#FA Success Ep 319: Competing For Big Clients As A Small Boutique With A Focus On Task Management, With Jim Niedzinski

Resources Featured In This Episode:

• Jim Niedzinski
• Motive Wealth Advisors
• Tru Independence
• Dunbar’s Number And How Many True Financial Planning Client Relationships You Can Really Have
• Financial Planning Value Summit
• David Allen's Getting Things Done
• Tamarac
• Asana
• Knudge
• Smarsh
• Wealthbox
• MindMeister
• Brene Brown Podcast with Mike Erwin (co-author of Leadership Is a Relationship)
• Small Giants: Companies That Choose to Be Great Instead of Big by Bo Burlingham
• Essentialism: The Disciplined Pursuit of Less by Greg McKeown
• The Wealth Management Index: The Financial Advisor's System for Assessing & Managing Your Client's Plans & Goals by Ross Levin

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

Full Transcript:

Michael: Welcome, Jim Niedzinski, to the "Financial Advisor Success" podcast.

Jim: Thank you, Michael. This is going to be super fun.

Michael: I'm really looking forward to today's conversation, and talking about what I think is a really interesting, unique style and structure of firm that you've built. There's this phenomenon I feel like I'm seeing more often out there these days in the industry that as more advisors go independent and build their own firms, I feel like this perception has started to crop up of...one of the great things to do in going and building your own firm is you can serve these underserved segments that a lot of traditional firms don't let you serve, particularly because they have minimums and so then you can't serve next-generation clients, or business owners, or the folks who don't have liquid assets. And lots of growth that has happened in the direction of advisors starting independent firms basically to serve the clients that the other big traditional firms can't serve and don't serve so that they keep just circling the wagons around very high net worth, affluent folks. That's sort of been the bread and butter of wirehouses and a lot of large firms for a long time.

And I feel like it's now almost getting to the point of...a conversation I'm hearing crop up more and more that's not just, hey, one of the cool things about being independent is that you can serve nontraditional clients. But that if you're independent and going on your own, you have to serve nontraditional clients because you can't compete for really affluent, high-value clients if you're solo on your own. You have to have a big firm, and a big office, and a big team, and big resources, or you just can't be competitive with more affluent clientele. And I know you have kind of to me bucked this trend in the extreme. You've been in large firms and have gone to a small firm, and you worked with less affluent clients and gotten to very, very affluent clients. And so, I'm just really excited to talk about this phenomenon of how do you get out there and attract and stay competitive with sort of more affluent, high dollar, high-value clients when you're not in a big firm and you can't just put a globally known name on your business card, and you're trying to compete and attract high-value clients. How does it work in a small firm to attract big clients?

Jim: It's a great question. And at this stage, 20 some years in, 22 years in, there isn't many people that I'm meeting that isn't connected to some relationship that I've had already.

Michael: Okay.

Jim: So, I think it's in large part the byproduct of years of being in the trenches and doing good work, and the classic trajectory of earning referrals without asking them. Yet, you're exactly right. When we begin the conversation, you can see it and hear the inquiry of, "How do you do this without hundreds of analysts, and all these employees in offices?" So, I do think it is a surprise to people that we focus on that space of complexity and they wonder how. It's really interesting.

Where Motive Wealth Advisors Stands Today [06:45]

Michael: So maybe just to dive into this. Why don't you start by just describing for us the advisory firm as it exists today? Just paint a picture of the firm so we understand what this looks like right now.

Jim: Yeah. So, we serve little less than 50 families. About half of that would be in the space of a net worth north of [$]10 million, and the other half would be in that 1-to-10-million-dollar total personal net worth. Gets odd when you add business net worth. And there are three of us that are client-facing. My friend and partner and co-founder, Jay Close, and then the amazing Alexis Lowry. We have behind-the-scenes Tru Independence. They serve as a back-office plumbing and electrical really compliance and technology, and support that way. And we're really aiming to do everything from fiduciary wealth management up to family office-type services for our larger clients. And attempting to wrap all of the solutions through one phone call.

Michael: So, I was just going to ask how this adds up in terms of assets or revenue, however you measure. What does this come to overall in terms of breadth of the firm of who you're serving?

Jim: Yeah, we've sure put a bunch of thought into how we would bill when we built this. We ultimately ended up with an AUM model. We wanted the all-inclusive experience. I did not enjoy over the years what I experienced, is of a nickel and dime approach of, "Well, there's a planning fee for this. And if you take these extra services, it's more." So, we started the year at about 250 million in assets under management, and that's our only source of revenue, of course. So, we don't have an additional add-on fee for anything.

Michael: And then what does that fee schedule look like? On the one end, everything's wrapped in at once which sort of can pick up the fee on the flipside. Half your clients are north of $10M which for a lot of firms... you start getting some break points. So, what does a fee schedule look like for the folks that you serve?

Jim: Yeah, we have two. We have the initial one we launched with. We started with zero dollars.

Michael: Okay.

Jim: Relationship over time but zero dollars. And so, we kept a very competitive fee schedule that starts out at 1% on the first million and a half, and then drops in half, goes to 0.5% on the next $3.5M. And then continues to drop a bit from there. After we realized, "Oh, this is working," we launched... it'll be...actually I think it'll be darn close to three years to the day that this probably airs. And so, once we realized, "Oh, this is working," we made our fee schedule a little bit more competitive and anchored it in our target clientele. So, we sat and put in writing in the ADV a minimum of $5M for an initial investment. And when we did that, we created a new fee schedule for new clients which is 80 basis points on that first $5M.

Michael: So, I guess relative to where you were, 1% on the first 1.5, 0.5% on the next 3.5 which, if I'm doing math right, that's basically 65 BPs blended rate on the first [$]5 million. And you raised it on new clients to 80 BPs on the first $5M.

Jim: Yeah, that sounds right. And then it doesn't drop as fast. So, it's a bit more competitive. If I still look at some of that data out there, we're still a little too competitive. We're wondering if that family office space that we're focusing more on, we need do a little bit...

Michael: What do you mean by being too competitive?

Jim: Yeah. Yeah. I keep finding myself finding... it's odd to say, "We're doing all of this. Here's the full list of services. Oh, and we cost about the same as what it appears that the average advisor around the country is charging even though some of them...you can't get them on the phone." And so, I don't know how premium of a price but I know we're delivering a premium service. And we should probably re-examine that.

Michael: Interesting. So, from your own end, you actually worry that if we go to people and say, "We do all this extra stuff that no one else does, but we charge a more or less average price to what everybody else does," that that may be a problem for you. If you're too competitive... I guess the implication is if you're too competitive, people won't believe that you really do all this extra stuff because they're going to say, "Well, you say you do all these other things but you charge the same as my old firm. My old firm didn't do any of that stuff. So, either you're not telling the truth or I was an idiot for choosing my old firm. And since I don't want to admit I'm an idiot, I'm going to question whether you do all this stuff you say you're doing." So, from your end, there's a hazard in trying to provide above-average services for an average fee from the client believability end?

Jim: Yeah, that's right. At launch, uncertain, fearful. Hey, come follow us on this crazy venture, people I know, and it costs more. I couldn't get the guts for that. But I don't have that issue now. The imposter syndrome's gone. I am very confident. And it's not an issue of charging what we can. It's an issue of saying, "How do we sustain saying yes to any need that they have?" And I think it needs to be at or above the national average. And I think we're headed in that direction.

Michael: Well, I'm struck by just how you frame that to say, "I didn't have the guts to charge for that originally. I just launched my firm from scratch. I just need clients and revenue to get some stuff going. But now I am a couple of years in. We've got a $250 million asset base. We've got a good client base. I don't have to be beholden to that decision now. I can change it and re-up my fee schedule for who we're working with going forward. Now I'm confident we've got premium services so I can charge an appropriately premium fee for a premium service."

Jim: That's exactly right. And talking about fees is always... it feels sensitive. It's not an issue of greed as much as it is protecting that profit is what enables us to give the time. And in my view, that is the rarest of things available to an advisor, to have enough time to deliver all this.

