create my own process from scratch. Can you help me out?" So I've decided to actually now turn that into video courses for planners on measuretwiceplanners.com. So, again, you come back to, like, where are you spending the rest of your time when you're not doing the 10 hours a week? It's really, like, now, there's so much demand for these new models, that not just the advice-only part, but like, how do you create these templates from scratch? It's provided me an opportunity now that I've created my own process and continue to make it more efficient. Now I can spend a lot of time sharing that with other advisors and DIY investors.

How Cody Markets By Showing Up In His Own (Virtual) Community [1:12:02]

Michael: Just for those who are interested, this is episode 255. So if you go to kitces.com/255, we'll have links out for Measure Twice Planners and some of what Cody has been sharing here. So, Cody, walk me through just kind of the rest of the planning process. The three-meeting process itself. So just, like, what are the three meetings at the end of the day? Is this basically like a data-gathering purpose and to plan and implement the plan? Or I guess implementation looks different for you. So what's the actual three meetings, and what happens in each meeting and between each meeting?

Cody: So the three meetings are the intro call, is actually included in... So these are all video calls over Zoom. The first one is a one-hour intro meeting, which again, is just learning more about the family and their personal objectives. The second meeting is the data gathering meeting. So once I've reviewed and summarized the 30 to 40 documents, that's when I start to ask those really good opportunity questions. So that's an hour and a half, that second meeting. I call it the data-gathering meeting. Then after that, that's when I... Now that I understand both the quantitative part and the data gathering process, the data-gathering meeting was primarily focused on the qualitative and now creating, like, collaborative what-if scenarios and things. Since I have the quantitative and the qualitative, now I can develop, really, the comprehensive planning presentation document. And then that third meeting is typically two-and-a-half hours. And that's where I present that financial planning document, really, in an educational style.

Michael: That's a long final meeting, because just you've got a lot of...

Cody: Well, it's split into two, right? But it's funny. So DIY investors, they love data. It just seems that most of them, like, they would love to be on the call for five hours sometimes. So, yeah, they're two-and-a-half hours. And I've only had one family so far, saying, "I think we'd like to split that in half."

Michael: Okay. Because again, these are folks that are curious and want to learn, right? Just at the end of the day, they're so motivated to learn, they're willing to pay $6,400 for someone to teach it to them. It's like, they want to learn.

Cody: And it's funny, and a lot of them, like, when I get on the Zoom call, they're like, "We've been waiting all day for this." They're so excited to learn, really, to have... It's not just to learn the data, but they're really excited to finally have the clarity and competence to move forward with all their objectives.

Michael: Well, and just I think it's striking to make that point. Like, I don't think a lot of advisors can say, “My client's literally excited when I present the financial planning book to them.”

Cody: It's funny, I get emails anytime, like, somebody joins a Zoom call before I started it. A lot of them get on the call, like, you know, 12 minutes before it starts, just waiting for me to open up the webinar. That's kind of how they view it, is like, “I can't wait for the show to start. Like, let's sit on the couch,” and, you know, literally have popcorn in their hand ready to go.

Michael: Interesting. So let's talk a little bit more about that end of just... So, like, where do you find and get these clients that will pay $6,400 for a three planning meeting, and are so excited to come and have you teach them, and pay you $320 an hour for the privilege of being educated?

Cody: So the best way I can describe what I've done kind of on accident, this goes back to... I hear Carl Richards say it a lot, that the best way to market is just simply be remarkable. And before I toot my own horn and be like, I'm remarkable. The way I describe marketing in my head now is with an extended metaphor. Do you want to hear that metaphor?

Michael: Sure.

Cody: Okay, good. So the metaphor I use is, like, finding a landscaper to mow your lawn. Okay? So, you know, what usually happens when you're... You know, whether you're looking for a landscaper or not, what happens is the landscaper sticks the business card in your front door, right? You come home from work, you open the door, it goes to the ground. Like, there you go. You now know this landscaper exists. But the moment that you knew they existed, they're already selling you a service or a product. Right? So, you know, the alignment now with financial advisors is, that's very much like cold calling, ads, mailers, elevator pitches. It's just like, the first time I'm meeting this person, they're selling me something, right? And that's very much, like, the transactional, not relational, way to market. So the second way to market is, let's say that, Michael, we're just hanging out right now and I say, "Hey, you live in my neighborhood, who mows your lawn?" And you go, "Oh, there's this guy, Luis. He's really great. Here's their number." Right?

