#FA Success Ep 357: Building A High-Tech High-Touch Advisory Firm With The Modern Advisor Tech Stack, With Jon Henderson

Resources Featured In This Episode:

• Jon Henderson
• Echo45 Advisors
• Advisor Referral Boost
• Eaglebrook Advisors
• Edelman's Financial Engines
• Orion Custom Indexing
• Orion
• Kestra Financial
• Cetera
• Calendly
• Redtail Speak
• Redtail
• AdvicePay
• FpPathfinder
• Asset-Map
• Holistiplan
• RightCapital
• Income Lab
• PreciseFP
• Pontera
• BlackRock
• Global X
• Coinbase
• Binance
• Blockchain And Money Course Taught By Gary Gensler (MIT)
• Digital Assets Council of Financial Professionals (DACFP)
• Certification in Business Data Analytics (IIBA®- CBDA)
• Grayscale Bitcoin Trust
• Mindy Diamond Podcast

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

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Full Transcript:

Michael: Welcome, Jon Henderson, to the "Financial Advisor Success" Podcast.

Jon: Well, thank you so much for having me, Michael.

Michael: I appreciate you joining us, and the opportunity to talk a little bit today about what to me is a really interesting evolution in the industry around how much of our future is technology-driven, more tech tools, more automation, basically more abilities for clients to self-serve, and then what we do that's still high-touch. And some put it concierge-level services. How we go beyond what the tech offers and increasingly automates.

And I feel like if you look at the really large firm environments and the mega enterprises out there, I feel like they're basically trying to push in tech and automate everything they possibly can. Because basically software's cheaper than humans and they just would rather minimize the number of humans. For those of us in smaller advisory firms, small being not a bajillion trillion dollars under management, so, like all of the independent community in particular, most of us, I find we lean the other direction to say, "No, no. If you want to self-serve with technology, go do your thing. I'm here to be an actual human being that you get to work with for people that still want to work with a human being."

And there's this balance of how much tech and how much personal service do we put in? And so, I was struck in learning about your firm and backstory. That you've tried to position yourself in this world of high tech and high touch, not because you're a tech startup that raises a zillion dollars to make things, but just running an advisory firm, serving clients, buying the technology that's available to us, and trying to figure out how, just in practice, as an individual advisor with a team, do you make something that is high tech and high touch to clients at the same time?

Jon: Absolutely. I think being a cyborg is really the answer. We started with just a phone, and it was all service, really. And getting that trust with clients, being there for them, that's never going to go away. And that's why we really never lose clients, because we try to respond to everybody within the hour, however they reach out to us. But one of the reasons I left the big firm environment is because the tech was so limited.

They have to manage just so many advisors. So, you get that feeling you're sort of being managed to that lowest common denominator. And inability to do things like tax planning. We weren't even really allowed to look at tax returns because we weren't CPAs. So, the world, I think, has changed and people want so much more. They need so much more from their advisor. You can never replace that high touch, that service model with technology. AI is promising something in the future, who knows?

But for now, nothing replaces that human touch, for sure. So, we put that above everything else, is that client service. People are going to remember that more than they're going to remember the returns in the market for that year or anything else. They just know that when they pick up the phone and they call us, they're going to get somebody on the phone who knows them by voice and is going to take care of them.

What Echo45 Advisors Looks Like Today [06:38]

Michael: So, paint a little bit more of the picture for us of just the advisory business as it exists today. Of clients and team size and assets or revenue, however you measure. Just give us some context for the business that you run at this point.

Jon: Absolutely. Yeah. So, we're a team of 7 right now. Basically 3 advisors. We have a planning coordinator. People call it a paraplanner sometimes. We use the term planning coordinator. And that's Cole. He's been just integral since day 1, coming in and bringing business over. Transferring from the whole book coming over initially. But we also have a client concierge, and that's who was with me since the beginning. So, Gen has been my right arm basically for about 15 years now.

Never would've left Merrill without her, kind of thing, because the clients look at her and I as 2 halves of the relationship. Again, the service is so important. So that was just a no-brainer. She had to be on board to come over. We had about 150 million in the book when we transferred out. Transferred the whole $150 million over in the first basically 4 or 5 months or so. Was able to get registered directly with the SEC.

And then we've had some people change over the years. We did launch with a CCO that is no longer with us, and a planner. He's gone. We had another gentleman that was on the team for a while, and he was working toward his CFA, and then pretty much the week he got his CFA, he left to go to a much larger institution. And then we had 1 other person come in that was helping on the trading side that didn't work out long term. But we're finally to the core team that everybody's a self-starter, everybody is hardworking, everybody has the same goal in mind.

And so, we really are working as a team. I noticed that teams are such a push in the industry. They look at the data and they say people want to work with a team. So, in my old days, the teams were basically 2 advisors they would smash together and say, "You guys are a team now." And then, their clients would only really talk to one of those people unless the other one was on vacation. But we're actually trying to function as a team here.

So, there's an advisor, it could be myself, could be the lead advisor, but the clients know that they can pick up the phone and call Gen directly when they need something from Gen. Or they can call Cole directly if they want help resetting a password. Or someone to get on the phone as a financial advocate for them with a third party so they don't get steamrolled or talked over. So, that's my goal, was that it would function as a real team, and then the clients would actually feel like they actually have multiple people, and they know who to call to get their answers quickly.

Michael: So, I want to make sure I've got all the parts of the team. So, 3 advisors, planning coordinator with Cole, client concierge with Gen. So then who else finishes the team as it's currently constituted?

Jon: My wife is our director of marketing. So, I married into that. We were a little too small, I think, to have a...

Michael: It's a good business strategy.

Jon: There you go. Yeah, absolutely. Yeah, we are arguably way too small to have even a marketing budget. But she was kind of stuck with us, I guess. But she joined us at launch and had a long career in her own right in digital marketing, of course with much larger budgets. But she's been helping us out since day 1. Our website is something we're really proud of. Our branding is something that people are constantly sort of commenting on, and we're very proud of all of that. So, she's not really client-facing.

And then we also have our CCO, who's Amy. And Amy is also not really client-facing, but she's full-time CCO. That was really the thing. When Gen and I realized we wanted to go independent, I remember the day we had a meeting with Fidelity, and we both came out of that meeting realizing that one of us was going to have to become a CCO if we were going to launch in that way. And that was a formative day.

It was the very next day that I met the guy that did come in as our CCO that is no longer with us. But that was a light coming on. Because We really wanted to go independent, but that was something that had always been provided coming from the comforts of the wirehouse. That was a big light coming on for us. So, everybody's kind of hybrid too.

Michael: I'm fascinated by that shift. I was in the wirehouse world. Compliance is always provided for me. I'm going independent. I guess I have to hire my own chief compliance officer if I don't want to do that myself. So, I guess I'm just wondering, was that a drawback, like, "Oh, geez, we have to hire a person to do this." Is that a plus, like, "Oh, we have to hire a person to do this, but that's less than what I paid off the grid at the old firm anyways, so maybe that's a deal?" How did you think about that transition of we're going independent, but if we want to handle compliance, we feel like we have to get a whole person to solve this for the business?

Jon: It was really a necessity. Because as we started to interview, we looked at some supported options. I met with the guys from Kestra. We met with Cetera along the way. But really what came clear to me is that if I was going to take that leap, because I was very comfortable at Merrill. I'd been there for 19 years and 10 months. We had a very successful career there. But if I was going to do it, I really wanted to be the one who's going to call the shots.

And it came very clear to us that if we were going to join a lot of those supported options, which was really set up for you to leave Merrill and still feel like you were at Merrill, really was what they were sort of providing for people that really didn't want to do any of that back-office stuff. I've never been afraid of being a business owner. I've always been excited about it. And I think that that's where a lot of people, they launch their own firm, they realize that they're good financial advisors, but maybe they're not really good business owners.

And to me, it's always been exciting. I just knew on the CCO stuff, that wasn't what was going excite me. And I think that you should always be working on what excites you, and delegate what's going to burn you out. And both Gen and I knew right off the bat that neither of us were really going to be too excited about doing the CCO work. And we both knew that we were going to be wearing multiple hats with clients.

Michael: And so, even in a world where there's this growing range of compliance consultants out there, you didn't want to keep the responsibility with a consultant. You just wanted a full-time person who was going to solve this for you.

Jon: Yeah. And we all worked as hybrid employees. So, the 1st CCO really did come in as a, he was sort of our head planner and then also a CCO. That's now been sort of split out. So, now Nannette, who I know that you know, from her days back at XY Planning Network, she has come in and she's now our director of planning. And so, everybody is hybrid. So, she's an advisor in her own right, has her own clients that she can service. But she's also handling all of the planning for all of our clients within Echo45. It's something that I think is necessary. And a lot of my clients that have been with me for 15 years or so. They don't really look at me all the time as their planner.

They kind of look at me as their investment guy. It's just sort of a function of how long they've been with me. So, half of the job is really getting them to engage in the planning and get them to see the value in doing that. And I find that if it's another member of my team, I can say, "Hey, chat with Nannette." And then it kind of opens that for them because they don't have that frame that she's just on the investment side. So, another excellent addition to the team.

Michael: Interesting. Because I'm always fascinated by that transition of, when you have longstanding clients that know you for the thing you did originally for them, it's ridiculously hard sometimes to reframe the context of that relationship, right? If you originally did some insurance with them long ago, you're still their insurance guy or gal, and it's hard to shift it. If you did some investment work with them originally, often they put you into that box and it can be difficult to get them to accept or recognize, "No, no, no, we're a little broader. We do more things. We're more holistic now.'

So, your way of framing it is, "Well, now it's not just me. There's a team. Our team includes this wonderful director of planning. Her name is Nannette. I'm going to ask her to join us in the conversation and support you on some of your broader planning needs." That's how you get to open that conversation with clients that don't want to let… let go of you being investment guy?

Jon: A hundred percent. And then I can tee her up. I can make the introduction. It's always better if somebody else introduces you, as you know. And so, that way, by the time they talk to her, they've already heard from me that I think she's going to do a great job for them. And then they're going into it positively and already seeing the value. So, yeah, it's queuing it up in the right way and sort of getting them to. And then also that's how we gain leverage or scale.