Michael: That's an interesting framing. It's about protecting the profit to give time. I guess to serve the clients the way that you want to serve them.

Jim: Yeah, and that is what goes back to the question you posed at the beginning which is how is it that small boutique firms can compete, or even be in the same playing field, with massive firms. But I find there's a bottleneck at the advisor level. The client can only experience the advice through a person or a team, and that time is limited. The bottleneck is either the client, typically, and if they're very successful, they're very busy. Or it's the advisor, and I know what it feels like to serve 100, 120 families, or your own work has shown that the average is probably much higher, 150, 175. Some of those big famous firms that are listed, you find those teams, they have up to 500.

Michael: Yep.

Jim: Yeah. You can't remember 500 people's names.

Michael: I have trouble remembering 100 people's names, yeah.

Jim: Yeah, the Dunbar's number, have you written... yeah, I think you've written about it.

Michael: Yeah, yeah, yeah. We've written about Dunbar's number, just the... and it's a fascinating thing. Actual research into brain structure and physiology, that there is a particular part of our brain that's associated with... it's how many different human beings our brains can keep track of. And just that part of our brain is kind of tied to a capacity of about 150 people on average with the caveat that some of those are... I have a great relationship with clients, but some of those are my family and my friends' friends as well. So, my clients can't have all 150 spots that my brain is able to handle. I need some of them for personal friends and family.

And so, when you drill down to industry benchmarking studies and you just really get down to that clients per advisor ratio, an astonishing number of firms even up and down the size spectrum, if they're really into financial planning and having... I like just having actual relationships with clients, they tend to top out at about 60 to 80 clients per advisor, or it might be a 2-person team with 150 but 2-person team with 150 which means it's 75-per. And the higher... the deeper your services get, the lower the numbers go from there because you've just got sheer time constraints at some point.

Jim: Yeah, and that position drives things like blog posts that really don't say anything, or mass emails, or all sorts of things that don't move the needle. And we want our work and effort to actually make a difference, and not to do things that we have to do because we have to do them en masse. Actually, Jay, my partner said, "We're anti-scale." And not really as a business owner. Obviously, we want to be efficient, but we just are pushing back I guess on more, more, more, more people. How about less people, deeper relationships? But then that does leave us needing to have those people pay a pretty good size fee to make it affordable.

Michael: So out of curiosity, just in this vein and direction for so many of us that sort of inevitably underpriced ourselves early on, and then came back later and were like, "You probably need to fix this." And then we fixed the fee schedule going forward to what it should be. Have you gone back to the existing folks to change and update the fee, or have they managed to grandfather themselves by getting in early?

Jim: We're telling ourselves that we're thanking our legacy clients for being a part of the launch and so we have not. And it's really hard to stomach and think about it. I do think there are a few that have joined us more recently who it'll be appropriate to point out some of the really unique things that we're doing. And I think we're wondering if a slight rebranding almost, or a clarifying of the brand to even put proper language to it, that there is investment advice, there's financial planning, there's wealth management but we really are doing some services that you would normally only find in a multifamily office. And so, I think there is an opportunity to go back to some. But right now, we're not. We don't have the stomach to do it.

Michael: So, I guess more opportunistic, "Hey, you utilized the services a lot this year and way beyond traditional services. So just want to use that to highlight to you the sheer breadth of what we do. That's a little bit different than other folks, and want to let you know that as we continue to do that for you going forward, we've updated our fee schedule a little bit."

Jim: Yeah, and even as I'm saying and hearing you reflect it back, I've yet to ever find fees to be an issue. Maybe that's partly because in this higher net worth space, I don't experience a tremendous amount of fee pressure. I always found it more in that emerging wealth, that $1 million or $2 million, real discerning former do-it-yourselfer space. But the higher up I've gone, actually I find less sensitivity to fees. I don't have hundreds and hundreds of data points to support that, but that has been my experience.

Michael: So, I guess just tell me more about that because I think for some folks who are listening are either incredulous, or have had one or two opportunities to get in front of high-net-worth clients and couldn't win them because, at some point, it came down to fees and someone else was doing something different or cheaper. I guess just help me reconcile that. I feel like there's so much feeling these days that if not fee compression...because if you really look at the industry, average fees basically haven't moved for 10-plus years since the robo-advisors came. But I think a lot of people at least are feeling more free pressure like, "I've got to do more to justify my fee. It's certainly a lot harder to show as a premium advisor. Ideally, I would like to be a little bit less than my competition so it just...fees are not a blocking point because I'm not the most expensive on the block." So, I'm fascinated by this framing of, "I feel less fee pressure as I move up market." I guess just how do these conversations show up and where did the fee pressure go?

Jim: Well, I sure feel that insecurity about, "Are we doing enough?" always. But upon reflection, it just never manifested into an issue. I think one of the advantages is coming from a, over the years, independent RIA fee practice. The cost of the portfolios are so low. I've seen your work. The bell curve of cost and we're at the low-cost end. And many of these...well, we call them underserved high net worth...this target clientele, maybe 10, 20, 30 million in personal net worth. They're small for the big Chicago, LA, New York, the coasts and the big city firms, the big family offices, and private banks. They're on the small side and yet, there's maybe... they are 2% or 3% or 4% or 5% of a practice of a typical advisor. They're not the focus.

So, we think it's a great space, and what I'm finding is many of them are coming from wirehouses. And love my wirehouse brethren but the overall cost up there is pretty high. At least that's what I see. I don't have my finger on the pulse of the industry, but when we get hold of a portfolio or find out what their fees are, we...wow. Gosh, it's easy. So, it's really not an issue.

Michael: Interesting. So, I guess it's just a good framing. I find we in the RIA world in particular tend to have a really strong focus on comparing our fees to other RIAs, and kind of forget in practice, we're usually not getting the client from another RIA because if they're recently well served, they're not leaving and if they're leaving, it's probably not because of the fees in the first place. It's relationship or communication or just bad results or something else. We tend to win business a lot more either from people who haven't had an advisor before and they go in the first time. Granted, sometimes they're a little bit more fee sensitive because they've never seen what it costs for advice until they have to hire an advisor for the first time. Or they're coming from a large firm environment that may be one that was more product based where a lot of the margin was coming from the underlying products. And when you drill down to what their all-in costs were, the answer is you're actually a lot less expensive in the channel just because you don't have some of the overhead of broker-dealer structures pushing up your cost.

So, it's an interesting framing to me. It's not about whether you're cheaper than the other RIAs in the space. It's about whether you're cheaper than the wirehouse that the prospect is coming from, and the answer is yeah, you're winning so much on underlying expense ratios alone that that has not been a problem.

Jim: That's exactly right. And upon reflection, I don't think I've ever accepted a new client that came from one of our brothers and sisters in the RIA space. I don't think it's ever happened. We do have one we're beginning to work with now, as I say it, a client of one of the... just a giant, giant, famous RIA, and their website humbles mine. I had an inferiority complex. I thought, "Oh, my gosh. They do everything with one arm behind their back. Wait a minute. Who are we? Can we do this?" And then had the conversation and it's the classic example. It was all promise and no delivery. It was, sure, we've got specialists in this and tech experts in that but just nothing ever really got done, and it was all kind of minimum viable delivery for assets under management. And so, if it isn't the fees that we can reduce from the big firms, the wirehouse firms, it's what we can actually deliver on the promise at about the same fee that the massive RIA firm was saying that they would deliver. So, either way, it was an increase in value and then we win.

Michael: I like how you frame that. They were doing the minimum viable delivery to earn their AUM fee. Just that...an interesting way to frame there's a subset of firms that have bundled fees because they really do a lot of stuff for clients, and it's just easier to charge it in one bundled AUM fee than, as you commented earlier, sort of nickel and diming them for lots of different fees for different services. And then there are some firms that charge a remarkably similar fee, but they're not doing maximum delivery to earn their fee. They're doing minimum viable delivery to try to not lose a critical mass of clients.

Jim: Yeah. Yeah, 95% retention or whatever sounds great, but I wonder how much of that is just inertia. Yeah. Probably a pretty good amount.

