#FASuccess Ep 429: What It Takes To Really Help (HNW) Business Owners Navigate Their Wealth With Purpose, With Ali Nasser

Resources Featured In This Episode:

• Ali Nasser: Website | LinkedIn
• Top Ten Advisor Attributes For Working With Entrepreneurs – Download (PDF)
• The Business Owner's Dilemma: Take Control of the Mental Chatter, Clarify Your Ideal Future, and Enjoy the Success You've Earned by Ali Nasser
• Entrepreneurial Operating System

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Full Transcript:

Michael: Welcome, Ali Nasser, to the "Financial Advisor Success" podcast.

Ali: Thank you, Michael. Pleasure to be here.

Michael: I'm really looking forward to today's discussion and getting to dig into, as I think about it, just what it really means to work with business owners, like business owners of, I guess it's called sizable businesses. Because I feel like in the advisor world, we're often trained to look at this from the lens of investments, diversification because business owners can have sizable liquidity events and maybe have a lot of free cash flow to reinvest. But the reality is that when a business gets to a certain size, the biggest impact we can have on those clients usually is not helping them with their portfolios and their investment assets. It's helping them with the business and the business asset because that's actually the main asset, main cash flow generator on their balance sheet.

And frankly, I find there's a lot more ways you can actually move the needle for a business owner to help them grow 1% more than there is to try to lift up portfolio returns by 1% more. And it's often their bigger asset. But we don't necessarily get trained for that as advisors. CFP curriculum doesn't really have business consulting as a thing. And so, I know you've had a career of building in this space, of working directly with business owners. And so, I'm excited to really dig into what you have learned about what it takes to really work with business owners effectively and even what the difference is between the work you do with business owners and, dare I say, call it traditional financial product.

Ali: Yeah, understood. When you think about an owner and their balance sheet, it's so drastically different than, call it, the traditional client. And the dichotomy that jumped out at me first is if you meet someone that's got $50 million invested in Apple, what's the first thing you think of as an advisor?

Michael: "Oh my Lord, how have you not diversified after that? Are you insane? What are you doing?" It flows forth. I'm having a physical response to the mere thought of $50 million of your portfolio solely invested in Apple.

Ali: Yeah. But what if I introduce you to my friend Justin, who also has a $50 million net worth, but it's entirely invested in the company that he built?

Michael: Wow, what an amazing company. Tell me more about what you build. How did you create that? What have you done?

Ali: So, that dichotomy is extreme. And the reality is, arguably, Apple is the most successful company in human history. And this guy, Justin, that built this manufacturing company over the last 20 years, I don't know if that company will be around 20, or 30, or 40 years from now. But when we meet them, you just gave the perfect reaction. That's the spread. And when I saw that, I said, "Wait a second, why is that?" And then as you lean into it, you realize it's a perception of risk because Justin controls his company. He has a perception that his company has low risk. But the reality is, what really has less risk? Justin's manufacturing company or Apple? And I think it'd be very hard to argue that Justin's company could even remotely compete with Apple when it comes to a function of risk.

But control changes that. And entrepreneurs, by design...and you're an entrepreneur, I'm an entrepreneur. Control makes a huge difference in the way that we make decisions on our business. And rightfully, control also will impact the decisions we make with our personal wealth, with our personal planning, with the way that we approach so many decisions in life. So, the whole paradigm of planning for the entrepreneur is very different than that traditional approach. This example of Justin versus Apple is just one example of how that manifests. It just happens to be a very big example and a very big financial example.

The Delicate Balance Involved In Helping Business-Owner Clients Consider Concentration Risk [07:44]

Michael: So, maybe not to take your example too on the nose, but as you framed it, you're planning for the business owner is different than planning for others because Justin treats his $50 million business very different than a client who has $50 million in Apple because of the risk perceptions are different because of the control. I guess almost the first question that I have in response, is the financial planning actually different, or do I just have two clients with different mentalities because I have a different conversation in how to get my client with $50 million in Apple to diversify versus how I get Justin to diversify out of his business? Are these just two clients that have different approaches to risk perception, or should we be thinking about these more differently when we actually start talking about financial planning and tools and techniques and strategies?

Ali: Yeah, it's the latter. It's the latter. You've got to think about it differently. And it's not just this is Apple, this is a company that he runs because the psychology and the perception is so drastically different that that has to be taken into consideration, and also the pathway that you can sell Apple in a few minutes by clicking a few buttons on a screen. You can't go out there and just liquidate, "Oh, let's just take 20% off the table with this manufacturing company." And then there's people, and emotions, and a human aspect, and he might have inherited it or bought it from his parents or grandparents. It's such a different asset, and it's not just money. It's not just a financial tool. It represents life's work, and approaching it with that level of empathy and with that level of consideration is required. It's not only something that we should do, it's something that we're required to do. Otherwise, we really won't make the progress helping that client plan.

And sometimes, just to pull on the thread you mentioned of diversifying, in many situations, the best decision for that owner is not to diversify and say, "Hey, you need to take that $50 million and spread it out." It might be you might need to take a few chips off the table, sometimes no chips off the table, and keep growing it. It's giving an advisor or giving the client the perspective to where they can get to the decision points with clarity to where they know, "Okay, I'm moving forward, but I'm not moving forward blindly. I have the appropriate guardrails or perspective or understanding. I have the appropriate path as to when or how this might change." It's not, "Hey, stay fully invested because you should just keep doing what you're doing." No, you've got a lot of risk here, and you need to understand what that means and how to protect against it. Even if you decide to continue building the way that you do, or we recommend that you build the way that you do, you'll be doing it with conscious awareness versus just blind growth.

Michael: So, can you take us a little bit further on that conversation? You made the comment, "Okay, maybe the best decision for the owner is not diversifying. Maybe it is 'only' taking a few chips off the table. Maybe it's even reinvesting into it." So, I feel like you've almost crossed the line into financial planning heresy because I really do feel like there's a mentality of I think just what we're trained into in financial planning. If I meet a business owner who has a $50 million privately held business, literally, the only acceptable answer is thou shalt diversify.

Ali: Yeah, and I wouldn't disagree with that. If an advisor meets an owner that has a high concentration in their company, one question is, "Do you want to have independent wealth separate from this business? If so, what does that look like?" And then in other cases, "Does the business need you to be fully invested all in?" Or could you say, "Hey, you're making 10 million bucks a year in cash flow. Do you need all of that to be fully reinvested or can we start to pull chips off the table through distributions or cash flow from the company and start to build that independent wealth separate from the company?" So, those are the types of conversations that need to take place with an entrepreneur because I can practically guarantee you if you go in there and say you need to diversify, you're going to alienate the client. And if you go in there and give them a path to diversify, but their better path was to stay invested and continue to grow and ride that wave, you're probably down the road going to regret that you made that decision. So, it's really a delicate dance between their objectives and where they are in the business and where they are in their lifecycle and balancing between those different aspects.

Michael: I guess there are two things that hit me. One, it makes sense. I mean, there is sort of a time horizon thing here. The 25-year-old decamillionaire, bless their soul, but the 25-year-old decamillionaire may very well say like, "Hey, I made over $10 million, but I'm 25. If it all goes away, I'll just do it again when I'm 30." May or may not be a realistic expectation, but there is a like, look, they're young enough and have a long enough time horizon that if they want to ride this roller coaster a long time, they can. And that may show up different than the 40-something-year-old, who maybe still has a decent time horizon, but might be staring down college or retirement as far away and saying like, "Okay, maybe I can take my foot off the gas a little bit. I'm not necessarily out yet, but maybe I can take my foot off the gas a little bit." So, it strikes me there's an age/time horizon distinction here.

