#FA Success Ep 359: Building A Financial Planning Assessment To Show Clients Progress And Value Over Time, With Eric Miller

Resources Featured In This Episode:

• Eric Miller
• Econologics Financial Advisors
• EFA Financial Prosperity Index (Download) – PNG
• BizEquity
• Kitces Marketing Summit 2023
• Elements
• AssetMark
• Profit First: Transform Your Business From A Cash-Eating Monster To A Money-Making Machine By Mike Michalowicz
• Schwab's RIA Benchmarking Study

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Full Transcript:

Michael: Welcome, Eric Miller, to the "Financial Advisor Success" Podcast.

Eric: Thank you very much. It's a privilege to be here. I do want to say 1 thing. I want to acknowledge your support staff, Michael. They really do a top notch job, very competent people.

Michael: I appreciate that. We worked very hard to build the team in our own kind of special nerdy fashion, as it were, to keep our...the good attention to detail we like to do around here.

Eric: They were great.

Michael: Fantastic. I appreciate that. And I really appreciate you joining us here today as well to dig, I think, into today a topic that I kind of hold near and dear to my heart around what we do as advisors, which is just this phenomenon of how do you measure the value of advice, the success of advice. Just like how do you know it's working? I mean, there's always the proverbial, "Work with us for 30 years. Trust me, you'll thank me in the long run." Which I totally believe is true. I really do. It's not the most resounding thing that I try to present to a prospect, or even to take a client who's merely 3 to 5 years in the relationship, "I have 27 more years, and you're so going to see it."

And I know your firm is taking an interesting approach with this that I'm just seeing starting to crop up with a couple of different firms, where you built your own version of, I guess, at least how I think about it, an assessment, how are you doing in your financial life assessments? That is not necessarily just a quantitative math, like, "Let's measure your financial performance, and your returns next to benchmark," and such, but much broader and much more holistically, "How are you doing across all of the different financial planning domains of your life? Can we give you a questionnaire, assess how you're doing, and then give it to you again after a year, and see how it's doing better, and give it to you again after a year, and see how it's doing better?"

And when you build something that I think about it like it's a little bit more qualitative, you can really show clients how they're making progress over time in a manner that is always hard when you're just truing it totally based on investment portfolios, or net worth, and such, where they only save and invest. There's only so much economic value that gets created in the span of a couple of months or a couple of years. But someone's overall holistic planning picture really can materially change in a couple of years if you've just got some way to measure the progress.

Eric: Yeah, it definitely has been an interesting tool for us to utilize. And to your point, I think...look, people are visual. They like to see. And everyone likes to keep score. Who doesn't like to keep score? So, if you look at the number of people that check their credit score on a daily basis, it's probably in the millions or more. And when it comes to your financial life, it's not just made up of, just like you said, just your investments, and the performance of your investments, or your portfolios. There are a number of different areas that we know that clients need to address. And if they're not, then that could turn problematic. So, we just wanted to create something that we felt was comprehensive enough, but simple enough too so they could see it visually and say, "Oh, okay, I'm doing well in this area. I'm not doing well in this area." And then most importantly, what can we do now to fix this? What's the next step now to fix this?

Why Eric Developed A 'Financial Prosperity Index' Assessment [07:26]

Michael: So, can you describe for us a little bit more just what you created to try to do this and score clients? We're on a podcast. As you said, people are visual. So, let's talk about it. But try to help us understand what you created here.

Eric: So, we basically said, "Okay, what would be an optimum condition for someone as it relates to their personal financial condition?" And like you said, I'm sure that advisors are all going to have different definitions of what that would look like. But if you googled "financial freedom," you're going to get 1,000 different answers of what financial freedom actually is. So, we had to kind of start and say, "Okay, well, what would a definition of financial freedom look like?" And also at the same time, knowing who our public is, or who our niche is, which is mostly health care owners. We had to build it a little bit around that as well.

But we said, "Okay, the definition of financial freedom for us would be someone that has a household where they have an abundance of income coming in from multiple sources, would be free of all bad debt. They would have created income sources that could pay for their basic lifestyle. They had a business that was profitable, sustainable, and transferable. Their assets were protected from taxes, inflation, and lawsuits. And they had time to pursue whatever life goals." That's the optimum condition right there. And I think most of us can agree that that is an optimum financial condition.

Michael: And I'm noting that's a little bit of a mixture of I've got purely sort of quantitative things, I'm not carrying a pile of bad debt, I've got income sources that cover my core lifestyle expenses. But I'm noting some of this is a little bit more qualitative. I've got the capacity to pursue my life goals, which is... that's sort of partially financial, partially other...

Eric: Correct.

Michael: Just my income sources are diversified, that's sort of qualitative. My business is sustainable and transferable, a little bit of subjectivity to that. I'm struck, this is not... you're not just describing, "Let's get 12 financial data points, and we're just going to put in 12 numbers, and give you a score." That doesn't really sound like the context here.

Eric: That is correct. That is correct. So, after we came up with that definition, we were then, "Okay, so what are the area..." If you're looking at a human body, right? The human body has certain systems, cardiovascular system, it has a respiratory system, it has all these different systems that make up the human body. And they're all pretty similar from human to human to human. Right? So, when it came to looking at the financial condition of a household, we said, "Okay, well, what do we all have in common?" And certainly, income planning, debt and credit, estate planning, taxes, asset protection, investment, these are all areas that obviously, from person to person, we all have those things in common. And there is an optimum condition for each of these areas.

And that's kind of where the premise for the assessment came from. And then from there, we had to dig down and say, "Okay, well, what questions can we ask someone for this specific area? What are the 8 to 9 questions that would signify how someone is doing in this particular area?" So, we had to come up with the 9 to 10 questions for each of those particular areas. And when we did that, and we kind of looked at it and said, "Okay, we have a 100-question assessment here that would allow someone..." without having to give us any data at all. We don't ask for any statements, or retirement accounts, or bank accounts, or asset and liability sheets. "What questions can we ask in a yes, no, or maybe format?"

Michael: So that's the context here. Even the things that are more quantitative, I guess you're not asking them to put in...enter the balance of your credit cards that you're paying interest on, or something. You're just asking them some yes, no, maybe, "Are you carrying a material amount of credit card debt?"

Eric: Exactly. So, 1 of the questions would be, "Have you updated your will in the last 3 or 4 years?" We're asking basic questions, I think. But they do uncover whether or not that person is certain that they have whatever the question would be, they've actually done something about it or not. And a lot of the answers we usually get are no or maybe because they don't know. So, when they finish the assessment, typically the average score is right around 420. That's what we found the average score to be.

Michael: And just scored on what to what? I don't know how to...I don't know what the context of a 420 is. Is that up to 500 where I'm feeling good, or is that up to 1,000 where I'm feeling not so good?

Eric: I think the top score is 850 that you can get. So again, we try to mirror a credit score because I think people have familiarity with that. So, when we came up with that number, we're like, "Okay, 850 will be the number." But we found that so many people have... there's just I don't knows. Financial I don't knows are so prevalent among even the type of people that we deal with.

Michael: So, basically lots of people answering maybe to those questions. "Have you updated your will in the past 3 years?" "Maybe. I forget when we did it. It was a few years ago. I'm going to go with maybe because it feels better than no."

Eric: Well, I will tell you, of all the 9 different areas that make up that assessment, and the estate planning one is generally the one where you'll see the 0 at the bottom because most people just have not confronted that area for whatever reason.

