#FA Success Ep 348: Building Your Own Planning Spreadsheets To Show Clients What They Need To See, With Jeff Jones

Resources Featured In This Episode:

• Jeffrey Jones
• Cypress Financial Planning
• XY Planning Network
• Cypress Sample Financial Plan (download)
• Kitces Research On The FinTech That Advisors Use & Like
• Kwanti
• eMoney
• iRebal
• Wealthbox
• FP Transitions
• TIFIN

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!

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Full Transcript:

Michael: Welcome Jeff Jones to the "Financial Advisor Success" podcast.

Jeff: Hey, Michael. It's great to be here. I was just thinking we're getting to the point now where you've been doing this for 348 times, you've been doing it for that long. I guess you have to scrape the bottom of the barrel to find some guests. So, here I am.

Michael: No. No. There are so many wonderful advisors with great stories out there. And somewhere around episode 500 or 600, I may get a little nervous because there's, yeah, finding people, but no, I'm really excited to have you on and I think, I don't know, get to talk and nerd out a little bit about something like financial planning software to a good extent.

We just put out our latest advisor tech study on all the different software that advisors like and don't like, and which vendors they like the most. And one of the themes that we found, particularly when we dug into the financial planning software domain, is I feel like there's been this sort of mantra over the past several years of planning software is really time consuming and hard to use, we need to make it simpler and easier.

Planning software is hard to use, we need to make it simpler and easier. And a lot of the planning tools have been making these iterations of trying to go simpler and easier. But when we actually ran the analysis and we looked at what are advisors expressing the most satisfaction with and which factors do they weight with the most importance, what we found is the number 1 factor driving satisfaction with planning software is not how simple it is, it's how deep and comprehensive it is. It's the depth, and the comprehensiveness, and the technical accuracy that drove it. Obviously, at some point you don't want it to be brutally hard to use, but it's much more about the depth than making it simpler.

And I know for some advisors, all the planning softwares in their depth still aren't deep enough. And especially some of us that come from a little bit more of a math and technical and engineering background, I'm not satisfied with the depth of the planning software. I got to go deeper and make my own. And I know you have lived that journey, came to the advisor world from the engineering world, have, I'm sure, a certain view around how these analyses should be done. Ultimately, built your own planning software that, I know, kind of took on a life of its own, which we'll get to talk about.

I think for all the advisors out there who maybe are still a little bit frustrated that the planning software doesn't quite do what they want it to do the way they want to do it, and start having this inkling, should I just start building some of my own tools? I think I'm excited to have the conversation with someone who actually went that route and built their own tools and what it's been like when you get to do financial planning your way with your software.

Jeff: Well, I'm excited to share the story, Michael.

How Finding A Mentor Helped Jeff Transition Into A Financial Planning Career [06:30]

Michael: So, as we queue up into this, I want to start by just understanding a little bit about the advisory firm itself, just so we have some context of kind of the business and where it is today, and then understand this evolution of building some of your own planning tools. So, help us understand first the advisory business just as it exists today.

Jeff: Sure thing. Well, the name is Cypress Financial Planning. We're based in Haddon Heights, New Jersey, which is right outside of Philadelphia. And we have another office where my partner Evan works out of, and our client service associate, Chelsea, down in Charlottesville, Virginia. And I'm happy to get into the background of how our firm got to that point of having these 2 locations. But as of today, we have 4 certified financial planners, including myself, and a part-time chief marketing officer, Ben, and then the client service associate, Chelsea. So, 6 of us total. We're fee only, do financial planning and investment management. Just hit our 14-year anniversary. I founded the firm on my own in 2009, and then gradually added team members between now and then. And at this point, we manage $275 million of AUM, and we have about 380 clients.

Michael: Very cool. Very cool. So, that's quite a growth journey unto itself, and I'm just sort of reflecting back on timing. So, 14-year anniversary, started in 2009, that's a heck of a time to start an advisory firm coming off a wee bit of a financial crisis. So, was that a deliberate momentum to, "I want to start something coming off this crisis?" Or was that a forced life career change because a lot of people were getting laid off and had to go start their own thing in the midst of the financial crisis?

Jeff: Yeah, it was a blessing and a curse. In hindsight, it was a fantastic time to start in terms of the growth in the markets and how strong the economy was for the decade that came. But no, leading up to me founding Cypress, I had actually been working at Goldman Sachs and their private wealth management division in Philadelphia. I was in a two-year program as what's called a financial analyst, which is kind of effectively a paraplanner for a wealth management team. And I was there from 2007 until the summer of 2009, so, right in the heart of all the meltdowns of '08.

And to back up a little bit, I had aspirations to found my own firm prior to joining Goldman. That was a stepping-stone for me, and I knew that that analyst program was 2 years. So, yeah, just kind of the way things lined up. I stuck to my guns and left Goldman right then with the markets starting to show signs of bottoming in the summer of 2009. And, yeah, the rest is history.

Michael: Interesting. So, was that your entree into the industry, overall, like into that Goldman Sachs financial analyst program?

Jeff: It was. It was. So, my personal background, similar to many others I find in our field, is from a very technical educational background. So, my undergrad was in mechanical engineering. I have a master's degree in something called operations research and financial engineering, so, pretty technical. And my first job out of college was not in finance at all. It was with Lockheed Martin in a leadership development program.

Didn't feel as though I was ready to commit to a path of working my way up corporate America. I had aspirations to potentially be an entrepreneur. Obviously, that was my first job out of college, so, I was very young at the time.

So, I was in this leadership development program, Michael, and the intention was absolutely that, to mold recent college graduates into future directors, vice presidents, so across the organization. And in that role, I got exposure to a lot of different high-level employees in the organization. I heard their stories. I heard them speak. I saw what their skillsets were, and frankly, I just didn't feel as though I was going to be able to A, enjoy it, but B, really differentiate myself and my skillsets.

Even my direct boss, a gentleman named Mike Cerrone, I have a ton of respect for him and his skills. He had great people skills, great leadership skills, knew how to manage upwards, manage downwards, be a manager, be a leader. And I was beginning to learn more about my own strengths and weaknesses, and I could fake the funk, or I could learn those things, but that just wasn't something that I naturally excelled at, being a leader or a manager or just kind of in a big business, a large corporation like that.

And so, thought a little more deeply about what are some of my God-given talents? What are things that I really excel at? And candidly, math is at the top of that list. That's something that I was just kind of born with, very strong math skills. I took the SAT a bunch of times in high school, and candidly, I got an 800 on the math section every time. I just took it multiple times to try to boost up the verbal. So, that's not to brag, it's just something that's kind of always come very natural to me. And it's like, "I'm so young in the working world, what am I going to do that I can really excel at and use those talents?" And so, again, pivoting away from corporate America, more toward entrepreneurialism, because I felt like I was young and that was always an interest of mine. And if I failed, I could always go back and get a job somewhere else.

And so, kind of combining entrepreneurialism and kind of technical strengths, and as well, I was also enrolling in the 401(k) at Lockheed Martin, learning more about watching my own portfolio go up and down, setting up my own budget as a recent college grad. And all those things were extremely interesting to me. I was gobbling up books, learning more on my own, and all signs were pointing toward, yeah, trying to go down this path as a financial planner. Ultimately, did lead me to Goldman Sachs. Yep.

Michael: I was going to say, so how did you find the… I guess, even just find the industry? A lot of folks who come through the engineer... There is a lot of crossover of people who come from an engineering background, and have a strong math interest and sort of cross apply it as were to the financial planning realm. But at the same time, a lot of people just, if you come up through engineering channels, you don't know financial advisor exists as a career. That's just not in your lexicon and career familiarity. You tend to learn all the things that are available in engineering jobs and career tracks. So, how did you get to financial advisor realm in the first place?

Jeff: That's a great question. I, at least, had one thing going for me. When I was growing up, my best friend's father was a stockbroker with Legg Mason. So, I, at minimum, knew that the job existed. As a child, it wasn't something that I was considering personally, but I did, at least, know that the job existed. So, I had that going for me. And so, when I was at Lockheed, yeah, I basically stepped outside my comfort zone and got on the internet and tried to Google, I think, there was the Garrett Planning Network. I think there was a few other searches, if it was NAPFA, to see or just Googled what were some advisors in my area, and just cold called them, cold emailed them. And it's funny I actually remember...