Mapping The Path To Independent Wealth For Entrepreneurs [13:43]

Michael: But the other thing that jumps out at me, Ali, as you explained that, look, most of us as advisors is by the numbers. The media loves to talk about the firms that work with the very affluent clients. But most of us work primarily with the mass affluent segment, like a couple hundred thousand dollars up to a million. And when we get good clients, we get clients that have a few million dollars, that's a great client for virtually every advisory firm. And if we're working with business owners, often it's business owners that run a medical practice, run a law firm, run a local HVAC, and great businesses that could be worth several million dollars. But there's still a zero missing. It's seven-digit wealth, not eight or nine-digit wealth. And part of what strikes me about what you said in working with larger business owners is that it feels like the numbers in the conversation start to change when you add a zero or two because I can't go to my local services business clients say like, "Hey, maybe you take 10% off the table to cover your independent wealth for your lifestyle for the rest of your life."

Ali: Yes. Yes. And that's a great point. And let's discuss that a little because you're spot on. Adding a zero makes a very different decision model. And I use an extraordinary example with Facebook and Mark Zuckerberg. Just because it's so drastic, you can frame conceptually that someone could be the MySpace or someone could be the Facebook. And you have to consider that. Not everyone's going to blow up. In fact, the vast majority won't blow up. But let's take the zeros off and let's go to the business owner that maybe has a $5 million or $10 million or $20 million net worth. And just for context, the majority of our clients in my advisory practice, it fell into two segments. It was $5 to $20 million of net worth, and then $20 million to $100 million of net worth. Call it the 80% of our clients. We had maybe 10% that were larger than that and 10% that were smaller than that. But that was the window. It wasn't billionaires or multi-hundred millionaires. There's a few hundred millionaires, but certainly wasn't the majority of the practice.

For those business owners, having their cash flow, their business isn't necessarily...it's a life decision to sell a business or to take stock off the table. The bigger decision is, "Hey, your medical practice..." Let's just say we're talking about a surgeon here who owns a medical practice with a few other surgeons. And let's say he's cash-flowing $1.5 or $2 million a year from the business. The question with that owner isn't do you want to sell it? It might be. But I think at this point, if they're growing their practice, it might be, "Hey, what are some of the ways you can enhance the value of your company, whether it's hiring more of a team, or an operator, or implementing a system to expand the business, or helping them strategically think about how to grow the enterprise value?" Like, "Hey, your practice trades four times earnings, but if your practice is triple the revenue, it'll trade at eight times earnings. And if you decide you want to do M&A, you can take advantage of that arbitrage."

There's strategic conversations to help the owner grow their business and then introducing the appropriate experts that can help with that. There's strategic conversations that can help them maximize value if they decide they want to sell one day that we can certainly help them through and help guide them in those conversations. And then there's financial planning decisions that need to be made each year. "What are we doing with the $2 million of free cash flow? How much goes back in the business? How much is going to be distributed for independent wealth or for college," as you mentioned. And for owners like that, the more traditional business owner that we deal with, it's not independent wealth by selling 10% of the business. It's independent wealth by saving maybe 20% of your free cash flows for the next 15 years.

We're saying we're taking your 35, and you're a surgeon, and you're doing this thing. And by 55, you're going to have so much wealth separate from the company that your business actual exit will just be excess wealth that you can do whatever you want to do with. But all your base is covered because you've been saving consistently from the company. And whether it's a guy that has a dry cleaner that makes $500,000 a year, or a surgeon at $2 million a year, or a manufacturing company that has $10 million a year of profit, it's the same decision model and conversation. It's what is your path to independent wealth? Is it through savings? Is it through sale? Is it through a combination? And let's map that path to get there. And while you're on that path to get there, how do we protect against the big risks? What happens if you break your hand? What happens if you aren't around anymore? What happens if X, Y, and Z take place? But across the board, it's the same decision model. What is your path to independent wealth?

How Ali Honed In On A Niche Serving Business Owners [18:46]

Michael: So now, help us understand just what you were doing with this relative to your advisory business. So, you said you started early 2000s. So, were you building with clients like this? Were you going after business owner clients like this from the start, or was this something that you found and came to over time?

Ali: That founding came to over time. So, when I first started, I didn't come from money, I didn't grow up with a book, I didn't have a senior person. I started at 20 years old. My first two clients were my doctor and my mechanic and my dentist. I did not know anyone. I came into the financial services industry and it was like, "Eat what you kill." When I got recruited in, I was still in school, finishing my degree in finance. And a recruiter came along and said, "You can help people, you can make money, you can get licensed, and you can start to build a potential six-figure income." And I was like, "Sign me up." So, I got started and had early success. And I thought I'd do this business for a year or two, finish school, and then probably go, work in sales and trading in New York or something like that.

And I fell in love with helping people. And at the same time, I couldn't stand the conflicts of interest of the financial services industry. I was like, "This is so backward." I remember helping a client. I had spent probably five or six hours in meetings with them over the course of two or three meetings. I'd helped them through everything. And the best advice for them was to pay down their credit card debt in an accelerated fashion and maximize their company benefits. And I gave them that advice, and we got done with the meeting, and they said, "Well, what do we owe you?" And I said, "Well, you don't owe me anything. At some point in the future, if you need financial services, or investments, or something, I can help you." And they're like, "Well, that's not right. You've just spent all these hours with us." And, of course, we start in the business in a similar way. That wasn't the business model to charge fees.

So, I went back, and I understood what they said, and I reflected on it. And I was probably a year into my career at this point, still in school. I said, "You know what? I really need to be able to provide advice independent of any financial solution." So, then I shifted. I said, "I want to do fee-based planning." And I got a lot of pushback from the firm. And I was like, "I'm going to do fee-based planning, whether it's here or elsewhere because that's the right way to serve the client." And then I started charging fees. And with the exception of maybe 1% of the situations, like 99% of the clients I've had in my career, we start every engagement with a consulting fee to go through a planning process. So, that started as the model.

And then naturally, being an entrepreneur, I didn't know it at the time, but being an entrepreneur, I naturally gravitated towards entrepreneurial personalities. We got along. I like their vision. I like their ideas. We vibe the same way. So, four or five years in, I realized a lot of my clients are entrepreneurs. And then I had a crisis of sorts, probably seven years into my career, where I was like, "I have these three groups of clients, retirees, entrepreneurs, and young professionals. Where do I want to focus in my niche?" Because I strongly believe and still believe that the narrower the focus, the greater the opportunity. But I had these three great client segments. And I had to pick like, "Where are you going to focus your practice?" And it's really hard because one group is really profitable and a lot easier, one group is really hard, but there's a lot of passion, and one group has a ton of potential. And I made a decision.

Michael: Which was which, as you were saying?

Ali: Great. Yeah, I appreciate these follow-up questions, Michael. So, the retirement group, thank you. The retirement group is highly profitable. They were easy. They were nice people. And you can help someone build a retirement income plan, and Monte Carlo, and protect the longevity risk, and all that stuff. And it's highly profitable. But it wasn't a 10 out of 10 passion for me. The business owners were the most complex, maybe had the largest amount of profit per client. But the profitability was a lot lower because it take a lot more work and time. But there's a much larger opportunity financially and huge amount of passion for me working with the entrepreneurs.

And then the young professionals, it was easy, it was fun, and there's also a lot of future potential because they were growing. And at that time, it was the new cool thing, the Millennial group. We were the early stage at that point. And I had to make a decision, a very difficult decision as to where do I want to focus. And I picked the client segment that was the hardest, but I had the greatest amount of passion for. And that was the entrepreneur. And at that point, I said, "From this day forth, we're only our marketing, our content, our website, our conversation. Everything is entrepreneur from now on." And we reached a point where we would just not accept any other client, but sometimes we'd have to make exceptions for a client family member or the typical exceptions that will come up. But that was our focus. And it was one of the best decisions I've ever made in my career.

One of them was to charge fees for our financial planning process, not even for the plan. We charge a fee for the process every year. That was one of the best decisions I ever made. Then picking to focus on entrepreneurs is one of the best decisions I ever made, and then developing our planning process, which today is called WISE, the Wealth Integration System for Entrepreneurs. That was probably the next decision that was a game-changer. So, it's these moments in your career where...and, of course, the decision to get into the business and just help people the right way. So, it went from protect clients from the bad advisors and help them to give them a structured planning process to help them, to an entrepreneur structured planning process, to a full ecosystem and thinking system for entrepreneurs, which is where things are today, and now helping advisors expand that as well. So, that was the evolution.