You know, of course, we call that referrals or word of mouth. Right? The one thing that I do say... You know, usually, people don't complain about getting referrals, right? But I will say about referrals is, if the only source of incoming prospective clients that you're receiving comes from word of mouth, right? That's great that your current clients...the current families you serve, are really speaking well of you to others. But if you're only source is through referrals, that probably indicates that you're not providing any value to communities outside of your client base. That usually means that you're really only focused on serving the people who are already paying you. So the third part of marketing, kind of the flip of marketing is, let's say, Michael, you're sitting down your breakfast table, looking out the window in the morning. You're having your breakfast or your coffee. And you look at across the street, and there's this guy mowing the lawn. And you look down at your watch and go, "Oh, wow, like, that guy shows up every Friday at 9 a.m., exactly at the same time."

And what's really crazy about this landscaper is, he literally gets down on the ground and he cuts every blade of grass with a pair of scissors to make sure that they're exactly right. You know, he measures twice. He's super detailed. Right? So what happens is, you've actually seen that landscaper provide value to your neighbor. You've seen them provide value to others. And so you go across the street, and you introduce yourself and say, "Hey, I noticed how great of a job you do, really providing value to my neighbor. Do you have the capacity to mow my lawn as well?" So that third form of, like... So what happened with me is, I was spending a lot of my time - without any expectation to get clients to work with me - I was spending a lot of time providing, really, financial education - not advice, just financial education - through a lot of Facebook communities. And they were just communities I was already a part of. Like, I was already a member of those tribes.

So I was just providing, for example, in a personal finance community, somebody would say, on the group, "Hey, I have the option to do a traditional or Roth 401(k). What should I do?" And, you know, everybody's listing, traditional, Roth, traditional, Roth. And I'd just say, "Hey, here are some variables you should consider before making this important decision." Boom, boom, boom, boom, boom. I never mentioned I was an advisor, right? I never said, "Oh, send me a DM." But I just provided educational value, like, for just months, just because I enjoyed... I believe the best way to learn is to teach. So I was just teaching others just through education, no advice. And within six months, I had four to five prospective messages through Facebook DMs, saying, "Hey, I just realized you're a financial advisor. I've been seeing you. You've been so helpful to the community for months and months and months. I just realized you're an advisor. Would you be willing to work with me and my family?" So they'd been provided value too, and watched me provide value to others. And I didn't know they existed before they reached out to me. So none of this was to actually find clients, it was just, I wanted to provide value. And I realized, ultimately, that the best way for me to be successful in business is to give it all away.

Michael: But I guess one of the interesting dynamics that goes with that is just, I’m betting you were basically the only advisor active in those communities, right? Just because so many of us, we're not exactly hanging... You know, we're advisors. We don't tend to hang out and do-it-yourself investor communities.

Cody: Well, what's funny, though, is that there are a lot of advisors who are joining those communities, not to provide value, right, but to find clients. So they get kicked out of the group pretty quick, right? So, for example, my Measure Twice Money, which is my DIY investor education platform, it doesn't link to my firm for financial planning. Like, I specifically want to... My passion is to provide education to people without ever selling anything to them. Not being, like, "Okay, by the way, I've provided all this value. And now you pay me." Right? And the only way that would happen is if it got to the point where, you know… with the course, for example, a lot of people are just asking me, like, "Hey, do you sell any courses?" It gets to the point where people kind of hand their wallet to you and say, "Sell me something. You've provided me way too much value for free."