Michael: What did you reach out to them about? Like, what were you asking them?

Jeff: Yep. So, it was a bit of an ask, and I'm sure, maybe in hindsight, I probably reached out to more than 3, but I do vividly remember that I ended up meeting in person with 3 separate advisors, and I had 3 totally different experiences. And so, yeah, I just asked them, I said, "Hey I'm a 22-year-old kid thinking about making a career change," A, and just saw what could stick. Obviously, I wanted to pick their brains as much as I could, but if they needed extra help as maybe possible intern off hours, or if it could turn into a role where I could quit Lockheed and join with them directly, or if I could just pick their brain and establish some type of mentorship relationship. That was how I kind of teed it up.

You know, it's funny, the very 1st meeting, in hindsight, I feel like the gentleman was...at the time I felt like he was cold and very put off-ish, and I was offended, but now, I just have a little more understanding and appreciation for his perspective. But I met with him, and yeah, he chatted with me for 15 or 20 minutes a little bit about his story, and then I tried to see what else could be developed with him. And he was like, "Jeff, you're making it sound as though you could be an intern for me and you could help me out a whole lot, but my time is valuable as well, and taking on an intern isn't just a pure immediate benefit for me. I've got to figure out," and this was the line that I remembered, "I've got to figure out do I want to take on this client? Do I not? Do I want to work with Jeff or do I not? Or do I want to just go home and wash my car or not?" And so, yeah, that was my first meeting with a financial advisor, which wasn't very positive.

Michael: So, very clear on the autonomy benefits of running your own business.

Jeff: Yep. Yep. Got that message. Yeah, the 2nd meeting I had was with, yeah, more of an on...what I understand now as a hybrid fee-based ensemble firm. And I was able to reach out to them because their junior partner went to Duke, and I went to Duke. So, I was able to make that connection, and they were pretty warm to meet with me. And so, I was able to pick their brain for a while. They showed me around, they answered all my questions. They didn't have an immediate need for me to work with them directly, but I did have a good relationship with them and they did start to keep in touch.

But it was really the 3rd meeting that sealed the deal and gave me hope for humanity and hope for the field. A gentleman by the name of Don Webb, and I do have to call him out by name because he's a wonderful person, and I attribute him a lot to my early success. Again, I cold emailed him, I had no Duke connection and no connection to him at all. I emailed him on a Friday afternoon with the same thing I just told you, I had outreached about, and he responded back within 40 minutes. And it was just such a warm email, "Oh, Jeff, it's great to meet you. You sound like a go-getter. How about we go out to the Union League tonight, and I'll buy you a drink and I'll answer all your questions."

And whatever I had going on that night, I dropped it all, and went out and met with him, and we became fast friends. And he absolutely was the reason that I went to work for Goldman, because he encouraged me not to just quit Lockheed and hang up my own shingle. So, he absolutely became my true mentor, my cheerleader, I'll probably mention him more times in this conversation, but so thankful that he was brought into my life. I had nothing really to give him. I offered to be an intern. I offered to do work, and he was doing things on his own, which was fine, but just more to his personality and graciousness that he would invest so much of his time into me at an early age. And so, that's been a great relationship for these... I mean, that's not just 14 years that I've had Cypress, that was 3 or 4 years prior to that as well that I've known him.

Michael: So, out of curiosity, do you remember what the ask was, what the outreach was? Just because I know there are some young folks still trying to get in the business today who struggle with what's the outreach or the words that get someone to take these calls, take these meetings that you ultimately got with Don. How are you setting up and doing the outreach?

Jeff: Yeah. That's a great question. Yeah, I wish I had the email in front of me back from 2006 or whatever. But yeah, just knowing myself, it was really just trying to be as candid and go getter and willing to kind of go at their own terms. If you're only willing to talk to me for 15 minutes, I'll take that. If you have some need where I can do some research for you on a project, I'll do that. I'm sure I said, "Look, I work at Lockheed, my hours are 7 to 4. I can come at any other time and work for you."

But more so than that, I think... And even sitting where I sit now, more on the flip side of that, because I do have people either reaching out to me for internships or reaching out to me for mentorship, I'm less looking for an intern and somebody to do work for me and more just happy to spend an hour or 2 at any shack or have an ongoing relationship with a younger person. You just ask, you say, "Hey, I'm really interested in the field." You show a lot of enthusiasm. Maybe you do some homework. If somebody went on my website and saw my bio and then I could tell that they weren't just sending the same canned email to some distro list that they found, yeah, I'd absolutely respond to that.

And I think, yeah, I've heard it many times in your podcast, this abundance mentality, and that's absolutely true. We don't view ourselves all as competitors and everything as a threat. If somebody reached out to me... And I'm not saying this hypothetically, it happens, with regularity, and even when it doesn't happen, I have sought out opportunities to mentor people. Advisors are more than willing to pay it forward and add some young blood, whether it has nothing to benefit them.

How Jeff Leveraged A Goldman Sachs Position To Gain Industry Experience And Knowledge [21:23]

Michael: So, how did you find Goldman Sachs financial advisor program in particular? It sounds like Don...I don't know if Don sent you to Goldman specifically or was just giving you overall guidance of don't hang your shingle as a 22-year-old on your own, which I would fully agree with Don on that advice. Don't hang your shingle from scratch in your early 20s. Just go get some experience, get more familiarity under your belt. It'll just make it easier to launch later. Was Don steering you to Goldman in particular? Or just said like, "Jeff, find a job first," and then you found your way to Goldman? How did this come about?

Jeff: Yeah. It certainly wasn't Goldman as the only firm. I think he just said more of a larger, more established firm where I wouldn't just be handed a phonebook and be responsible for be kind of commission based or something where...an eat what you kill model. Somewhere where I can do a job, perhaps in a support or research role and gain some experience, get a little older, get a little more confident and understand the industry. And so...

Michael: So, it's more of the find a big firm that can give you a job job that's not an eat what you kill.

Jeff: Correct. Correct. And even looking back, Goldman, in particular, their main emphasis was on investment management, less so on financial planning. And certainly, the type of financial planning that I do at Cypress is more to help people accomplish their medium and long-term goals. Whereas at Goldman, the level of wealth there, all of anybody's meaning and long-term goals are all more than satisfied many times over. So, the financial planning, and I could kind of sow my oats with the CFP coursework, with kind of, ultimately, gaining clients at Cypress and learning by doing. But where I think that Goldman, in particular, was very strong, and then I lean on heavily was the investment management element.

Understanding how their investment strategy group up in New York came up with models or tactical tilts or how they come up with a strategic asset allocation. And then within that, each advisor could kind of choose which active fund manager or how much in private equity or which fund they like. So, how to analyze performance, how to understand what's going on in the markets. And also, what even the smartest people in the room can't do, which was very apparent in 2007 to 2009. You certainly come into that role at Goldman thinking that if there was anybody that was getting some kind of advice that maybe had, I don't want to use the term insider information, but something with a little closer pulse on what the future would hold in the markets, it would be a shop like Goldman.

And, largely, the financial crisis came and went, and clients took it on the chin as well, and we were doing a lot of the same types of conversations that I would have now with clients during the pandemic or during 2022 as the markets were falling. So, yeah, Goldman was a fantastic place to learn investment management. And the financial crisis was a trial by fire to understand the psychology of clients, the physical pain that you feel when you lose that much that quickly and the fear of what it's going to take to earn it back.

Michael: So, did you go in knowing and expecting that, "I'm going to do my two-year stint here through the analyst program, and then I'm going hanging my own shingle?" Or was it more open-ended of just, "I'm going to do this, and then when I get to the end, I'm going to decide do I like large firm environment, or do I want to go out on my own?" How conscious was it of what was coming at the end?

Jeff: Yep. I'd say I was probably around 95% certain the day that I took that job that I was going to stay there for 2 years, and I was going to start my own firm. I think I really had that entrepreneurial fire. Don had instilled in me the wisdom or his philosophy of passive management and index funds. And so, I kind of came with a bias against an active shop, which Goldman was.