Michael: So, I'm fascinated by this, I guess, crossroads moment for you seven years in to decide to do the narrowing. So, I guess lots of questions here. So, first, you said the narrower the focus, the greater the opportunities. So, we're looking at where did that come from for you? And if that was the thing, why did that hit in year seven and not year one, if that's your philosophy in the first place?

Ali: Well, the short answer to why it didn't hit in year one, I think there's a certain amount of wisdom and learning that came to get there. I don't know that I had that necessarily year one. Also, year one, you've got to feed yourself. And if you develop a hyper-niche market day one, you may not survive. You've got to sink or swim already in the industry. And then if you go into a hyper niche, it may be even harder. So, I think, initially, sometimes you've got to get your feet where you've got to learn what you like. I didn't even know at the time what the niche was. So, initially, it was help people and take care of them. And I saw a lot of bad advice out there. So, I wanted to protect them, call it from the bad advisors or some guy out there just trying to sell a product with no real planning.

And then as you start to work with different clients, and I can imagine a listener that maybe is 5 years in or 10 years in, and I've worked with 20 different types of clients, well, you'll know by trying different ones, which ones you really have passion for. And I highly encourage individuals don't make a decision based on the financials being first. Don't look at profitability first. Look at passion first, because with passion comes unlimited energy. If you're passionate about something, you'll continue to build and grow because you've got all of that energy. Business is hard. Building an advisory business is hard. So, you better have 10 out of 10 passion for whatever you're building toward. And once you figure out who you want to be, who you want to take care of, the client you want to be passionate about, and once that's figured out, then simplify and narrow that focus. So, take the time to measure twice, if you will, and then cut once, I think, is a strong approach, especially for an advisory business because you don't really know what you're getting into until you've done it.

Michael: So, was there something going on that just made that the point that you said, "I'm ready to pull the trigger and start narrowing in?" I certainly get the you've got to feed yourself and find the segments that you enjoy working with, that you have passion for working with. Was there some moment going on that year seven was the year that you said, "Okay, now I'm going to pick one," and it wasn't year five and you didn't wait until year ten.

Ali: So, I formed my own RIA. I started in an eat-what-you-kill model within a larger firm. But we had to source our own clients and run our own practice. I shouldn't say hire our own employees, pay our own office space, but we had freedom within the system. But we're still in a structure. And I started my independent firm in '09, which was six years in to my career. Then at that point, I'm saying, "We want to scale this business." I think to answer your question, it was the growth strategy or the scale strategy. "We want to grow and scale this business. In order to effectively grow and scale, what is the client that we really want to make the biggest impact? In which client's life? Which client do we want to take on? Where do we have the greatest skills, capabilities, passion, gifts to really impact?" And it was a decision to say, "We want to grow better and smarter. And who do we want to grow with?" And that was the business owner market. And they were a joy and a pleasure to work with as well. So, from an energy standpoint, even though they were the most work and the most complex, they gave me the most energy and I gave them the most energy.

Michael: Interesting. So, it was the transition to independence and, I guess, the fresh start, "Okay, I'm building my firm now." And I guess age-wise, your late 20s, early 30s, like, "I'm building my own firm. I've got a long time horizon. I'm ready to actually make this thing scale. So, who am I going to focus on and scale scale it up with?"

Ali: Yes.

Helping Clients Identify Planning Gaps Created By Isolated Outside Advisors [29:28]

Michael: Okay. And you said then as you got deeper in with business owner clients, you ended up building your own planning process. I think you said you called it WISE. So, can you talk to us more about what this planning process was or turned into that you were doing with your business owner clients?

Ali: Yeah. So, I noticed with business owners that when I would meet them, they would give me a very similar response. I'd talk to them. I'd have a meeting set up from someone made an introduction, and we were referral-only business for years. Someone would make an introduction, and I'd meet with, call it Mr. $30 million business owner. And he'd be like, "Ali, I'm all set. Look, I've got two financial advisors, I've got an investment, I've got insurance advisor, I've got tax, legal, I've got trusts, I've got captives, I've got all... I don't know what it is that you're going to do for me, but such and such made an introduction, and I'm happy to have a conversation." That was kind of the pattern that I would notice. "I'm all set," in short.

And what I noticed is when I heard all their planning, I was like, "Okay, yeah, there's a plan in multiple different areas." But when I pull all those plans together, I noticed that there were major planning gaps, and those planning gaps were largely unknown to the owner. They didn't realize that those gaps existed because they think they have five advisors with five different plans, they must be all set. But in reality, they had these huge planning gaps. And the reason that exists is because each one of these professionals was providing their work in silo, and there was nobody pulling all the pieces together. So, it was like they had five different advisors with five different plans. A lot of times had conflict with one another, and there was gaping holes that they didn't realize exists. So, I started to show an owner that let's take a look at all the different pieces, and let me show you where your planning gaps are. Let me show you where there could be a huge opportunity for change. And the larger the client, the larger the gap.

And I essentially helped them understand why integration was so important. And the way we get to integration is through this unique planning process that we had built. And at the time, it was called Wealth with Purpose, and it still is called Wealth with Purpose within WISE, which is a larger system of entrepreneurial planning. But what the Wealth with Purpose process was essentially, let's create the purpose behind all of your wealth and the intentionality, if you will. And then let's integrate your spouse, your tax and legal advisors into that planning process. So, we don't only go through a process that crystallizes your goals and maps out an appropriate strategy and helps coach you through your options and considerations. We're actually going to integrate your tax and legal advisors into that planning process. So, when we're done with this, we not only have intentionality behind your goals, we now have integration where we're actually bringing the different parties into one process, and we have repeatability each year.

We can re-bring in your advisors as needed so that this not only builds out a great plan year one, but we can sustain this through year 10, year 20, or 30. And that level of integration, especially at the time, it's rare today, but 15 years ago, it was extremely rare. And that planning process was what brought all those pieces together for the owner. And then the value for that was far beyond what's your rate of return. Sometimes it would be, "Through this planning process, we just saved you $4 million. And on a projected basis, we saved you $30 million." That was the kind of ROI that was exponential. And that process was the pathway to giving the client that type of clarity and that type of return on investment.

Michael: So, what kinds of gaps were you finding in practice? Where do those holes tend to show up?

Ali: So, an easy gap we might spot is, "Hey, I noticed you donated $40,000 last year to charity, and I also noticed you have $200,000 of capital gain. And are you aware that you could be donating appreciating securities and avoiding capital gain deduction and avoiding capital gains tax and getting an ordinary income tax deduction." And they're going, "Are you kidding me? Why didn't my financial advisor tell me that? Why didn't my CPA tell me that?" And I said, "I don't know why. Someone should be looking at the whole picture. And if I were to guess, you're meeting with your CPA at tax time in a very reactive fashion where they're literally just trying to prepare the return, and then your financial advisor you're meeting with to discuss investments, and it's not a collaborative conversation, or neither of those two advisors is saying, 'Hey, wait a second. Let me take that extra step forward and say, how do I create more value for this client? You don't you don't need to pay that tax.'" So, that's one example of a gap.

Sometimes it would be we'd look at their will, and the will would say, "Everything goes to the credit shelter trust if someone passes away, and then all their assets are titled joint with rights of survivorship." I'm like, "Well, guess what happens? That doesn't work." So, it's great you paid 5 grand for a will and it's great that you have an investment advisor, but guess what? Your plan's broken. It doesn't accomplish what you wanted to." You know, all these types of lever or gaps we pull, and sometimes it was... I remember the largest one I met. This was an extreme example with an extra zero. But he had made a $10 million dollar donation a year prior to a medical facility. He had his name on the on the wall, if you will. And he wrote a check. And he had tons of appreciated assets and real estate. And I was like, "Literally, your advisor team cost you a couple million bucks with not catching that."