Michael: It is is a little depressing.

Eric: It's very depressing.

Michael: The whole death thing is... it's a little morbid. So, help me understand a little bit... So, you've got these different dimensions that you're evaluating, like income from sources, bad debt, sustainability of your business, because you said you work with health care practitioners. So, we'll come back to that in a bit. So, I guess I'm just trying to visualize overall. How do you surface back results? You took 100 questions, and your score's 420, I'm like, "Okay, what do I do with that?"

Eric: For us, it's a point now of being able to educate them and say, "Okay, so in the debt and credit system, you said you weren't certain about when you were going to have your bad debt paid off. Or some of your ratios, your debt ratios were higher than what they should have been." So, we utilize it as a point to say, "Okay, well, what are the action steps now that we can take to rectify this area?" And again, 1 of the sections would be taxes. And I think 1 of the questions on taxes would be, again, knowing the types of professionals that we work with, my effective tax rate is over 40%. So, we're just trying to ask questions that are going to uncover for these people like, "Am I doing all right? Am I not doing all right? What should I be doing next?"

And it's just been a very valuable tool for us as advisors to really start at least getting into the conversation with our clients, and saying, "Okay, let's come up with a real plan so that we can actually handle this. Because if we don't, then it's just going to be... it's going to turn to something worse down the line." So that's that's how we've been utilizing it in implementation and working with our clients.

Michael: So how does this get communicated back or presented back to the client? Do they just get a score, do they get sub scores, like, "Here's your estate score and here's your debt score." And then they add up to 420? How does it get communicated back to them?

Eric: So it's actually a... it's a PDF that they would get, and it's a graph. So, at the top is going to have all of the areas, policy and procedure, business viability, income planning, debt credit, estate planning. And then we have it on a scale from down at the bottom would be 0, up at the top, let's say, would be 90. So, it's a graph. And each of those points then they can see, "Oh, my debt and credit is in the green zone, and then my state planning is in the red zone." So, we added some color, some graphics to it so they can see being in green is good, being in red is bad.

And really and truly, it doesn't tell anybody, "I'm rich or I'm poor." It doesn't really indicate that. It's really just saying, "Do I have my basic financial rudiments in place?" And we built it really on those, "Do I have my basics in place? Am I saving appropriately? Do I have, like I said, our basic estate plan, our wills, our… Do I have these things in place?" From an investment standpoint, kind of a similar thing. We just ask questions that would indicate whether or not they have their basics in. So that's really been the success of the tool.

Michael: So, would you be willing to share, do you have a sample of this just for people who want to see, as the saying goes, picture's worth 1,000 words. Is there a sample you'd be willing to provide? Just so people can get a little bit more of a visual sense of what this looks like.

Eric: Absolutely. It's very easy to do. We can put up a graph. We actually even put it a score there, too. So, we have the score. And I misspoke. It's actually... it's out of 900 is the top score. And then we also put a grade there with it as well. So just like A, B, C, D, F, so that would be... that's part of it as well. And again, we had to make it real for people to understand, "What am I looking at here?"

Michael: So, for folks who are listening, this is episode 359. So, if you go to kitces.com/359, we'll have a link out to Eric's sample scoring system, client scoring...what do you call it, Eric? Because client scoring system sounds a little bit inappropriate.

Eric: We had to come up with a cool name. We just called it the Financial Prosperity Index.

Michael: Okay, so if you want to see a sample of the Financial Prosperity Index, which sounds a lot better than the client score system, kitces.com...

Eric: Trademark that. Yeah.

Which Categories Eric Focuses On To Gain An Accurate Assessment [19:12]

Michael: Yeah. kitces.com/359, and we'll have a link out to the sample. So, Eric, you mentioned a couple of categories in there. It's like business viability and such. Can you walk us through those once more? Just what are the categories? What do you actually scoring people across?

Eric: Yeah. So, the 1st one would be financial planning. So, some of the questions would be built around does someone have a plan? Are they following a plan? Are they implementing a plan? So, we came up with questions related to whether or not someone is actually doing any planning. And if they are, the top of the score would provide success. If not, the bottom would be failure. The next one would be policy and procedure. And when I say policy and procedure, one of our main themes or philosophy that we try to teach our clients is that they have to run their household like a business. And if you're going to run a successful business, then you probably should have policy and procedure in your business. So, we try to have that same mindset when it comes to running your finances of your household that there needs to be policy and procedure amongst, let's say, the executives of the household, which is usually the husband and the wife.

Michael: So, what kind of things do you ask? "Do you have a system? Make sure your bills are paid every month," that kind of stuff?

Eric: It's similar to that, "Are you communicating with your spouse regularly? Do you have a meeting regularly? Do you have account set up where you're allocating money? Are you preparing for 'unpredictable expenses?'" I mean, there's a lot of things that go into policy and procedure, and we try not to make it too complex because, let's face it, I think we could probably write thousands of policies if we wanted to. But what is going to keep this household in agreement with one another when it comes to money, especially since it seems like the divorce rate is generally built around arguments about finances. So, it's important for us to say, "Okay, are you 2 on the same page with how the finances are going to be run?" So that's what that part is.

Business viability. Again, if you own a business, it is part of your household portfolio, and is generally a big part. And I would say that with most of the people that work with business owners, I mean, the values of their businesses probably make up 60% to 70% of their net worth. So, as an investment component, it's really important that that business is viable and it's profitable. And there's a plan for it to transition at some point to someone else. So, we ask some questions on the viability of their business, and to make sure that it's in a certain condition. You want me to keep going?

Michael: Yeah. Yeah. I'm fascinated by these. Yeah.

Eric: So, the next one would be income. And of course, what we're trying to figure out there is, number 1, are you making enough money to live the life that you want to live right now? And then are you planning on creating future income sources? And do you have a plan built around that? So, when it came to income, because again, we work with business owners that have power over how much money that they make. So, they're not just wage earners. They don't have a set wage. It's like, no, you have some say in how much income that you make. And let's plan out how much you really need to be able to live the life that you want to live. So, we build questions around that.

Debt and credit, I think is pretty self-explanatory. We want to make sure that their debt and credit is in a good condition. State planning, same way. Taxes, again, we want to make sure that they have control over their tax situation. They're filing on time. They are looking for strategies to try to minimize their tax liability. They're in communication with their accountants on a regular basis. So, we built questions so they're efficient in their taxes. 2 more. Actually there's 3 more. Asset protection. So, we ask questions obviously on, "Do you have proper amounts of insurance? Do you have assets that you own in your own name? Do you have limited liability corporations if needed," basic questions built around asset protection.

Then on the investment side, it's, "Do you understand the investments that you own? When's the last time..." Which most people, "Sure." Most people can't answer.

Michael: "Maybe." That's good, "Maybe."

Eric: One question we'll ask, "Do you have a household investment policy statement?" "I think so. I don't know." And then actually, the last category is help.

Michael: Help?

Eric: Yes.

Michael: Like, "Do you have people you can go to for help?"

Eric: No. So, I think… You would think that. I think one of the biggest problems that us as advisors have is that we're sometimes dealing with people that have a tough time being helped. And I wanted to... And if you've ever had difficulties with clients, which I have, one of the things that I uncovered later on was that you can actually ask questions to people about the subject of help. "Can you be helped? Have you ever had a bad experience in trying to be helped by another advisor and it failed?" And Michael, I tell you, it's 1 of the things that we do up front now when we're dealing with new people that I will ask them, "Can you be helped," in questions that will uncover whether or not they can or not.