Because then she's able to do these meetings directly with clients while I'm working with a different client during that hour. So, it has been a much better way to go. And that's really what I wanted to build, was something much larger than myself. That's why I didn't name the firm Jon Henderson Wealth Management when we left, because I really did want it to be a much larger institution than myself, and a team feel.

Michael: So, I understand now the team of 7 and what it looks like. So, how many clients is it? Just how many people or households, however you measure?

Jon: I think it's about 180 households right now. Somewhere in that range. I don't know why I feel like it's 150. I think we looked at it, it was like 180, something like that, households right now.

Michael: And what's the asset base for you?

Jon: Right now, about 163.

Michael: Okay. Okay. So, that typical client is right around $1 million or just shy, right? Just 180 into 163. So, it gives a good, obviously...

Jon: On average. Absolutely.

Michael: A range with some bigger and smaller. But that's where your sweet spot is.

How Jon Navigated His Breakaway From Merrill Lynch [16:39]

Jon: Yeah. For a long time, my niche was working with IBEW, which is the International Brotherhood of Electrical Workers, the union for PG&E, which is the utility up here. So, about 11 years, that's pretty much exclusively who I met with, did planning for, worked with. So, about 60% of our clients are retirees from PG&E at this point.

Michael: So, you talk about in the past. So, what ended or changed?

Jon: Me leaving the team that had that niche. I was working over at Merrill. I was working on a large team for about 11 years, and they had that relationship. So, part of me leaving that team to get my sort of independence within that firm before going independent and leaving the firm was walking away from that niche, unfortunately. So, something you've done a lot of work on in your career is just the importance of a niche and how powerful that is. And that's really, the last 3 years of this firm has been sort of getting everything dialed in.

And really, now, the next step is moving into our new niche, which we're working toward now. And that's something that has to happen. It really is a stark difference, because once people know you in that community, they start talking about your name, it's a whole different ball game.

Michael: So, this moving away from the niches as you left, was that a requirement like there was an agreement, or was that just a... I want to be respectful of my colleagues I worked with for 11 years? My clients are coming with me, but I'm not going to go compete against them in the thing that we were building together.

Jon: Yeah. It was more like a divorce within Merrill. You're walking away, you're taking these clients to service, they're keeping these clients. It was an 11-year team relationship. It was a very large team. We had over $1 billion in assets on that team that we were managing, I was handling 420 households. I had 18 calls a day just to break even, just to stay up with my client service.

Michael: Wow.

Jon: Yeah. So, I kind of burnt out on that team just because of the way that things were running. So, that was my 1st time I was kind of running the daily operations of that team, and I thought, "I can do this better." And that was ultimately why I wanted to go away from that team, even if it meant walking away from such a built-in niche. I just knew that we could do more for people.

Michael: So, in that vein, when you left and transitioned, was it a conscious shift of, "yeah, I don't even want all of my clients because I'm serving too many clients on this old team anyway. So, I'm just going to take the subset that I wanted?"

Jon: No, I loved every client. Yeah. No, I wish I could've kept working with all of them. Yeah. I loved every client on that team. It was a lot for 1 person to keep up with those calls just because we had a very high...we reached out to every client pretty much, some clients we were calling them every 6 weeks. We just kind of left it up to the client and let them pick their call frequency, which was a mistake. And that's 1 of the things I'd change.

We still do reach out quarterly to every single client proactively, plus other outreaches as well, and market commentary and all these things. But to me, you've got to always be reaching out. You got to be touching base with them, hearing what's going on with their life. Have they had changes? Really staying on top of anything that's new with them. But, yeah, it was not that I wanted to leave any clients. It was really more of Merrill says, "This is your portion of the team, and you get to walk with this many clients." And it's a big contentious thing and, oh, yeah, it was drama.

Michael: Oh. Because the whole dynamic is when you're really teamy team, not just, we're pretending we're a team, but really you have your clients and I have my clients, and we share some overhead, if you're really a team with shared clients, who gets what if we separate is kind of messy.

Jon: Oh, yeah. Real messy. Yeah. And it wasn't fun, but ultimately, it was the 1st step in this journey to getting to this point. So, it had to happen. And it was tough, but it was part of the journey. And 1 of the best things I did along the way, for sure. But I learned a lot. On that team, I learned just so many things during that time. So, it was an excellent skill-building time of my life.

Michael: So, how does the carve-up work if you've got to figure out who gets which clients when you go through the team divorce? Do they get tagged of who brought them in? Is it just a split? Does someone from on high declare what it's going to be? How does that work?

Jon: It's actually written into the pool agreements, is the way that they used to do it. So, the way that ours happened to have been written, and it's funny because you don't really notice this when you're starting, but at the end, it's like a divorce. It becomes very, very important the way these things were written up. And ours was actually manager discretion. So, the largest team in the complex was breaking up and it was really up to the manager. So, it actually was very subjective, more than I would hope.

And there was a lot of sort of horse-trading along the way. And was I going to stay out there? Was I going to go to San Francisco? Because my real goal was to live and work in San Francisco. And I was living in the city, wanted to work out there. That was my goal since day 1. And I just was never able to do it in the beginning. I started at Oakland, then I went out to Walnut Creek, which is the East Bay out here. And then finally, ended my career in San Francisco. But that was ultimately 1 of my goals too, was just to live and work in San Francisco.

Michael: Interesting. Interesting. So just, what's to stop the manager from saying, "Hey, the team's assets also kind of rolls up to my goals," because I'm sure managers have some assets and flows goals as well. It's like, "Jon, I've used my manager's discretion to determine that your discretionary allocation is no clients." What's to prevent them from just not assigning you clients, if it's the discretion of someone who wants to presumably keep all the clients if they could?

Jon: Well, what I learned was, really, nothing. It really was just manager discretion. And there was a fairly big swing in what I was going to be able to keep if I stayed versus going to a different complex, which was totally within the rules. But looking back, I feel like the world is different now. I feel like things were different then, and it was a different environment. But, yeah, it was tough getting away from there, but, again, it was the right thing to do. And then it was kind of funny because I went to San Francisco for a week. That manager, I then learned later, was leaving. He didn't tell anybody, but he was leaving that office.

And so, I went over there, I was bringing a fairly large book, and he didn't even have an assistant ready for me, he had no office for me. He put me on a floor where they had no printer. And I was sitting there, and I was like, this is the most closed door I've ever experienced. What am I doing here? This is not right. And ended up going back to Oakland. So, if I would've just gone straight from Walnut Creek to Oakland, I probably would've helped myself quite a bit on the money side.

But I was trying to get to the city, and I was there for literally about a week before coming back to Oakland. I was in Oakland with Gen and I as a team for a number of years, then I dragged her over further west to go all the way to 555 California, which is where we were at for the last 5 years of my career at Merrill.

Michael: Okay, interesting. So, you had a couple of different Merrill branch moves as you moved around geography that also puts you on teams, pulled you off teams. And, Gen, bless her, still went along with you.

Jon: Absolutely. And now we're out here. We're in Walnut Creek finally. So, I came back her direction. So, she won in the end. But, yeah, moving offices too. You'd think when you're working for a big firm, it would be an easy thing to move from 1 office to the next. But it was a whole account number change... It was a lot of client upset to go from 1 office to the other. And I did it a couple of times, which was...it should have been, I think, a little smoother. But it was...

Michael: Interesting. Even though you're still with Mother Merrill, you're still under the same umbrella, but there's still repapering requirements even internally, or I guess were at the time? I don't know if they ever changed that.

Jon: Well, at the time, the office prefix was the first 3 digits of the account number. And so, if you're going to go from Oakland to San Francisco or Walnut Creek, you actually had to get a whole new account set of numbers.

Michael: Oh no! So, clients see a new account number, which basically means new accounts, which means new account paperwork.

Jon: And back in the day, people really cared about that. Now people don't even know their account numbers. Right now, what we're going through is the three-and-a-half-year transition from TD being acquired by Schwab, which is going to finalize here in about a month. But that even seems less upsetting. Because the clients don't even know. They just call us and say, "Hey, I want to move money out of my IRA." They don't even know their account numbers anymore. So, it seems like it's actually less of an impact on clients now.

How Jon Leverages An Advisor Referral Business To Develop COI Relationships [25:35]

Michael: So, do you have a sense as to where you're going with a new niche now that you kind of get to set your own foundation for what you want it to be?

Jon: I do. And I'm just so excited. I want to come back and talk to you in 3 years to see if it is a success. But I finally feel like I have a direction to run in. And so, I'm very excited to be moving forward. One of the best things we've done recently for business development, we started working with... I know because we like to share best practices on here, and I'm hesitant to do it because he's been so great and his team has been so great, I don't want to overwhelm them. But I'm not sure if you've heard of Advisor Referral Boost. There's a guy named Jason Essayli and his team has been, basically, they set meetings with centers of influence. So, if you're looking to meet like CPAs...

Michael: What do they do? They set meetings with CPAs. Okay.

Jon: Yeah. Whatever you're looking for. So, CPAs is a great one for, I think, most advisors, complementary business. You can refer to them, they can refer back. Maybe estate planning attorneys, another one. But I've done a lot of these over time where they make these promises and it ends up just being like a cold call, if the person shows up at all. A lot of no-shows. And this has just been the best experience I've had. Because their team not only sets the appointment as though they're calling from my office, because they reach out as like an extension of your team, but then they follow up the day before to confirm the call. And then they're letting me know all of this through a shared sort of a CRM that they set up. So, it's been a tremendous experience.

Michael: So, I'm fascinated by this. So, I just want to make sure I understand the mechanics. You hire Advisor Referral Boost to say, "Look, I want to get in front of more CPAs or attorneys," or whatever it is. I'll do my thing to share my expertise and, and try to establish a relationship, I just, I need at-bats. So, you pay Advisor Referral Boost, they reach out to local CPAs or attorneys or whatever it is you're targeting. Say they're calling from your office to try to set an appointment to get to know each other. And if they do a good job, you just show up to meetings with prospective COIs and start relationship building.

Jon: Absolutely. And so, these have been some of the best calls I've had. If I was actually trying to reach out, I feel like it would be a struggle to even get these meetings set. But they have access to my calendar, so I've been getting like 2 of these a day. But the way they did it is basically they promised 30 meetings with COIs or Centers of Influence in 90 days. And so, that's what I signed up for, paid their one-time fee. I also really liked that, that it was... Other ones I've worked with, they want a cut of the business even, in some of the cases.