So my goal is just to provide value, period. But in the Facebook groups, there aren't a lot... There are a few advisors in there that I've noticed over time. It's just that the advisors in there, they were a part of that community probably before they became an advisor. I think it's really important that if you are going to try to use any type of Facebook group strategy, only join Facebook groups that you would join if you weren't an advisor, right? Be like, “Oh, I'm a single mom with three kids. Oh, I found a group for single moms with three kids.” You're not going to join that group because, “Ooh, I want to work with moms with three kids.” Yeah, just join groups because you are already aligned with the philosophies of that tribe, provide value, and never mentioned what you do. It's sort of funny, like, don't say that you're a financial advisor unless somebody asks you.

Michael: But I think sort of the striking thing that does come with this is, you are showing up in a community with people who have millions of dollars. Right? I mean, not knocking you, just, that's the point. It's when you find the intersection of a thing you would have wanted to join or be involved with, or have some interaction with anyways, and at least some subset of the people who are there do have the financial wherewithal to pay you for your advice services, right? I mean, I'm sure there are plenty of people in some of the FIRE communities that also have negative net worth and dream of the kinds of things that you're talking about, right? Because...

Cody: Yeah, certain levels of FI. There's like fat FI, there's lean FI, there's regular FI, there's coast FI, barista FI. Yeah, there's like all sorts of kind of levels.

Michael: So, just recognizing, you do have to do this in the context of a community that has at least a subset of people that might be able to pay you for your services and what you do. But when you do show up there, and there's financial wherewithal, and you're involved in the community, as you've shown, then business development opportunities start coming.

Cody: Well, what's interesting, though, is that the groups you're a part of don't necessarily have to be your ideal family to work with. What happens a lot... There are people in that group who do not want to work with advisor, like, not ready to. But they said, "Hey, I realized you know a lot about finances and my mom's about to retire." So, like, in every community of people, whether you have money or not, or high income or low income, you know people who need... And that's part of the education, is, they know people who are at that level that are about to retire and need financial planning. But my goal is that we understand that financial planning isn't just distribution strategies. Like, the benefits of creating a tax-efficient accumulation strategy is massive. And again, going beyond investments. Like, yeah, I'm not pushing it as an advisor, but I'm really sharing a lot of financial education to make families realize that financial planning starts yesterday, at whatever age or asset size you're at.

Why Cody “Gives It All Away” And How That Leads To Referrals [1:23:23]

Michael: And so just share with us a little bit more, just how does sharing messages in a Facebook community turn into, I think you'd said four to five prospects per week. Just how does that actually show up and turn into business?

Cody: So, like, what happens for them to reach out?

Michael: Yeah. Or, like, what are you doing so that eventually, at some point, they realize that maybe they should reach out?

Cody: Yeah, it's funny. Like, one of my other kind of measures of success as advisor is, how many sentences can I end with a question mark rather than a period? And in Facebook groups, the way this has happened is... Let's share another example. So, let's say somebody in a Facebook group says, "Hey, I have 22 years of my mortgage left. Should I pay off my mortgage first or invest the rest?" You know, that very traditional debate of investor, to pay off the debt. And most people in the group, again, they've only learned the dogmatic one size fits all approaches from other media sources that says, "Like, oh, I'm a Dave Ramsey guy. Pay it off." Or, like, "Oh, I understand. Investments always make 12%. So you should..." That's not advice or real life, by the way, on the podcast. But what happens is, there's a lot of, like, back and forth of, everybody's saying what they would do, right? Everybody's saying, "Oh, well, this is what I would do. This is what I would do. This is what you should do. This is what you should do." And I go in there and say, "There are both rational and reasonable ways to think about debt repayment." Right?

And I kind of do the thing... I kind of have everybody, like, let's sit back a little bit and learn that there are both rational and reasonable sides of every financial decision. So I list out a few of the things to consider. And a lot of times, the thing is, none of it is advice. I never even say, like, "And this is why you should do this." I just lay out the pros and cons of different opportunities from what I know. And then what that does is that helps them ask better questions about what makes sense for them. So my education is actually not to tell them what to do, but to make them ask better questions of themselves. So by doing that... And I think that's where people come to the realization of, like, “Oh, wait, maybe all this one size fits all advice... Like, in other parts, not just the debt part, of like, maybe what I've heard recently on Roth conversions, and how much I should have in each tax location isn't one size fits all, either. And, you know, who do I know who could possibly help me figure that out on a personal level?” And they go... And I'm sure I'm probably one of the only advisors that some of these, you know, members of communities know, or at least trust.