Michael: It's a powerful way, just to clarify...I mean, I think that both in 2 dimensions, it lets you unearth the conversations of, "Tell me about your experiences working with other advisors," because people have all sorts of baggage around that that then impacts the relationship. As well as just at the end of the day are they going to be interested in open and willing to take advice? Are they likely to implement? I can see just the person who can't answer that well, that's probably a pretty good indicator of this is going to be someone who's not likely to follow your recommendations and implement.

Eric: And you're exactly right. And really, it's just getting them to talk about the subject of help. For whatever reason seems to be therapeutic to someone like that. I'll give you an example. I remember talking to one guy and I asked him, "You ever had a bad experience with a financial advisor?" And he was like, "Nope, I never had." But there was something, he was still resistant to me about talking and opening up. And I was like, "Okay," I was like, "Did you ever see anyone else have a bad experience with a financial advisor?" And he just opened his mouth and just started talking about an advisor that was dealing with his mother. And it was just... But all I did was just let him just let it get it out. It was almost like a therapy session in some cases.

But something magical happened after that is that after he was able to communicate that, I just gave him a good acknowledgment. "Thank you for telling me that." And then the conversation went completely different. He was open. He was willing to talk to me because I asked him a question that no one had ever asked him before. So, I think, look, as human beings, we all want to help. I think you do what you do because you love to help. But there has been a lot of times where people have been betrayed, and now they don't think help is possible. So, I think it's an important area that everyone can do better at when you're talking with people upfront about the subject of help.

Michael: So, I got to ask, 100 questions is all a lot. I'm assuming this has been iterated over time. So, how did you end up at 100, and not 200, or not down to 50? You could just ask them 2 questions in each of these areas. How did you come to the design that you've settled on that you've been running with?

Eric: Well, I think when we first started out, and I'll have to give kudos to my now ex-partner because he was really instrumental in helping build this. But it came down to what is tolerable for people to take. And I don't know that we knew whether or not people would fill out 100 questions. And over the years, of course, I've thought about it right now, "Is this just too much? Could I get more engagement if people would...if there was only 50?"

Michael: I mean, you're using it in practice. Are they taking it?

Eric: They're taking it.

Michael: All right. Well, the results are what they are. If they're taking it, they're taking it.

Eric: It's true. It's true. Well, it's a requirement for all of our clients to take it every single year. So, we do make it a requirement as part of our checklist when we're doing an annual review with somebody is that they have to fill out not only this, we actually created another one for their practice as well. But that's more geared on the practice side. But yeah, it's a requirement. People take it begrudgingly sometimes. Of course, every once in a while I'll hear people say, "Gosh, I got to fill out that assessment again." I'm like, "Yes, but don't you feel so good when you see your score go from 320 to 850?" They're like, "Yeah, I do like seeing that." I'm like, "Okay, good."

Michael: Get your credit. You can't get your points if you don't take the assessment.

Eric: What are you complaining about? But you see their faces on the Zoom when we pull up their score, and they're looking at, and they're nudging their wife and they're like, "Good job, and thumbs up." And that's a good feeling right there to see that kind of effect that's created.

Michael: Because they literally get to see their score evolve over time. They start at a 320, and then they're at 420, and they are at 500, they're at 600. They're literally fixing their stuff and getting their financial house in order with you. I'm assuming that's part of the whole dynamic is they get to see the score move as independent from just, "Did I get good investment returns and is my net worth going up into the right?"

Eric: To your point of trying to somehow quantify what the value is of me as an advisor that's charging them either portfolio fees, or planning fees, or whatever it is, we have to show them something that's going to inspire them to continue to want to utilize us and engage with us so that they can see that they're making progress. So that's why we call it results based. It's not performance based, it's results based. What is the result that you're getting with your experience and working with us? And it's been a very valuable tool for us.

How Eric Built His Assessment And Uses It In Practice [31:08]

Michael: So, I'm just curious for the mechanics, literally, how do you do this? I mean, you mentioned earlier creating the software. I mean, did you go and write an entire piece of software to do this? Is there some assessments.com thing you buy off the shelf that makes this really easy? How do you actually build and implement this as an assessment in your practice?

Eric: So, this is actually something that we hired a software developer to create, and he's the one that has the...I mean, we own the intellectual capital, all the algorithms, and all of the calculations, and everything that has to do with that. But he actually created the software. This is one of many other not assessments but financial metrics that we keep for our clients. And to your point, we probably should just use some of the standard financial planning software out there. And the only reason that I don't use some of it is because again, the type of clients that we work with, I wanted to customize some things. So, it spoke to them individually. So, we had to create some of our own proprietary numbers and metrics that we would want to keep track of for the types of clients that we work with.

Michael: So, out of curiosity, I don't know how long it's been since you built and put this in place, but what does it cost to get a software developer to make this? And where do you find one?

Eric: It's thousands of dollars.

Michael: But not hundreds of thousand, or millions. This is thousands of dollars.

Eric: Yeah, it's thousands of dollars. And every once in a while, it'll glitch just like anything else does. And we'll have issues, and we got to call them up and say, "Hey, Elon, can you help fix this right here?" And he's like, "Yeah, let me fix it." He'll go in and do it.

Michael: It's a series of questions, and then it has to manifest into the output.

Eric: Yes, exactly. So, we have... And there are some...we do have some traditional metrics where there is data that's inputted that our paraplanner would do, but we set it up so it's really simple to do. And it's just part of our planning process. So, we have 16 to 18 different metrics in addition to the Financial Prosperity Index that will go over with our clients on a regular basis so that they can see the progress that they're making.

We have a traditional net worth calculation that is part of our system, which is not obviously that proprietary. We'll manage because a lot of our clients are business owners, I have profit margin so we actually have to...we help them calculate their profit margin for their business so that they can see exactly what their profit margins are. That's important to them so that they can see the progress that they're making.

I measure their business gross revenue so they can see the progress that they're making there because believe it or not, some of these guys just don't care, they don't track it. So, I'm like, "Look, you have to see that. Here's your targets for next year. Here's where I'd like you to get." We have some traditional debt to assets ratio, debt to income ratio.

Michael: So, a little bit more of the... I'll call it the traditional air quotes, "financial metrics," some of the more quantitative things that you might track. Kind of reminds me of Elements has their 12 metrics that they track in their software. So, you've got your 16 for your clientele that you measure as well.

Eric: Exactly. I mean, for example, most financial planning software is not going to measure the business emergency fund for a private practice. But I wanted to make sure someone...that was something that was important, especially after COVID, most of these guys were...just didn't have enough funds in their business to be able to survive well. So, we thought it was important that we measure something like that. So, we had to customize it to that degree. But it's been successful in working with our clients.

Michael: And so, is this only for clients? When you start out as a client, you get your first score. And then as we work with you, it moves over time? Or does this... I guess when does this first show up as clients are getting started?

Eric: So, when someone engages with us, we will create a roadmap for them, and they would see all of this material in that initial roadmap. And then when they are doing some kind of a review with their advisors...and we can update it how frequently we want to. Typically, there are a couple that some people want to see a little bit more frequently, but typically we will update the numbers on an annual review with each of the active clients every single year. And we'll give them, "Here's where you were last year, here's where you are now. And most importantly, here is the target that I am setting for you for this next year," because we're big on setting targets for our clients because I think they appreciate that push and...