Michael: So, in the aggregate for this... just kind of getting back to the core number. So, $250 million of AUM, less than 50 clients. So average client's north of $5M, I guess of investible which means net-worth's even higher than that. Only taking $5M-plus going forward. And there's three of you. It's you and a partner, and someone providing support, client service management support.

Jim: Yeah.

Leveraging Back-Office Support To Gain More Time And Capacity [25:30]

Michael: So, I think you said as well you've got some outsource support on the back end from Tru Independence. So, for those who aren't familiar, what is Tru Independence?

Jim: So, they're an RIA themselves. They're a team of people who... there's compliance, technology, some consulting support. They basically supply... I don't know. In my words, what an independent broker-dealer almost would only exclusively for fiduciary RIAs. They actually serve as our chief compliance officer. All the tech questions go to them. So, they're invisible to our clients but enable us to not have to run point on those. I can't imagine having started the firm without their help when we first launched.

Michael: So, structure-wise, are you technically IARs under them as a corporate RIA, or are you still your own independent RIA but you sub out certain services for them? Just how does this structure work?

Jim: Yeah, we're our own RIA and we hire them via a contract. But when we first started at launch, we did, we started as IARs with... under them. We started with zero dollars. We were able to step in and work with Fidelity and Schwab as custodians through them. And so, we had all the autonomy and freedom we needed and wanted at the time, but enabled us to get right to action. And then about a year after launch, we popped out and became our own RIA with their help.

Michael: Interesting. And so, I'm presuming that's just part of the intended structure for them in the first place. This wasn't like, "We were there and then we broke away," to use the breakaway kind of language. Just the whole point was we're going to use your IAR structure for a while, and then we're going to stand up our own firm and be affiliated to you after that. And that's just part of the structure.

Jim: Yeah, that was the intent from the beginning and as I understand, they're agnostic whether their teams stay on as IARs or pop out.

Michael: Interesting. And so, I guess the appeal from your end particularly since you were starting at zero but transitioning from already being in the industry, wanted to get going quickly which means appealing to be able to be an IAR under a platform so you can get going right away. You're registered immediately as soon as you file with them. You've got access to custodians because they give you access to custodians because they're a bigger platform, and then you get to build your firm over time.

Jim: Yeah, that's exactly right. And saved time knowing that based on relationships I had that was expecting and hoping that my phone would be ringing for people I knew to join up, and I wouldn't have the time, and I didn't to at the same time be figuring out how to plug in my printer. So, it was super helpful to have them at launch.

Michael: So out of curiosity, just how does this work economically? What do you pay for this kind of support infrastructure?

Jim: Yeah, it's a percentage of revenue and it's regressive, much like our fee schedules. Starts out double digits and works its way down as assets grow. But it's essentially like hiring a full-time employee cost-wise if you think about it, if it's 10%, 12%, 15%, somewhere in that range and falling. So, the question for us is are we getting more value, are we saving more time? It certainly has been the case. And we signed a contract, multiyear contract, and somewhere in our to-do list is to say, "If we had to recreate what they're doing, what would it cost, and how much time would it take us to recreate it? Could we recreate it as well? Could we do it better? What's the value?"

Michael: Interesting. And so, I guess it's that neighborhood of 10% to 15% of revenue kind of framing?

Jim: Yeah. Yeah, that's right.

Michael: So, when I think about that just relative to advisory firms often run something like 30% to 35% in overhead for all the different staff, and tech, and compliance, and other costs. So, they're consuming a portion of that overhead space but only a portion of that overhead space. But they're only providing a portion of the services. They're covering compliance, they're covering tech. But you've still got to do your own internal staffing for just client service management. So, you've got Alexis doing that at the local level, at the in-firm level.

Jim: Yeah, those numbers bear out almost exactly between the office, location, and our expenses, etc. You're about exactly right. And they actually do provide some overflow custodial support. So, some prepping of forms if we need it, and some help in that way. So, there's a little bit of a surge relief that they can provide. But our idea was to have anything that the client sees or touches, or is touched by be ours, and that if it's behind the scenes and invisible, then let's leverage the outsourcing. And it's been very good for us so far.

Michael: So then how does this work on the investment side? Are they also doing a outsource investment management thing? Is this kind of bundled in with TAMP services, or is investment management still separate in your own?

Jim: Separate in our own. In house, Jay is our true wizard. Both of us separately at one point were sharing an investment committee of a wealth management firm and responsible for a billion of client assets. So, we've been in the hot seat of making those decisions and organizing that. Jay takes to that much more naturally and has more experience. So, he runs point. We work together as an investment committee, he and I. And then we purchase research. So, we enjoy work for BCA and Ned Davis. And we also, through our alliance with Tru, have access to an institutional investment consultant. So, we have plenty of information and research but then we build and manage that in house.

Michael: Okay. Interesting. So relative to where a lot of other advisory firms outsource where... I feel like the most common structure if you're outsourcing is still a TAMP platform that tends to be more expensive. Often, they're 30 to 40 basis points and up, and they're handling all the investment work as well. So, they're doing the research, they're doing the model management, they're doing the trading, they're doing the rebalancing, they're doing the paperwork, all those other pieces. So, you pay more but they handle those layers that you just sort of parse that out a different threshold to say, "We'll keep the investment stuff. I can do it internally. But I don't want to do the rest of the compliance, tech, and some of the other pieces. Tru Independence can do that layer on our behalf, and we'll kind of split the overhead allocation."

Jim: Yes, and it seems rare that these back-office support firms are willing to do that. I imagine the leverage and money is in TAMP services. So, the fact that Tru is happy to deliver us those services works out very well, I think, for our overall costs and with the clients we're serving, so much of what we're doing in the portfolios is hands-on and custom. And if we had to try to outsource that, it'd be just as much work trying to communicate that to an exterior firm than it is to just do it ourselves. So, in that way, it's worked out very well.

Michael: And then is there tech that you're using in-house just to literally manage portfolios and trading and do all this yourselves?

Jim: Yeah, another unique aspect of Tru was they were tech-agnostic. I don't know if that long-term works out well for them because it's tough to be a consultant to many teams with unique tech structures but it's been great for us because we were able to pick. So, both Jay and I come from the history with Tamarac in trading software and reporting. So back to the idea of being able to continue our work and get launched quickly, it made all the sense in the world to choose Tamarac through the Envestnet ecosystem. So, we adopted that and they support it and help us glue the different softwares together.

Michael: Okay. So how do you... I guess I'm just wondering. When you're talking to these multimillion dollar clients and up, how does this get positioned in practice? Back to that dynamic of... at least the perception, I feel like right or wrong, has been really affluent folks just want to see some size, some mass, some gravitas, call it, of the bulk of the firm to sort of validate that it can handle and serve them well. Your structure is this three-person firm, but Tru Independence is powering a lot of the back end. Do you share that with clients or prospects? Is that part of the conversation, or is it just all about you and Jay and Alexis, and, "Let us tell you about the truly high touch level of service that we're going to provide," and no one asks about the back end? I'm just wondering how this does or does not show up in conversations when you get into the, how big do you need to show you are or not.

Jim: It doesn't come up as much as I thought it would. We introduce it as much as it's needed and sometimes it doesn't come up at all. Training I received way early in my career that's still with me today is that the best way, at least in my experience, to convert a prospect to a client is to, A, make it about them, not about me. And in so doing, to differentiate the planning they've had done from the planning that they could do under our care. So quickly, as fast as possible getting past theory, and brochure, and credentials, and experience, and getting into, "Well, tell me about your situation," and then being able to demonstrate planning strategies and solutions that they either say, "Oh, I'd heard about that but my advisors never brought it up." Or, "That was brought up but they never did it." Or, "I've never heard of that at all. Tell me more. What is that?"

And when we're in that space, that is the meat, in my experience, of being able to convert them to a client. In the process comes all of the subjective and emotional and relational connection, and the answers to, "Well, how do you manage a firm like this with just three of you?" That is so much better answered after they realize that we have technical horsepower that they're not experiencing in their current situation.