Michael: But I guess it's really like, how, at the end of the day, do they know you're an advisor and reach out, right? Just like, you know, I've been in plenty of Facebook communities over the time, and seen some people who offer helpful advice, but I usually don't DM them and ask them if I can give them my life savings.

Cody: Yeah. The way it happens is, so these are DIY investors who, earlier I was talking about, like, they're the types of people who do lots of research. What they do is, hey, this guy's providing a lot of value. He seems to know a lot about what he's talking about. So they just start Googling me. Right?

Michael: So you just have to be findable enough that eventually they go down the rabbit hole, because you are working with people who are very research rabbit hole inclined.

Cody: Right. Yeah, going back to what I said. I don't tell people... this is a big thing, too. I think that this is really...this is not a marketing tool, but this is just, you know, by giving it away. When members of the community ask the question, "Hey, I'm looking for a financial planner, either for myself or my family member, does anybody have recommendations?" An advisor on LinkedIn or an advisor on Facebook is typically going to say, "I can help you. Send me a DM." Every time somebody asks to find an advisor, I say, "Hey, you know, if you're looking for a fee-only advisor, I suggest searching on XY Planning Network and Garrett Financial Planning Network."

So I just provide resources to go find an advisor without saying, you know, that I'm one. What's really interesting, though - this is not my strategy at all = but what's funny is, a lot of times that I've suggested places to find advisors, they go, "Oh, wow, thank you so much. That was helpful." They click on my profile and do a little digging and they're like, "Wait, you're a financial planner, and you didn't say? Like, you didn't even mention yourself. You're the type of financial planner I want to work with." It's kind of like the backwards approach. But again, you know, I'm not doing that as strategy. I'm just doing that because that's the right thing to do. And it ends up again...

Michael: It just also happens to work.

Cody: Yeah, just giving it all away just happens to provide exactly what you need in the long run.

Leveraging Intentionality And Mindfulness To Create Immense Professional Growth [1:28:05]

Michael: So what surprised you the most about building your own advisory business over the past few years?

Cody: That five-year goals become one-year goals. And I think...

Michael: Because it's grown so much faster than you'd expected in having your revenue ramp up?

Cody: Well, I think just... I'm realizing this every day, every week that, you know, they say that the days go by slow, right, and the weeks go by fast, or the years go by super fast. Yeah, so when I was talking to a lot of... Again, I think that the power of networking is so important, especially in this industry. And there are so many people who are willing, again, to give it all away to other advisors without thinking about competition. I reached out to financial planners saying, "Hey, I'm thinking about launching my own firm, maybe in the next year or two." Right? And then four months later, I launched my firm. And then I go, "Okay, well..." You know, you hear about the benchmarks of, like, okay, it typically takes maybe three years to become profitable in your business. Right?

So within three months of launching my business, I made more revenue than I had made, in my previous careers, in a whole year. I was like, well, that happened fast. Right? And again, I think that part of it was, like, I wasn't actually being realistic with myself. I think a big part of that was certainly an imposter syndrome of... For example, I had two years of living expenses saved up before I launched my business. Right? And now that money is now back into my savings. But I mean, you know, I'm very much, like, fundamental risk management. Like, you take care of those things first. So I didn't realize, like... It's definitely, this is something I can't take for granted. Like, I have to have gratitude and understand, like, this truly is privilege. Not just, yes, a lot of hard work went into it, but a lot of things... You know, Facebook existed, right?