Michael: I was going to say, that's not them setting the goal for next year. That's you giving them a target for next year.

Eric: Yes. Because target attainment creates necessity in people. And if we're saying, "Look, this is a very important target, I want you to hit it this next year." And I train my advisors to make sure that they push people. Because I think most traditional...I haven't looked at it in a long time, but I don't know that it sets targets like that. I guess in some cases it does. But I really wanted to make sure that people understood, "This is where I want you to be next year." And then they're happy. The next year we do it, "Look, congratulations, you hit your target. And let's see what you're going to do next year." We're trying to accelerate the process of getting into financial independence. And I think that to me is the real value of a good advisor to be able to do that.

Michael: And if you set a target for them, no one's coming for their annual review having missed the target. That's the joyous effectiveness of social accountability, and deadlines. No one wants to come in for the deadline say they didn't do their thing.

Eric: There's been some interesting conversations, but by and large, it's been a successful action for us.

Michael: Interesting. And so, all of this is basically part of the financial metrics, Financial Prosperity Index. This is all part of the new client process that they go through so that you can craft recommendations?

Eric: Correct. So, the 1st thing we'll do is obviously we want to get their…we want to show them their numbers. "This is where you're at." Try to get rid of any confusions, or I don't knows financially. And I guess the best way to do that is to show them that hard data. And then from there, we formulate a plan for them to be able to create what it is that they want. And so, the next part of the plan would be setting the recommendations. And if they have monies that we want to reallocate, or we want to change their...pretty standard financial planning actions from there. But it does start in going over those metrics.

Where Econologics Stands Today And How Eric Structures Fees [39:03]

Michael: So now help us understand this in the context of the practice overall. So, how big is the firm of I guess revenue, or assets, or clients, or staff? However you measure it, we use a lot of different metrics. Help us understand overall size and scope of the firm at this point that you're implementing this with it.

Eric: Yeah, I think we're...as far as revenue, we'll exceed $4 million this year in revenue. We have right around 300 active clients. I have 4 advisors. I'm kind of a quarter advisor. I've basically gotten out of client service at this point. I still have a small handful. And I think we have 17 staff right now. But a lot of what we do is built around...I mean, we have...as far as AUM is concerned, we're over 100 million traditional AUM. I think we have another 100 in insurance-based products. But the value of what we do is really in our planning fees. I mean, we were able to charge a consistent amount of planning fees because of, I think, our service model for the type of clientele that we work with. And that has been really, really nice to create that.

Michael: So, help us understand what that looks like. I mean, if I napkin math, over $4 million in revenue, 300 active clients, it's about $13,000 of revenue per client on average. At 100 million of AUM, it is not coming from the AUM fees, not to add up to that much. So, what is the planning fee structure, I guess the overall fee structure for the firm?

Eric: Yeah. So, we do charge an upfront fee for a plan that we write. So any time a client engages us, there is a...we usually charge right around $6,000, $6,500 for the upfront planning work. And then once they engage with us, we have a structure where we are charging them $475 a month, and that is kind of a subscription-based method. But it is... we've been successful at signing people up for that, and like I said, we have 280, almost 290 people that are on that model.

Michael: Okay. And so, they pay the planning fee for planning services. Then they also pay investment management for investment management services down the line. So, clients maybe a mixture of a multiple different revenue streams as you build, that's part of the model.

Eric: Yeah. And we have an insurance agency as well. So, we do insurance, and life insurance, and annuities, and such. But it is really those categories. So, the upfront planning fee, but that really is nothing more than delivering them our initial roadmap, and the time, and the plan. And then, of course, we get into the recommendations that we make. But that $475 planning fee is really the core, I think, of what we do. And again, we had to do that early on because most of the types of clients that we're working with, and we work with health care practitioners and health care owners, and I think a lot of people think, "Well, these doctors are rich, they've got millions of dollars." That's just not the case, at least the ones that we were working with. Most of their money was wrapped up in their business. And so, they didn't have $500,000 portfolios or $1 million portfolios, but we needed to help them. So, we had to come up with a model where we felt we could do that, and it was fair.

Michael: Interesting. So, I guess across the business, you end up with $1.5 million or $2 million of ongoing and upfront planning fees. That creates about half the revenue base. And then of what's left, half of that's investments. And it's like a quarter of the total is investments, a quarter of the total is insurance. Is that about where it lays out?

Eric: Pretty close. At first we were much more commission based. And now we've flipped that to be a lot more on the recurring fees, and the investment management fees. We try to trail everything even if we're doing insurance products too.

Michael: Because you had routes that was more insurance heavy in the earlier years of the business.

Eric: In the earlier years, again, a lot of our clients just weren't...they didn't have portfolios, and they weren't putting a lot of money away in that method. And they were younger and they were much more insurable. So, we just had a bit of a different model. But that's changed since we started.

Michael: And are there multiple tiers of planning fees? If I've got certain complexities or size or something else, is there a higher tier, or is it just it's a straight $475 a month for everyone because you've got a consistent clientele, so you kind of know your systems and process for it?

Eric: Working with the niche, when you work with the types of practitioners that we do, we can learn how to standardize, and really understand each person from practice to practice. So, I'm sure we have some flexibility in there. If someone came to me that was outside of what we normally do, I probably could charge more, but it's just not in our wheelhouse. And so, we just stick to what we know. I think the benefit of working in a niche is that there's a lot of repeatable things that you see from person to person that you get to see from an exterior view. And you can see those patterns develop from practice to practice.

Michael: So how do you actually handle this just in terms of billing and managing 475 a month times 290 people? I was going to say, that's a lot of checks. I'm assuming it's not literally all coming in as checks. But when you work with a lot of clients who don't necessarily have sizable or any investment accounts, you can't necessarily bill all this to an investment account. So, how does it work just for charging people and doing this?

Eric: Credit cards. They put it on their... Most of them are... And again, I have them check with their accountant to see whether or not they make it a personal or a business expense, because we are dealing a lot with their business. So, a lot of them will make it a business expense. And we just have it set up so that we draw it from a credit card every single month.

How Eric Leverages Business Consultants As Centers Of Influence [46:20]

Michael: So, help us understand, what do you get for $475 a month? Like you said, "We're able to charge this amount of planning fees because of our service model." So, help us understand this service model. I guess even I'm realizing as I ask that, I should take a brief pause to say, tell us a little bit more about your clientele first, because we've kind of said a few times you've got this focus in a more of a niche. I think you said you're working with people that have health care practices but help us understand who the target clientele is. And then get into what you do for them for $475 a month.

Eric: Yeah. So, just to kind of maybe go back a little bit, my experience in the financial industry kind of morphed. I started working with a small mutual fund company in Dublin, Ohio. And then when I moved to Florida, I wanted to really be a financial planner. I wanted to be a financial advisor. But I also wanted to work with people that I felt like we can make a meaningful difference to them, and people that were in charge of their own "financial destiny." I know it sounds kind of corny, but we wanted to work with business owners. And we wanted to help health care owners just because I grew up...my family was largely in health care. I saw that they really weren't being served very well financially. And so, that was kind of where we said, "Okay, we want to help these types of people."