Michael: So, what's the price? What do you have to pay to get 30 meetings in 90 days?

Jon: What I paid was $3,500. I don't know if their pricing is still the same, but it was $3,500 for the 30 meetings. And I would say that it's been well worth it by far. We're actually going to switch it to a monthly going forward. I'm just going to keep working with them.

Michael: So, I'm just trying to, I guess, understand the context of it. What expectations are they creating for the meeting? They're just calling to a random CPA, I'm sure they're trying to find people in the area. But just like, 'I'm calling from Jon Henderson's office at Echo45, and he'd love to meet with you about, why..." What's...?

Jon: Yeah. Potential referral partnership, right up front.

Michael: So, just right out there.

Jon: Yeah. We're a local registered investment advisor. We have clients with needs for your services and obviously, we would like to become a referral partner if we could do a great job for your clients as well. And it's been… I think I’ve had 1 no show.

Michael: And so, right out there with it. And I guess from their end...

Jon: Yeah. Yeah. So, when they’re on the call there's no confusion. Yeah.

Michael: Right. Well, and I guess from their end, right, you're, well, who knows how many calls they do that fail before they get 1 that succeeds. They may call 100 CPAs who aren't interested before they find the 30 that are willing to take a meeting with you. But from your end, everyone who takes that meeting knows exactly why we're getting together. So, there's no like, "Hey, I'm just trying to get to know you. And then someday maybe, I hope we'll form enough a relationship for referrals." Everybody knows coming, if this is a CPA who is not into doing cross-referrals, presumably, they're just not going to take the meeting. So, you're not wasting your time.

Jon: Exactly. And even some of those, I've had a few of those where they kind of start off like, "We're not really interested in referring back. That shouldn't be a consideration." But I just kind of treat it like a cold call with a prospect from back in the day. Right? You just keep asking questions about them until you get them to laugh, then they're talking about themselves, then they're flowing. Then you hit something that's important to them and then it's like the person changes.

I had 1 of these the other day. I was talking to an attorney and he was talking to me like he was giving a parking ticket. He was just like, "I'm really not going to be a referral source to you." He put it out there like 5 times, that he really wasn't going to be able to send people to me. But by the end of the call, we ended up finally connecting on a couple of personal things. And then he was off and running. It was the crypto stuff that kind of tipped it. I let him know about our capabilities of holding crypto assets in trust title.

And that is just such a big deal to estate planning attorneys, because they spend so much time creating these beautiful trusts for these families. And then people have these assets that are just floating around that could be triggering probate in some cases. And very difficult in the current landscape to get those assets, whether they're at Coinbase or Binance or wherever you're doing your purchasing. Robinhood, none of those really support trust-titling. And none of the big firms can get into it because it's not regulated yet.

And that's actually one of the biggest reasons I decided to leave Merrill, was just because I felt that that whole industry was just not going to be able to touch it until they had regulation. And that's just 2 or 3 years that we have where this whole industry is going to change so much, and we need to be out in front of that. So, yeah, it's another big part of our focus now.

Michael: Interesting. So, you get a series of 30 meetings in 90 days. Is this all in person? You mentioned something around Zoom with the attorney that really likes that you can do crypto and trust structure. I mean, are these in-person meetings? Are these virtual meetings? Because, hey, we're in the new virtual world. How do the meetings work?

Jon: Most have been set up as phone calls. A couple have been Zoom-type calls to start. One was in person to begin with because we actually had a shared client. And so, that's something I didn't even know because obviously, I'm not the one making these outgoing calls. And so, he took the call and then he looked at us, he saw, oh, we've got a shared client, he wanted to meet in person. So, that was great. That was just off and running right off the bat. But most of these, about probably maybe 4 or 5 of these have already then turned into 2nd meetings where we've met in person. And that is really where it happens, right?

Because then you've talked to them, right? You kind of get the idea they know who you are, they look you up, and then when they come and sit with you, that's where you really get that sense of who somebody is and then get that comfort level. So, now I'm moving on from the 1st meetings to the 2nd meetings with a lot of them. And really, the follow-up is the biggest thing. So, trying to get something to them, some Echo45 schwag, something cute for them to remember us and then sort of something helpful for them, or maybe leave them a review.

Something we can do to be positive. We have a little Echo45 onesies, so when clients have young children, these COIs, have been sending those out. And people love that. They love that more than anything in the world. So, things like that, just the personal touch.

How Jon Uses High-Tech Tools To Maintain High-Touch Client Relationships [33:26]

Michael: Very cool. Very cool. And so, now, help us understand what this looks like from a service model perspective. So, just for clients of Echo45, as you're trying to live this balance of how do we do high-tech and high-touch, what does it look like for clients on an ongoing basis? How do you try to stay engaged in high-tech/high-touch manner?

Jon: Well, it's kind of funny. It's sort of on the simple side. So, I think the best bang for buck that we've gotten for our tech dollars has been Calendly. In my Merrill days, most of my job was calling clients, leaving voicemails, then being on the phone when that client called back, so I could then call them back later. So, phone tag was 30% of my day. Now, Calendly, literally, I will send out an email to the clients that I'm due for the quarterly review. Hey, how you guys doing? It's been a few months, time for our check-in, please book right here.

They click that link, and then they just show up on my calendar. So, they're ready for me when they want to talk to me. My whole day is very efficient now, I don't have a lot of breaks, but it just kind of fills right up every day. So, it's not a lot of me doing... I almost do 0 outgoing calls at this point.

Michael: So, out of curiosity, how do you stack your meetings in Calendly, right? Because if you're not careful, it will really fill your day if you leave them all up.

Jon: It does. Yeah. And I'm a masochist.

Michael: How do you set it up? What do you set it as your preferred Calendly scheduling options to let clients stack meetings with you?

Jon: Well, I just let it go. I open it. I don't take anything before 10:00 a.m. just because that way I know my morning is guarded and I can get done what I need to do. First call would be 10:00 a.m. every day and then it's wide open until 5:00. So, some days I'm on the phone from 10:00 to 5:00 or in meetings back-to-back almost from 10:00 to 5:00. I'll get a couple of 15 minutes or 30-minute breaks in there somewhere to hit the restroom or grab a coffee.

But pretty much I just let that dictate my day. It's the most effective way for me to kind of get through as much as possible. So, you can definitely put guardrails on that if you need to, which Nannette is starting to recognize my... She doesn't like the same open flow so that you can put like maximum 2 client meetings per day or whatever you want to do in there. But it's been wonderful. Just a great productivity enhancement.

Michael: And how long are typical meetings for you? Are you a one-hour ongoing meetings kind of guy, or do you like them longer or do you like them shorter?

Jon: I let the client pick a 15-minute quick chat, a 30-minute meeting, or an hour-long meeting. And most clients will take the 30-minute meeting. It's usually plenty of time for us to get done what we need to get done. If it's going to be a tax review, if it's going to be a planning meeting, we'll do an hour for sure, and we'll use the full hour.

And then it's just always there too. I think clients can just use that. That doesn't have to come from me. It's on our portal book time with your advisor, people just book right there too. And so, I find that that way, nobody's feeling like they haven't heard from me in a while. That was the thing before. Like, "Oh, I haven't heard from you in a bit." But now that almost never comes up just because people are always so easy to get on the phone with me if they need to.

Michael: And I think you'd said earlier, your goal offhand is quarterly, is reaching out to clients, or at least give them the chance to do this quarterly?

Jon: Yeah. Over my years of doing this, I found that's the sweet spot. If it's any less than quarterly, people start to feel like they haven't heard from you in a bit. More often than quarterly, not enough is really changing, either in markets or their lives. And so, quarterly seems to be a really nice sort of frequency to check in with people. If they don't have anything going on, not everybody books, if I send it out each quarter. Because they've been working with me for 18 years and they're retired, and they have a pension and they're very comfortable. And they know how to find me if they have anything they need. And then of course, the at minimum annual full check-in, making sure KYC.

Michael: I was going to ask, do you have any sense as to how many clients you reach out for a quarterly and their answer is none of the above. I don't need a 15 or 30, or 60. It's like, "Jon, I'm good. Nothing's really going on. I'll call you if something comes up, you call me if something comes up. Other than that, I'm good. I don't really need to meet right now."

Jon: Because so many of our clients have been with me for so long, it's a decent number. I don't know the exact percentage, but there's a comfort level there for sure. So, I don't feel stress like, "Oh, I haven't spoken to so and so in a little bit," just because we have had such a long time together. A lot of clients feel like friends. I mean, a couple of clients that were... They started as clients, they actually came to our wedding in Cabo. So, I've been very blessed with my career. I pretty much just talk to people all day long that I enjoy speaking with. It's a wonderful career.

Michael: And how many days do you take these stacked meetings? Are you doing this all week long or do you hold a day or 2 internally for other stuff?

Jon: I just open it up Monday through Friday. We have a couple of internal meetings. We have a Tuesday huddle, so the whole team gets together for 30 minutes every Tuesday. Then we've got investment committee meetings that have to happen. We have financial advisor check-ins, these kinds of repeating things. But there was a period of time a few years ago where I think we got a little too meeting-heavy internally because we had a lot of objectives we were trying to accomplish.

And everybody was doing these sort of internal meetings and we had to step in there and consciously reduce the number of meetings that were on people's calendars. So, I think we found a nice medium here where we have a couple of standing meetings each week that everybody's expecting. Tuesday is the big in-office day because COVID drove everybody out, right? Nobody was coming to the office for a long time.

But it's really starting to...people are coming back now. But Tuesdays, if I'm going to book anything in the office with a client or somebody else that wants to come in, generally, we shoot for that. But otherwise, I just leave it open Monday through Friday. And we take a three-day weekend here and there. But mostly I try to keep myself available to clients as much as I can during the week.

Michael: And so, what happens at Tuesday huddle?

Jon: Everybody gets a chance to speak you know, go around robin. Go around the team, ask Cole what's going on with any clients that he's working on that week. Is there any objectives that they need that he's not comfortable with, or anything we can help with? James will chime in on the trading. James and Cole and I represent the investment committee for the firm. So, we'll talk about any changes that we're doing with investments potentially. Then we'll go around, we'll talk about compliance.