How Jim Differentiates His Service Model Through Caring And Experience [36:50]

Michael: So, share a little more on that direction. You said the key is trying to differentiate how planning will be different with us versus what they got before, or what they got where they are now. So just how do you explain that? How do you show that? Because I feel like a lot of advisory firms...how do you show the value of intangible financial planning can be a real challenge. There's a lot of, "Trust me, after 10, 20, 30 years, you'll be so thankful you've been working with me," which may be completely true but is not the best sales pitch. So how do you actually get down to differentiating how it will be different with your firm versus what they got before?

Jim: In that early part of the conversation, we're asking questions to understand their financial landscape, what do they own, earn, and owe. And as that landscape comes out, going back to my training 20 plus years ago, don't judge, don't jump in with observations. Just gather the data. So, we build this view, oh, maybe a 10,000 or 20,000 foot. So, we're not diving in deep. But the key is to get data on multiple areas, their business, their investments, their insurance, estate, tax, as many areas as we can. And all the while that I'm taking notes and listening, and I'm showing empathy and concern and care, I am beginning to develop care for them because I'm hearing their story, I'm finding out, "Oh, well, tell me about that. And what about your kids and, oh, grandkids?"

And so, I'm beginning to get my soul engaged which is a divine place. That's a special zone where I actually care about them and then they feel that. As that's happening, I'm also taking on the far side of my paper a list of every possible planning idea or strategy tied to the data they're sharing with me. "Oh, that's not titled correctly. Oh, they don't have a solo 401(k). I wonder if they've ever heard of the mega backdoor. Who is your trustee? Oh, my gosh." And as I'm writing all of that down, I'm beginning to then circle the ones that are high profile, high value, or are tied into the things they said they cared about.

Michael: Okay.

Jim: Because I'm only going to have so much time to share these ideas so I've got to pick wisely. And what I'm looking for are ideas I can share that are easy to explain and easy to understand or as irrefutable as possible. So, it's great to work in the areas of just fact as opposed to a promise of better performance or some kind of, "Just trust me," sales pitch like you talked about.

Michael: Right.

Jim: So easy to explain and understand and then irrefutable. And then the magic is it's tied into something they said they care about. So, if I can get three or four, oh, gosh, five of those, and then after they've shared everything, come back and say, "Well, let me just share some observations with you and tell me what you think." And then we have a conversation about these planning ideas and I'm asking, "Had you heard of that or how does that hit you? Is that the type of thing that's valuable?" And in there also then trying to quantify it. So, if you could put a number on and say, "Oh, gosh, if you did that, that's a couple of hundred thousand dollars savings over time." That kind of thing. So now I've got what? I've got the emotional connection. I'm showing technical wherewithal they haven't experienced, and they're beginning to experience that I'm tying in those planning strategies to things they care about. That's in a nutshell what I was trained to do when I was 22 and still doing it.

Michael: And out of curiosity, where does that training come from? Because that's a very good, structured process.

Jim: Yeah. The bulk of that training happened at Sage Market Consulting. It's a part of Lincoln Financial, an independent broker-dealer, and they were amazing at what they did. And it was so impactful. Though maybe not healthy, it was so intense. We had so much training, and there was so much fear, and I was memorizing facts in the shower. My wife would joke that if the shampoo bottle was a prospect, it would've been bought by now. But I carry it with me to this day. And very technical and very people-centered. It was great.

Michael: Yeah. Interesting. I guess so the crux is just lots of questions at a high level of just the full breadth of their financial situation, the financial landscape, as you framed it, with... I liked the three buckets, what they own, what they earn, and what they owe. Is that the three pieces?

Jim: Yeah, yeah.

Michael: So, lots of questions on that. You start writing down potential ideas that you might highlight to them. Solo 401(k)s, mega backdoor Roths, trustee issues, whatever it is, but you're not saying... you're scribbling them for yourself. You're not saying any of them yet. You're still just getting more questions, more discussion, more of the picture, scribbling down more ideas. And so then at some point in the latter half of the conversation, it gets to the, "So can I share a couple of ideas and observations of what I'm hearing and what I'm seeing?" And you'll pick your top two or three or four or five of them, and start sharing those to say, "Well, here's one idea. What do you think? Have you heard of that? How's that hit you? Would that be valuable to you? Because by our math, that would save you a couple hundred thousand dollars over the next few years." And you're just trying to go through a couple of those, whatever few you think will be highest impact to that prospect to make them say, "Yeah, if that's what you're bringing to the table, we need to continue this conversation."

Jim: That's exactly right. And those three or four or five items, I ideally want them to be in as many different dimensions of planning as possible to underscore the point that your experience has been insurance-focused or investment focused, but as you'll note...I'm not necessarily saying this but they're experiencing it that it's across the domain.

Michael: Right.

Jim: Yeah.

Michael: And just out of curiosity, how does that meeting end for you? What's the ask or the pitch or the next step at the end? I'm always fascinated by people's sales processes. How do you finish that flow?

Jim: Anti-sale, no hard close, I think it's still recovery from my sales training 20 years ago where I...it is at your schedule, no rush, it is super gracious, very relational. There's no implied close, there's no, "Sign here, press hard." It is very soft. What I'm typically closing for is the next meeting which in these situations is often more work because there isn't typically a yes in anything of this size in one meeting and a scratchpad of yellow pad notes. It's going to be, "Can you share some of the documents? Can you share some of the information? We're going to do, at no cost, an initial analysis, and we'll share in more detail what we're finding when we see your information." Really expounding on the types of things that we shared during the meeting just now. So, we're closing to gather that information and have that second meeting.

Michael: And then what comes in the second meeting? Are you doing a full-on financial plan? How far do you go with this?

Jim: Yeah. Subjective. Tend to bring a bazooka when a handgun's only needed. That's the tendency because I don't want to come under-prepared. But it's a function of how much data they're willing to share. And so, I don't want to ask for everything and then that's a huge project they never get around to. So, I want to make it easy, yeah. So, it's feeling out how eager are they to share information, how easy and accessible is it to get. I'll take anything and everything they'll give us from trust documents, insurance policies to all the investment statements. What they give me is very helpful as well because it helps me understand what they're concerned about, what they care about. So, if they first document they post to the portal or bring into the office is some estate planning documents, okay. That tells me that really is a concern.

Michael: It's a good point, yeah. And if the first document... when you say, "Can you share more information?" If the first thing that shows up is wills and trusts, apparently, that's what's bothering them. If the first thing that shows up I some business document, apparently, that's what's nagging at them deep down. If what shows up is a statement, then they might be really unhappy with something in their investment portfolio.

Jim: Precisely. And so then based on how much they give us in information, it's how much work we're going to do. It's pretty rare that we're getting into financial modeling at that point because it's not even really helpful to think that it's going to be a concept and impact. And all along the way, "Is this the kind of planning you're looking for? Are these the results that would be meaningful to you? Does this align with what you wish you had been receiving?" And trying to get yeses, trying to understand what's important to them.

And all along... this isn't a technical sale and it's not a relational sale. It's not a sale. It's I've got to step into actually caring. And then I forget about... that I'm trying to close a deal. It just becomes genuine or yet, if it's all relational and handshakes, and let's go golfing, then I don't think that's effective either because that's not why they're there. They're not there for a friendship initially. They want impact. So, it's got to be a dynamic marriage of highly technical like we're engineers and highly relational. And it's that combination and I think it's... that's the magic.

Utilizing Task Management And Deep Caring To Create A Referral-Only Business [46:59]

Michael: So where do these prospects come from that you're a 3-person firm with a $5 million minimum, $250 million under management after...I think you said you just got going about three years ago. Lots of prior industry experience but stood up from 3 years ago and had 250 million so quickly. So where do these very affluent, already working with some other advisor that they happen to be unhappy with prospects come from?

Jim: The real, real answer goes back to very unaffluent clients 20 years ago from cold calls. That's the real answer because it's that in the trenches pounding out on the phones that is the domino, snowball effect that led to relationships with attorneys, and accountants, and other people, and that led to a relationship that led to a relationship. And eventually to the point where it's all referral. It's all, "Oh, yeah. I know you and so and so speaks highly of you and we should talk." And at this point, there...we're antimarketing. We're actually trying to a little bit be like that hip new restaurant that you and I know don't know about, Michael, that doesn't even have a sign.