So, we had a relationship with a consulting group that works with physical therapists. And that's where we started. So, we created a financial course for them. And we started working with physical therapy owners. And I learned early on that if I didn't know...it was hard for me to give financial advice to people if I didn't understand their biggest investment. And their biggest investment was their practice. So, it was really a crash course on us learning, "Okay, what drives value of a physical therapy practice? What are their profit margins? Who are their people? What things can we do from our end to make sure that they're solvent?" All these things that were built around a physical therapy practice, I had to learn those. And we did.

Michael: And was this intentional? "I think physical therapists would be an awesome niche. So, let's go form a relation with the consulting group, make a course and go after these folks." Did you have that level of intentionality, or you landed in this and this was just a land and explore kind of thing?

Eric: I think when I first moved down here, we were doing like, "Okay, you got a pulse. I'll definitely take you." But it just wasn't the direction that we knew we wanted to go. And we definitely knew that we wanted a niche. We just maybe weren't sure exactly where we were going to start. And I think again, when you're intentional about things, maybe something opened up and there is a communication line to this consulting group, and "Hey, let's do this." So that's really where it started from. And then once we got into physical therapy, it was like, "Okay, I kind of understand how this health care practice works."

So, then we did the same thing with a veterinary consultant. So, we met a veterinary business consultant, and the same thing. We said, "Hey, we'll create a course, and we'll teach your guys about finances. And that'll hopefully make it easier for you to charge them for your consulting fees because they'll have more money." And from there, we went to dentists, and optometrists, and chiropractors. And those are really the...is that 4? Yeah, those are the primary types of practitioners that we work with.

Michael: So, I'm struck by this sort of model that you use to enter into these spaces. So, you find business consultants that specialize in the group, business consultant for vets, business consultant for physical therapy folks who do, I guess, the pure business consulting. And you come to them and say, "We'll help your clients with the financial planning end. And if we do that well, they'll also be more comfortable paying for you." So, obviously, everybody is sort of benefiting in that circle. I guess I'm just trying to understand if they're already viewing themselves as they're the business consultant to make these people more successful, why do they need you? Aren't you a threat? Are you trying to take my business consulting stuff?

Eric: Yeah, you would have thought that, but no, because we're really not... I'm not going in there and saying, "You've got to fire this front desk person." I'm not going in there and saying, "These are the stats that you need to keep for your business. This is how many new patients you need every single month."

Michael: Which is what the pure business consultants do.

Eric: That's what they're doing.

Michael: "This should be your patient load. This should be your staff overhead. You're overstaffed in the front office. Go make this change." That's still their domain. You're not doing that level of business consulting.

Eric: We're just helping them more on the finance end. Definitely showing them what their numbers should be as far as financial targets. But most importantly, making sure that the business profits are transferring to your household. And that's what happens to a lot of business owners is that they, for whatever reason, will never set up a system to really make sure that practice profits are channeling to their personal household.

So that's where we really uncovered a lot of...and really helped these consulting groups with that. And just got financial order in, and instilled some financial sanity. And that just made it easier for them to work with their clients as well. Because when people aren't stressed about money, they're obviously more likely to pay.

Michael: Yeah. They end up making lousy business consulting clients because they're basically just trying to figure out how to get more money out of the practice because they're feeling financially tight. It's like you don't have a practice problem. You have a what you do with the money after problem. So, Eric and his firm will solve that, so then the business consultant gets a better relationship out of it as well.

Eric: They look like a hero. And we actually created a financial course that they could sell to their people. So, they made some money on it as well. So, we created a financial course that we would deliver to them. And then we just gave them the money. We just said, "Hey, you guys, we'll deliver it for you. You can charge them 2,000, 3,000 bucks." I just want the person so that we can talk to them about doing financial planning.

Why Eric Built Financial Education Courses To Connect With Prospects [53:37]

Michael: So, tell me more about this course. What's the thing? What do you do?

Eric: Yes, so we basically created a 3-day financial course, and we just said all the things they didn't teach you in medical school about money. And it was really built around the basics of what you need to know of how to make sure you're utilizing your practice, harnessing the power of your practice so you can build personal wealth, and get out of debt, and do all the basic financial functions. But how do we utilize the practice as that engine to be able to do that? So, we created a 3-day course where we went over a lot of these basics. And it was successful. We got people there.

Michael: 3 full days? It's a big time commitment.

Eric: 3 full days. I have changed it since then. We did a virtual training, what they call a learning system, or put a course online so we can still deliver that. But yeah, it was 3 days of intensive financial training that we gave to these health care owners. And it was hard to deliver, but it was worth it because they were just an easier client now to work with because they're educated.

Michael: But you're doing this... they're not necessarily clients yet. You're doing this essentially as a way to prospect, get in front of people who might become clients in the future.

Eric: Yes.

Michael: And so, the model from the consultants' end is you told them, "You can charge for this couple of days business owner, so you can charge a couple of grand. You can charge for this, you can keep that money. We're happy to deliver it for you, and set you up for success on that because we know or are confident we're going to get a reasonable number of clients out of this. And it's going to work for us in the long run."

Eric: If I get 20 people in that course, I know that we'll probably close at least 15 of them.

Michael: It's that high.

Eric: It was pretty successful. When you're in front of someone for 3 days and...

Michael: And they've got some kind of money concerns in the first place. So they're not signing up for a 3-day course for a couple of grand unless they are very motivated to do something about their finances.

Eric: Yes. So, I still have clients today that were part of that, that took that course. And it's morphed over the years, but it was still part of our system that we almost required people to go through it just because they were so much easier to work with when they were...when they went through that intensive training.

Michael: And I guess for a lot of consultants, I mean, suppose it varies depending on whether they're a big consulting firm, sort of like an individual person who does consulting, before an individual consultant. If you're charging a couple of grand and they can get 20 people in the room, and there's 20, 30, 40 grand of revenue on the table. That's not trivial for an individual consultants.

Eric: They didn't have to do anything but get people to show up.

Michael: Yeah, get an amount of money for them to basically monetize their list and their client base, especially if you're ultimately closing 75% of them. That's a monster outcome for the business. You're doing quite well despite the forgoing revenue of the workshop fees.

Eric: Exactly. Exactly. So, it was a benefit to them. It was easy for them. They didn't have to do anything on the delivery aspect of it. They could just charge it. And we just had to make sure that we delivered. And that was it.

Michael: What's the ask? Just what's the ask at the end to get them to become clients that doesn't make it awkward, or a tough sales pitch?

Eric: Well, we would set up one on ones with people afterwards. We built in time so that we could actually close people while we were there. But everything that we've always done has been remote. That's why when COVID happened, it was really no skin off our back because we have clients. We're used to doing business remotely. So, all of our clients are spread all over the United States. And so all of them are from Maine to Hawaii.

Michael: But the workshops, it sounds like, these courses were in-person or not necessarily.

Eric: We did require them to fly to Florida to do the courses. But Clearwater, Florida is a pretty beautiful place. So, it wasn't really hard to get people to come to Florida to take this course.

Michael: That's interesting. So, you go to a consultant, say, "Hey, you've got..." veterinarians all over the country, "We're doing a 3-day financial course on how to get your financial and business house in order. It's 3 grand. You fly to Florida for it. Hey, stay through the weekend. It's lovely down here. Bring your significant other, take a business right off." All that good stuff. Consultant keeps the money. And then you've got these warm introductions, and now 3 days of in-person relationship building time with them. So you do follow-ups afterwards to say, "Hey, we'd love to get some one-on-one time with you just to talk a little bit more about how you're applying this in your financial life, in your business." And then that becomes the opportunity to say, "Hey, do you want to work with us to help you with this ongoing?"