Amy can let everybody know if there's anything that's changing or any objectives they need to do to stay compliant. Any client issues with Gen, and then any planning objectives with Nannette. So, just kind of go round Robin with the team and see what everybody needs. And then that pretty much eats up the 30 minutes pretty fast. And it's very useful time and then get everybody back to work.

Michael: Interesting. Interesting. When is that in the day? Is that a first thing in the morning or last thing in the day?

Jon: Tuesday at 10:00. Yeah. Do it in the morning, hopefully get everybody fresh.

Michael: Okay. Very cool. Very cool. So, then what else happens in the world of trying to stay high-touch to clients?

Jon: So, another thing that was kind of a huge change for us was Redtail Speak. So, we're using Redtail as our CRM. Redtail Speak is basically their compliant texting function. And I find a lot of clients don't love email, especially some older clients. That's not their thing. But clients of all ages seem to love to text, and I think it's great. We get this almost like a...

Michael: Interesting. So, your older clients are happier with text than email?

Jon: Absolutely, 100%.

Michael: Okay. So, what are you doing with Redtail Speak and texting?

Jon: So, on our end, it functions like a chat room. So basically, anyone that's going to be on the team servicing that client, when that client sends us a text, it's going to be seen by every one of us. And when that person responds, the member of the team that would be handling that, they can see who's responding. It's the same phone number, but they can see, oh, this came from Cole, or this came from Jon. And it's all compliant on our end, so we're within our bounds.

But it is just such an easy way. So, many clients just love shooting us a, "Hey, can you shoot me over my statement from last month?" Something quick like that. And they love it. It's really added an efficiency on the communication. So that's another small thing that just was out of reach during my Merrill days.

Michael: Interesting.

Jon: I just saw the other day, Wells Fargo, I think, was in the news. One of the big firms was in trouble again for WhatsApp being used by their advisors. So, stuff like that was a really big deal. They never wanted anyone texting clients and everybody wanted to text clients, but it was not compliant. So, that's a big enhancement.

Michael: When is it an email and when is it a text message as you're trying to decide which is which? Like when you're queuing up, it's time for the next meeting, is that an email with a Calendly link, or is that a text with a Calendly link?

Jon: Probably an email on those. So, just setting meetings, those kinds of things usually we'll do that. People are on their computers. But yeah, it's not a defined this would be a text or that's going to be... But if the client starts with a text, then obviously we're just responding to the text. It's real easy. So, it's a lot of that, usually the client starting it. But sometimes we just know certain clients just hate email, and they like the text. And so, it's just knowing the client and then how do they want to be communicated with. And then just using that line of communication for that specific client.

Michael: And then how do you, I guess, monitor it in practice? Do inbound Redtail Speak texts route to your phone other text messages? Do you have to be logged into Redtail? Does someone on the team have to be logged into Redtail? Because you may be in meetings all day. How do you field them to make sure you actually got the text messages?

Jon: Yeah, great question. It does come to the phone, which is wonderful. Because I'm just out and about and just like anything else, I'm answering client questions very quickly in a compliant text on the go. Where before it's like I got to sit down and draft an email. Lemme get back to them. So, yeah, it's definitely easier. It does come through the phone. It comes through the desktop as well. So, once you're logged in, it's a separate website that you're opening to, it’s just the Redtail Speak.

But if you're sitting down, you're on your workstation, you're checking emails, you're checking that, that's super easy.

Michael: So, what else in this domain of client touch, client communication?

Jon: Those are probably the big ones. I think you've probably heard of AdvicePay and FpPathfinder.

Michael: Yeah.

Jon: Those are both awesome. I'm a pilot as well, and checklists are very comforting to pilots. So, I love the whole FpPathfinder. I'm very visual. The 1st piece of tech, the thing that actually got me independence FOMO when I was still at Merrill was Asset-Map. We didn't have anything like that. And for years, I was sitting down with clients, and I'd be in an initial meeting getting to know them. Let's draw a stick figure, this is you. A little circle over here, this is your IRA, this is your home. Here's the debt on the home. And so, Asset-Map, it's very, again, very simple, but it's something that clients really love.

And it's really the 1st thing that I look at. When the phone rings and it's a client, I'm pulling up their Asset-Map. And it's the first thing I do. I start kind of going through it, I see the house, I see the debt, still the same. Has this changed? Has that changed? And the client is sitting there. I know all of this just off the top of my head because it's just right there in a picture on a single page. So, clients enjoy those. We're able to do a real quick analysis, and that's the way we bring new business in too, is through the Asset-Map discovery link.

Somebody takes 5 minutes to fill out that discovery link, before I even have the phone call, I see their entire balance sheet on 1 page. So, when I call them, I'm hitting the ground running and I'm already talking about their specific situation, rather than spending that first 30 minutes just asking questions.

Michael: Wait. I want to make sure I understand that. So, with prospects, you'll send them the Asset-Map discovery link before an intro meeting to say, what? Like, just in order for our time to be more productive, can you please fill out this link with some of your financial information? I'm envisioning the doctor intake form before I get to go back to see the doctor. But that's a disservice to Asset-Map because Asset-Map is beautiful, my doctor's intake form is not. So, it's probably not the best analogy. But that context, please fill out this information in advance of our first meeting so that our meeting can be more productive. Is that how you serve it up to them?

Jon: Yeah, I put it right in the Calendly. So, if somebody says, "Hey, we want to have an initial meeting," we send the initial meeting link. And that's a 30-minute. I do a 30-minute just free intro meeting with anybody. And if they've taken the time to fill out the Asset-Map link, then it's a very productive 30 minutes, and usually a very positive one. So, yeah, I just put it right in there. I say, "If this is your first time talking with us, please fill this out."

And I've also found it's a very high predictor of who's serious. People that fill that out, you have a very good meeting with them, it's a very high likelihood that they're going to be coming on as a client. Whereas if somebody won't even take the 5 minutes to fill out a basic Asset-Map intake, chances are they may not be as serious or ready to start talking about their planning.

Michael: Okay. So, it's not a requirement for them to meet you. It's a request. But it's a helpful request both for the information, and the implied indication of interest for people who are willing to share their information and go through the process in the first place.

Jon: Yes. Exactly.

Michael: Okay. Very interesting. So, then where do you use FpPathfinder? Is that upfront or with ongoing, or in some other context?

Jon: Ongoing. And something I need to learn more about out of our entire tech stack, that's probably the least utilized. I love it, and I love everything about it, but I feel like we're not utilizing it to its full capacity. So, that's something that is on Nannette's long list of things to get to eventually, for our firm's sort of overarching planning direction. But it's really been used when clients have questions about something. Can I make a Roth contribution? Pull up the flow chart and kind of take them through it, start asking the questions.

And what I love about it is, a lot of times there's things people might forget along the way. And that those checklists really kind of make sure you don't forget those minutiae that you might've kind of forgotten along the way and trip you up. But, so, right now it's more of a later in the relationship. Sort of an ongoing, sort of a support tool that we're using. Yeah.

Michael: So, it guides the conversation when a client asks about a thing that Pathfinder has a flow chart to take you through. Like, can I make a Roth contribution? Am I eligible for conversion? All those things. That there's a series of questions to ask and steps to move through to figure out if they can.

Jon: Absolutely. And of course, I think maybe our favorite piece of tech is Holistiplan. That's just a game changer. And one of the, again, another the really big reason that I left the wirehouse is I felt like clients really need tax planning. And I felt CPAs are doing tax filing, but not tax planning, in a lot of cases. So, Holistiplan really is that ultimate cyborg addition where we can take a tax return, run it through their system, 10 seconds later have it spit out basically all of the important numbers we want to see. We see where all of the assets are, so if somebody hasn't told you about something, you can start to have a conversation about, well, what about this account? We didn't have that involved in the discussion.

How Jon Structures His Client-Centric Team [49:47]

Michael: The good old, I see in the declaration of interest, a very sizable amount of interest, given interest rates. That would be a pretty big account that you hadn't mentioned. And there's some dividends from some mutual funds that you did not mention you have. Let's talk about that.

Jon: Absolutely. So, we run Holistiplan for every single client every year. So, we are just trying to get every single client to just automatically upload that tax return. And that's just going to be an annual meeting that's going to happen with every one of them. And that's probably the most important meeting we have all year, because that's where we reaffirm everything with them. We talk about optimization of their current just brackets, is there a conversion in place? And those guys have continued to just improve that product. And we love it. So Holistiplan is now obviously... FpPathfinder is now integrated with that too. So that's another thing I want to start to use more.

Michael: Right. Right. So, if clients are getting prompted to do a Roth conversion in Holistiplan, you can pull up a flow chart to talk them through it on the spot.

Jon: Exactly.

Michael: I am curious in that context though, just, I've seen this for advisors both in the context of FpPathfinder and just in general. Some of us really like to pull out visual aids that helps show the process to the clients and walk them through it. Others don't like it. It's like, well, the client's expecting me just to have all these answers. I don't want to show them the cheat sheet of how I'm figuring out the answer. I'm just supposed to have the answer. Not right or wrong, just, we come to it from different ways. So, I'm just curious or trying to understand, how do you think about pulling a guide out like that in the meeting, versus being the 1 to give them the answer in the meeting?

Jon: I'm a very visual learner myself, so for me, I just think it's such a nice thing for you to be able to show somebody and kind of take them through that, especially if they're also more of a visual learner. And to your point about you want them to think you're smart, I think early in my career, we always wanted to have the answer. You always wanted them to think that you were really smart and knew all these things. As I've gotten through my career, I find that's not that important. People don't really care that you know the answer right off the bat.

They just want to make sure that you get the thing done right. And so, taking something like that out and walking them through step by step, number 1 affirms that I'm not making a mistake, and then they understand it much more. It just creates a much deeper level of comfort.

Michael: And this annual Holistiplan analysis, I think you said like an annual meeting for clients. When do you do that?

Jon: As soon as they can get us their tax return. So, again, it's just kind of on the client. And right now, we're kind of getting the fire hose again because a lot of people have gotten their taxes done and have questions now and it's the 1st thing we're going to ask for. But California, a lot of the counties, we were extended to October this year. So, this year's a little weird because some people aren't going to file for a little bit later.