Michael: Yep.

Jim: Yeah. You just have to know where in the alley and what the knock on the door is. We put the sign up on our...for our name on our building on our office and we intentionally didn't put wealth advisors under it so it just says Motive. It doesn't say Motive Wealth Advisors. And I think I deactivated our Facebook account some time ago. Why spend the time when it's referral based? It's not that we've arrived or this is just so amazing. It's just we're not trying to onboard a ton of people. And it's all referral. So purely relationships.

Michael: So, referrals from existing clients, from primarily attorneys and accountants, from others? Just who's referring?

Jim: Yeah, primarily existing clients. So, when we launched Tru, I didn't make one outbound call. It was clients that I'd served along the way over the years deduced, "He started his own firm. I'm going to call him," and we welcomed them into the family. And that was the big gamble, was just will that phone ring from those years of working. And so how did those clients come to be? It was one who referred the next who referred the next. And now this second layer of clients here in years two and three of Motive have been referrals from them, 100%. Yeah, so mostly clients and some advisors.

Michael: And do you ask for referrals? Are you a, "We'll ask for referrals," kind of firm or they just do it?

Jim: Years ago, during the young and building phases, I was very intentional, and I had a whole system, and a whole process where I dropped notes and hints right from the beginning, and all of those...

Michael: We get paid two ways.

Jim: Oh, Michael, don't. Do we have to admit that we said that?

Michael: I get paid in two ways. The first is the business that you do with me and the compensation I receive from my firm, and the second is by being introduced to other people in a similar situation to yours that I can help.

Jim: I'm cringing. I'm cringing. I never went so far as to put, "Don't keep me a secret," on the bottom of the email.

Michael: Oh, literally had that at one prior firm, yep.

Jim: Yep, yep, fair enough. And I don't know how that would work today. Well, I know how that would work today but I don't know how the level of intentionality would work. But the point is culture, contextual, intentionality, absolutely. And I would be doing it if I were trying to build today. But now we're not. We're letting the work earn the referral. And there's something about not...we don't smell hungry. That just makes people feel confident to support us. But you know what? I have some intentionality of asking a couple of clients who were in a position where I think it would be natural to say...I don't even have the language for it because I haven't done it in years but I would come up with the language for how to ask because I think it would make sense in the context, given their life situation to ask who they knew.

Michael: So, all right. So, then I've got to ask because there are a lot of advisors out there that work really hard for their clients, presumably do some pretty reasonably good work, have a similar philosophy that we shouldn't need to ask for referrals. Clients should see the great work that we're doing and the labor that we're engaged in on their behalf and want to refer us. They're not getting $5-million-plus referrals on a regular basis and have not gathered $250 million in 3 years. So, what are you doing that makes these multimillion-dollar referrals appear for you that just in practice don't appear for almost any other advisors?

Jim: I don't have a great pithy answer but a few ingredients that I think go into the mix is never being solo. When I was real young, I was always doing, as we called it back then, joint work. I was always teamed up with an older, senior, wiser, better advisor. And it's certainly expedited technical expertise, and I got to see how they said things that made the client cringe or made them warm up. And it was just pure reps of being able to observe and say, "Oh, I like that. I'm going to adopt that. Oh, I'll never do it that way." And then as I became the intermediate advisor, I started teaming up with others to share the work. And then as I became "the senior advisor," started to have some gray in the beard... Jay and I are so complementary.

It's like the EOS system where there's a visionary and the implementor/integrator, I should say, or the yin and the yang. And so being able to really step into strengths and to team up with people. So, I would think one key thing is the team approach and not being solo. And so, whether it was me as the junior learner or me as the teammate with Jay, I think there's something magical there when it's complimentary, and it's not two engineers or two salespeople but complementary. I think that's one piece.

Michael: Well, I hear you on that end and the virtue of teams but again, I see a lot of advisors with multi-person teams, and dividing the work and sharing the work, and more hands to do more work for clients. They're not getting giant client referrals. Wish we were but I don't see a lot that are getting the kind of referrals and referral flow that you're talking about. So, what's triggering people to voluntarily just up and say, "You've got to work with Jim," and they're multimillion-dollar people saying that to multimillion-dollar people?

Jim: Well, I would say two things, I suppose. One is... sounds like a platitude because everyone says it on the brochure, but I think it might be real in our case where we really have in our project and task management system every possible task, planning strategy, big and sophisticated right on down to the most mundane for the client, and we're championing that list and not just advising, giving a leatherbound book but owning to get the task done as if it were our own. And so, there is movement, there's progress, things to get done, phone calls get followed up on. It isn't five years in a row of, "Well, I thought you were going to update your trust. I put that in the three-ring binder. You didn't do it?" It's...we're calling the attorney, scheduling the meeting, being at the meeting. It gets done.

So, I think some of it is just blocking and tackling of actually moving the ball so that a client can say in their head, "Oh, if something needs to get done, Motive's going to do it. They'll get it done." It's not glamorous but isn't that what matters? Is action taken? It isn't is the advice good, and it sure as heck isn't is it shiny and pretty. That may be good for prospects but it's not good for clients and good clients refer good prospects. So why not just focus all the energy on the stuff getting done?

The other piece of it is... and this also sounds like a platitude but you know the difference between actually feeling... oof, I'm going to use the word I cannot... actually feeling love for someone. I don't mean the emotion. I mean, just truly wanting what's best for them. And I think that that's a choice initially and then becomes a real thing over time. I don't think I sit around and wait to actually care. I act in a way that is caring and that over time births genuine care in me. And so that place is almost a spiritual place of really having a relationship, I called... well, actually it was the last thing I did before you and I got on the phone, is I called a client we serve. Today was their... had their mother been alive, would've been their mother's 95th birthday. And I know that that was a big loss for her so we called and we talked. And we actually didn't talk about anything financial. And that's not common because most clients we serve have a lot of financial things to deal with, but that's all we talked about.

And it wasn't a technique, Michael. That's what I'm trying to say is... yeah. Maybe at first, because at first, we don't know each other. We don't know people. But once we get to know them, it can birth a genuine care. So, I think it's some combination of deep relationship and actually doing the things I need to do to get my own heart to actually care, and marrying that with highly technical...well, I should say technical that matches the client's situation, the level of technical prowess, and then marrying that with David Allen, "Getting Things Done" level productivity so that nothing falls through the cracks. That's the three-legged stool. Nothing special.

How Jim Utilizes Asana Instead Of A Traditional CRM To Help Clients Put Advice Into Action [57:51]

Michael: And so just how are you doing all the tracking, nothing falls through the cracks at level of, "Making sure I touch base with a client whose mother died but would've been 95 today." Are you just CRM ninjas in being able to manage all this in a CRM system? How does getting things done get done?

Jim: Yeah, we went all in on a project management software. We use a software called Asana, A-S-A-N-A. It's not actually for financial advisors. Where that comes from is... yeah, I am a David Allen "Getting Things Done" disciple, and in my own personal life many years ago, I began using one of those task managers. There's Trello and... what was it? Remember The Milk was an original one?

Michael: Yes.

Jim: Yeah.

Michael: Yes.

Jim: Yep. I've used Todoist. And it changed my personal life following David Allen and then using a software to do it. And it's only natural to bring that over to the business, those same concepts. But CRMs in my experience are woefully inadequate. They're really good for large firms who need to say, "I need to find all lefthanded Polish 65-year-olds who have an annuity," and so you can bring that up and then you can mail merge, and I don't need to mail merge. I don't need to find those client characteristics. I need to manage tasks, and the task management piece in the workflows always seems tertiary at best. So why not use a software that is absolutely designed for that? So, Asana was our choice and we're all in.

Michael: So, do you literally not use a CRM system at all? You live in Asana, or is there still a complimentary CRM alongside?

Jim: Yeah, we use Wealthbox as a Rolodex. We know it's also capturing emails though we use Smarsh to actually record all of those emails. So Wealthbox is there. At this point, it is for our social security numbers, and birthdates, and anniversaries, and the official single point of truth for client contact information, but we do not use it for one single process.