Eric: You got it. And of course, we had everyone take that financial assessment. So yeah, comes full circle, buddy.

Michael: They take the Prosperity Index as a part of the program.

Eric: They take that as part of the program. So, we give them their score and put it right in front of their face and be like, "Oh, my God, do you really want to sit down there in that red? Or would you like to be up in the green zone?" So yeah, it worked really well. But there's always a shelf life with any consulting group. And again, things we learned over time that I just can't rely on consulting groups, or referral partners like that for clients. And then we had to really start, "Okay, we have to figure out this marketing thing so that we go direct to these types of people."

Michael: I was going to ask, what morphed? Because you're describing a lot of this that seems to be working so well in the past tense. What changed?

Eric: Relationships with the consulting groups changed. And I don't know what happens sometimes. And I could probably take responsibility for it too. Maybe just communication drops out, or expectations that we're going to start giving you referrals. I'm speaking to the consulting groups, they want referrals from us. And at that point, we weren't suited to do that.

Michael: If your clients mostly come from consultants, even if it's other consultants, I can't really...

Eric: I can't do that. Yeah.

Michael: Yeah. I'll take a client from one of the other consultants, give it to you, but only if I take one of your clients, give it to them. So I don't think either of you are going to like that at the end.

Eric: Yeah, that's not going to work. But I think, like anything in life, you just can't rely on 1 of anything. And when we are dealing with how we are client acquisition, how are we getting clients? And it was just like, "Wow, this is the only..." I mean, yeah, it was successful. Yeah. I think it really was...it was an anchor, a ballast, whatever you want to call it for us to get new clients. But we just couldn't rely on that. So, then we were like, "Okay, so now we have to start... Okay, now we have to go on the road shows, and we're going to have to start going in front of these veterinarians and start going into...get speaking engagements in other areas so that we can start getting leads. And then figure out the whole digital marketing. And how are we doing bootcamps, and online bootcamps?" But it's morphed from just concentrating on or relying upon the consulting groups to give us new clients.

How Eric Leverages Speaking Engagements To Connect With Prospects [1:01:58]

Michael: So, what paths and strategies did you end up pursuing? 

Eric: Well, we would go to, let's say, a veterinary event. And then we would pay for a speaking spot where I could go up there and talk to a roomful of veterinary practice owners. And then we would generally be able to close a significant number of those people to be clients.

Michael: So, they're not getting the 3-day course thing. This is, I assume, veterinary practice owner conferences are not dissimilar to advisor conferences, lots of one-hour breakouts and you get to do your thing in an hour and try to make an impact.

Eric: That's it. You get about an hour to talk. So, I really had to get good at the one-hour talk. And I think we did. And we got it so that it was meaningful and impinged.

Michael: So, what kind of topics would you come to them with?

Eric: Well, mostly it was... Speaking to veterinarians, I think they never got into it for money at all. Most of them got into it because they just love pets and animals. And financially it shows. So, I think when you show them, "Look, we can drastically improve your financial condition quickly by just making a couple tweaks to how you're handling your finances and your money. And it'll make all the difference in the world to you. It'll now make you feel like it's worth owning this business as opposed to going through the proverbial owner burnout." And most of the burnout that I saw was just they not paying themselves enough. So, once you show them that, they're like, "Oh, my God." Just getting permission to pay themselves. It's always something simple, it really is.

And once we did that, it was just like, "Oh, okay, now we're..." But that's different talking to dentists, because dentists don't have that problem. They're a different beast. But we had to learn the different types of health care practitioners. There's nuances to them as well. But that's the fun part.

Michael: So, what would you have to pay to get these kinds of speaking opportunities?

Eric: Thousands of dollars, tens of thousands of dollars in some cases.

Michael: So, it's expensive.

Eric: It's expensive. I mean, you really got to be...I don't know if I would just start off doing that if I was someone. You have to have a bit of a base and a commitment to saying, "All right, we're definitely going to go all in on these people." But yeah, I mean, in some cases, I think we just wrote a check for $15,000 to do a speaking engagement for... But hey, if I'm going to get up in front of 50 owners, then it's worth it to me because I feel like we can close them, and it's worth the investment to do that.

Michael: And how do you get them from one-hour session at the conference to actually follow up and engage with you?

Eric: Yeah. So, we have them fill out a Financial Prosperity Index.

Michael: Hey! I've heard of that now!

Eric: No. So, we have a process where we will give them a book. So, I wrote a book that was specific to practice owners. And so, I'll do that as a giveaway. In exchange for that, we get their card and we set up an appointment with them to talk. So generally, it's some kind of giveaway that we do so that they will say, "Hey, I'll give you this free ebook, and then just give me your card so we can follow up with you." And then we'll schedule a call with them. And again, because we have so many veterinary owners right now, I have so many success stories, kind of builds a little bit of momentum doing that. I don't know if I would recommend people doing that to start, but it's something that we're doing right now to build our client base.

Why Eric Implements A High-Touch Service Model [1:06:20]

Michael: So now take me back. You take these practice owners on. They're into this ongoing planning offering at $475 a month. So, now help us understand, what do you do for these practice owners for $475 a month ongoing?

Eric: Our service model, and part of what I talk to them about "other advisors," and look, I try not to...I don't want to speak disparagingly of other advisors in their models but I also know that most of the experience that these people have is a meeting 1 to 2 times a year going over their portfolios with their advisors. And our business model is such where my advisors are talking to their clients at least once a month. And I think that's a big differentiator right there. If you're going to charge a monthly amount, if you're going to charge a monthly subscription, you really can't go more than 6 to 8 weeks, I think, without talking to that person, because you're going to see the credit card bill, right? You're going to see, "I'm paying $475..."

Michael: You're aiming for some touch point at least every other month.

Eric: Yeah. Generally, it's every 4 to 6 weeks is, I think, the timing that I figured out. I think that was the amount of time where someone would want to be talked to you, or have something come up in their life, because these people are constantly having to make financial decisions all the time. Owning a business, you're constantly confronted with having to make financial decisions. "When do I expand? Should I buy this piece of equipment? Should I buy a building? Should I refinance?" Whatever it is. "Should I look at selling? Can I bring on this new associate?" Whatever the questions are, they're going to need financial guidance on that.

So, we have a checklist of what my advisors are supposed to go over, basic questions I want to make sure that they're doing. But there are touch points where they're talking to them very, very frequently. And that is the way that we're able to charge $475 a month because they have that...that person now knows, "I can call up Eric, I call up Josh, call up Zach for whatever reason I need to, and they're going to help me navigate whatever questions that I have."

Michael: And does touchpoint mean your advisor's picking up the phone or sending an email? I mean, I know for some firms, we send a monthly newsletter, those count as some of our touchpoints. Others are like, "No, no, touchpoint means human being talks to other human being on phone or video." What's touchpoint in your world?

Eric: It's a Zoom call. It's an actual call where they're going...where they're talking to them about something. It's either implementation of their...if we do a review, there was implementation actions that we want to... 

Michael: It sounds like a lot of it is, notwithstanding the discussion that you try to be more on the financial side than the business consultant per se, that a lot of this is business-related finance questions.