And then as my time went on at Goldman, again, part of realizing what you're good at and what you're not good at or don't care to do, and the role as an advisor at Goldman in that private wealth management division was very sales-oriented. You're spending a large portion of your day networking, developing relationships with trust and estate attorneys, accountants, watching to see who is building a strong business that might have a liquidity event in the next few years, and knowing that you, as well as every other major investment management shop in Philadelphia is also sending advisors to court that same potential client.

So, you have to really either have the right connections, be a fantastic kind of communicator, salesperson, and yeah, it wasn't a path that interested me that much, frankly. I'll be vulnerable and say that it wasn't something that I thought that I would be fantastic about. Sure, I could make it work, but similar to that Lockheed Martin thing, it would be more of a square peg to just be in a role that involved so much around competitive potential clients and really having to sell and network and solicit as much.

And, again, just being in the driver's seat for the types of clients I wanted to take on, not having a large corporation tell me, "You've got to make this many calls, or you have to have this many clients, or if you're happy with this many clients, the shareholders aren't, or our managing director of our office isn't, you still need to bring on another few clients this quarter or this year," even if my personal needs were being met or I was kind of sufficient or happy with where I was.

So, long answer to your question, I was 95% sure that I wasn't going to stay at Goldman. And that was largely accepted in a role like that. It was a two-year analyst program. I was odd in that I had already worked at another role after college. Most of my cohorts in that analyst program had just came right out of college, and it was very common to have that be somewhat of a revolving door. Some of my cohorts went back to business school. Some of them went to a different division within Goldman, investment banking or trading. A few certainly stayed on in Philadelphia to go into an associate program. That's where I met Ben, Ben Pitts, but it was largely... It wasn't frowned upon to use that as a stepping-stone. And I think they knew they needed a high caliber a person to be in that financial analyst role, and they knew that somebody with the chops to do that role well also wouldn't really want to do that role forever.

How And Why Jeff Built His Own Planning Software In Excel [28:48]

Michael: So, what was the path to then launching your own business?

Jeff: Yep. So, there was a lot leading up to that. So, that was 2009 and there were so many different things I had to focus on at that point. XYPN wasn't on my radar. I'm not sure if it had even launched back then, but that would've definitely been something that I would've gravitated toward. It just felt like somewhat of a deer in headlights of having...I had a checklist of all the different things I had to do. I had to register with the state of New Jersey. I had to come up with what custodian would take me on and come up with a business plan, make sure my personal financial house was in order, that I had the run room to start the firm. And then who would be my clients? What would I do every day?

And then what, again, was most interesting to me about that entire launching of a firm and what I spent the most time at, because it was the most interesting to me, was building out my own financial planning software. That was something that I was passionate about. I knew that was going to be something that would keep me very engaged in this role to have that, that I created on my own. I'm kind of naturally a do-it-yourselfer anyway. I'm pretty cheap as well, so I didn't want to have a lot of startup costs, and I certainly did not. And so, yeah, just a lot of different things I needed to check off of my checklist in order to launch Cypress in the summer of 2009.

Michael: So, I want to come back to the planning software in just a moment here. But help us understand this, what was the business plan and structure at launch? I mean, were you BD? Were you RIA? Were you charging planning fees? Were you doing AUM? What was the initial business structure and vision of it when you launched?

Jeff: It was to absolutely be a fee-only RIA from the start. So, I'd done enough research and I'd, again, had guidance all along from Don in terms of the different ways that I could...the services I could provide and how I could charge for them. And then I saw a whole different way of doing things at Goldman. And, yeah, pretty clearly, I knew I wanted to be kind of an AUM fee structure and be fee only, not take commissions on insurance, get licensed for that. And, as well, I also wanted to be able to take on clients that didn't come to me immediately with a certain amount of portfolio size.

So, in conjunction, I just had a minimum flat fee of $1,000 a year. So, you could either pay me 1%, which tiered off at different levels or a flat fee of $1,000. And I was going to do financial planning, I was going to do investment management. I wasn't going to do hourly. I wasn't going to do one-time projects. And so, yeah, that's how I decided pretty early on that I wanted to go that path, other than maybe raising minimums or changing tiers modestly from time to time for new clients. We haven't changed that at all.

Michael: So, now, help us understand this whole planning software thing. So, what is it? What did you build? And what was wrong with eMoney and MoneyGuide at the time? It would've been your primary choices back then.

Jeff: Right. Right. So, it was daunting and it was pretty exciting for me to just open up a blank Excel file and know that that was going to... Like an artist with a blank canvas, from that, I was going to birth an entire tool. And I knew it was going to be very in-depth and have a lot of sheets and formulas and code behind the scenes. And thankfully, I had confidence I was going to be able to pull it off and I had confidence that the resulting analysis that it would spit out would be more than sufficient to be up to snuff for the financial planning world.

Michael: I really appreciate that opening up a blank Excel file is your version of like an artist with a blank canvas. That's a beautiful image right there.

Jeff: For somebody who geeks out and wears nerd with a badge of honor, you're one who I could absolutely say that I'm absolutely a nerd as it comes to Excel. Again, just to backtrack a little bit, I had had an internship in college with NASA, actually near you at the Goddard Space Flight Center in Greenbelt, Maryland. And that was really my first foray into using Excel with Visual Basic and the Macros and a graphical user interface. I'd kind of taught myself from scratch. They gave me the whole summer, they paid for coursework, they paid for this Crystal Ball bolt-on software to do sensitivity analysis and Monte Carlo simulation. Obviously, it had nothing to do with finance but it was cool, and that got me hooked a little bit.

And then even when I was at Lockheed, one of my other roles within that leadership development program, it wasn't a role that I was asked to do, it was just a role that I kind of offered to do once I saw how all these repetitive tasks that a lot of my colleagues were doing on the computer, some in Excel, some outside of Excel. And I'm like, "You guys are wasting time doing all these things. Just let me sit with you for a half an hour, you tell me what you click, how you format this, how you manipulate this data, and I will come up with a logic behind the scenes to just click a couple buttons and do that." So, that was fun for me. It really lit a fire in me, so to speak with using Excel and being confident with, not massive programming.

But, yeah, going back to what was the deficiency with eMoney? Obviously, we say that facetiously because it's true, those tools have dozens and dozens of engineers and subject matter experts that are just constantly improving them. And it would be naive of me to say that what I've created rivals that in any stretch, because it certainly doesn't. But for me, how it does rival and why it has stood the test of time for me, and we still use it at Cypress, is because we just know all the inner workings of all of the assumptions that go into it. We can customize things, and certainly I can, more than any of the rest of us.

And I like that. It gives me the confidence when I go into a client meeting and they ask, "Why does this chart look that way?" I can know what the limitations are, what assumptions I made, what growth rates, what level of detail regarding tax calculations it went into and what it didn't, did it get into different state tax exemptions or not? I know all the answers to those things.

And as I was starting my own firm, again, just feeling like I had one shot to really build something and create a day-to-day life that was going to be rewarding for myself. To not just have a financial planning experience for myself that involved having an info gathering meeting, taking down all their information, plugging it into software, where I kind of understand what's going on behind the scenes, but I don't truly. And then I get a report, and then I sit back at a meeting with a client, and I present it to them.

And I know that's the way that 99% of financial advisors do it, so, nothing against that. It's fantastic advice. And I would be happy to be a client of someone who uses that software, but as an advisor who has to use software and having the capabilities to build out something that I did, that was really going to be what would make Cypress that much more fun and beneficial for myself.

Michael: So, it sounds like a big piece of the appeal to planning software yourself is this knowing exactly where all the numbers come from and what's baked in every number on the projection? Am I hearing that right? That seems to be a pretty big driver of this for you?

Jeff: It is. It is. And that's half the story. So, I'm glad that you are kind of peeling that onion a little bit more. So, when I was building the software, what I did was I gathered as many sample reports as I could at the time. So, it was eMoney, it was MoneyGuide Pro, it was NaviPlan, it was Money Tree. And I still have them saved on my computer, the sample reports from those tools back in 2009, 2008.