Michael: Interesting. So then help me understand more of just what does Asana look like for you in practice. I guess describe your task management system is kind of a strange thing to say, but just how do you manage this? How do you organize this projects or structures? Just how does it work managing a firm and its workflows not through the CRM but through Asana?

Jim: Here's where we should magically push a button and turn this into a webinar but...

Michael: Yes, ideally. So let me turn on the screenshare now.

Jim: Yep, yep. Oh, shoot, I didn't have pants on. My bad. I thought this was a phone call. It would be worth your listeners tuning into the Financial Planning Summit, the Value Summit that you hosted recently because I was really surprised to see that Jake...

Michael: Yeah, Jake Northrup, yeah.

Jim: Yeah, had a presentation on the same concept. That's the first time I've heard anyone else doing this. So, there are some visuals there, and he had some good things to say.

Michael: Yeah, he does a version of this where he's doing super intensive task management for clients using a task manager. He uses MindMeister instead of Asana or Trello but... so his structure is every client has a board, has a project. They're shared into that project so the client has tasks, the firm has tasks of what they're doing on behalf of the client, and they just sent out a big, old list of projects for all the different clients and the tasks going back and forth for each of those clients, and then some rollup summary board so they can keep track of things across clients. Are you in a similar structure where every client has a little project in Asana, and then all the tasks pertaining to that client live there?

Jim: That's correct. There's a project for every client and every area of planning from philanthropy to insurance and so on has a section. And every section then has projects, and every project has tasks. And what we're trying to accomplish is three things. One, it's first of all behind the scenes, what do I need to do by when and for whom. And there are ways to share those tasks among the team, reminders. It's all organized, findable instantly, and searchable via my mobile device or computer. The second thing it's serving as is the facts about their financial situation. So, we're trying to marry information with activity. And so, traditionally, there might be a task that says, "Retitle such and such account to their living trust." Well, the living trust, the facts about that have been read and analyzed, and are summarized in the project heading. So right there on that same page is all the facts rather than being stored or saved on some Word document buried somewhere in a network drive.

So, the assumptions and the facts about any asset they own. So, if it's an asset or an income source, it exists in Asana as reference information. So now our activity, our tasks are right next to our information. It makes it so much quicker. We don't have to say, "Oh, who's the trustee of that irrevocable trust?" Or, "Wait, what kind of account is that or what kind of insurance policy?" We read it once, we analyze it once, and the information gets put there almost like an assumptions page.

Michael: Okay.

Jim: Then the third thing is... what's great about Asana is we can create a second parallel project that becomes client-facing. And we call it a dashboard. I think Jake calls it the same thing, funny. Now what I show a client on the screen in the conference room or over a Zoom isn't double work. I don't have to take what I did, and then regurgitate it, and edit it, and format it, and print it which is immediately out of sync with real-time because we're having a conversation, things are happening so quick. Rather than having polaroid photos, why not have a live feed? So now whatever I'm doing in my project is happening simultaneously in the client-facing project.

Now at this phase, they're not getting access to it digitally like Jake's clients. We're working toward that. But I don't ever have to create an agenda. It's built in real-time. A client literally called yesterday and I just bring up their dashboard because it's the curated summary of anything and everything that's an open loop in their world which is just a small collection of the open tasks that exist on my project for them that they don't see. But it's instant, it's immediate. As soon as the beneficiary's updated in the task and it's hit complete, well, that's now showing in the proper place on their project dashboard.

Michael: Because that's just kind of configuration of what tasks are tagged to which projects, and which columns they show up in which is all super configurable in tools like Asana. So, you've got that framework built out. So, in real-time, you're just managing tasks as tasks, and they get reported out or column moved or shown where they're supposed to be because you did that configuration.

Jim: That's precisely right. And it's a key to our efficiency to be a boutique because we're eliminating so much duplicate work. It's so fast.

Michael: And did I hear you say as well that you've got different templates for different planning strategies? So, at some point, update and fund the client's revocable living trust has a task with 17 different subtasks of all the different follow-on items you have to do because you've done this before for other clients. And so now you just queue it up for the next client and off you go?

Jim: Yeah, and those templates exist at two levels and we're building them both over time. One of them is what you said, it's procedural. So, we all know a backdoor Roth but what are the steps where we can build a template, and then just apply that to a client when needed? The other form of template is the actual technical strategy itself. So, as we learn little facts about the $1,000 HSA contribution that the second spouse can make, and the rules around that, "Oh, shoot, I didn't know that." That goes in the health savings account strategy template which is in Asana. So, we're building this massive library almost like the old Ross Levin "Wealth Management Index" of planning strategies that we keep live. And what's so efficient about that is we just duplicate that over into the client project when it's applicable. So, we have this Walmart, Costco shopping mall of planning strategies we go to that our thoughts, our comments, links to articles is right there, and then that just instantly can be a part now of the deliverable to the client.

Michael: And so, are you... is the client interfacing with this? Do they log into Asana and have tasks assigned to them of, "Make sure you call your attorney to get that meeting scheduled." Do they get tasks in interface with this as well, or is this ultimately still you're using this to handle all your tasks but it's not their thing?

Jim: Yeah, the latter. We're using it for our tasks. We're using their dashboard project in client meetings to communicate. But we haven't yet activated the idea for, "Hey, Mr. and Mrs. Client, here's your login to your Asana." I dream of the client portal having a tile that's their task inbox. So, they double-click on it, and it single signs them on into Asana, and we're engaging in that way in real-time. Jake, as you mentioned, is doing a version of that.

Michael: Yeah.

Jim: I think it's overwhelming for many advisors to think of tackling a software like this, and it seems so out of the box, but I'm pretty convinced that CRM isn't designed for most RIAs for task management and that this ultimately is more efficient. We haven't gotten to the step of having clients engage with it but I really want to.

Michael: And so out of curiosity, I guess just nerdy, technical and... are there integrations between Asana and Wealthbox? Do you even want or need integrations, or is that a moot point? I'm just... so many of us I know are loathe to live in two systems with duplicate information, so I'm just trying to process does data move back and forth, does it need to move back and forth, how integrated or redundant is this?

Jim: Yeah, we started to ask, "Well, what data do we need, where, and why?" So, we've been working with compliance to understand what can go in Asana and like programs and what shouldn't. So, we're keeping things like social security and full account numbers out of there. And we're not using it as a document management system. Through Tru we have that separately. So, the actual trust document itself or the account statement is not in Asana. But what's beautiful is everything can hyperlink. So, we can hyperlink from Asana out to Wealthbox, or to a document in a management system, etc. And that's secure and works real well. But ultimately what needs to be there. We think that it's a reference for our projects, and tasks, and client preferences, and that serves that purpose. What does need to be in a CRM? So no, we have no integration, and I don't see the need for it.

Michael: Interesting. But I am noting though it seems like you're pretty specific to not store a lot of private client information in Asana. Is that an expediency efficiency thing, or is that compliance concerns about whether Asana is secure enough to hold social security numbers and trust documents?

Jim: Yeah, it's been compliance so far. However, we have an open task to explore just how secure Asana can be. You can now be HIPAA compliant in Asana. So, the degree of privacy and security and two-factor. So, if you had an all-out brawl on security between a Wealthbox or any type of CRM and Asana, I don't know who would win. Our tech consultant there at Tru is comfortable with how we're using it. So over time, I expect that we'll find that, "Oh, gosh, this is just as secure or more, so why is it okay to have a social security number in CRM and not in there?"

Michael: Yeah. Yeah, I get compliance wanting to do their thing and being wary but to me, just having lived... well, advisors have one set of compliance rules. We deal with this through AdvicePay. There's a whole separate set of security rules about credit card information and PCI compliance. That's a whole other domain. Health services have their own thing around HIPAA, but HIPAA is freaking robust. I just... to me, to hear that... if Asana can figure out HIPAA compliance, RIA compliance should not be a problem. HIPAA rules are way more stringent than what RIAs typically go through. So, I'm sure there's some configuration stuff, two-factor authentication and the rest, but I... just my gut is if Asana has figured out HIPAA, it shouldn't be that hard to figure out the SEC. Our cybersecurity requirements are just not for the average RIA work. HIPAA already is.