Eric: It is. I mean, they get their profit and loss statements every single month. So, my advisors actually have the clients upload their profit and loss statements to them every single month. So again, it's a constant... So, when it comes to financial matters, they're looking at us as their financial experts. Not their accountants. Obviously, they have CPAs and bookkeepers. But they're looking to us, you know, for financial guidance. And you would think... "What the hell am I going to talk to this person about," right?

Michael: It's a lot of calls. Yeah.

Eric: I never had an issue, right? Any time I got on the phone with someone, I was like, "What do you got your attention on right now?" First question I always ask them, "What do you got your attention on?" And blah. And they'll tell you, "This, this, and this. And I'm uncertain about this. And what about this?" And it always leads into an effective call where we clear up some confusions, some uncertainties that the person has. And I have a list of standard questions that I want to make sure that they're doing. Making sure...

Michael: What else is on your standard list.

Eric: Well, I have, for example, 1 of the 1st things that I have every practice owner do is set up a...I call it a wealth storage account where I have them take 10% of their practice revenues every single week. And I have them channel that into like a personal investment...whatever you want to call it. I'm sure there's number of names for it. But I'm just trying to get them in the habit of paying themselves as an owner. Okay? And that's been very effective because it allows them to really...they put money in their 401(k)s and their IRAs, but I'm trying to accelerate this whole process. So, that's 1 of the first things we show them how to do. If you ever read the book "Profit First," I'm sure you have, right?

Michael: Yeah.

Eric: It's kind of that concept where I'm having them expense out their profit, or at least a portion of their profit to pay that to their household. And we utilize that to further build other investments. So, I want to make sure that they're doing that. So, every call, it's like, "Hey, where are we at on that right now?" Oh, I see you're here on this schedule. You're only doing 4%. Let's try to bump that up to 5% next week." So, it's just, again, constantly trying to push them to be able to do more and reward themselves and compensate themselves correctly. So that would be one.

Going over some debt, "How are you doing on your debt schedules? What's the next thing to go off on your debt schedule?" "Oh, yeah, we got 4 more payments, and our car is going to be paid off." "Good. Let's make sure that we know exactly where that's going to go after that's paid off." "Okay, great." "How are you doing on your

here is a structure to the call. I actually wrote up a policy for my advisors of, "This is what I want you to ask. These are the questions I want you to start with," because I want to make sure that this person...you try to start going off into what you want to talk to them about, and you're ignoring what's on their mind. So, you have to make sure... that's why I ask that 1st question, "What do you got your attention on? If you don't have anything that you have your attention on, here's a list of things that I want to go over with you." So, we do have it codified to that degree that we have a series of questions that are...just making sure that they're doing all their basic actions, and anything that we need to do from the annual review that they're making sure that they do.

I mean, it could be anything from, "Hey, have you done your...updated your...I don't know, your business registrations? Have you done your business minutes or anything like that?" "Oh, no, I haven't done that yet." "Okay, let's make sure that you do that."

Michael: So, you then have a big checklist for the advisors of what some of these question talking points are?

Eric: Correct.

Michael: Okay. Okay. And because all the clients are practice owners, the questions pretty much work for everyone.

The Other Services Eric Offers His Health Care Practice Owner Clients [1:14:11]

Michael: So, is there other planning work or deliverables or such that you do or build up to through the year? 

Eric: Absolutely. We have another piece of software that we purchased for business valuations. So again, it was something that I found through one of our...the platform that we work with, which is AssetMark. They had some benefits that we could utilize as advisors. One of them was a valuation service where we could actually offer business valuations, or probably more like appraisals for our clients. And again, that's really important to them because they want to know, "What's the value of my business?" So, we purchased that.

Michael: Not like you acquired the software company. You pay to use the software, you found a tool that does this.

Eric: Exactly. It's BizEquity. And they've been great as far as when we tell them, "Hey, look, this industry..." because they pull a lot of, I think, the data from certain sales going on in the industries. And then we give them the data as far as the client's profit. And revenue and other things. And they give us a range of values. And it's not like a professional valuation, but it sure is nice to see...a practice owner can see what the potential value of their investment is. And so that's been something that's been pretty successful as well.

Michael: Interesting. So, you're not holding out as doing a "formal valuation" to prepare you for sale, but let's at least get some benchmark of what this practice that you build is worth?

Eric: Exactly. And we do a lot of income stream planning because a lot of them will always want to talk about, "Hey, am I okay? If I wanted to sell my practice, what is my life going to look like?" So, we do a lot of work on that end, showing them what they're going to get from their building real estate, what they're going to get from all their other investments. I think typical income planning that any advisor would do. But we certainly are pretty frequent about making sure we go over that with them. So, a combination of things. But I think the value is just that that person understands that we get them, and that seems to be important to the types of health care practitioners that we work with. They know that we know them. And there's a lot of value to that.

Michael: Interesting. Interesting. And so, how do you think about this from a capacity perspective? When you're doing this level of touchpoints to clients all the way through, how many clients can an advisor manage to before this gets overwhelming?

Eric: So, I would say, I mean, when I was doing it, I could...I don't know, I had over 100, but I think probably 90 to 100 is where I'd like each advisor. That puts them at about...from a production standpoint, I like to see my guys do about a million, 1.2 million in production themselves. But remember, Michael, they don't have to go out and "get the clients." I really wanted them to focus on working with the clients and getting results. And not have to so much do the upfront. Although I'm changing that a little bit, I'm having them do some of the upfront selling now of the plans.

Michael: So, if you bring in a lead, they, they can start talking...they don't have to find the person, but they can answer the phone when you make it ring.

Eric: Correct. Correct. But yeah, I think the capacity is probably 100 clients for each advisor.

Michael: If you're at $475 a month, that's almost 6 grand a year, 100 clients, there's 600,000 of revenue there, plus the investment advisory, plus some of the insurance implementation. So, that's how you get to a million, 1.2 million of revenue per advisor.

Eric: Yes.

The Surprises And Low Points Eric Experienced On His Journey [1:18:31]

Michael: So, what surprised you the most about this path of building an advisory business?

Eric: Oh, I think every once in a while you get disappointed in some of the choices that you make with people. And I'm pretty optimistic. But I've had... Look, I've been through a bad partnership breakup that was pretty tough. So I would just make sure that people understand that if you're going to have partners, definitely make sure that you guys are both on the same page, and going in the same direction, which I'm sure sounds pretty canned, but it is pretty true.

Michael: So, what happened that you ended out not in one of those situations, I take it?

Eric: Oh, I wasn't in 1 of those situations with a bad partner. Well, no, when I first moved down here, there were 3 of us. And it was myself, and then my 2 other partners but they were married. All right. And then, of course, they got divorced. So, then we had to go through them getting a divorce. And then trying to figure out whether or not...

Michael: Oh, so you get to be part of their divorce. Isn't that lovely?

Eric: So, then it came to, "Well, who do I want to be partners with right now?"

Michael: You have to pick.

Eric: So, I had to pick. It kind of naturally happened, but that was probably one of the harder things to deal with right there.

Michael: So, is there something you would have done differently, though, or is that just the reality? Unfortunate when you have partners who are married, and then their marriage doesn't work out.

Eric: Yeah, I probably would have tried to figure out, "All right, is this a solid marriage, where you can build something on? Were there indicators?" Okay, but I guess you really don't know. But I don't know if I'd do anything different on that one. It led me to where we're at right now. And that's a pretty good position. I got a good relationship with my partner. We know the direction that we're going. It's still hard. The marketing aspect is particularly tough. I will also... I forgot to thank you for that marketing seminar that you did not too long ago.