So, it might be a $20,000 or $50,000 mistake for, call it, a more modest client, or it might be a million-dollar mistake for a super client, or it might be someone that...do you realize your entire illiquid estate, you're worth $50 million today and it's all in real estate. Your wife passed away 15 years ago, and your three children are going to inherit $50 million of illiquid assets inside of all of these entities, and one of them is involved in the real estate business, and two aren't. Let me tell you what's going to happen, and how many things are going to blow up here. And let me make it very real for you so you understand this is an issue. Those are four examples of gaps that we would identify. And our goal at that point was to really educate the owner on here's why this is a big deal, and here's why now is a more important time to solve this than one day.

Michael: So, are these gaps you're trying to find and explore literally in an introduction conversation to engage a business owner in the first place, or are these things you find because they've engaged you for a planning process and they provided you all the documents and you're just going through everything and trying to find gaps?

Ali: So, it's a combination of both. So, typically, my model has been...and I encourage advisors to do this as well. Don't have just one introductory meeting with a client and try to prepare an engagement, especially for a larger client. And again, I gave you the size of our client base. When we would engage clients, we typically have a couple of meetings, usually two, sometimes three, pre-engagement. Now, engagements were larger. Our fees were, call it, $10k to $100k in consulting fee, and the vast majority is probably $20,000 to $50,000 of consulting fee for our planning process. And on the front end, spending two or three meetings, making sure it's the right fit was really important. And it also gave us an opportunity to uncover greater gaps and get under the hood a bit. And sometimes we may discover a few things on the front end, and we need to discover enough to say, "Hey, we want to warrant this engagement. We're not just going to come in here and charge you fees with no value. We want to come and take you through a process and deliver a lot of value." So, some of that we identify in the first or second meeting, and then some of those things, it was really when we got under the hood and inside the documents during the data process, which might be four or five meetings in.

Michael: So, I get it that you get two or three meetings in, you start finding a couple of things, like you made a $10 million donation last year in a medical facility. You didn't produce any of your appreciated investments that may have cost you a million dollars in capital gains that you could have avoided. If we could help you find...

Ali: And that one was actually a lunch, believe it or not.

Guiding Business-Owner Prospects Through Multiple Pre-Engagement Meetings [38:33]

Michael: "If we could help you find more opportunities like that, do you think it would be worthwhile to engage us in our planning process?" I get it. You find something that big, and it's like, "Well..." Yeah, if you're going to find more things like that, that $25,000, $50,000 fee doesn't seem such a big deal anymore." I guess I'm still trying to envision, though, how do you get prospects to engage in what might be two or three pre-engagement meetings when all this so often starts from some premise to the extent of, "Ali, I'm really all set. I've already got two advisors, and my insurance agent, and my CPA, and my attorney"?

Ali: Yeah. So, it's a great question. And there's an art and a science to engaging with high-net-worth business owners. And I could probably tell you, as you say this, I'm having a realization of that might be rare. The vast majority, I'm going to probably call it 90% of the introductory meetings that I've had with clients or prospects over the years, we've had no problem getting a follow-up meeting to present our preliminary findings. And it's actually very easy to get those, very rarely do we not. And as I'm thinking through this, you ask great questions. There's an art and science to educating them as to where the problem is. So, when I give that description, and there's other language and descriptions that I use, and there's a whole framework and language that is part of this planning process, that really helps the owner understand this, we start with education. "Here's why the problem exists." And the industry is not built for high performers. The industry is built for the mass market. And the mass market doesn't serve high performers.

So, if you think about a financial services company, 80% of the financial services landscape is probably doing business with Morgan Stanley, Merrill Lynch, Fidelity, Schwab, Raymond James, LPL. That's probably 80% of the financial services industry. Those firms are not hyper-focused on working with a high-net-worth entrepreneur. And therefore, the solutions and the services that you're getting are built for the masses, and they're probably underserving you. Eighty percent of businesses go under in ten years. Less than 1% of the United States population is going to have a net worth over $10 million. And you're in that group. So, there's a 99% chance you're not getting served appropriately with your current solution. That's the kind of language. This is one example of many things that can be done. But that's the kind of conversation that will get an owner to go, "Wait a second. He's got a point. That makes sense. And then you're talking about these planning gaps, Ali, that I have, I want to know what the gaps are."

So, in an initial discussion, I'm data gathering, trying to figure out, what are you doing? How are you doing it? How is it positioned? And then being able to think through that and usually circling with my team, soundboarding around some considerations or opportunities, I refer to them as issues and opportunities, "Where are the issues that this client has, challenges? And where are the opportunities that this client or prospect could really take advantage of?" And then coming back to them with a meaningful discussion around, "Here's what I heard. Here's where I think there may be issues. And then here's where you've got opportunities." That type of conversation isn't being delivered to owners. What they're usually hearing is, "Hey, how much money do you have in investable assets? Oh, cool. Let me get a statement from you. I'll come back with a proposal for why my investable assets is better than their investable assets," which is complete garbage. It's a terrible process. And it's not really solving their bigger issues.

So, when we engage or talk with the owner, it's really about empowering and educating. If you empower and educate, even with what I've said in the past few minutes, on an introductory meeting, there's a 90-plus percent chance that owner is going to go, "I'll give this person a second meeting to present their findings. Plus, I want to know what they think my planning gaps are." So, it makes it a lot easier to pivot to that next step. Does that make sense?

Michael: And then the goal is to find enough planning gaps that it makes sense to have an engagement to say, "We can help you with these, and we're going to put you through a full planning process. And we may even find more opportunities to create value for you."

Ali: Yes, that's a fair statement with the exception of, "We want to make sure it's the right fit." So, in many cases...

Michael: Which you define how.

Ali: Right. One of the criteria is they have enough planning gaps that warrants our process. But then also, do they have the right mindset to be a client for us? Do they have the appropriate resources for this to make sense for them? Are they going to be committed to this process? Are they enjoyable to work with? I would always lead with that and talk to owners like, "Look, not every client's a fit. We want to make sure it's a good fit for you and it's a good fit for us. It's got to be good for the both of us." And that helps kind of level the playing field. We're not here trying to sell or find a reason why you should do business with us. We really just want to make sure it's the right fit and that we can deliver value to you and that you can appreciate the value that we deliver.

Ali's Planning Process For Business-Owner Clients [43:55]

Michael: And so, if they decide to do this, help us understand further what the actual planning process was. I think you framed it as Wealth with Purpose process. What's the process? If I say, "Ali, sounds great. I've got $30 million dollar business, and you already found a few gaps. Sign me up. I'm ready to go," what actually happens next? What was the process?

Ali: Sure. I'll give you the short answer. This is all written out in my book and explains it in depth because it literally takes a book to express the process. It's very in-depth. But the faster answer for, call it, this conversation, we'd start with, what are your goals, your initial goals, then identify a high-level map of their financial position, call it the 10,000-foot view, identify the initial issues and opportunities within their planning, then we would engage. Once we engage with a client, we get a comprehensive view of their financial position. I call this total balance sheet. Everything you own from a planning software system. We've used eMoney for... I think I've been an eMoney user for 17 years now. Their early birth of their company, we started using it. We put everything there. "So, here's everything you own. Let's look at this today, and let's look at this in the future, and let's have some perspective of where you're going, not just your investments, but your business on there as well. Put a fair market value for your business's worth. And let's see what this looks like."

And most owners, they've never seen a total balance sheet. They've never looked at their balance sheet with their company value on there. So, they're going, "Oh, yeah, yeah, I'm worth $3 or $4 million." And you put it down. You're like, "No, you're worth $24 million." "Why am I worth $24 million?" "Well, because your business makes $4 million a year, four times before...sorry, $4 million of earnings and 5 times multiple. You're $20 million, and you've got no debt. So, here's where your balance sheet is." So, we start with that. Then we would integrate and educate with their spouse. Sometimes the husband was the business owner, sometimes the wife, sometimes they're both working in the business. So, we'd bring them into the picture to say, "Here's where you are. Here are the major points you need some education on." And then we would coach them through their paradigm gaps.