But it's usually just as soon as they get them done. In an ideal world, we would actually have a relationship with the CPA, where the CPA just uploads it for us. In some cases, we have a CPA that works with many of our clients, and we just have like a tax dome portal kind of a thing where we can just send sensitive documents back and forth with the CPA.

So, as much as we can kind of partner with their CPA and take that off of the client's shoulders, I know Holistiplan was working to allow us to pull 3 years going back and 2 years going forward, or something like that. And I know that they hit pause on that because the client experience wasn't up to snuff. But that's very exciting to me. If they will allow us to do that where the client will sign once and allow us to just pull the transcripts, that would be a much...

Michael: Yeah. The dream is how do we get IRS transcripts with a reasonable IRS API that makes it not painful.

Jon: Looks like they're close. Yeah. They're getting close.

Michael: So, I guess in practice, because some clients file early, some clients file on tax deadline, sometimes clients file for extension and get it done a little later. Sometimes clients file for extension and then do it the day before the extension, you don't really end out with a, it sounds like, at least, you don't end out with a surge of these. Like, okay, it's May, or it's November. Time to crank out 180 Holistiplans in the big overtime process. In practice, for you, it's basically dribbling out over the span of about 6 months just because different clients are all over the place on their tax return timing over the span of six-plus months.

Jon: Yeah. And you have to, anyway. You don't have the time and the day to do all of them in one week. So, it's good that they do kind of get spread out.

Michael: So, then what else around the service model? What is planning software for you? Are you solely and fully in Asset-Map as visualizations and planning, or do you have a separate planning software that you use as well?

Jon: We do. We do. Actually, so we're using Orion for record-keeping and everything. That's sort of our core... And they keep getting bigger, obviously, and acquiring more companies themselves. But Orion, they had their own planning software which was Advisor, before, that they had acquired, put in there. So, that's what we launched with, and we were using that. We're still using that for our portal. So, if clients, where they can access their statements, all of the performance, all of those things still run through that sort of Advisor portal.

When Nannette came in though, she had experience with RightCapital. I had seen RightCapital, I always thought they were great. I thought it was one of the better ones out there, if not the best one out there for what we're doing for clients. And she had experience with it. And that was one of the big things I was excited about. So, when Nannette came to join us, we made the switch and we added RightCapital. So that's now our core planning.

Michael: Yeah. Well, because RightCapital was long included as part of the XY Planning Network membership. I know Nannette was in XY Planning Network for a period of time, so probably got familiar there and then brought it forward. So, you said RightCapital, you feel like, is particularly good for your clientele and what you do. So, what makes RightCapital better fit for you than the alternatives out there? What makes it such a good click for you?

Jon: Well, actually, and to be candid, most of that's handled by the planner. So, the gentleman that was here before and now Nannette, they're the ones living in there. And that's really the focus for that. So, for me as a business owner, I want to supply my team with the best tech that they want. And so, when I met with Nannette when she was coming in, she said that's the best one. She had the experience with it. And I was like, "Hey, I don't, I don't want to spend the next year learning a new software, so, wonderful." So, to be candid, she's really the one in RightCapital living in there and presenting to us before a meeting and going over everything.

Then when we meet with the client, everyone's on the same page. But I'm not really in there doing too many clicks personally. And she's found with some people lately that they've had some income planning needs that have kind of gotten beyond what RightCapital could do. So, we've actually just added something called Income Lab which is another one. So, she's really enjoying that so far. We're going to start to implement that with more clients that have more complex income planning needs.

Michael: That's on the retirement income side, how am I doing my distribution drawn on planning work?

Jon: Yeah. Absolutely.

Michael: Very cool. Very cool. So, then how does the client concierge role fit into all of this for you, for the business?

Jon: So, when I started for the longest time, it was really just me and, in the Merrill days they called them a client associate or a CA. So, Gen and I worked together in that sort of advisor CA role for a long time. And I think clients really get used to that. This is the person I talk to about my investments, this is the person I talk to about the administrative side, if I need anything else done. So, I knew that clients were comfortable with that, but I knew that we had to add the sort of planning coordinator role as that interim role.

So, I see the client concierge role as a career support role. Somebody that comes in that doesn't want to go into production, somebody that wants to serve clients, that enjoys that relationship and wants to work with clients for many years going forward. And then that's going to be a salaried position, potentially salary plus bonus kind of a position. Whereas the planning coordinator role, that's really a role that I want somebody to come into that really wants to learn the business and become an advisor down the road. Somebody that's looking to get their CFP, wants to service their own clients and learn that business from the ground up.

So, that's really a 3–5-year sort of a transition role where they go from working directly with the client concierge on a daily basis as the support team, but then moving up into that production role later on and somebody else coming in to train underneath them. So, the client concierge is really that point of contact. Every one of our clients is basically friends with Gen. They know her personal life, she knows theirs. They're very comfortable calling in, always asking about how she's doing, those kind of things.

Michael: That's her gift that she has. One of those folks that's great at having rapport with clients when they call in.

Jon: Yes. Extremely gregarious. Everybody loves chatting with her. It's something you can't replace, something you can't train. So, that's the client concierge role and really just where everybody knows they can call in if they need to get something taken care of in the account. I know that she spent many hours in the last week just making phone calls back over to Merrill Lynch to try and help clients figure out some class action lawsuit that came out.

And they get these things, is it going to pay me anything? Is it worth my time? Is it fraud? All these questions. And so, she spends a lot of time trying to figure those answers out for people so then she can reach out to everybody and let them know, "Hey, you probably got this in the mail." And then we can be proactive and let people know so they don't have... Try and take things off their plate.

Michael: So, this isn't necessarily in the domain of other extra services that get piled on. I've seen some advisory firms that their version of concierge is, this is a separate role with a whole bunch of additional services that only our A clients get, where we're going to do these extra things for them with the client concierge. That's not the context for you here. This is high touch to all clients across the firm. Centralized point of contact that you have a relationship with besides advisor directly because sometimes you're in meetings all day and you can't get back to them as quick.

Jon: Yeah, we probably, and this may not be the brightest thing to do, I don't know if this is the right way to do it, but we treat our biggest client the same as we treat our smallest client. And I know that that's not the way the other firms do it. And I've got clients that are sweet little old ladies who were widowed many years ago and they're well below a minimum that we would have set. But I'm never going to send them away, and I'm never going to not treat them as if they were any other client. Because they are the ones that need it, probably more so.

And you can hear it from certain people just how appreciative they are that you are taking that extra time with them. So, yeah, we don't... I used to listen to all these guys, "Oh, you should fire your smallest 3 clients every year and make room for your new large clients,' and whatnot. So, I know from a revenue perspective it may not be the brightest idea, but I sleep good at night, and I feel good about what we do for our clients.

Throughout the year, if my staff comes to me and says somebody's not treating them with the utmost respect, that person's gone. That's just a commitment I made a long time ago. You got to protect your team. And sometimes people will kick the dog because they can, and that's just not okay. You got to treat people with respect. But thankfully, it rarely ever happens. Almost never. So, our clients by and large are just really nice people, but sometimes you catch people on a bad day, and it's a one-off. But if somebody's sort of habitually, as you say, a PITA, they got to go.

Why Jon Uses Cryptocurrency To Diversify His Clients’ Portfolios [1:01:47]

Michael: So, help us understand as well. You mentioned earlier, one of the positive uptakes with the attorney COI introduction is that you're supporting clients on crypto and doing it through trusts, so it makes their estate planning lives a little easier. But as I'm sure you know, a lot of advisors are not doing anything in the crypto domain. Even some that I think were looking at it decided not to over the past year or 2 as Bitcoin got a little bit more volatile on the downside. So, share with us more, what are you doing in the crypto realm with clients at this point?

Jon: Absolutely. And thank you. Yeah, it was one of the other reasons, the big reasons, that I decided to leave the comforts that I had at Merrill, was just that the big firms are going to be kept out of that market until there's regulation. I actually thought we might get regulation this year with Gary Gensler, the chairman of the SEC. Because he taught a course on blockchain at MIT which is actually free online. You can just watch an MIT course, kind of cool. But I thought he was going to be the guy to come in and do it. He's taken a different route of sort of suing Coinbase and Binance. And so, it doesn't look like we're going to get regulation, which arguably is a good thing for myself. Because we are sort of in a position where I think we've got a year or 2 now where we're really the only game in town to do this.

And as I'm talking to these estate planning attorneys, over and over, every one of them has said that they have not heard of anybody else that's doing this. So, I think it's a limited time, but where we can really get ahead of this particular movement. So, I got my certificate in blockchain and digital assets through DACFP, which is Ric Edelman and Don Friedman's company. Ric Edelman, of course, grew the largest RIA in the world, Edelman's Financial Engines. So clearly a successful guy. And he sort of dedicated his whole career to the digital asset space. So, I went with his accreditation, if you will, or certificate. And literally, about a week ago, they just got listed with FINRA. So, it's now the CBDA, which is this certificate in blockchain and digital assets.

I got that myself, and I actually paid for every one of my employees to get it, because I think it's so important that people be able to speak this language. Whether a client ever owns these things or not is secondary. But they need to at least know what it is. And when I was working at a larger firm, their position was basically, you couldn't even discuss it, just because they can't do anything with it. They can't touch it. So, I felt that that regulatory restriction was going to be a really big hurdle for those big firms. So, I think we got a long road here. I think we're early in this game. Blockchain, I think like the internet, the internet doesn't get better, but the websites on it do.

And I think that blockchain is blockchain, but with the applications, the cryptocurrencies are the current. But I think there's a lot of other applications, things like voting. I believe that blockchain will reduce the cost of trust. Anywhere that you see a cost of trust, like when you're buying a house, you got to pay for title insurance, things like that. I think that the blockchain's going to clean up a lot of that stuff eventually, once people get their head around it.

But for now, estate planning attorneys, they have to create LLCs to hold these assets, and then they put that LLC in the name of the trust. There's a lot of workarounds because where you transact like a Coinbase, it's not like a Schwab or a TD Ameritrade, someplace like that, where if somebody passes away, you can reach out to them and give them a death certificate, right? My dad passed away, I need to get ahold of this account. That money is just lost. If the family even knew that they had it, they probably wouldn't know how to get it unless dad gave them his secret code to get in there.

Because if he didn't, that money is effectively just like bearer bonds under the sink. So, I'm old enough that when I started in the industry we had stock certs. A lot of clients would literally come in for the first meeting and bring me a box of stock certs. And Gen...