Jim: Yeah, and so if that can get sorted out... and I think there are ways that clients can have access digitally to their project where we're sharing and communicating, I think that can be navigated. That's where we're heading. And I know there's some resistance to, oh, yet another login, but how many... I think it's okay. I think it can be navigated and I dream of some custom integration someday, and maybe we'll be able to tackle that.

Michael: It does strike me though that just when you get back to sort of the question of so why do clients ultimately refer you in ways that other advisors don't necessarily get referred? To me, there is an interesting power to... well, you articulate it well. It's one thing to give the recommendation, to have the smarts, to have the knowledge to give the true, good, right, best advice that nobody ever told them before, but at the end of the day, the true question comes down to do they actually take the action. Do they do the things? Do they implement the recommendation? And I've long wondered if we will reach a point in the coming years where at some point advisory firms don't just look at things like retention rates of clients, or the breadth or depth of advice. You get to metrics like the percentage of recommendations that clients actually implemented in 6 to 12 months.

Jim: Right, right.

Michael: And you start measuring on that basis. And I don't have any data to prove it but I have a very, very strong suspicion that when you drill down to what firms drive referrals or get referrals, get inbound referrals, it's a lot more about that metric than almost any of the others. Because just when clients at the end of the day can sit down and look back and see like, "Wow. I did this, and that, and that, and that, and all these things have been done and I literally feel like I'm in a better financial place because I can see the things that got done, and I know deep down I never would've gotten them done without my financial advisor because I'm a human being that procrastinates," and do all the things that clients do or don't do that makes them show up in our office needing help in the first place.

That if you look at follow-through rates like that, what percentage of your recommendations get implemented, and what steps do you take as a firm to help make sure that clients do that? It's the clients that actually see the outcomes of that work that refer more, and just to me the striking thing in the context of what you're framing up...if you want to make that up scalably as an advisory firm, that might not happen in your CRM because it's not actually task-y enough to help clients get the tasks done versus Asana, Jake using MindMeister. I know there are even some standalone apps like Knudge in the industry that's trying to do a version of this as well. And we just...we historically have spent no time really talking about and focused on the follow-through parts of this beyond the ones that we get paid for, which is like did the account opening and the assets move?

Jim: Yeah. Is my job done? Can I check the task off when I've told them, or does that task need to have a reminder to me with a tag that says, "Verify," and it pops up in three months that contacts them and says, "What's the status?" I think that latter part is where the rubber meets the road for advice becoming action, and it requires systems, and it requires technology and intentionality, and a focus on action, not on advice.

Michael: So then in that context...I guess my other question is for the firm overall. Where is this going and growing for you? It's you and Jay and Alexis in support. Tru Independence, I'm presuming, will... they'll go along with you on this ride as large as you want to be. Just keep growing, and they'll provide their support services for a percentage of what it grows to. So, scalability is pretty straightforward on their end. But I guess I'm really curious on your end because you've got such this high touch task-y oriented, "We do the work and all the follow-through steps framework." I'm really curious. Where does this grow for you? Is there some capacity on how many clients you and Jake can handle before it stops? When you get there, does it stop or do you try to find another you or Jay? How does growth play out for you guys?

Jim: We're pretty focused on what we've said is 25 families per founder. So, a 25-to-1 ratio. And that is tied into that $10-million-plus space.

Michael: Okay.

Jim: So, at this point, we don't say, "Well, then let's replicate that and have another team and another team." We're more focused on enjoying the work, enjoying each other, enjoying the clients and not just growing to have a bigger firm. The question is how do we have capacity for that next, what I think would be 25 families? And part of that answer is how do we care for those without abandoning them, who are amazing people and amazing clients that aren't in that family office type services space that.. .how do we do that? And we're solving that in real time. I don't have that answer. I know that a cold consultant might say, "Sell them or set them free. One in, four out." We're just not wired that way and it doesn't feel like...

Michael: I usually just tell people go one on, two off. One on, four off's kind of brutal but sure.

Jim: Yeah, yeah. We joke we don't want to be that immature junior high boyfriend who just was mean hoping that he'd get broken up with. That's not right either. So, we want to care for them and do it right. But how?

Michael: But that means that... so the framing for you is we don't necessarily want to ever be more than 50 families for you and Jay, and it's only going to be you and Jay. And the question is just if we continue to get more new clients coming to us, can we keep taking on bigger clients and letting go of smaller clients and then as we do that, how do we do that in an appropriate way that honors them. Is that the framework? It's not going to be more than 50. It can grow because the 50 may write bigger checks and be bigger clients, but you're not trying to grow by getting more than 50. You're trying to grow by having the 50 be a higher average.

Jim: Yeah, and the reason is Jay and I can't help ourselves. We end up providing this kind of advice and service and detail regardless of how many zeroes are there and it's more of a self-preservation. Rather than fighting our wiring, just give into it because not everybody has that and so we should do our unique good for the people for whom it's a fit. But how to honor those other clients? And we'll serve them till the ends of our days or we've been talking lately about, "Okay, I think there needs to be some room on the team maybe for a real like-minded partner too who can come in and be responsible."

And so maybe we actually end up with two services, a wealth management deliverable in the $1-million-to-$10-million space, and a wealth management and family office deliverable, 10 and above. So that's kind of our working theory now. But we said we would always evolve the firm to fit our people as a...it's kind of a small giants takeaway I had was people first, people, people, people. And that really does mean if we've got great people or no great people, we'll come...let's work together. Now what should we do now that we're together? How does the firm evolve that we've got another team member in the mix who's so unique and good? So, it's going to be a bit flexible as we defined who joins us. Who is that going to be?

Michael: Interesting. But it struck me how you framed that, that we're going to keep providing this level of service no matter the assets because that's just how we're wired. So, we may as well try to do it for people who are a fit. Because I view it like I'm going to do very, very high-value work no matter what so I may as well find people who are actually going to pay me fairly for it because I don't know how to do less work for small clients. So, I may as well just do this level of work for whoever will pay the most effectively for it, and I guess the market speaks for itself at that point. It's kind of very, very pure capitalist find the market clearing rate phenomenon.

Jim: Yes, yes. That's well articulated.

The Surprises Jim Encountered On His Journey [1:21:34]

Michael: So, as you've gone down this road, what surprised you the most about just building this advisory business?

Jim: I didn't think I'd end up owning a firm. Generally, was a part of a team, not building one. So, it was a surprise to even be here, I would say. I would say what's also a surprise, a great surprise is that it worked, that you take the risk and it's almost healthy. Everyone should almost do it because it was a validation of what was...I think a lot of imposter syndrome disappeared when people said, "Hey, I want to be with you. I want to follow you. I know you're making a different change and I choose you." And that was so validating. Am I doing a good enough job? They said that you were to the degree that they would follow me on the launch of my own firm. So, I was surprised that people were advocates and that it felt so good and that I ended up here. That's a big surprise.

Michael: So then help me understand just how did you go from, "I was always part of teams and never thought I would end up owning a firm," to, "And then I launched my own firm." How did you end out in the, "I'm a business owner-founder," scenario?

Jim: I think I discovered about myself that I would much rather deal with big problems I created than small problems other people created for me.

Michael: Okay.

Jim: I don't...I realized I'm much happier in the entrepreneurial, "Oh, my gosh, this is hard, what are we going to do, is this going to work? Let's figure it out and do it." And less so being stuck without options or having to deal with politics or other people's priorities. It was a large part of the reason we named it Motive was we wanted to completely align what we did on a daily basis with our drivers, our values. And I found that whatever challenges we face, if I'm doing that, they're much smaller emotionally than when I'm dealing with challenges based on someone else's motives, or approach, or priorities, or focus, whatever.

So, it was about saying, "Oh, that hurts less. Those kinds of pains, problems hurt less." I'm a people person, Michael. So, at the end of the day, I like teams, I like people, I like engagement but I think I wanted to be the one solving the problems and making the decisions on where to go and how.