Some owners didn't understand things the right way, and they needed wealth coaching. And the difference between coaching and advice is advice is telling them what to do. Coaching is helping them find the solution on their own through guided questions and really educating and empowering them to find their own solution. So, we do wealth coaching through that process. Then once we had the owners or the client in a place where we had clear goals, we had good coaching, clear perspective, then we would integrate or bring in their tax and legal advisors and say, "Hey, John and Jane have these goals and objectives. Here's what we've identified as issues and opportunities. This is what the balance sheet looks like in totality. And we'd like to have meaningful conversation with you, the attorney, and the CPA on ways we can solve these challenges and ways we can capture these opportunities."

And we would tee up and frame the conversation and then say, "Hey, we've laid out the architecture here. We're serving in, call it, a GC [General Contractor] capacity. We need the contractors here to pour the concrete and do the electrical. And what's your perspective? Should we use a GRAT here? Should we use an intentionally defective trust? Should we sell? Should we gift? Should we change from a C corp to an S corp? Should we hear all the different levers and empower the tax and legal team to really come in and give that advice?" So, we're playing not just financial advisor, investment advisor, we're playing quarterback to the planning. And once we have the integration with the tax and legal team, then we would come up with a comprehensive blueprint that represented all of the client's goals and objectives and had a clear path forward. And only at that point would we then say, "Now, we're going to execute this and actually move investments, set up trusts, change entity structure, fund the college funds, whatever actions may be. But before we get to all that implementation, we got to plan this right, and we got to integrate this right, and we got to get the buy-in of not just you, but your spouse, and your tax and legal advisors." So, that was our planning process in a nutshell, if you will.

Michael: So, how many meetings is this to walk through? I'm just trying to envision literally what the meeting sequences and how many there are because that sounds like a lot of stuff to get through.

Ali: It is. It's a lot of stuff to get through, and you've got to keep energy and momentum. And it's more of a workshop-style meeting than it is a sit-and-get meeting. But basically, if I summarize, I'm going to call it a middle-of-the-fairway client, which for us would be maybe a business owner with $20 million of net worth and maybe they had $2 million investable. I'm just going to count these meetings here because I don't know the exact number off the top of my head. We'd have a introductory meeting, a preliminary assessment meeting, a data meeting, probably one to two education and strategy meetings. So, we're talking five, integration with the tax and legal team, six, recommendations, seven, and then implementation path forward, eight. So, over the course of, call it, six to nine months, we'd probably have eight meetings. Some of those would be an hour long, some of those two hours long. Maybe one is a 45-minute call. Yeah, eight meetings over eight months. That sounds nice.

Michael: Okay. So, this draws out a lot, which I guess helps me understand why you had a substantial separate planning fee because there's just a lot of work and stuff that's going on in this stage.

Ali: Yeah, a lot of work, a lot of value. And if it was a smaller client, Michael, we might have been able to do that same process without skipping any steps, but we might combine them in meetings. With a smaller client that didn't have as much complexity, we might have been doing all of those things in three meetings or four meetings. So, the family office, it might have been 12 over the course of 18 months. But the process is the same. Yeah, just depends on the complexity.

Educating Clients To Help Them Overcome "Paradigm Gaps" [50:07]

Michael: So, help us understand further. You talked about there's a education coaching layer that you said, like finding their paradigm gaps that they need wealth coaching through. So, what are paradigm gaps in this context?

Ali: So, I'll start at a very basic level. Let's say it's an entrepreneur that says, and many entrepreneurs say this, "I've lost a ton of money in the stock market. I don't believe in the market, and I'm going to invest in my own business." If an entrepreneur says that to me, I completely 100% can empathize. And I know how many entrepreneurs that were in the, call it, investing in the late '90s, early 2000s. They had a bunch of random tech stocks and JDS [Uniphase] and whatever else. And you've heard this story many times, "Man, I lost all my money in the market, or 90% of my money." The market was going up, up, up, and I invest, and I lost money. I'm never doing that again. Then the next leg is that the individuals that had invested in pre-'08, and call it a little younger investor, maybe they're Gen X, or maybe they're Gen...well, I guess now they call it Millennial that lost a lot of money in '08 or '09 and really took a beating, and they don't want to invest. So, they've deferred back to, "I'm just going to invest in my business, or I'm going to invest in real estate because I don't believe in the market."

Well, I'm not here to tell them in an advice way, "You're wrong." The S&P 500 was at $1,500 back then, and now it's at $6,000. And I don't know how you lost money if you just bought the...that's not the place or the time to be telling somebody what they should believe. You've got to be empathetic towards their position and understand that was their experience. And I'm just going to make a little note on the side of my pad. At some point, at the right time, we've got to give this client comprehensive education on how markets work, maybe where they were misinformed by buying one stock, and let's teach them about how diversification works or how indexes work.

So, what I do is identify any gaps in their paradigms in the initial meetings. This is part of the art and science to our planning process, and why it is so robust, and why it takes a book to express this, and it's not just a one-pager. That planning process identifies, "Okay, where are the different gaps that could exist in their paradigm?" And this one market gap is a small example. They think markets are gambling. They think that they're going to lose their money, and they don't understand...and they love entrepreneurship. This is a huge opportunity because if you think about the S&P 500, it's diversified entrepreneurship.

So, let's say I meet a YPO [Young Presidents Organization] CEO, and he's like, "I don't believe in the market. I don't trust it. It's gambling." And I said, "What if I said there was an investment out there that the top 100 YPO CEOs, highest revenue, growth rate, margins, all those metrics combined, we had the healthiest 100 companies in YPO, which is Young Presidents Organization, and you could invest in that fund." And they all say the same thing. "Heck yeah, I'd invest in that. I'd be all over that. I'd love to put my money there." "Okay. Let me express to you that the S&P 500, if we can take away the noise of MSNBC and everything you hear on the news and Jim Cramer, it's the 500, not just YPO companies, the 500 best companies in the United States. And what if I told you if it didn't trade on a screen and it was more fundamentally based, it would look totally different." And you start to give them that education. And one of my favorite stories that I tell avidly is the story of Enron. And this may be new to you, Michael, but do you know what company replaced Enron and the S&P 500?

Michael: Oh, no, I remember Enron blowing up, but I don't know what replaced them.

Ali: So, I live in Houston, where everybody not only knew about Enron, but they felt Enron's collapse because we still see the Enron buildings in downtown. This was the home court. And everybody knew Enron went bankrupt. And a lot of the people in oil and gas, remember that, and I said, "Let me tell you why Enron going bankrupt was actually good for the S&P 500." And they give me this crazy stare. Like, "What are you talking about? How could it be good?" The small $5 billion company that replaced Enron as the number 501, if you will, in the S&P 500 was Nvidia. And Nvidia was worth $5 billion at the time. And they went from $5 billion over the next 20 years or 25 years to $3 trillion of market cap. Even if Enron had compound returned at 10%, it wouldn't have beat having Nvidia in there, obviously compounding a much higher rate.

So, what it is, it's diversified entrepreneurship. One company goes bankrupt, a new one gets added in. So, you're constantly owning the 500 best companies. It's basically entrepreneurship and innovation at its finest. I'll have this conversation with an entrepreneur. There's a multitude of things I explained to them in this meeting. I'll chart this out or draw them or show certain concepts that address this, and I'll say, "What you're buying is you're buying diversified entrepreneurship in a passive capacity that takes zero time from you that historically has generated about a 10% compound rate of return. You just have to not watch the news when this happens, not sell when it's low, not get emotional." And if you can train and educate them in the right frame of mind, not when the market's falling and not when they're getting defensive about investing in their business, half of the entrepreneurs I talk to will convert. Half of them still need more time, or they won't convert their mentality of thinking. But it's these kind of stories and examples and education that shifts their paradigm from going, "The market's dangerous. I don't believe in it. It's gambling," to, "Ah, I understand. If I follow this set of rules and look at it very differently than I do my own company that I control, I can have something in the background working for me at 10%."