And what I did was I took all of the content that I had learned with all the CFP coursework, everything that I learned at Goldman about how to manage money, how to do performance reports, how to put together a presentation for a client on the investment side, and then also all the outputs from all these different tools, and I worked backwards. I thought if I'm going to deliver a financial plan to a client, how am I going to do it? What are the things that I'm going to want to show them? Obviously, the different topic areas of estate planning and tax minimization and financial forecasting, retirement forecasting, college planning, and how am I going to want have that conversation and what are the slides going to look like to continue that conversation?

Because that's how we did it at Goldman, frankly. The advisors, I would sit down with them to plan for a meeting. They'd say, "Jeff, we're meeting with X, Y, Z client. This is the story that I want to tell. These are going to be the reports and the way that I want to show this data. So, Jeff, you go and build out a PowerPoint presentation that's going to tell that story." And I thought that was effective, that's how Goldman was doing it for their clients, and that's how I want to do it for mine as well. So, I started kind of with the end result in mind of what's the story I want to tell, a lot of the reports at the time where these 170-page PDFs with tons of text and tons of tables and very data heavy. And so, a client would look and say, "Oh, yeah, Jeff has done his homework. There's a lot of data here." But I was a little turned off by that.

So, actually, in my appendix of my presentation, I do have a lot of figures and data to kind of show that the numbers are there, but for the main presentation, it's just what is the point of this slide? What is the message that we're trying to send about the future or about what to do right now in your financial life? And then working backwards what is the Excel engine that's going to be needed to make that slide?

Michael: So, I take it then, from an output end, this isn't solely showing literally Excel spreadsheets and charts, this actually serves up into separate external output pages?

Jeff: Exactly. Yep. The software is a series of Excel files that I'll link to a templated PowerPoint presentation effectively. And if it's a client who doesn't have any kids I'll remove the section on college planning, and so, none of that will link up. But, yeah, ultimately, the output, what we deliver to our clients is a PowerPoint presentation. We'll speak to it, we'll present on it, we'll provide it to them at the end. And that's maybe the 3rd and maybe smaller benefit of doing it through PowerPoint and doing it on my own is that oftentimes, and what makes our job interesting, is when clients come to us with a pretty unique question that isn't just, "I've got 2 kids, and they're these ages and let's do a college projection."

But there are some custom analyses that come up relatively often that we can build out a new section for in PowerPoint and do all the analysis for that, and then it looks like a very seamless presentation. I've got a lot of Lockheed Martin clients and they have a very unique pension system with all the legacy companies that site built up from. And so, we've got a whole section on how to interpret their 40-page pension statement and all the different claiming strategies. So, all these kind of unique financial planning circumstances that look pretty seamless in our financial plan that we deliver to clients, which is pretty cool.

Michael: I think it's a powerful framing to me, conceptually, to kind of anchor that as much as we're talking about building your own planning software in Excel, that's still functionally like Excel's basically your calculation engine as it were. But the planning software output is, really, it's building in a PowerPoint. Think of it as a PowerPoint presentation with all the charts getting populated from underlying Excel spreadsheets, Excel formulas that get expressed into the charts. So, the plan template is there, the chart templates are there, the spreadsheets then just populate in the actual specific charts and analysis that you've got the output you need for the client that you want to show and sit across from. So, how long did it take to build this, to create this and get it in place?

Jeff: My life journey from now to then looks like an entirely different universe ago. That was, again, 2008, 2009, I was beginning to put this software together, doing a lot of research. I was recently married, we had no kids. And so, I'd do my day job or certainly after I left Goldman and I had maybe a month or 2 in between as I was waiting for my New Jersey license to go through, and I had all the time in the world. So, it's hard to kind of put an exact figure on that between the research, between the coding, between all the debugging that came later as I'd actually start to work with clients and want to add a few different things or run into some issues.

But to say that it was 300 to 400 hours, it wasn't like thousands and thousands. But I remember vividly, down in my basement, Lauren, my wife would be asleep, I'd just be cruising until about 1:00 in the morning, music blasting, and just geeking out with rows and rows of formulas or rows and rows of code. I look back on it, it was pretty fun.

Michael: So, this was a pretty heavy, you built it and grounded out all at the beginning when you were starting the firm to say, I've got a certain vision of how I want, I guess, my financial plans to appear to clients. So, I'm going to make that now while I'm getting started, while I have a lot of time and not a lot of clients yet. I'm building this stuff here and now.

Jeff: Right. Right. And there were a couple of times that I really had to clear my calendar and focus on improving the tool again. The biggest of which was in 2012, about 3 years later, I had started to get a good working relationship with Ben Pitts. He was at Goldman, he was starting to refer me a few clients that I was winning. And he was a South Jersey guy, and we just had very similar value system. So, long story short, I was able to court him over from Goldman to join me as a partner.

And the reason why this links into the software tool is that it just went from being something that only I needed to be able to use, and I could, because I knew everything, and I was very comfortable with Excel, to now, Ben was going to be a financial planner as well, and he needed to be able to understand what was going on with the software. So, I had to really make it into having a better interface for him as somebody who didn't create the software that he could know how to go through an info gathering session with a client, putting the data properly into the tool, in an easy way that wasn't crazy for him, and then create that PowerPoint presentation as well.

So, that one took another few hundred hours or so to take the tool and build it out so that it could be used by a team. And ultimately, now, that we're a team of 6, we're all in these files all the time. The 4 advisors that came with various levels of technical backgrounds or Excel. Most financial planners in general have a decent technical chops. And they were all able to dive right in and the plans made sense. And they like to be able to, from time to time, manipulate a few of the cells in the software as well to their specific client need.

How Jeff Integrates And Maintains His Financial Planning Spreadsheets [46:42]

Michael: I was going to ask in that vein is it a giant spreadsheet on lockdown? Is it every time you have a new client, you make a copy of the spreadsheet with a new client name in the file, and then that's that client's version of it, and off it goes? Is there an ability within the spreadsheet to save client profile data and load new clients? Like, I know that's a little bit in the guts, but I've seen some advisors try this and you just get into version control issues of, "Yeah. Bob changed one of the formulas and did it a little bit wrong, and no one realized it. And now, we've been using the software for the past 3 months with Bob's error in there." That kind of stuff shows up. So, how does this work in practice to manage to this?

Jeff: Yeah. Yeah. That's a great question. So, you hit the nail on the head. I maintain 1 master version of all of the files, the pure files, and then anytime we get a new client, we just copy and paste a version of that entire set of files. And then you take that into an info gathering meeting and you start to pre-populate that copy and, yeah, nobody touches that master file. And it's also gotten to the point where there are clear parts of the file that are for the input data where an advisor is supposed to key in things, and then there are a whole other sheets that are doing all the calculations. So, if the tax code changes or we roll into a new year and the different 401(k) limits change, I can go in and make those changes on my end, and they kind of propagate through to where the advisors have just put in the information on certain areas.

Michael: Oh. Because you, I guess, sort of in programming fashion, you structured the spreadsheet, so limits aren't hard coded in the spreadsheet, they reference some other supporting sheet. So, even if I've got 100 different versions of the sheet for 100 clients, I can still change the reference table of number once and then it propagates to all the sheets because they're all referencing that source?

Jeff: Correct.

Michael: So, I guess, out of curiosity, are you willing to share a sample version of what one of the plan outputs look like? Just for advisors who haven't seen it, I feel like it would be helpful to visualize, when you build something into a template through PowerPoint that powers in from Excel, like just how does that show up in practice when you're looking at client output? Is there a sample version you're up for sharing?

Jeff: There is. There is. I'd be happy to do it.

Michael: So, for folks who are listening, this is episode 348. So, if you go to kitces.com/348, we'll have a link out to a sample version of what the financial planning software looks like that Jeff has built with his team.

So, Jeff, I guess, there's a couple of things I'm still wondering is just processing this. So, how much does it take to keep up with the software? I'm sort of envisioning everything from the annual tax law change or the annual numbers that change, right? Like 401(k) limits and RIA limits and such go up. You get, every now and then when Congress passes a new law, like Secure and Secure 2.0, where you've got a whole other slew of changes. Is that a real challenge? And whenever Congress passes a new law, you're like, "Well, there goes the next 2 weeks of my life?" Or do we make this out to be a bigger deal than it is, and when you're comfortable designing tools like this, it's just not a big deal? You crank on some formulas because that's what you're good at and it's done.