Michael: Was there a particular moment that was just a transition moment or, "Okay, I've realized now I'm going to have to be an entrepreneur."

Jim: Yeah, it feels like I was put in a stream and the current carried me. I don't recall making a decision. It was more of a...it actually started with a, "What if I had to? What if I had to do this on my own? What would I do and how would I do it?" It was actually a fact-finding... almost like a fire drill. And circumstances began to accumulate where I was like, "Oh, my gosh. I'm so glad I have this fire drill because this seems to now be the right thing." And in that process of gathering information, how would I do it, what would it look like to start my own firm, in that process, my heart began to change. And it wasn't just about facts. And once my heart caught up with what my mind had learned, it was time.

The Low Points Jim Experienced On His Journey [1:25:16]

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

Jim: There were some... that, "3:00 a.m., I'm still working," moment. "Is this ever going to end? Did I build something that is going to crush me, can I do this?" I never wanted the clients to experience me dropping the ball. So, I paid the price. That's been lifting now and we're at a healthier pace, but going from zero to that many families at that level of work over a very short period of time was pretty intense. I actually had a wise mentor to me say, "You're not going to be able to do this forever, you know?" And he said, "You're going to run out of juice to be auditing a tax return, and then an irrevocable trust, and then a rebalance from growth to value all in the same day. You're going to need a healthier pace." And that's good counsel. So, I think some of the lowest moments was worrying about that.

And I would say the other was those moments of, oh, just fear. Will people listen and follow me and believe in me? And then I was so relieved to see that they did. So 3:00 a.m. moments and the fear of it not working.

Michael: So, what shifted that you're actually feeling like you're getting a little bit more of a lift or breather now? Because it sounds like it's been you and Jay all along so it's not like, "Well, I was getting buried and then I added a partner."

Jim: Yeah. Alexis has been... she is such an amazing addition to the team. She's so high-powered. And I also think we were hesitant to want to expand the team because Jay and I struggle with doing things a certain way, in our way. So Alexis is a big part of it. It's also just beginning to get organized in Asana as opposed to being in launch mode like we were for those first two years. And I'm confident, as we're getting referrals based on the work we've been doing from new people, that it's working, that we've got the right deliverable. Now we just need to get more efficient and add the right team members slowly as we add on new clients. So, hope, it's always hope, Michael, it's hope that we're on the right track and that the right people make the difference within the team. Yeah.

Michael: Well, I think you make an interesting point though about how the business transitions that when you get to a point where the referrals are picking up and flowing, it's an indicator that you've got the right offering, you've got the right deliverable which means...and particular challenge I think for a lot of entrepreneurial folks. You don't have to keep making new things to do to be valuable to your clients. If they're retaining and they're referring at a really good rate, you're there. You don't have to keep making new things. Take a pause now and figure out how to get more efficient to the things you're already doing because you're doing them on a repeating basis and systematizing. Just there's a shift to that that I see some advisors, particularly in the entrepreneurial...and they struggle with. They still like making the next new thing to show value to the clients that they kind of miss at some point, you might actually be there where you don't have to make the next new thing. You can just go back and make the current thing a little more efficient so it's easier to do what you're already doing.

Jim: Which then leads for more breathing room, for more presence, for more of that special care, that special connection and relationship and presence with the client. And now that's even stickier glue, if you want to talk about it that way, than adding the new shiny thing.

The Advice Jim Would Give His Former Self And Younger, Newer Advisors [1:29:02]

Michael: Right. It's a good point. So, what do you know now about the advisory business you wish you could go back and tell you 20 years ago when you were first getting started in the industry?

Jim: I would say to the younger self to read a book that hadn't been written yet. That was "Essentialism" by Greg McKeown, that concept... I think I chased everything and worked inefficiently, and I worried about everything, and made sure the alignment, and the font, and every punctuation, had all these things that were just not in alignment with what really mattered. The motive was good. "Hey, I want to help the client, want to do my best." But it was misplaced. It was so inefficient and I could've saved myself a whole lot of energy and time and been more present for people, which is ultimately what it's about, is relationship. And could've been more present doing what was more effective. So, if I could somehow go and say, "Hey, here's what matters. Here's where you should spend your time and energy," it'd be that.

There were a lot of 3:00 a.m. mornings, working hard, all-nighters trying to get ready for that client presentation. And so much of that is unnecessary and actually is counterproductive. So, I would tell myself that. Take it easy. Focus on what matters and here's what matters. It's people and the key planning deliverables that really move the needle for them.

Michael: And what are the key planning deliverables that really move the needle?

Jim: That's the beauty, right? What is it for each client? And that's what's different. I think I had a tendency to treat whether it's 72% or 68% equities in their 401(k) the same as they're really worried about their adult daughter, and how does the planning address that. Relax on the 4% deviation from target and spend the time on what matters. And by the way, it doesn't have to look great. You don't have to have a beautiful presentation with the animated PowerPoint. It's okay if it's on a whiteboard because that's...it's the advice, and it's the presence, and their relationship, and it's tuning into what's important to them. And I think I focused a lot on trying to make everything look good and be all perfect.

I don't know. I think there's been an emphasis on giving the client an experience like we're some retail store or a movie theater, and I get that. And I understand that. But I think at times for me, that came at the cost of presence and focus on what really mattered. Not too much. I'm being a little reflective but I don't know. I don't know that we really need to emphasize so much an experience. I don't need to host a client event and...if I'm really present, and really care, and really listen, and then give advice, and then help them implement and do that over and over, we have a great relationship, and their financial situation improves, and then they get to go and do what they care about most deeply, I think that's a whole lot better than a winetasting event, in my mind.

Michael: So, any other advice you'd give younger, newer advisors getting started today and trying to figure out how to start navigating this journey for their careers?

Jim: As I reflect, anything good that's come for me has been in the context of some relationship, and generally someone better than me or older than me. So, I would like others to experience that same joint work like we called it back in the day, being able to team up. So I would pick a firm not based on its website, or its position even in the community, but by the character and quality of the person you could work with. Find mentors and glue yourself to them, and help them, and serve them, put them first, and that will carry. That would be my advice. Find good people who are doing good things for good reasons. I think that is otherwise more tempting for making decisions about where to get hired, or where to work, or even what position to take. All of those other things are detours.

Jim’s Plans For The Future And What Success Means For Him [1:33:11]

Michael: So, what comes next for you?

Jim: I would say we're doing more of what we're doing, and being able to do it at a less sprint pace, as you were just saying, and then finding the right next few people to join with us on our mission. It's that simple. It's continuing the deliverables and continuing the emphasis on our relationships, and having a few more to join in. We're on mission and we want the right people to do it with. It's people.

Michael: So, as we wrap up, this is a podcast about success, and just one of the big themes that always comes up is the word success means very different things to different people. And so, you're on this wonderful growth trajectory with the business with $250 million in 3 years, attracting very high-value clients as a boutique firm. So, the business is going very well. How do you define success for yourself at this point?

Jim: Yeah. That really is what matters. I have the classic faith, family, and friends... whether it's spirituality or even science, the evidence is clear. People who are happy and fulfilled are those who have high-quality deep relationships. And it goes back to that Dunbar's number you and I were speaking about.

Michael: Yeah.

Jim: So, the older I get, the more I realize there's no better investment than relationships. I was just listening to Brene Brown podcast with a guest, and he's the author of a book, "Leadership Is Relationship." And there's so many podcasts and books and... Arthur Brooks from Harvard and Robert Waldinger, that researcher on human development. And the answer is clear. For me, it's faith that God is real, and that I can have a relationship with him through Jesus. For me, that's central and ends up leading but even that...that's relationship. And so, whether it's faith, or science, or sociology, or psychology, my best moments, the best moments of any of us is in the context of close, intimate, vulnerable relationships. So, with my wife, my kids, my colleagues, and trying to make room in Dunbar's number for my clients, trying to not let the client book get so big that it exceeds Dunbar's number. So, the quality of the relationship, if I'm investing in that, then I'm in alignment with what I really believe, and I found that's when I'm feeling the most success.

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

Jim: Thank you for inviting me.