Michael: So, are there other common paradigm gaps like this that come up? I totally get the, "I don't believe in markets. I'm going to invest my business." What else crops up?

Ali: Well, I started with, call it, the most basic one for financial advisors, obviously, understanding the market. I'm going to go to the flip side of the most extreme challenge on the opposite end. And this is deep. And I'll try to explain it in a simple way. Most entrepreneurs have a paradigm that either their money experience was either traumatic, or they had a high amount of adversity towards it at some point in their life. So, essentially, most entrepreneurs grew up poor or lower middle class. So, early on in their life, they didn't have a lot. If you look at the top...and this goes for midsize businesses all the way up to billionaires. If you look at the billionaires list, it's either family money or a guy that grew up poor, or lower middle class. So, a guy or gal, I should say.

That situation usually started with an early in life, they had maybe what they needed, but not what they wanted, or they didn't have anything at all. And they had to go build, build, build, build, build, build because that was how they put food on the table, and that's how they got out of the tough situation they were in. And they had these memories and these experiences with money that formed their paradigm. And if they had a traumatic experience with money when they were single digits or a teenager, they've been running toward building wealth to protect themselves against that fear of scarcity or inadequacy that they had once upon a time. And most of them don't realize what they're running from. And you'll see somebody who's worth $50 million, and they still feel like they're poor. They still talk about how they couldn't afford dinner. Subconsciously, they're still concerned that they won't have enough when monetarily, an advisor that maybe doesn't have the empathy is going, "You are worth $50 million. What are you worried about?"

But the reality is...and I'm going pretty deep here, but the wounded child in them that has been hurt by the money and doesn't necessarily ever feel like they have enough is looking at the situation going, "I need to keep building. I can't slow down. I can't diversify. What I did to get where I am is what I'm going to keep doing because that protected me against being poor." So, they need coaching and education and sometimes therapy to really reset their psychology or their paradigm of money. So, that's a huge, huge part of the entrepreneurial experience and journey. And the vast majority of entrepreneurs have a major paradigm of money. They either haven't dealt with or don't know exists, but it's there.

Michael: So, I know you said you get into this deeper on the book end as well. So, just for folks who are curious to get deeper on this, just if they want to go look up, what is the name of the book? How do folks find the book?

Ali: "The Business Owner's Dilemma" is the name of the book, and it's on Amazon. So, they can find it there. And essentially, in the book, I give the entire journey. I've wrote this book for the entrepreneur. It's certainly been extremely effective for the advisors that have read it as well. But it's written to the entrepreneur and walks them through their journey as an entrepreneur and how to think about and how to frame their biggest decisions at the intersection of business ownership, wealth, and life. So, essentially, you want the life plan, the wealth plan, and the business plan to come together to give you not just a great return on investment, but to give you a great role, which I refer to as return on life experience, not just getting great growth and money, but also getting the life experience you truly desire from your wealth because wealth, it's a means to an end. And ideally, the wealth is a source of well-being. I think the source word for wealth is a Middle English term that means well-being. Many people with a lot of money don't have well-being. So, what I teach entrepreneurs in this book is, "Here's how to build wealth, have money, but also get the well-being and the return on life experience that you desire. And here's how it's all framed, here are your three dilemmas you're facing, and here's the system that brings it all together." So, it's all out there in "The Business Owner's Dilemma" book.

Michael: So, I guess for folks who are listening as well, if you otherwise want to get access to the book or just find the book, this is episode 429. So, if you go to kitces.com/429, we'll put a link right out to Ali's book in the show notes as well so you can get it there if you can scribble this down while you're driving or exercising, the things that many folks do as they listen to this podcast.

Ali's Transition From Advisor To Educator [1:01:10]

Michael: So, Ali, taking this back to the advisory business for a moment, just help me understand your actual business model.

Ali: Sure. Yeah, I'm happy to share that. I will preface this with saying that I no longer own my practice. I went through a transaction last year and have since made a major change in my focus and shift towards entrepreneurs and advisors. But I'll speak to the practice before we had our sale/merger and discuss what that model looked like. We had two major client groups, the $5 to $20 million business owner and the $20 million to $100. That was the 80% of our client base. So, every client went through the same process. We would charge a consulting fee to go through that Wealth With Purpose process that I described to you earlier and take them through that journey of really understanding their wealth, having clarity and empowerment toward their wealth. And we charged not for a document or a plan, we charged for a process. It was very distinct. And we would show owners, "Here's the process you're going through. And this is why this is so valuable for you because this is going to create clarity and peace of mind. And that's what you want." In fact, our mission statement for the company was to create clarity, alignment, and peace of mind for your life's work. So, that's what the process did. Then subsequent to the process...

Michael: And that's what you charged, $25,000 to $50,000 for this eight-meeting process they're going through.

Ali: Yes. And then on a subsequent basis, each year, we would continue to charge a consulting fee. It wouldn't be the same fee as the first year. Usually, it would go down. But we continually would charge that fee to then manage that ongoing strategy and essentially keep the engine running as it should.

Michael: And what kind of fees are we talking about, just neighborhood-wise?

Ali: Again, depending on scope. I'd say most clients for $5,000 to $15,000 per year in consulting fee. And then some clients that didn't need that process wouldn't have a consulting fee. But that was very rare. That might have been a client that's a retiree that's on autopilot, where they're not really having the business.

Michael: It's like once they've sold the business, life gets simpler from that perspective.

Ali: Yeah, sometimes. A lot of times it gets more complicated if they're an entrepreneur. But I won't go down that rabbit hole right now.

Michael: The only thing worse than an entrepreneur with tens of millions of dollars in their business is an entrepreneur with tens of millions of dollars of cash and all their time available.

Ali: You nailed it. Literally, you just quoted one of the lines from the book. There's nothing more dangerous than a bored entrepreneur, except a bored entrepreneur with a lot of cash. It's very dangerous. So, we take them through that planning process. We charge a consulting fee. And then, of course, as we all know, just because they've gotten the right guidance and input and strategy, they still need the financial services because those commodities, like investments, or insurance, or trusts, they're there to fulfill a goal. Now that we've gone through the process to know why and what, let's get into the how and let's execute these planning recommendations. So, once we went through the planning process, then we would provide the actual end services, which for our firm was heavily asset management driven. We weren't a business that did a lot of insurance or annuities or anything like that. It was heavily planning guidance and then, call it, fee-only assets under management services.

Michael: So then, fast forward us to today. So, what is the business now, or I guess what is your business now if the business, the advisory firm transacted last year?

Ali: Yeah. So, after I launched my book and saw... I really wanted to take everything we've talked about today, the framework, the knowledge, the impact to entrepreneurs, and just package it all in a way that could really help the entrepreneur make better decisions. And that was why I put the book out there, "The Business Owner's Dilemma." When I launched that book, there was such a huge amount of demand from owners and entrepreneurs that wanted the education and coaching and workshops behind it, and then also a lot of demand from advisors that wanted to learn the system and utilize the methods and the coaching and that framework that I'd spent 15 years learning. "And can you train me and license me on this approach?"

So, I had a long look in the mirror, if you will, and said, "Do I want to be the CEO of a wealth management firm while also being the CEO of an education and coaching company while also giving keynote speeches to entrepreneurs and advisors, and while also having a personal life and building a family? Can I really do all of that?" And the answer was, "Yeah, you could do all of that. But do you really want to do all of that?" And I essentially made the decision to say, "If I could find a best-in-class firm that works with entrepreneurs, that could be the home for my clients and my team, and I could continue to work with them in a strategic collaborative capacity, would I take that and then fully focus my attention towards the expansion of this entrepreneur and advisor impact?" And after I thought about that and deliberated over a while, it was a very difficult decision, one of the hardest decisions of my life, probably my hardest business decision.