A lot of what drove the demand for my services were things that other people provided. I didn't do any of this stuff myself. Like, a big shout out again to Joe Birkofer. I had a meeting with him literally three years ago, saying, "I really love personal finance." You know, I was working as a professional musician at the point. And he said, "Hey, well, why don't you just drink out of the fire hose and do the CFP education program, right?” So three years later, I own my own firm at deliberate capacity, serving exactly what I want to serve, and controlling my time. Like, that happened in three years. And that makes me now understand that... Like, it almost makes me think that a lot of people have the capacity to literally have a different career, a full career every five years. And that things happen much faster, especially if you have the intentionality and the drive to get it done. Like, you just go, just do it.

And I'm sure a lot of this comes from, I listen to a lot of like productivity and mindfulness type of podcast. And it's really, again, those are my ways of understanding that physical, mental, spiritual, financial, relational health are all related. So, I guess to go back to your question. The thing that I've realized is that, especially now that revenue is not a driver of what I'm doing, it now opens me up to really filling up all those other pies of my life. And the thing is, now that I've understood this, it's now an opportunity to give this all away to other planners and help them along the way. So I want to get to a point... My financial independence goal isn't just to lay down on a hammock all day. It's to provide value to as many people as possible without expecting something in return.

Cody’s Low Point And How He Defines Success [1:31:30]

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

Cody: I think the low point on the journey was actually the 10 years leading up to this point. And it's really the... You know, Jocko Willink's book, Extreme Ownership. I very much have a philosophy of extreme ownership, of not just, you know, doing my job, but kind of doing the job of others around me, if I feel like... I'm just always driven to... You know, I'm the type of person who's like, 30 minutes early to a meeting every time. I'm sure a lot of that comes into, like, anxiety and a lot of, you know, probably mental health stuff, certainly. But I think that the 10 years of anxiety, that went along with that drive. So I've been speaking with somebody recently who talks about how important it is to have... So there's kind of like a Goldilocks of how much stress you need in your life to get things done or to grow. The thing is, if you don't have enough stress, right, you end up just kind of like doing the same thing over and over again. Like, probably either burning out or just being comfortable phoning it in.

And then there's a certain level of stress that's too much and really can break you. Right? I was very much, like... So if that's a one-to-ten, I've been at an eight-and-a-half to nine in anxiety, and really drive and intentionality to keep bettering myself for the last 10 years. And so, now, like, this is the first opportunity I feel like... So my last financial planning meeting of the year is this Saturday. I have eight weeks with no financial planning, through December. The last 10 years, I've never taken off more than three days of work, ever. Like, since graduating college, I've never taken off more than three days. And those three days, I was checking email, and doing all the work before I left on vacation, and doing extra work when I got back. And this is my first opportunity to see, like, maybe I can do this differently now.

Michael: While you're grossing at a pace of $140,000 of revenue, and can net $130,000 of it.

Cody: Right. And as a household, I've never made more than $80,000.

Michael: And averaging 10 hours a week. So, I mean, you could dial up the lever, and take on more clients, and drive up more revenue if you want to. It sounds like just the whole point and takeaway is...

Cody: Yeah, four plans, $300,000. But the thing is, yeah, like, that doesn't fulfill me as much as spending time giving more away.

Michael: So, what do you know now that you wish you'd known three or four years ago, when you were starting down this path into the adviser world? What have you learned you go back and tell you from a couple years ago?

Cody: I probably wouldn't, because I think I needed exactly what I got. And really, I think something that... So, again, Joe Birkofer has been an amazing mentor of mine, especially at my last firm. Like, he really helped me not just be a fly on the wall as an advisor - I didn't know what an IRA was starting off - but he let me in every client meeting, gave me opportunities that I thought were too much for me. But I think going back then, the one thing that he taught me that I think I need to continuously tell myself and new planners need to tell themselves is don't be worried about not knowing the answer to everything. And another thing, too, is that, the clients that are working with you, the reason they're working with you is because they don't know. Right?