Michael: I remember, I started about the same time. We had one client couple, I still remember, they had been buying stock certs for literally decades. And for a year and a half, they just kept bringing in more stock certificates. They would bring in, they're like, "I think this is all of them." And then they go home, and we'd see them 3-6 months later, and they're like, "We found a few more," and we'd deposit them, and "We found a few more," and then we deposit them. And cumulatively, they ended out with something like $1.5 million.

This was 23 years ago. This was when a $100,000 account was a good client. They were a $1.5 million client. It was all stock certs. They had no idea that they were worth that much. Because their retirement was, they just spent dividend checks when they came in. And they had so much wealth that the dividend checks were more than enough to cover their bills. They never even tried to consolidate it before. So, yeah, stock cert world was a crazy world.

Jon: But I think that's where we are today in the digital asset space. You know, I think that people are doing self-custody for the most part, and there's a lot of risks involved with that, but there's no other option. And the idea, if you asked a client right now, do you want to hold your own stock certs or would you like to hold them at a custodian? It's not even a question, right? So, I think as this option becomes more available to people and they understand that this is going to be something that people are going to want... Because right now, it could trigger probate, a lot of people are not doing any sort of tax management.

I think a lot of people have been transacting too in these, and they've created taxable transactions along the way they've never reported. And I think that pretty soon here, eventually they're going to get those records from the Coinbases of the world, and everybody that has transactions is going to get audited if they have not been filing that. Because the first question on the 1040 the last couple of years has been, do you own or have you transacted in cryptocurrencies?

So, Bitcoin, Ethereum are both sort of known quantities as real property as far as the IRS is concerned. They've taxed it that way. So, as you mentioned, some people were getting a little leery about getting involved, but I think that in those 2 specific securities, they're a little bit more of a known quantity. There's a lot of other stuff right now with things that are crossing the line as far as banking products, staking. That kind of stuff's pretty messy right now, but as far as just a client owning Bitcoin or Ethereum, it's pretty straightforward.

Michael: So, help me understand then what you're literally investing clients into. Because you've talked about cryptocurrencies directly, like Bitcoin, Ethereum. You were mentioning earlier, right, the opportunities of blockchain, which function, like, you don't buy blockchain per se. You buy shares of companies that are building an application to run on the blockchain. So, what are you investing clients into?

Jon: The direct tokens. Yeah. To me, that was the... I interviewed a lot of companies and looked at a lot of options. Right now, if a client wants to buy Bitcoin, let's say, they can buy the Grayscale Bitcoin Trust, or they can, there's a bunch of these funds out there that are basically futures funds, right? And so, as you know, if you want to buy a gold fund, you want to buy a spot fund, you want to buy the actual underlying asset. Futures have all kinds of problems, as you know, and they can get all haywire. So, right now, there is no spot ETF. The big news a couple weeks ago was that BlackRock has applied for one. They're the largest ETF company out there.

So, Bitcoin got a $5,000 pop just on that news, and I think that's going to open the door for a lot more people to come in when that spot ETF shows up. But right now, that doesn't even exist yet, and so clients that are buying, if they want to own Bitcoin and Ethereum, they have to go somewhere to buy that, like a Coinbase or a Binance U.S., someplace that they can get that, Gemini, and then effectively hold that in what's called a hot wallet.

It's connected to the internet, it could be hacked. They could lose that money. Very Wild West over there. And then in most cases, people are not doing any sort of tax trading on that. There are no wash-sale rules on digital assets, currently. So, you could sell Bitcoin for a loss, buy it back 5 minutes later, and you don't have a problem. So, we're actually using a TAMP. I went to a meeting out in Arizona and met with a bunch of... It was a one-on-one that DACFP had kind of put together. And I met the guys from Eaglebrook Advisors.

And so, they're basically a digital TAMP, turnkey asset management platform. And they offer direct investment in Bitcoin and Ethereum, and the client is buying the actual underlying coin. But then they're holding that in cold storage, which means it's basically an air-gapped computer. It's not connected to the internet, and it substantially reduces the risk of theft. So, if we can reduce the risk of theft, we can get it into trust name or IRA titling so that it passes to their heirs along with their estate plan.

And we can create basically tax efficiencies. All through last year, obviously, where you had this volatility, tax loss harvesting on a stock side, we do that through custom indexing which we can get into. But on the digital asset side, same thing with no wash-sale rule. So, there we can do 100% Bitcoin, 100% Ethereum, a blend of those 2. And now I see Global X, actually is coming out with their own SMA, which is basically a 10-coin layer 2 coin portfolio, which is very exciting to me. Because that's the next thing.

As people all start to get their head around Bitcoin, Ethereum, what these things are, what the value propositions are, then people start moving to the next layer, 'Oh, there's better coins already. Okay, well, let's look at those." So, yeah, it's an evolution. I think we're in the maybe 2nd or 3rd inning of this game.

Michael: And what is the cost for going through this? Just Eaglebrook has a TAMP layer cost, what does that look like? Are there other costs that underlie this? Like, how does it work from an expenses perspective?

Jon: They do. So, you're going to have your advisory fees to the firm. They're always there on any assets, if it's an AUM relationship. But then you've got your platform fee, and then there's a very small transaction fee. When they actually do, it's very small. But those are really all the costs. And when you total it up, it's actually still less than if the client were to go out and just buy GBTC. The big players, there's such an illiquid market, I guess. The fees just to get access to the coin in a futures fund is about 2% per year.

Michael: And what does it add up to in Eaglebrook?

Jon: It's going to be less than 2%. I think it's like 1.5%. I need to actually pull up what it... I think it's about 1.5% on the platform. It's not cheap. It's going to be more expensive than if you're trying to get like an S&P exposure, obviously, where you have much more efficient market.

Michael: Well, yeah, yeah. Where we can get our super cheap ETF for a couple of bps.

Jon: But inexpensive for the digital asset options that are out there.

Michael: And so, how much of an allocation do you put to this?

Jon: So, that's…Ric Edelman's big thing. They did a lot of work on that. That was a big part of their work that they did for the advisors, is they came up with a 1% allocation recommendation, which I thought was interesting. And so, that's really where we're starting. If clients are saying, "Hey, I really do want to sort of dip my toe in, I'm interested in this space," we can have a discussion about it. We can build a 1% position for a client like that. And when Bitcoin is up 70% plus year to date as it is so far this year, that 1% can make a meaningful impact on the client. We would let that run to about a 5% position, then probably start paring it down.

So, that's kind of how we're starting off, 1% positions for clients. Now, if somebody obviously has the wealth and the ability to take on the aspirational risk, and they're more tech-savvy, then we can push that a little higher. But generally starting with a 1% allocation, assuming it could go to 0, and you're not going to hurt the client because it's such a new technology.

Michael: Well, I was going to ask, on the one hand, I get it, 1% is small enough that if crypto has a catastrophic loss, we're not destituting anybody. We're not over-concentrating them here by any stretch. But at the same time, whole other TAMP relationship, whole other structure. I'm assuming there's some additional paperwork and stuff that's got to get done. Is it a challenge to justify the cost, the time, the hassle, just the administrative overhead that I'm imagining you have to deal with for a "just 1%" position for clients?

Jon: Well, for me it's not just because this is such a big focus that I have, and being able to... We're going to grow with this too. I'm sure the process will get better. It does take about 2 weeks, it seems, to kind of get the whole thing set up and started. It's not an instantaneous process, by any means. But once it's up and running, then the clients are very comfortable and it's very easy for them if they want to move money between those.

Michael: So, does every client get, because this is a standard model thing for you that just, this is part of the holdings we own on behalf of clients, or is this still a one-client conversation at a time? "Are you interested in this? If so, let me talk to you about it a little bit," and each client are either yay or nay and you got a list of each.

Jon: Yeah, basically I had sent out an email to all clients. Once we were set up and able to do this, which took longer than I wanted, which was actually a blessing because last year was such a bad year for crypto assets. But once we finally got up and running, I basically just put it out there to all the clients that this is something we can do. If it's something they want to talk about, they have any interest at all, just book time with me. And if it's something that we want to go forward with, we'll do that. So, it's not an asset that I think I would recommend to anybody if they didn't first sort of ask me about it, first of all. It's nothing that people need to have. But I think it's something that is very interesting to people.

They want to be able to talk about it with somebody that understands how it works with their traditional assets. And that's important for people. A lot of people already have it. What I'm really trying to do this for first and foremost is de-risking the risk that people are already taking around these assets. So, if somebody's already made a purchase and they own some Bitcoin or Ethereum, and it's in a hot wallet and they're not doing any tax trading around it or filing, and they haven't told their kids how to get ahold of this asset. So many people already have it, and they've taken the risk of owning the underlying asset. We're just trying to de-risk some of the tertiary risks around that.

Michael: And in practice, do you have a sense, what percentage of clients have taken you up on this? Are most clients in or is it like a coin flip 50/50? Is it still a pretty small percentage?

Jon: It's a small percentage, for sure. I think it's going to grow as more clients come in. As I mentioned, a lot of my clients are retirees. It really would be inappropriate for most of that group of clients anyway. A lot of them are just comfortably living off the income that they get from their portfolio. Bitcoin, Ethereum is just, in their minds, maybe a Ponzi scheme or something like that. They have no interest at all. It wouldn't make them feel better to have it in their portfolio.

But I have other clients, 1 client was running his own mining node. And he was very concerned that his daughter's not going to know how to get this asset if something happened to him, and he's going to be bringing his Ethereum over for us to hold and start paying us an advisory fee and a platform fee to hold it because he sees the benefits outweighing those costs for that way. So, it's different for everybody.

Michael: Interesting. So, the appeal for him is just when you live in a world of running crypto and trying to keep it secure for yourself in a self-custody world, ideally you want to keep it in cold storage, disconnected from anything, only accessible by a super-secret password. And if you get hit by a bus and don't have a way to transmit that information, that's gone from your family, as you said, like the bearer bonds that get lost under the sink. So, the appeal for him was basically what you can bring to the table through Eaglebrook, we can still hold in cold storage for you, but it's in a trust structure that is still transferrable because then you can transfer it to the beneficiaries and with successor trustees, so you don't risk having it vanish or lose control.