Jeff: Yeah, that's a great question. So, I think the 1 that took the most time was the tax cuts and JOBS Act, to try to change around itemized deductions and solve tax... That was pretty heavy. And I did, well, I don't know if it was a week, but that was a longer one. But changing the RMDH, phasing that up to 73, 74 that's a smaller piece in this. So, yeah, it's really just the 2 that you mentioned. So, each year, as limits go up, those are easy. We do those at the beginning of every year and then when a tax law changes or if we decide to make a change in the assumed inflation rate or something like that.

But, yeah, it's been battle tested to this point where, again, there are occasionally times where a client will come to us with a one-off analysis, but for the core, if you have a rental property, if you have a business, if you have kids, if you have a pension, if you have multiple jobs, if you're moving to different homes, or different types of insurance policies, those have been pretty well set up.

Michael: So, I guess, do you worry about, I don't know, staying competitive with other planning software, like, trying to keep up with it? Is that a pressure or not? Because you're good with what your planning software is and your clients are happy with the planning software, and so, who cares what other people are doing?

Jeff: Yeah.

Michael: How do you think about that dynamic of trying to maintain your software relative to what the rest of the industry software is doing or evolving?

Jeff: Sure. I do. I do. Yeah. One small example after I kind of really fleshed out my software, I think it wasn't long after that eMoney and MoneyGuide Pro both launched the ability to be sitting with a client and dynamically change if they're kind of doing hypotheticals on the fly as you're sitting with them. Or if you made a mistake in your assumption or you heard something wrong, you can just go back and put that right into their web-based tool and then project that right up to the screen and dynamically see the difference for a what if analysis.

My software doesn't do that. If I'm in a meeting and we've mistyped something or if a client wants to see something differently than we've showed it, I'm just largely taking notes, and then that's part of our follow up, is usually the PowerPoint that we send as a follow up will look slightly different from what we had showed them in the meeting because they probably would've updated us on a handful of changes in their budget. Maybe they pushed back the year that they're going to buy a house or do a job change. And so, I'll send that as a follow up with some explanations. That's just 1 example where...and I'm sure there are dozens and dozens of others of where again these big software shops with all the staff and the resources that they have, will be able to be ahead of what I can do.

But, yeah, I think just kind of harken back to this is what has made it work, it was the most kind of interesting path for me and how I wanted to deliver advice to clients. If I started to see real strong pushback in terms of not winning clients because of a function like that, or if we wanted to hire another advisor and an advisor was like, "Oh, all I know is MoneyGuide Pro," or "I don't want to touch Excel. You guys are just in the stone ages," then that'll be a wakeup call that we'd have to do something different perhaps. But the other advisors that we've brought on, they've embraced it. They like the output. They like the meetings they have with clients. It's been a win for them. And if it ain't broke, don't fix it. So, we're going to keep on cruising on this path.

Michael: You make a powerful point, look, we're still winning clients. They're happy with the output. Our advisors are appreciating the conversations that they're having. So, what more do you need? Maybe the other guys are making some fancy pants features that people don't actually need or care about if you're winning all the business anyways that you want to win without those capabilities.

Jeff: Yeah. I guess that will always be kind of the existential question in our field is at what detail do you need to get into? How many bells and whistles does it need to have to be able to influence change and motivate somebody? I can always add bolt-ons. We still subscribe to eMoney so that we have financial aggregation so that we can see clients held away accounts and things. So, we can always bolt-on other software.

Michael: Oh, interesting. So, at this point, you do pay for eMoney for the account aggregation side, but then you still don't want to use them for the planning software side?

Jeff: Right. Right. I think it just comes down to, as simple as it can be, I still prefer my own. It's not a cost function. It's how I use it, how I can guide everything that we've talked about up to this point. I just prefer how I do it.

Michael: So, what's the rest of the technology stack for you that's bringing those pieces together?

Jeff: So, we've custodied with TD Ameritrade, which is becoming Schwab. So, on the investment management side, we lean on iRebal. We also lean on a performance reporting software called Kwanti. That's been a nice one that ties has great feeds in from both TD Ameritrade and Schwab and can show performance reporting in a real nice clean, easy to explain way. And yeah, the other big software we use is CRM. We use Wealthbox and which is less related to the financial planning software and more just related to how to run the practice efficiently. Those are probably the big ones.

Michael: So, you had said pulling investment performance reports into the planning software or planning output as well. So, are you pulling Kwanti reports and putting them into the PowerPoint presentation deck, plan deck for clients?

Jeff: Correct. Yep. And we're pulling the disclosures and things from the Kwanti reports as well, but yeah, it's trying to bolt it on as just one seamless presentation.

Michael: So, are there gaps that you worry about? If you had more resources to build some additional features into the planning tools that you have at this point, what do you wish you could build if you had more resources for it?

Jeff: Yeah. I think, certainly, a cleaner interface. And I think you're aware that Ben Pitts, he kind of split off of Cypress now, just works part-time. And he started a FinTech company, taking the software. And one of the most obvious things that he had to do to build upon that was to, yeah, make it more user-friendly and not just be native to Excel. So, they raised a lot of money, and paid programmers to take that tool and make it more web-based, coded in Python and really went heavy into that. So, I think that would probably be something that... To make it more user-friendly and then to just continue to iterate.

I think that's what all the big companies, that's their main and only product. Our main product is to be financial planners. We're not a software company. So, yeah, to have a team that is just constantly coming up with version 2.0, version 2.1 of how to just keep incrementally making the outputs better, making the experience better, and adding different features, kind of staying best of breed. So, I do worry that that's not something that I'm able to put time and attention to constantly.

Michael: So, even though Ben split off a version of the software to take it to other channels, do you use that or you still use your version that's built in Excel and not their web-based Python version?

Jeff: Right. Yeah. We still use the Excel one mainly because that's something that I can control, we can manipulate as a firm, and up to this point, our small team of 4 financial planners is all comfortable enough to use that as the main engine. 

Michael: And so, what is Ben's FinTech software company version of the planning software now? Where has that gone?

Jeff: Yep. That's a great question. So, it's gone a few different directions. That was a pretty exciting time in our lives. Ben joined me at Cypress in 2012, a couple years later as he really saw how powerful the software was and the different ways that the clients were giving us good feedback on the entire product, he thought, "Oh, Jeff, what would it be like if we tried to build out software that wasn't just for Cypress? See how it could be used in other venues." And so, I have a little less ADHD than Ben, I enjoyed working with clients and just being a financial planner at Cypress. He had more kind of risk tolerance than I do, and really was intrigued by just doing a true FinTech startup. And so, I said, "Look, this can be separate from Cypress, and I'll give you the blessing to go off and do it, but it's got to be separate from Cypress."

So, he really kind of started this thing from scratch. He brought on a team, a few different subject matter experts, 1 from California, 1 from Texas. They did a fundraising round, and they really put a lot of resources into a sales team, and in terms of a product team. So, their intention was to try to... The niche that they were looking for was employees in the workplace. So, that was going to be 1 specific subset of users that we could take my underlying logic and build it into a tool that people who are at a medium or large size employer could use it on their own. And Ben would try to sell that to these businesses.

And so, the need was definitely there. And financial wellness, it's still a very important topic as an employee benefit. And then ultimately, as this company, myFinancialAnswers grew and pivoted and had successes and failures. They tried to market it toward retirement plan advisors who already kind of had an in and relationships with a lot of these companies, and they wanted to have ways to differentiate or deepen that relationship. So, this would be kind of an add-on service that they could offer to 401(k) plan participants.

And so, that was getting some traction, but it's hard starting a software company. And they had some growing pains and eventually got to the point where Ben and the team sold the business to TIFIN which is a larger FinTech conglomerate out in Colorado, and Ben moved his whole family out to Colorado. And now that's how kind of the software lives on within TIFIN as they're trying to build out some different financial planning tools there.

Michael: So, out of curiosity, when you go through that sort of transition where you've built the software and now it's going to split off to go this other direction with what Ben was doing, how do you handle that as the owner dude who built the software in the first place? Were they going to pay you a licensing fee for the software? Do you get equity in the new entity? Did you just give it to them with the blessing to say, "Go do your thing, I'm happy where I am with my practice, good luck with that?" How do you do that and get it going and make sure it just feels good and fair to everyone?