I said, "I'm going to take the fork in the road, and I'm going to pick the path to build this education and coaching company, essentially not be the advisory firm owner anymore, not be the CEO of a wealth management firm." So, went through an M&A process, found the right partner, and I'm making a long process very short with this description, found the right partner, and essentially stepped away from being the advisory firm owner, and stepped fully into...and I'm in the process right now of further expanding that, saying, "How can I take the pain that I know so well, the 15, 20 years of advisory work, the 15 years with entrepreneurs, the 20 years with all sorts of clients, and help create a bypass for all of the advisors out there that truly, truly care, fiduciary advisors that want to lead with planning, that care about the entrepreneurial journey, how can I make a massive impact in their lives and in their ability to grow those entrepreneur clients?"

And that's essentially what we focus on at WISE Global and the training and work we do for advisors to give them the boot camp, the resources, the tools, essentially all the how behind the work that's in my book, expand that. And then simultaneous to that also speak to owners and create, if you will, awareness and also demand in the business owner space through keynotes and workshops and different mediums to really educate the owner that you've got a bigger issue than you realize exists, and there's a better way to realize your life's work. We got to help you realize your life's work in the right way. So, that's kind of where things have shifted to today.

Ali's Advisor Coaching And Education Business [1:08:34]

Michael: And so, I guess just help us understand a little bit further. What's the actual business of WISE at this point? You do workshops, you do consulting, you do coaching, it's mostly advisors, it's mostly entrepreneurs. What's the offering or offerings at this point?

Ali: Yeah. So, there's two sides to the business. One is the advisor side, and one is the business owner side. I'll speak to both. So, for business owners, we take them through workshops, and I deliver speeches, pay fee for consulting, fee for workshop, fee for keynote, whatever it might be. I get hired by business owners and coach business owners on planning their life's work, independent of and separate from any financial planning, financial advisory work. So, I've retired, I'm no longer doing anything under 1940 Act anymore. So, I don't deliver financial plans, and I don't manage a dollar of money. So, I'm doing no advisory services. This is all coaching and education for the entrepreneur.

Then part two to WISE is advisor licensing and education. Specifically, we have a boot camp literally coming up here next month, where we're training and teaching advisors how to work with entrepreneurs. We charge a fee for that training program. And essentially, those advisors get to learn all of the how behind our planning process, they get to utilize the intellectual property, the content, and essentially, take what took 20 years to build and say, "I can now use this and learn this for the entrepreneur client that I want to work with," which in design will create better engagements, better quality solutions, larger engagements, larger clients, and a better overall experience for the advisor working with the entrepreneur. So, those are the two distinct sides to our business.

And then there is an intersection that happens is every once in a while, I shouldn't say once in a while, quite often, that's a poor description, quite often, Michael, I'm speaking to a business owner group, and they're saying, "Hey, Ali, how do I get this implemented?" And we might have had 100 owners last year that reached out to maybe more than that, probably was a couple hundred that said, "I want to get an advisor to help implement this. I've read your book, or I've listened to your workshop. Who can get this going?" So I tell them, "Candidly, I don't do the advisory work anymore, but I can connect you with and help you find the right team or the right advisor that can help you through this." So, there's a third channel, if you will, that would be helping good advisors that do the right work get connected with the right clients.

Michael: And so, as you train advisors, so the boot camp end, you end up building a base of advisors over time who can do this work, trained in the process that you're teaching the entrepreneurs, so it all comes together.

Ali: You got it. You got it.

Michael: And for the advisor end, I know people are going to be curious, when you get into these boot camp style programs, how long is the program? What does it cost? Just how does that come together?

Ali: Yeah. I'll say this so far. The success we've had the past year as we've worked with other advisors and teams on the program has been quite remarkable that it's been expansive for those advisors that have been using it. So, we're now formalizing a training and boot camp program. And to be candid, literally last fall, we built out about 100 training videos. We created a learning management system. I took years and years of IP and started housing all of this and a training model and approach. And this boot camp program, essentially, it's a two-and-a-half-day intensive. So, coached directly by me, two and a half days of core training to basically walk through A, B, C, D, how do you deliver this process because the gems are in the details, and we want to walk through that entire process and explain exactly how everything's done.

You asked a great question earlier, "How do you get a business owner worth $30 million to book a second or third meeting?" I'll show you how. So, that two-and-a-half-day intensive starts them in the program. And then we have a series of follow-ups that'll be virtual coaching live sessions where we discuss, "What's working, what's not, how do we expand this to business development? How do you handle these objections? How do you run a great collaboration meeting with the tax and legal advisors? Where are you winning? Where are you not winning?" Essentially, continually making sure the group gets the appropriate guidance and education. And then they have access to, call it, a 100-ish videos on a learning management system, where at any point in time, if they're going into a strategy meeting with an owner and that owner is struggling with their paradigm of money, click a button, watch Ali's description on how to have that conversation. You can go into the meeting being prepared and having a framework to think about that discussion. And then in addition to that, all the tools, concepts, and content that supports that planning process. So, that's essentially what the program is.

I'm going to say it's probably going to take an advisor about three years, one year to get good, and then maybe three to five years to be really be exceptional in this space, assuming they're putting the right work in. And these are advisors that already have... This isn't an educational program like a CFP. I'm expecting someone to come in. You probably already have your CFP, you might already have your CEPA [Certified Exit Planning Advisor]. I think some of the best advisors we've worked with thus far, they're both a CFP and a CEPA already if they've done that work in advance because they're in it. So, our goal here is to make good advisors exceptional and to create an ROI that's substantially more than the program cost itself.

Michael: And where do you price the program at this point?

Ali: So, I've reserved the right to change fees in the future.

Michael: Absolutely. Understand. Podcast has a date of early 2025.

Ali: Yes, there you go, there you go.

Michael: It may vary depending on when you listen to this.

Ali: Yeah. So, we did our initial year program for, call it, the founders' group. We provided a discount, and we did it at $15,000 for the first-year training program. I expect the street price, call it, next year to probably be $25K for that program. And the way I look at that is it's about the cost or the investment, I should say. It's about the investment of what one client engagement would be. So, if you can go through this program, you can nail one new opportunity. You obtain one new client at $25K, or $15K, or $50K, whatever it is. You've paid for it. But really, I think it's exponential. I think someone that's already doing, let's just say they're doing five engagements a year at $5K or $10K, I wouldn't be surprised if they walk out of here doing eight engagements a year at $25K and delivering a greater experience to the client. So, that's our current pricing. And then year two and three will figure out exactly what that's going to look like ongoing. But at this point in time, everyone I've talked to has been, "Hey, if I can get all of that value for that, I'm in." We haven't really had any challenges with pricing. Really, I want to pour my heart and soul into this group. So, it's going to adjust and more if I think over time.

What Surprised Ali The Most On His Entrepreneurial Journey [1:15:49]

Michael: So, as you reflect back, what surprised you the most about building your own advisory business, your own entrepreneurial journey?

Ali: How hard it would be. It was hard. I was overwhelmed at times with how difficult it is to deliver a great client experience while also building an effective team that can help build that client experience with you. It sounds so easy in theory and it's just so challenging in application.

Michael: Where was the blocking point in practice? Is it systematizing? Is it literally team hiring and management and all that? What was the blocking point?

Ali: I think the hardest blocking point, if you will, was having other individuals deliver a client experience in a way that could create the same outcome as what you delivered as the founder, if you will, or as the first advisor. And people care. I've had a wonderful team over the years, and I'm super proud of my team. But it is hard to find individuals that will deliver a client experience with the same amount of care and love and passion as maybe you did for your client, being the first advisor and owner of the firm. That's really challenging. And then as you scale that business, being able to preserve the client experience, while at the same time, accomplishing all the other outcomes you want in a business. That was tremendously challenging. And the human emotion part of it, especially within building the teams and hearing people upset and dealing with the emotion... People are emotional. It's always going to be that way, but that was a very difficult journey to go through. Nonetheless, I'm glad I did it. I'm grateful for it, but it was certainly hard. If anyone says, "Oh, yeah, built this business to billion dollars of assets and it was easy," I think they're just being humble, or they're just not being honest.

Michael: So, were there particular things that you found to help get to that point of how do I get my team to deliver at the level that I want them deliver, that I expect that is in alignment with how I believe clients should be served?