So I think the imposter syndrome thing, having that anxiety of going into a meeting and saying, "What could they possibly ask?" Like, "I'm scared they're going to ask a question I don't know the answer to." So I would have just been even more on myself of saying, like, "Hey, you've done your homework. Like, you've prepared as much as you possibly could." You know, all the anxiety built up to the meeting, and once the meeting started, it was always okay. So I think I would just be that cheerleader on the side that would say, you know, especially in terms of anxiety to say, "Hey, you're going to come out of this alive, at the end of this. And, like, nobody's going to..." You know, I think maybe I need some of that, what Tim Ferriss calls fear setting, right? Like, what is literally the worst thing that can happen, right? And through building a...from going from being a professional musician to owning a firm and being at capacity in three years, the worst that can happen is I start from the ground up, and I feel like I can do it again. So I think I would tell myself that, like, “Don't worry about failing, because that might be the best thing,” or, “Making a big shift or a big pivot in your life might be the best thing for you and your family.”

Michael: So any other advice you would give to newer advisors looking to come into the industry, or particularly if they're looking at going the advice-only route?

Cody: Yes. So here's really that structure, again, is, number one, define... So pretend that you own your firm. Somebody walks through the door of your firm, whether it's virtual or not. Somebody can walk to the door, you need to know exactly who they are, coming through the door. So you need to figure out exactly who you want to serve, then figure out, you know, what do they need? How are you going to provide value to that family that came through the door? Whether it's a single parent with kids, or an elderly couple who are super scared about these things they hear about called RMDs. Like, not just put how much money they have, or, like, you know, married, or how much money they have, or how much income they have. But also, like, describe to yourself, how do they think about money? What are their fears? What brings them joy?

So I think you really have to define who you want to serve. This is not just for launching a firm, but before you even become... Even when you're interviewing for a firm, say, "Does the person I want to serve align with this practice? And if it doesn't, do you think I could introduce this practice to that type of family?" And then the second question... So the first is define who you want to serve. Second is, define how you're going to provide value as much as possible. And then only then figure out if the compensation aligns with what you want to do. Oh, and the last piece of advice is, find opportunities to give it all away. Find an opportunity to give what you know away, because as you know, there are a lot of families who are not being served. Not necessarily because... A lot of them just don't know that they can be served the way, you know, financial planners could truly serve them.

Michael: So as we wrap up, this is a podcast around success. And one of the themes that always comes up is just the word ‘success’ means different things to different people. So you've alluded to this a couple of times throughout the discussion, just getting the business to a place that's successful for you from a financial perspective. But can you share a little more just, how do you define success for yourself at this point?

Cody: So I mentioned a little bit before. Success to me is about how much can I give away without expecting something in return. In terms of working with clients one-on-one. This is kind of a... So the two parts to this are, you know, again, how many sentences can I end with a question mark rather than a period? That's changed the way I thought about, really, having conversations with families. And then let's see if I can remember the last one now. Oh, it's a funny one. So, if my throat is dry after a meeting, right, I know that I can improve there, right? Because that means I talked too much. So, for example, after this podcast interview, maybe I talked too much, right? My throat's getting scratchy.

But so, the final thing, success is defined by boundaries. Like, really create boundaries that don't just work for the people that you're serving. You have to create boundaries that really help you as well. So, a quick thing about my firm is that, I don't have my phone number... Like, I have a business phone number. But the families I serve don't call me. All my communication is email and video calls. Right? And some people say, "Well, like, that's rude. I mean, what if your clients want to reach out to you and can't get a hold of you quickly?" And what I decided is, like, I want to create an expectation. You know, I want to create a boundary that no communication in my business needs to be solved within 48 hours. And again, that very much aligns now with saying, hey, if I were managing investments, would I be able to have that boundary? Probably not. Right? I have to make that trade today if they want me to make that trade today.

So, yeah, like, build your business around healthy boundaries. And especially when you're creating something that doesn't exist yet, like, don't create... Like, just try to get away from the limiting beliefs of what won't work. Create exactly what you want. Like, go top-down rather than bottom-up when you're thinking about what you want to do in life.

Michael: I love that message. I think it speaks well just to the journey you've had and the incredibly fast path you've had. As you said, like, five-year plans become one-year plans very quickly.

Cody: Drinking out of a fire hose, yeah.

Michael: Well, thank you so much, Cody, for joining us on the "Financial Advisor Success" podcast.

Cody: Thank you, Michael.