Michael: Our marketing summit?

Eric: Yeah. Your marketing summit. Yeah. I got a really good... I'm sure you heard this too from the referral person that you had brought on. That was excellent. That was so good. How she had formulated how to ask for referrals.

Michael: Yeah. Her 3 questions that she asks to set up referral conversations with everyone.

Eric: That was great. So, I think the biggest challenge right now is just finding good leaders in the organization. And that's probably the biggest challenge is...because I've gotten to the point where I don't have to...now my advisors are on their own. I don't need to advise anymore, which is a tremendous amount of freedom because I don't have to do that. And now my job is to make sure the quality control is good, and obviously to be someone that's going out there and communicating. But just trying to build leaders to take over the organization, and really make sure that we understand how to market really effectively. I mean, that's still...I always want more clients and I always feel like we're not having enough right now. So, I don't know if that's just me, but I guess that's every advisor, isn't it, at some point, "We don't have enough clients."

Michael: Yeah. Well, so what's good client growth for you? I mean, you are at 300 clients over the path that you've taken.

Eric: I mean, I would like to bring on 100 new clients, 120 new clients a year. And that would be... Or I could bring on a couple of advisors every single year, advisors just to grow it a little faster.

Michael: What has been the growth pace?

Eric: So, we've had mixed years. We've had some years where we did 70, some years we did 50. I think last year we did maybe 60 or 65. I can't remember exactly the number. And I don't know where we're on track for this year. I think we've...

Michael: Still a big number by many advisor standards for...especially if you're doing that with centralized marketing. It's not like your...your 4 advisors aren't out there beating the streets as it were. This is your centralized marketing going out to conferences and doing the things that you do that's bringing in 60-odd clients through the various niches that you pursue.

Eric: But then I look at, "Should we be getting a lot more referrals than we are? How many referrals should I be getting every single year? How do I use testimonials now better? How do I get it to a point where I could start bringing on more people?" Because I get a lot of joy out of getting advisors confident, and being able to get actual results with their people. So I guess I just want to do it faster. But thank you for acknowledging me that we're doing okay.

Michael: Yeah, it's still a pretty...I mean by absolute numbers, it's a big number. On a percentage basis, if you're at 300 clients and 60 came on last year, that's 20% client growth. I think Schwab's recent benchmarking study said across the whole base of their advisors, the average client growth rate was about 6%.

Eric: Really?

Michael: Yeah.

Eric: Wow. Okay. Well, I guess that makes me feel better. But I don't know. We just have a target to try to help as many of these health care owners as possible. So, that's my own necessity level, I guess.

Michael: So, tell us more about the low point on this building journey for you.

Eric: It was definitely when I had my health issues. I had a heart attack last October. And not to get to re-stimulate people on if they've ever had a health issue or anything like that. But I've had...I went into cardiac arrest, and they had to hit me 6 times, 5 times with the defibrillator. And that was definitely a low point for me, 100%. Not because I felt the business was consuming me or anything like that, because I felt okay about that. I guess it was just my own lack of taking care of myself that I was most disappointed in. And that was where I was like, "God, Eric, I mean, you probably should have known that you have a family history. You can't be eating like you were." If you looked at me, Michael, you'd probably say I was in pretty decent shape. But that was probably a low point of just like being 50 years old, and having something like that happen to you, you're just like, "God, that sucks."

Michael: So, has that changed things for you since then?

Eric: One hundred percent. So, I have taken a very active role now in making sure that I take care of my body very well. And I don't... And quite frankly, have I spent as much time in the office? Probably not. But I don't feel like that I'm disconnected from it. And I don't feel like I'm putting the burden on anybody else just because we were able to set up systems so that I do compliance, and I do a lot of the speaking, but I can do that remotely. I can do that from wherever I'm at. But it definitely didn't...it just changed my awareness of being able to take care of my body a lot better than what I had been. And I feel great right now. I've been…I have a personal trainer, I'm in much better shape. My blood work is now...is really good. But I was really happy about the staff. I mean, they backed me up very well, and are very supportive. And so, that turned out to be a pretty big win for me.

The Advice Eric Would Give His Former Self And Younger, Newer Advisors [1:27:38]

Michael: So, what do you know now you wish you could go back and tell you 15 years ago as you were moving Florida to start this business?

Eric: What could I tell myself? Celebrate more. Celebrate your wins more, because it's one thing to achieve. And I see a lot of people that are kind of maniacs on just a constant achievement. "What's next? What's next? What's next?" And I tell clients this too, I go, "You have to celebrate your wins, because if you don't do that, then... there's just something therapeutic about just taking time and just acknowledging yourself and the successes that you have." So, I would definitely tell myself just to celebrate more when it comes to any kind of success that you do have in your life. So that would probably be the one thing I would change.

Michael: And any other advice you would give younger, newer advisors getting started with their careers today?

Eric: Well, I think a lot of people are afraid to make mistakes. Certainly, I've made a lot of those. But I don't know. I think the industry is...well, you would probably have a much better pulse on the industry than I do. I still think it's...with all of the things being told out there about AI, and robo this, and robo that, there's still going to be a place for...nothing is better than being able to have a live conversation with somebody. So, I would really tell people, really observe your communication, how you communicate with other people. Do you acknowledge them? Do you try to... Because when I'm talking to you, I mean, obviously you know how to have a good communication. You acknowledge people, you don't talk over them. These are little things that are really, really important when you're... Do you have the intention to understand this person? Or are you just thinking of the next thing to say? Really work on your communication cycle with how you interact with other people. Are you creating a good effect or not? And are people willing to talk to you? And I think that's going to be always the first skill that any advisor is going to need to have if they're going to be successful at all.

What Success Means To Eric [1:30:23]

Michael: So, as we wrap up, this is a podcast about success. And just one of the themes that always comes up is the word success means very different things to different people. And so, as someone who's built what anyone would objectively call very successful business already as you're cresting $4 million of revenue, and continuing to grow forward. So, the business is in a good place. How do you define success for yourself at this point?

Eric: Yeah, it's definitely not 1 area I would define success because I think life is comprised of many different urges to excel and to live. And clearly, I want to succeed personally. I want to make sure that I look good. I want to make sure that I feel good. I want to make sure that I take care of my health. I want to make sure that my family dynamic is in good shape. That my family unit is strong. I want to make sure that any groups, like my business, or any other areas that I'm involved with, that I'm contributing, that I am someone that can be depended upon. I want to make sure other human beings are doing well and are thriving and succeeding.

I want to have good interactions with the environment in the physical universe out there. And I want to make sure that I have a good connection with my spiritual side, and any higher being or supreme being that one wishes to believe in. So, success to me, Michael, is making sure I am surviving well in all of those different areas, and not neglecting or just focusing on one of those.

Michael: I love that. I love the breath... Maybe it just appeals to my hardwired financial diversification mentality of, "No, you can't pick one thing. You got to spread across all of them. Yeah, well diversified."

Eric: Yes. Well-diversified human being is certainly I think what we can all aspire to be.

Michael: Amen. Well, thank you so much, Eric, for joining us on the "Financial Advisor Success" Podcast.

Eric: It was my pleasure. Thank you, Michael.

Michael: Thank you