Ali: I think, first, you need to be the example, so you delivering that experience to clients and then making sure that the rest of the team understands exactly what that outcome looks like. And you need to be crystal clear with your vision, that this is what the client experience needs to be, and we're not compromising from this client experience. So, first, you've got to be crystal clear with painting that picture for the team. And then you've got to dedicate the appropriate time and resources to allow the team to get there. And then the hardest part, it's definitely the hardest part for me, is when there's someone on the team that isn't meeting that standard, getting rid of them. And that's the hardest part for me. Everyone has a different challenge. I have no problem painting a clear picture. I have no problem developing the standard and being articulate about what needs to get accomplished. But I tend to have a lot of empathy and believe in people like, "Oh, I can adjust this, or we can change that." I think if there's anything that's really difficult in that equation is if someone's not delivering to that standard. You've got a team member that's okay and good enough, but they're not great, it holds the whole team back, and it's better to set them free and let them go and have them find something where they're a perfect fit for versus maybe if there are seven out of ten fit for your firm.

The Low Point On Ali's Journey [1:19:37]

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

Ali: I feel like I can remember it like it was yesterday. A low point was where I'd scale up the team, and we had probably 12 people at the time, 10 or 12 people, I forget the exact number. And I had moved fast with growing the business, and we then tried to implement a lot of process and procedure, and we were few years into implementing EOS [Entrepreneurial Operating System]. We had a couple of wrong people on the bus, if you will. I remember it was probably one of the most emotional days of my life at a leadership team meeting, four leadership team members at the time at EOS implementer, and it was just so abundantly clear that two of our leadership team members were not the right fit for the organization and for the vision. Unfortunately, they were in executive leadership roles. They were the ones that were the internal captains of the business. And it was clear that there was a misalignment in both their understanding of what needed to be implemented to preserve the client experience and then also what needed to be delivered to create that client experience.

And at the time, we had lost some substantial clients because of this. It was too much unempathetic process that was being implemented, that was damaging the client experience. And then it was a lack of care for one particular individual that, I think, just didn't get it, didn't get what was really needed to create that entrepreneur-client experience. And the results were showing. We were having some loss of clients at the time. And I knew what the extremely hard decision to do was, which would have been, "Hey, you need to let these two people go because there's so many unintended consequences in there." I shouldn't say I knew, I felt, but we were in such a fight or flight mode. I was in such a fight or flight mode at the time, where we just have to figure it out. And the harder decision was to say, "Hey, let's let go of these two people." And the easier decision would be, "Let's keep trying to figure it out. Let's keep working through this. Let's keep problem-solving. This is probably an issue every business goes through." And then you start to rationalize your position. And when the shoe fits, it fits, and when it doesn't, it doesn't. And at that point, I kept wearing a shoe that didn't fit. And then that led me to have to make even more challenging decisions further on down the road.

Michael: To eventually let people go and enforce these changes?

Ali: Yeah, and it may have been letting go or it may have been what I ended up doing, I think, to answer your indirect question there was I had to then find... We had to go correct the problem. And if you can't deliver at the standard we need to, then let me show you how to deliver at the standard that we need to. And if you don't like that, then this isn't the place for you because we need to get these results, and we're not here to waste time on... I'm happy to invest time in meaningful change, and we did that for years. But then when changes aren't working, adjustments need to be made. So, eventually, just getting back in there and saying, "Here are the changes that are needed." And I think, in some cases, that ends up showing someone the door.

Ali's Advice For His Younger Self And For Newer Advisors [1:23:00]

Michael: So, what else do you know now you wish you could go back and tell you from 10 years ago?

Ali: Trust yourself, I think, is a huge one. If the shoe doesn't fit, take it off. If you want true feedback about your organization, go to your best customers and clients. They'll tell you what's going on. My best clients have always been the source of the best feedback. Internally, you can get feedback. It's valuable, but only so valuable. Externally, the client that's actually experiencing the end result is your best source of feedback. And not listen to any of the noise and go back to your best clients for your guidance and input as to how you should grow your business. They're your number one source of innovation and growth. Keep taking care of your best client and keep them happy and keep growing the next one, you'll build a great business. And if you listen to all the noise around you or all the complaints or the criticisms from this or that, you're probably getting distracted.

Michael: And did you have a particular way of doing that? Were you a, "I meet with my top clients once a year and just ask them for feedback"? Did you run an advisory board? Was this simply more informal extension of meetings you were already having? How did you cultivate this top client feedback?

Ali: Great question, Michael. All of the above. Everything you just mentioned, I've done at some point in my career. We've had an advisory council, we sourced client feedback, I have lunches and dinners, I have it in groups, all of the above. What I have found the best way to do this is, is to be very open and honest with your client. Pick your best clients. And you always want to pick the clients you want to replicate. They're the clients that represent your avatar, if you will. Who would we replicate over and over again? And that's the type of client you want to get the feedback from because if you pick the client that's always the squeaky wheel, they may give you some good insights, and I think that is important to get, but they're not your avatar. So, pick your avatars, and go take him to lunch, go take him to dinner, and say, "Hey, why did you pick us? What do you value most about our organization? If there's anything you could change, what would you change? And here's the direction we're growing the organization, here's the business we are, here's the business we're growing into and we're building. What are your thoughts on that? How do you feel about that? Is there something we're missing?"

And another question I like to do is, "If you didn't do business with us, who would you do business with and why?" And find out from your client, if they were looking around the corner at something else, what would that be, and why would they consider going there? And I think that gives you an incredible view as to what you need to build or what you might be missing, and then be very vulnerable and open to your blind spots. Don't think that you know it all. Go into a conversation curious about learning and about being better, and just put your ego aside.

Michael: So, what advice would you give younger, newer advisors getting started today?

Ali: Don't learn it the hard way. There are many people like me and like Michael that have made our mistakes over the years and that love helping and teaching and showing others their journey, their wins, and their losses, and their mistakes. So, get a good mentor. Read, listen, learn from other people's mistakes. Sign up for programs. I've invested hundreds of thousands of dollars in professional training programs over the years. And it's paid back exponentially. And I think that a lot of times people look at investments, and education, or training, or your collaboration groups as a cost, and it really isn't. It's an investment. And I think the more young advisors can get involved and learn from these programs and those that have been there done that, the faster they get over the learning curve, and the better they can build their business.

What Success Means To Ali [1:27:07]

Michael: So, as we wrap up, this is a podcast about success, and just one of the themes that comes up is literally that word success means very different things to different people. So, you've had this wonderful path of building the advisory firm, selling the advisory firm, now think of it like stage 2.0, and building WISE Global Network. So, the business is in a wonderful place. How do you define success for yourself at this point?

Ali: Yeah. Big picture, to me, success is about going out there and accomplishing what you set to accomplish, setting a goal and accomplishing that goal, and/or not accomplishing the goal, but learning and growing to where you can then revise, repeat, and get out there, and use what you've learned to then accomplish the goal. So, I think at its simplest form, it's attaining that goal. And whether you get there directly or you have to fail a few times to get there, it doesn't matter. The point is you're working toward that goal. And the second part of success to me is enjoying the journey. So often we're so consumed with getting to the outcome by any means necessary, that we don't actually enjoy the journey, and we're missing out on life. So, I think so much of life people live in regret of the past and anxiety of the future, and they don't live in the present moment. And I think achievers, goal-oriented people, they're so concerned with the outcome that they forget to really breathe and enjoy the journey. So, for me, success is getting to that outcome, but also enjoying the journey and the steps that take you there and making the choice to have a great life experience while also building. As I mentioned earlier, you want to get a great return on life experience while also getting a great return on investment. So, I think the combination of those two in pursuit is how I would look at success.

Michael: I love it. I love it. Well, thank you, Ali, so much for joining us on the "Financial Advisor Success" podcast.

Ali: It's been my sincere pleasure. I've loved the conversation and appreciate all your intentionality towards it.

Michael: Thank you.