Jon: A hundred percent. And then Eaglebrook Advisors is integrated with Orion. So basically, their digital holdings show up right on their statement from us. Their Bitcoin and Ethereum is right there next to their Apple and their Google stock.

Michael: And then just, do you worry about the liability risk exposure? Just because of the lack of regulations, some of the fraud that is now at least being alleged and unearthed with some of the players that have been out there. I know at the core, a lot of the big firms don't want to move into the space because it's not regulated, because they don't want the liability exposure of being in a space that's so Wild West, as you framed it. Does that worry you as an advisory firm owner? How do you get comfortable with that?

Jon: I left to start my firm so I could provide this to people. So, for me, I'm very comfortable with it personally. And because we do such a small position size for people, literally it could go to 0 and it's a bad day. It's not going to affect them in that way. So, that's why I have a lot of comfort around it, because we're really treating it with kid gloves, that this is a very highly volatile space. But I do feel like diversification, especially last year being the worst year in 150 years for the 60/40 portfolio, we owned commodities. Which, of course, the only way to own the commodities is in a futures fund, which is the only thing that made money last year and helped us with our relative performance.

But I believe that digital assets, crypto assets are sort of the 1st new asset class, really, since crude oil. And that to me is very exciting as a money manager, that you can have a non-correlated, highly volatile asset that you can add to a portfolio and tax loss harvest along the way. So, it doesn't have to make the portfolio even more volatile. In fact, as you know, a volatile asset of a certain size can actually reduce the risk of a portfolio. So, I'm not worried about that. I'm not worried about the regulatory aspect. I did think that we were going to get regulation in the wake of the FTX debacle last year. Because Sam Bankman-Fried could not have committed such theft if he was in an industry that was regulated.

But what happens is everybody thinks that crypto itself is crooked or illegal because they see that kind of stuff happening. But they couldn't have done that... He was working out of an apartment in The Bahamas, for goodness sake. So, the crypto world still has a long way to go on that. But for me, transacting in a small position in Ethereum and blockchain and Bitcoin, which I believe is sort of known quantities now as far as the IRS goes, that I'm comfortable there. I'm not going to be doing any staking or buying meme coins for anybody or anything like that.

But I do see in a couple of years, as the big firms all start to finally be able to come into Bitcoin and Ethereum, we're going to be way ahead of that at that point and doing something that's cutting edge at that point when they're finally getting in. So, I'm actually very excited about it. And that risk that you're referring to is also what keeps all of those firms out of this space and creates all that opportunity for me.

How Jon Creates Personalizes Custom Indexing For His Clients [1:21:30]

Michael: So then, how does custom indexing fit into this? You had noted that you're working in that space as well.

Jon: So, we use Andy Rosenberger and his team over at Orion Custom Indexing. We say OCI, acronyms for everything. But they've been amazing. And so, we pretty much got dialed in with those guys before 2022. And last year, the alpha that was created through custom indexing was phenomenal. I don't even know the exact number. They wouldn't even publish it. I think they were shooting for like a 1% to 3% alpha or added benefit on an annual. I think last year it was north of 9% or something like that.

Michael: Because of the tax loss harvesting for individual position tax loss harvesting.

Jon: We actually had a client bring us all cash, about $900,000, all cash to invest. Younger client. He wanted to put it all to work right away, right at the beginning of 2022. So, the peak of the market. And then we went through the whole last year. On that 900,000, I think we generated about 170,000 in realized losses. And the portfolio is almost back to even today from where it was. So, everybody else in the world just kind of held their ETFs down, they're holding them back up, and we were able to go in there and add tangible benefit for clients across the board in such a selloff here.

Michael: And so, the custom indexing, the direct indexing world for you, is it mostly that it's a tax loss harvesting story, not necessarily a, taking the word literally, it's not necessarily a custom indexing. You're crafting your own specific client-personalized indices. This is a tax loss harvesting story for you?

Jon: Well, it's both, actually. The irony is that ESG became somehow villainized over the last year or so. And I actually had clients calling me, angry. I had one client, she goes, "What is ESG?" She was so mad. And I explained it to her and she's like, "Oh, okay." That's just being able to invest in what you want to invest in. It used to be a big selling point to tell people we can do ESG, now everyone's like, what is that? So, yes. Custom indexing, that was 1 of the initial benefits. If we're going to deconstruct an index and use individual stocks, you get the best of both worlds.

When I started in the business, you had to be a stock picker to get those benefits. Stock picking kind of went away. As markets got more efficient, everybody's either in or out with exchange-traded funds, which then, of course, are horrible from a tax efficiency standpoint. So, for us, we will definitely have an intake form, and we have the client go through, is there an industry that you'd like us not to invest in? Is there a specific individual stock? Do you work for a company where you're an insider? We ask a lot of questions about that so we can basically build them a custom index.

Michael: Interesting. Is that an intake form you developed, or is that something that Orion Custom Indexing gives you?

Jon: We developed it. We created it over time. We were using, it was PreciseFP that's one of the platforms that we're not currently using. Because we were doing other ways to get those out to people. But, yeah, that's intake form to get those restrictions if people do want to, which sometimes they do. But the tax loss harvesting was just so impactful last year, and that was really the big bang for the buck.

Michael: So, some clients will end up with an actual customized, and others will just own the index, but own it in the direct indexing component parts so you can do the tax loss harvesting benefits?

Jon: Yeah. And we default to a global index. And their default is about 225 individual securities. So, if somebody doesn't want so many individual securities for whatever reason... This is another thing that, when we launched, it's one of the reasons I left. Because we didn't have this capability. And I thought custom indexing was kind of a game changer. And I felt like it was going to cannibalize the ETF market over the next decade, but then Schwab went to 0 commissions, and then then it became a very, very attractive white paper idea when you're not paying any commissions and you can trade as necessary. So, last year was a standout year for the benefit.

Michael: And so, do you direct index the whole portfolio? Is this a sleeve, an allocation, the large-cap holding, is covered with this, but then you own other funds and ETFs around it? How much of the portfolio is executed in this manner?

Jon: Yeah. We basically have 2 different ways. So, if a client is a tax-deferred account, if it's an IRA, Roth IRA and they don't have any ESG sort of requirements, we're generally going to do an ETF portfolio. Because the tax efficiency is not a concern, their customization is not a concern, it's going to be a lot easier for us to manage that portfolio. And so, we're buying the large, mid-small, foreign, domestic, all of that in an ETF model portfolio that we run. But in account where we're going to use the custom indexing, it's generally going to be a taxable account. And it's generally going to be representative of the entire equity portion of that client's account. Because we can get foreign, domestic large, mid-small, through the individual equities that Orion is going to be handling the daily trading on.

Michael: Okay. And so, almost in a variability of asset location environment, how much of the client ends up being direct indexed or not really ends up being a function of the mix of taxable versus retirement assets that they've got.

Jon: True. And then in IRAs we will still do direct indexing for clients that ESG is a concern. If they want us to block certain parts of the market, we would definitely use it for that. But it does get to some pretty large statements, where if you're holding that many securities, the client's got to be comfortable with that going in, and they have to understand that.

Michael: Well, I was going to ask, any complaints from accountants who have to handle the tax reporting when they hold that many individual positions?

Jon: Thankfully, not yet. Hopefully, everyone's just dropping that into an electronic solution, and they're not actually manually typing in things anymore. But I have had some old school CPAs still complain about the number of transactions going on. But I understand if somebody's churning, but if there's zero commissions and you're literally the only trades that are happening as to generate a tax loss, hopefully the CPA's going to see the value there.

Michael: And then what's the cost for this? I'm assuming Orion Custom Indexing has some cost layer, other tips and estimates that you've got to handle on top of this.

Jon: They're like 15 basis points. It's amazing. It's been fully customized, we've just had such an amazing experience with them, they've just done such a great job. And it's on par with an S&P 500 ETF. Yeah, it's just amazing. We couldn't be happier. And a lot of people have reached out. Yeah.

Michael: And then you don't have any underlying cost, you're buying the stock. It's just not like you've got a manager fee on top of another layer.

Jon: And then doing that stuff, that trading in-house, James does all of our daily trades, right? We have a primary trader on staff here. But him being in there doing the custom indexing, it's a non-starter. These guys, they have a whole team over there. They're in there every day handling that. And it's such an amazing value for what we're able to bring to people. So, it's been a great experience on that.

Michael: Interesting.

Jon: I was going to say 1 thing we do too is Pontera. If you're familiar with them, that's another huge game-changer. When I left Merrill, so many clients would ask me to help them with their 401(k). And I literally would have to tell them, don't email me these questions because my manager's going to tell me I can't respond because we don't hold this account. So, when I left, it was just a game changer that literally if a client's like, "Hey, I've got a 401(k) over here, I would like you to handle it," we can just go through Pontera. We literally just get...we send them an email, they put in their username and password. We don't see that information, but then they are granting us access and basically assigning us as manager on that account for them.

Now, we're actively managing that in conjunction with the rest of their household, which is what so many clients want. I find about a 3rd of our clients are generally full delegators, and they want that. And they would appreciate that. So, for us, being able to actively do that, get paid for the work that we're doing and not have to go covert and call the client on the phone and verbally try and help them with an account that they're asking for help with. So, that's another, I'd say, a really big game changer for us being able to do business the right way and getting rid of a conflict of interest.

So, many people that, as you know, there's so much work in the industry to get advisors to do the right thing on a rollover because the conflict of interest is so high. The advisor wants to do the business, the client wants them to help with that account, but then the conflict is that they've got to roll it over. And maybe that rollover is not what is in the best interest of the client. And I'd say in most cases it's not, especially while they're still working. So, that's been a huge enhancement.

Michael: So, how do you handle the cost layer for these, right? Eaglebrook’s got a cost for its piece, Orion Custom Indexing has a cost for its piece. Pontera has their own charge. Do you absorb these out of your fee schedule? Do you just pass them through the client and let them pay? Is it a mix and match, you absorb some and not the others? How do you handle the kind of the cost layers that we have to deal with when you've got your advisory fee, but all these various platforms and solutions have their own fee layers in the middle?

Jon: Absolutely. So, for Pontera, we eat it because it's basically, there's a cost for the client to be able to assign us. We just get paid less for doing it. It's the right business. We eat that. On the other ones like Orion, we look at that like an ETF cost. That's just an investment cost which we're going to try and keep that as low as we can for the client, but that's still going to get passed onto the client at the end of the day. And they're aware of that. They know there's the advisory fee of the advice, and then there's investment costs of course, which we'll try and keep low.