Jeff: Yeah. That was all early days and just a huge learning curve for us, especially when Ben created that myFinancialAnswers company in 2014. It's not like we were serial entrepreneurs that had founded companies and knew the ins and outs of legal contracts and profits, interests and things like that. So, yeah, effectively, I took an equity stake. I contributed the intellectual property. I agreed to stay on as a subject matter expert and help in a very small part-time capacity in the beginning. I wanted to make sure that Cypress had very large liberties to keep using our software anyway and...

Michael: Right. You don't want to mess with the core business you already had. You got to let me keep doing my thing.

Jeff: Absolutely. So, the financial component was an equity stake that I had in those businesses, and ultimately, a little bit in the TIFIN sub entity as well. So, yeah, who knows? I'm not sailing off and buying my own island yet, but it's been, if anything, just a cool experience. I'm forever grateful to Ben that he even saw so much potential in me and what I build, and to really impact his own life in such a meaningful way to start up as an entrepreneur, to move his family out to Colorado. I feel like a lot of that had to do with the kind of the faith that he had in me and that product. So, it was a pretty cool experience, and so, happy to a part of that.

How Jeff Plans To Share Firm Equity And Build His Succession Plan [1:05:28]

Michael: So, what comes next for you? You've got a couple of advisors on board, you built the business to $275 million under management after 14 years. So, what comes next for you in the business?

Jeff: Yeah, now, my day-to-day is less about the weeds of the software. It's just using the software and running the practice and being more of a CEO. I've got this firm that is a maturing firm, but still smaller, medium size. And it's had its growing pains. And so, now, the big hats that I wear is that I'm a financial planner to right around 200 clients, personally, and I've got a paraplanner that supports me with that. But then, I'm also kind of the CEO of this firm. So, I've got to kind of balance the 3-legged stool of bringing clients in the door, having the capacity for them advisor wise, having all the infrastructure in place administratively to keep that ship going. And so, that's kind of where it is right now. That's where I spend my time and energy on those 2 roles and just trying to continue to grow the firm and keep clients happy, keep the employees happy.

Michael: And so, is there a transition exit timeline for you on the business overall? You can have a very long time horizon on this but also have built a business to the good place. So, how does this flow from the business overall in the years to come?

Jeff: Yeah. Yeah. So, again, I was pretty young when I started this business. I was 25. Now, I'm 39, and so, I've been doing it for that 14-year timeframe. And I wouldn't change a thing. I've enjoyed it so much. And as I kind of see other advisors' journeys and how it changes over time, how it stays the same. Are you somebody who needs to do something new every couple of years, or are you somebody who wants to keep doing the same role for decades and decades?

I find myself in the middle there where it was super exciting to launch something from scratch. I mentioned launching that Excel file from scratch, the same thing was with Cypress. I launched it with 0 clients. The firm itself was a blank canvas, and so, it was super exciting, those early stages ramping up and not worrying about efficiency or processes, because I had all the capacity in the world. I was just taking on whoever I could. And now, in this kind of middle zone where we're hitting operational constraints and still trying to grow. And so, all along the way, being a financial planner to 2 clients, doing that core work is still very life giving to me and very...just something that I still get a lot of personal satisfaction out of.

Down the line in terms of what the path is going forward, I have a couple of things that I've been very self-reflective on that motivate me personally in terms of my future life path. And so, I can get into those in a little bit, but what they've led me to is to begin actually offering some equity to my other team members. I certainly dove right into that back when Ben came on in 2012. There wasn't much value there, I guess, compared to where it might be now or where larger firms are at. But when Ben came on, he was leaving Goldman, we were both very young, the business was very young, so I had already kind of gotten used to the fact of he was going to be a true partner and have his equity increase over time, which had happened.

And then Evan Powers down in Virginia was our, was our 2nd advisor. He started off as an employee, and then after about 3 years in the firm, we offered him equity as well. And then just this year, it was a big transition that we went through where I actually made the decision to offer equity to the 2 other certified financial planners, Kurt and David. And so, there's a reason for all of that, and there's a path forward for myself personally and for the firm. But, yeah, this has been a major year in terms of making those changes.

Michael: Well, so, help us understand a little bit more then, what is that path? Where is this going for you from here?

Jeff: So, the path is... At the moment, I still do own a majority of the firm, and who knows what the future may hold? But plan A would be for Cypress to have an internal transition. I would love, love, love for me to be, decades and decades from now, still able to see another generation of Cypress still kind of operating it, whether it's my software or something else, I could let that go. But to have Cypress still exist with me not the core driver of it would be something that I would take a lot of satisfaction of down the line.

So, I'm starting to set those stages, set that now. And kind of having that G2 in the line just to keep us all rowing down in the same direction. Selfishly, I would be devastated if the other team members were to kind of up and leave. So, I want to, not just kind of handcuff them with a non-compete agreement that restricts them. I'd love to reward with an ownership stake that makes them really have the buy-in that they are valued, that their decisions aren't just for their own book of business and their own self-interest. It's really for the firm because they are going to have a larger stake continuing over time.

So, that has been the path. So, we started that now, and then over the...we engage with a company called FP Transitions, which I know a lot of other advisors are familiar with that firm. They went through a big consulting arrangement with us to help try to model out how, if things go well, and the rest of the team are still happy and want to stay, and we're all growing as we have in the past, then I will continue to sell off shares of the firm to them with the intention that within next 10, 15 years or so, I'm not going to be the one calling the shots. There will be another team really leading the ship and doing that gradually over time.

Michael: So, you'd mentioned kind of selling shares off of the firm, as well as sort of equity as a reward for the team members that are growing with you. So, in this environment, as Ben and then Evan and then Kurt and then David have come on board, all of these additional advisors, do they buy equity? Is it given to them as part of their compensation or sweat equity earned? We characterize that various ways. How do you think about equity and how does it work as they glean access to it?

Jeff: Yep. Yep. So, FP Transitions, again, helped us a lot think through these things. But yeah, the long story short is they're buying in, but in this tranche and then probably, again, if things go well the next 2 tranches or so, we'll be largely seller financed, which is me. So, they might put a modest down payment that they have to feel a little bit out of their own wealth and then over time, they pay back a seller finance note, which if you really kind of peel back the onion on how that looks, as I'm sure you have with other advisors, that's getting paid with profit distributions that effectively were never theirs before. So, it's not quite as much of a pain point to be using those profit distributions to pay myself back.

So, it's a sale without a doubt. We value the firm, they buy the shares and then, yeah, down the line, again, hopefully we get to this point, if there is going to be a major event where I kind of hand over the reins and it all happens internally, that would be likely the way that it's been modeled out and the way that makes sense to me and would be like a bank financing for that one, where then the company would have to pay back a loan.

So, that's been the path. And, again, I don't know exactly how the future will play out, but that's how I've teed it up with the other guys. And, ultimately, it leaves room too, as we keep growing. If we have other advisors that come on and they're a good fit, we like them, they like us, they're growing well, it leaves room for additional partners down the line as well.

Michael: So, you said future tranches may be largely seller financed, and they put down the modest down payment, so they've got some skin in. That may sound like it was different in the past. Did you have different arrangements in the past than what you're doing going forward as you engage FP Transitions around this? Or is that what you've been doing all along?

Jeff: Exactly just with Ben. Yep. No, just with Ben. Yeah. When Ben came on, we weren't having consultants or we both used lawyers...

Michael: Well, the business was 2 or 3 years old then, we can only put together so much of this in the early days of the business?

Jeff: Right. Right. So, to answer your question quickly, yeah, Ben did not buy anything from me. But Evan, when he came on in 2016, he did. We used FP Transitions back then, not in a huge consultative agreement that we just had, but at least to value the firm, and then he did buy some as well, but similar, where it got paid back over time, more of a seller financed thing.

Michael: So, I have to ask because this comes up for some advisors as they start going through these internal transitions, the part of the model around this, particularly in the seller financing context, is basically like, if we sell you sort of moderate size tranches, you can afford a little bit of a down payment. If you can afford the down payment, the profits largely finance the note over time, as long as you finance over a reasonable number of years. And then, as the business grows, you get more profit distributions, which now gives you more free cash flow to buy another tranche in a couple of years, and then another tranche in a couple of years. It's a path to build folks up to be able to afford more substantive stakes even if they're kind of younger folks, early in their career and can't write a big check.