And then of course, if a client does want to do something like an Eaglebrook, that's going to be a separate, standalone, very small part of the portfolio for anybody that's even doing it though. So, the costs there are so minute. It's a cost on a 1% piece of the portfolio. So, it's generally a pretty, pretty small line item there.

Michael: So, you let them hold onto the Orion Custom Indexing and Eaglebrook costs because It's kind of like paying a mutual fund or an ETF manager anyways. You absorb the Pontera cost because it's more like an internal trading cost or like a platform fee that you have to eat as a business in order to provide the service that you're trying to provide.

Jon: Exactly.

Michael: Interesting. And so, is there a difference in fee schedules for what you do and manage accounts internally versus held away 401(k)s that you manage with Pontera, or is it just you live like an assets under advisory framework where it's just the same fee for all of it across the board?

Jon: We have our published fee schedule. We're basically the first, tranche is at a the top rate. And then as more assets are consolidated, that rate will drop. And so, we just look at the assets that are held in 401(k)s. It doesn't have to be a 401(k), it could be other types of accounts that are held away as well. But mostly 401(k)s is what people like to engage with us on that.

Michael: So, the assets are just funds... If I've got a half a million dollars with you and a half million dollars on my 401(k), you'd just bill me like a $1 million client on your statement.

Jon: Exactly. Yep. Absolutely.

Michael: And then billing-wise, how does that work? Because I know there are challenges for some that you can't necessarily pull the fee directly from the 401(k) for the 401(k)-management side.

Jon: Yeah. That's what keeps Amy and Gen busy for a few days each month, is coordinating all of that. So, we have fees coming in from clients, then we have to pay Orion. So, there are some manual steps that have to go on in the background, but we've got a pretty good process now on the monthly. But, yeah, we definitely have about 3 or 4 different platforms that need to be paid. And some of them, it would be nicer if they just could debit it directly, but in a lot of cases, they can't.

So, for Eaglebrook Advisors, for example, and Pontera we can't pull fees from those accounts. We have to pull those fees from a taxable account. So, if a client wants to do either of those, they either already have to have a taxable account set up that they want us to debit those fees from. Or in some cases, they would actually set an account up and just fund that with the fees because it's an ERISA issue.

Michael: So, either they have a taxable account to bill against, or you'll create a taxable account and fund it, channel money in whatever's necessary to be able to do the requisite fee sweeps at that point.

Jon: Exactly, yep.

Michael: Do you ever have clients who it's like there just ain't no taxable dollars to facilitate this? Does that crop up as an issue?

Jon: Yeah, we've seen that where somebody's just like, they just have like, "Here's all of my money, is in this 1 account, this 401(k)." And we have seen that. And in that particular case, the client did just open an account and they had a small amount. They just put the fees through there. It is a little clunky and not the best process. But still the client wanted the help, and we were able to do it. So, they were happy to pay the fees.

What Surprised Jon The Most About Building A Business [1:35:16]

Michael: So, looking back, what surprised you the most about building your own advisory business?

Jon: Well, we didn't really talk about the initial days. But we launched the firm, Echo45 was launched on February 21st, 2020. Which if that day doesn't stick out to you, that was the day that COVID hit the markets. So, I left Merrill after 19 years and 10 months, and all of the comforts of Mother Merrill, big salary, lots of money, and a deferred comp that I walked away from, because I was so passionate about starting my own firm and doing things differently. But the 1st week we were in existence, S&P was down 11.5%. The 1st month we were in existence, the market was down 31%. We had no assets. I had 5 employees, rent, a 5-year lease I had just taken on.

I spent $9,000 on a Surface Hub because I was so excited about the collaboration in the office. And of course, then nobody wanted to get around and collaborate around a Surface Hub. So, yeah, that's really the surprise. And we had actually negotiated to go with TD Ameritrade, and Schwab actually acquired TD Ameritrade weeks before we launched. So, even before COVID hit the markets, that whole thing... And I literally had to call that team and ask if we were still good, is the deal still on?

So, it's been extremely rocky since day 1. And it's just been kind of crazy. But it was also a blessing, Michael, because when I left Merrill, and this is the surreal part, is that everybody else, their life changed too. For me it's like I left Merrill and everything just went on the way it was, which would be normal. And then all of those people would be calling my clients the day that I left. But the day that I left is literally when COVID hit and everybody was scrambling, just trying to figure out their own lives. So, in a way, it helped that I didn't have 100 advisors.

Michael: So, they weren't coming after your clients when you transitioned out because they were just trying to deal with their own during the market insanity.

Jon: Yeah. Being sheltered in place and working at Merrill with no capability to do a Zoom call. That didn't exist when I left that firm. I don't even know. They had to scramble and put all that in place. So, it's weird to me that the world changed so much on that day. But in a way, it was like a weird blessing. Because it took about 3 months to bring everybody over, and that's right about the time the markets started to improve. So, our performance, even during horrible time, it was just the timing. It's like my future self said, "It's going to be painful, but if you want to go, go right there." And right before that plummet. So, yeah, it's been a crazy ride. So, I'd say that's probably the most surprising thing about our story.

Michael: Interesting. And I would imagine, is that the low point as well, just having all that hit right as you transitioned? Or were there other low points along the way?

Jon: Well, there was a few minutes there. I remember the market was down like 2,500 points. I had 1 of our first clients in the office. I was just watching the market just plummet. Trump had just ghosted a meeting on the COVID response, and the market just went down another 1,000 points. I was like, what is going on? What did I do? So, that was a little scary in the beginning, but you just had to go. We had to implement, we just had to work. And we literally brought over enough to be registered directly with the SEC in the 1st number of months that it had to happen.

So, we hit all of the metrics that we wanted to hit to stay in existence and keep moving forward. But it took the last 3 years to really kind of get everything sort of settled in and really dialed in after such a crazy start. And it's just now finally feeling like it's not affecting things. We've had people out. COVID just was such a mess. And I realize nobody wants to talk about it anymore because that's all we talked about for 2 years. But, yeah, everyone's ready to move forward.

And it's just good to see people back in the office, and I'm looking to grow the firm. At this point, we finally have the core in place. I'm hoping a couple of people will hear this podcast and say, "Hey, I want to be able to do those things. I want to work at a firm that is looking to be on the leading edge." Yeah.

Michael: Because you're in hiring mode now?

Jon: Oh, yeah. Oh, yeah. I'm looking for CFPs. I really want to only bring on CFPs that want to work at a firm that really supports planning. But, yeah, we're in growth mode now, definitely looking to add to the team.

What Jon Would Have Told His Past Self [1:39:38]

Michael: What else do you know now you wish you could go back and tell you 5, 10 years ago when you were still building in the past?

Jon: Oh, wow. That's a great question. I don't even know where to start with that. There's so many things changing all the time, Michael. You've just been such a huge resource. Honestly, I was walking to work. We were planning this transition for about 11 months to leave. So, I was literally walking to work, I was living in the city, working at 555 Cal, walking to and from work. And I was listening to the "Financial Advisor Success Podcast," just listening to every advisor and just listening... Like you said, it's the lower half of the iceberg. What's going on that you can't Google, you can't find that stuff because there's only firm owners telling their story that you can learn that thing. The other one was, I listened to a lot of Mindy Diamond at that time. She had another great source. I don't know if I have...

Michael: Yeah, Mindy Diamond's podcast is still going. Yep.

Jon: Wonderful. Yeah. See, it's like if you don't have the need anymore, once you launch, that's kind of a thing. But at the time, it was really you and Mindy Diamond, really, the 2 sources that I thought were just so amazing, and I couldn't get enough. I just was absorbing as much as I could. And I just remember walking to work, and I was like, "I'm going to launch my firm someday, and then I'm going to go on Kitces's podcast and tell my story." So, this is really a dream come true for me. So, thank you so much for allowing me to come on today.

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

Jon: Oh, man. Everybody's different. I realize too I tend to think everyone thinks like I do in a lot of those things. And the wonderful thing is that people don't. That’s what makes the world go around. I'm so, eat what you kill, you know what I mean? Like the old, "That's my client," that kind of thing. And I realize not everybody is like that, and not everybody wants that style of workplace. So, I guess the advice, someone like me is very different than somebody who doesn't want that aggressive daily life. So, it's hard to give general advice, but don't compromise, I guess, is my thing.

Even though I launched at the scariest time and that possibly could have happened, I've never regretted it. Even a second. Even that 1st week when things were just melting, and I was like, what did I do? What time did I pick to do this? I still felt lucky, Michael, that I had the opportunity to do it. I still feel so blessed every day that I made that decision. I never could've learned what I did if I didn't take that track. You got to put your time in, you got to learn. But, yeah, don't sacrifice, don't compromise, I guess, is my advice.

What Success Means To Jon [1:42:20]

Michael: So, as we wrap up, this is a podcast about success, and just one of the themes that comes up, that word success means very different things to different people. And so, as someone who's built, what I think anybody would objectively call a very successful advisory business as you're crossing up towards $200 million under management and getting ready to grow further from here, the business is firing so well. How do you define success for yourself at this point?

Jon: Well, now I have employees, so it's changing. Because I see them and their lives and I'm now a job creator. So, for me, success is keeping this moving, taking care of my team, making sure that they're able to do what they want in their lives and have productive, happy lives. But still providing the best possible outcomes and experiences for our clients. So, yeah, I think that success for me now is just making this firm better. I want to do this. I'm not going anywhere.

I had at least a decade at minimum that I was going to be doing this. We're in year 3. So, I've got at minimum 7 more years that I'm just only focused on making this firm the best firm that I can make it. And getting the word out there, growing the team, and continuing to bring on amazing individual people to add to our family. Because it really does feel like a family. Everybody's kind of... We got a member out today; she got a small injury you know. Everybody's in there supporting her, taking care of things, making sure she gets what she needs today. That didn't happen in my past life working for larger firms.

Michael: Well, very cool. Very cool. Well, thank you so much, Jon, for joining us on the "Financial Advisor Success" Podcast.

Jon: Well, thank you, Michael. It's been a true pleasure.

Michael: Thank you.