I know, at least the pain point sometimes from the founder end, though, is, "I'm selling them shares that they're paying for with profits that I would've had anyways if I just kept the shares and got the profits. So, why am I selling stakes of the business to you for you to pay me back the profits that I was getting anyways, if I wasn't selling it to you? It feels like we're going circular, except I don't have the shares at the end." Does that crop up for you? Is that a struggle for you? Or do you think about these equity transitions differently?

Jeff: No, I think you hit the nail on the head. From where I sit, it is a financial sacrifice. And candidly, when the whole deal was done, I had to go back to my family and say, "Oh, Thursday night, guys, we can't eat dinner anymore. No dinners on Thursday nights." Because of the financial hit that I took from this, but the kids are taking that in stride. I let them eat a little extra cereal on Friday morning. So, they rebound.

So, yeah, I think at the end of the day, it is... Again, it's not a gift, but if you had a crystal ball and you knew that the firm was going to grow, there weren't these certain motivational changes that happened within your G2 because they're owners, if everything was going to grow the same, that founder would be better off financially by effectively maintaining that ownership stake for as long as they can possibly hang on. And I say it facetiously to the rest of the team, but if any point, they ever want to sell me back the shares, I stand ready and willing to cut the check. It's a better investment than any stock in the S&P that I'd buy as an alternative. So, you're hitting the nail on the head there.

I think, again, as I mentioned, there's a selfish element where I like my team and I want them to stay, but there is a sacrificial element that I want these guys to do well. I wouldn't consider myself a great leader, but I do take ownership that these guys are going to support their families and that I want them to be successful and incorporate their ideas and their vision for the firm, more than beyond just their specific niche. So, that's kind of how I think about it and what has gotten me more comfortable being this open with equity at this age. Because that was one of the most immediate responses in our initial call with FP Transitions, "You're too young to be doing this." And especially...

Michael: Well, I was wondering as well, you said, you're 14 years in, you started when you were 25, you're 39 now. You even mentioned kind of 10 to 15 years from now, there could be a more substantive shift of leadership or ownership if they're growing well and things are coming up well. So, that puts you 49 to 54 years old, give or take, a little on the 10 to 15 years. So, in a profession where a lot of people do this well into their 60s or even their 70s, what leads you to cue this up now at 39 and be talking about "just" 10-to-15-year time horizons that put you out to early 50s?

Jeff: Sure. Yeah. I think 1 of the big driving factors is, and I've noticed this with some clients, and I can see myself kind of going down this path if I didn't give myself more accountability or really just be laser focused on kind of going against maybe natural instincts is that... And I'm sure other advisors can resonate with is that there are a lot of clients out there who are good savers, they live below their means, they live modest lifestyles, and they raise successful children, and they have this wealth, and then they're retired. And what's going to end up happening is they're not going to spend all that money.

Let's say they're husband and wife, maybe the second passes away around age 90, they leave everything to their kids. And how old are their kids at that point? They're at retirement age themselves, and did they need that money? Had they already made all of their financial planning decisions during their working careers, not expecting that, not knowing that that was a certainty? So, now that they're getting this money, it's not as useful to them. So, just seeing that trend and asking myself what do I want my 2nd half of my life to look like? And because I am a good saver. I am living below my means. I do have a modest lifestyle. I don't keep wanting to buy houses or keep having a lifestyle creep.

And by the same token, for as much as I'm a numbers person, I'm not trying to build Cypress just to see number get from $275 million to $500 million to $1 billion, just for the sake of that's where I've gotten it. If you said would I rather stay on at Cypress until I'm 70 and make it to a billion dollars, or whatever metric you can think of size firm? Or would I rather be more intentional about how many hours I have in this world and what type of impact can I have, and is there something else? That's really what has led me to want to be more intentional about starting this equity transition as I have, because, yeah, I've crunched my own numbers. By the time I'm in those age ranges that you're mentioning, my house will be paid off. I own this office building that I work out of, that office building will be paid off. My kids will be right around the end of college, and any financial projection that I've done for myself in whatever software tool you could think of is on thankfully a good path. I'm very blessed that's been the case.

And so, I don't have any great feeling about leaving my kids a huge inheritance at the end of my life. That gives me very little desire. And I feel like a lot of my...I have a lot of clients that resonate with that concept as well. And so, if it's not just growing account balances, growing business values as a be all end all, that's pointing me toward having another chapter. Having another chapter in my career. I feel very called to do something beyond Cypress that's not retirement.

And so, that has yet to be fully fleshed out, but where I feel like I'm being called is more in the pro bono financial planning world. I mean, it's a world that I'm very comfortable in. I know how much of an impact it can have. And candidly, I've tried to cater to as low as I can, operating a for-profit business, in terms of asset size or income size. And there is a limit. If I want to deliver a financial plan, it takes hours, it takes effort, and if you're going to charge a market rate for that, it prices out a lot of people. And so, to be able to release those reins and say, "Yes, I'll take on that teacher who has 5,000 bucks in a bank account and not have to charge them a minimum fee."

So, again, I've yet to fully flesh that out, but I feel very, very strongly that I'm going to have more energy, more passion to give back. This will be one where I won't have to be anywhere near as driven for supporting a family or having my own finances benefited from that next chapter as it is in the current situation.

Michael: It strikes me, from what you're describing, that you seem to have a pretty good clarity on, "I need to grow it to this point and get the economic value to this place that lets me live the lifestyle I want, pay down the house that I want to live in, make sure the kids have the proverbial enough, but not too much. And beyond that, if I'm there, why do I keep needing to do the financial planning business, wealth-building thing. I'm there may as well find something else to do with my time." Help the people you can't help while you're in the business-building phase.

Jeff: Yeah. There's nothing against somebody who just loves this job, wants to get up and do it until they die, they're not doing it for the money. Personally, they just en enjoy this role. God bless them. And there's plenty of advisors that will go down that path. I have a different perspective in terms of how I want to spend my time. I don't necessarily want it to just be Cypress and then retirement. I want there to be something in the middle, and it's going to be one where money is not going to be an object. And that looks differently for different clients. I have some who do consulting or do part-time work. So, I think it is becoming more common, not just to work in the rat race, rat race, and then sail off into the sunset. So, yeah, that is what is meaningful to me. And, again, it's not just growing wealth for that sake.

The Surprises And Low Points Jeff Experienced On His Journey [1:28:18]

Michael: So, what surprised you the most about this path of building your own advisory business for the past 14 years?

Jeff: Sure. Sure. So, one of the biggest surprises, I think is going back to the beginning years, really where the clients actually came from. If you would've asked me, just the day that I was starting, "Where do you think you're going to get clients?" Well, I'd say, "Oh, well, I've got this really close friend or this family member, and they know me. They know I'm smart, they trust me. They'll keep talking about me to everybody, and I'll get a lot of referrals from them." And now looking back...

Michael: Friends and family. I'll get it from my friends and family, correct?

Jeff: Right. Right. And looking back, I certainly have had people who have been in my court and referred me a lot of clients, but what was surprising was it was more of their own personality trait as opposed to their closeness to me, I think. There are a few people, and I can notice this trait, and Ben is one of them, and I've got a friend who I grew up with, who is one of them, and also a colleague from Lockheed Martin, who are the 3 who I can very easily say are these. Where they just have this connector mentality and a mentality of, "I want to help people even if there's nothing in it for me."

And you put those 2 traits together, and those have been the people that have really ended up being huge referral sources. People who feel like they're doing their friends and colleagues and family a favor because they're connecting them with me, and they're doing me a favor because they're helping me grow my business, and they get a lot of satisfaction from that. And, again, if I'm trying to give a lesson to a listener, I don't know how you identify those people, but boy, am I thankful that they exist, that they've been in my life, and that they had helped make the business into what it is.

Michael: Interesting. So, recognizing growing through referrals doesn't necessarily mean I've got 100 clients who send me a referral. It may more realistically mean I've got 3 clients who are super connectors, and they've sent me like 30 people apiece.

Jeff: Yep. So, that's absolutely true. If I drew a spider web of where every client that's here today has come from, there are definitely these big connectors, but to your point as well, you can't solely rely on 3 or 4 people. Referrals are going to be a growth engine of a firm largely, but yeah, it's... And, again, I'll drop Don Webb again. In those early years, when I was trying to grow and trying to see what would look ahead, every time we spoke, he'd look me in the eye and he'd have the conversation like, "Jeff, this is going to work. You're going to do it. You're going to last. People are going to work with you, and it's going to grow." And he was right. So, was it a surprise that he was right? I guess not, but, yeah, the referrals do come, and by lasting and doing good work, it builds. It's been pretty cool to see.

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

Jeff: That first year, without a doubt. Again, you know my personality by now, and I feel like your story was similar where you didn't want to have to go out and get clients. For better or for worse, I was willing to go through it, probably because I had Don giving me so much confidence that that was just going to be temporary, and that I'd have to prospect and solicit and go to networking events, and then there would come a time where I could turn that off and have that flywheel of referrals or have enough clients. And he was absolutely right.

But just going through that 1st year of putting myself out there. Again, I was 25, I had all my hair back then too, so that looked great and helped me in my personal life, I guess, but it did not help in the professional area. I got a lot of pushback on my age. I was trying to give as much as I could to get people into the door. I was doing financial plans for people who were kind of a fit, but then would ghost me, it wasn't even a term back then. And then there was a lot of an element of loneliness too during that first year, a couple years before Ben came on, where it's imposter syndrome, all those things. Just a lot of elements of, "Is it going to work out? Am I going to grow? Am I just faking it with the software?" And just all of the prospecting and networking that went into that first year, it wasn't fun.

Michael: So, where did it ultimately gain traction? What carried it through and worked that you survived the first year and you're still here today?

Jeff: One of the big ones, again, and everybody's career path is different, but the 2 roles that I had before starting Cypress ended up just being absolutely crucial for me, in terms of being able to gain clients. So, with Lockheed, I didn't burn any bridges there, so I knew a ton of people. They were the largest employer in Burlington County, so there was a ton of potential clients. I went back there and did seminars all the time. That was a natural fit for me. And so, I...

Michael: So, you were deep into Lockheed engineers, "I'm an engineer. I'm here to do planning for engineers." You can talk the talk. You had your own spreadsheets.

Jeff: It was a great niche. Yeah. They saw a little bit of themselves in me, and I was a comfortable speaker on various financial topics that I do for free with pizzas and stuff. And so, that created a nice groundswell of warm meetings afterwards, and then a decent conversion rate for clients. So, that certainly helped me get through year one. And then, as I already have mentioned Ben multiple times as somebody who I knew from my second job at Goldman, who was just encountering many people in his life that didn't have the $10 to $20 million minimums to become a Goldman client. And if they had $9,900,000, they could be a Cypress client.

So, Goldman wasn't really a prospective client zone, but it was where, again, I didn't burn any bridges there. And out of all the different ways that analysts left, I was the only one, by far, that went to be a financial planner for the mass affluent. So, anybody within Goldman's Philly office, if they knew me a little bit, and they came across people who were below their minimums, I was a quick call. So, those were 2 big blessings that I had after those, from here going onward.

The Advice Jeff Would Give His Former Self And Younger, Newer Advisors [1:35:34]

Michael: So, it sounds like you got all this great wisdom from Don Webb as you were looking at coming into the business, but is there anything else that you know now you wish you could go back and tell you 15, 16 years ago as you were looking at, coming out of the Lockheed program and coming in this direction of the industry? What do you know now you wish you knew then?

Jeff: Yep, yep. So, I would tell myself forget those networking events I was doing, forget even the seminars and the mass mailers, forget the software tool. What you need to do, Jeff, go to Best Buy, buy some computer processors, mine some Bitcoin. That's what I needed to know back in 2009. That's all, that's all I needed to know. That would've been the advice.

Michael: That would've worked out well. That would've worked out well for you in 2009.

Jeff: That would've worked out well. Yeah. We wouldn't be talking right now, but other than that, it would've worked out well. So, again, humor aside, the advice I would give to myself back then, or to anybody entering the industry is to be authentic. Our field is one where you can incorporate lots of elements of your personal interests into our industry. It is a fantastic industry in that regard. And I see it with other advisors on XYPN or others I come across. If you're into running, if you're into craft brewery, if you have other interests, niches are fantastic. I feel like the way that I was authentic to myself was, again, to build that software and that's certainly not for everybody, but you can put a piece of yourself into the way you're advising clients and doing this thing. And it makes it feel like less of a job. You enjoy the work a lot more when you're kind of incorporating a bit of yourself into it.

Michael: So, any other advice you would give younger, newer advisors coming into the industry today? When you're the Don Webb and the 22-year-old's calling you for advice and a cup of coffee, what's your advice to them at this point?

Jeff: Yeah, yeah. My advice to them is if you enjoy this field, it's going to work out. You just have to last. And there are just so many different ways to find a role within a firm. If you're comfortable doing the prospecting and bringing on clients of your own, then that's great, and you can have a different compensation level because you have that interest or that capability. But if you don't, if you really are of the personality where you just want to deliver financial plans as you did in your kind of 2nd role after the insurance industry, there are plenty of roles and firms where you can just do that.

Especially early on, when you're trying to understand your own self and what you want to do in this field, there are just a lot of different channels and the way that advice gets delivered that you shouldn't feel like you're not in a good fit.

What Success Means To Jeff [1:39:04]

Michael: So, Jeff, as we come to the end, this is a podcast about success, and one of the themes always comes up is just the word success means different things to different people. And so, as someone who's been on this wonderful path of building what anyone would objectively call very successful business, how do you define success for yourself at this point?

Jeff: Yep. Well, I'm going to answer that question from the mindset of a financial planner and the success in that role. And I'll tell you a story. So, a few months ago, I had one of my pretty good clients who I have a good relationship with, on a personal level, professional level. He emailed me out of the blue and said, "Hey, Jeff, do you have a few minutes? I want to come in." And so, I said, "Sure." And he left it at that. He didn't say if this was good, bad, indifferent, just talked about sports.

So, he came in and he said, "Jeff, I wanted to come in, thanks for seeing me. I wanted to let you know that over the past year, I've had some really serious health scares that had the chance of really going in the ultimate way, and thankfully, they did not. But now, my doctors told me that all likelihood, I can live for another few decades, but at any chance, I might just fall over and that might be the end. So, you've done well by me, we respect you. Your advice has been so valuable. And I just wanted to look in the eye here and hear you say it, that if the worst does come my way, my wife," I won't say her name, but, "my wife, my kids, you're really going to look after her and continue to work with her and just take care of her."

And you could see that this was what he, as a husband, as a father, as the provider, he wanted to provide if he wasn't physically here, and to include me in that was probably the most major elements of what he could do beyond himself. And so, that was pretty powerful for me. If I ever get to a stage where I'm only handling a few clients, he just catapulted his wife to number 2, right after my parents. It's my parents and then it's her, in terms of who I'm committing to absolutely stick with.

So, I appreciated that. It made me, obviously, feel good and, yeah, just a blessing in our industry to be able to work with people at that level and influence their lives in such a meaningful way. So, I wish I had that relationship with all of my clients. It's something that I strive for. Being realistic, it's not something that all clients would think of me on that level, unfortunately, but I won't stop trying. And I'm thankful that I have a client like him and a few others.

Michael: Well, that's phenomenal, Jeff. Thank you. Thank you so much for joining us on the "Financial Advisor Success" podcast.

Jeff: Oh, it's been a pleasure, Michael. Thank you so much. And your iceberg is so true. Our RIAs were such small firms, and were always wondering, "What is everybody else doing? What are they doing right? What are they doing wrong?" And I know, candidly, I absolutely felt that, and I still feel it. And one thing that has helped to lift that hindrance is this podcast, is all of the content that you're putting out. I've gotten so much from it, and I'm thankful for the opportunity to be able to share my story, and I'm hopeful that others are going to take something productive from it as well. So, thank you so much, Michael.

Michael: Oh, I'm confident they will. Thank you, Jeff. Thank you.