#FASuccess Ep 420: Making Financial Planning More Repeatable Without Losing The Customization Where Clients Prioritize What Matters Most, With Michelle Underwood Gass

Resources Featured In This Episode:

• Michelle Underwood Gass: Website | LinkedIn
• Paradigm's Guides Process And Wheel Of Life Exercise – Download (PDF)
• The Checklist Manifesto: How to Get Things Right by Atul Gawande
• Limitless Advisor
• AdvicePay
• Rich In Life
• Kinder Institute
• NAPFA: Consumer Tools
• PreciseFP
• ShareFile
• Why To Use George Kinder's 3 Life Planning Questions With Financial Planning Clients
• eMoney Decision Center
• Implementing Client Meeting Surges To Boost Advisor Productivity And Systematize Client Value
• Wealthbox
• Hubly

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

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Full Transcript:

Michael: Welcome, Michelle Underwood Gass, to the "Financial Advisor Success" Podcast.

Michelle: Thank you, Michael. I'm so happy to be here. I'm looking forward to it.

Michael: I'm really looking forward to the discussion today as well, and to talk a little bit about, as I think about how we make the financial planning process more repeatable, more systematized in our firm and trying not to lose the customization it takes for the fact that every client is a wonderfully unique, special human being that is not perfectly standardized themselves.

To me, there's a logical ideal of this that I've always viewed the ultimate version of this is Starbucks, where they have done process improvement on every single part of how that coffee gets made end-to-end in 5-to 10-second increments all the way down the line. Every single part of that process has been refined. Anyone who's been a Starbucks customer for ten, 20 years, you can actually tell they make the drinks even faster now and getting them down the line than they used to. So, everything about that has been iterated on in a standardized fashion to be efficient, and that's how every single person can order their frothy, unique, special 17-word-long drink and have it made exactly their way at any location very quickly and efficiently. It's like the perfect balance of every part is standardized so they can make every drink customized.

And I don't know if we can ever quite get to that level of ideal in the financial planning world, but I know you have spent a lot of time trying to make your planning process more repeatable, more systematized in how you do it in the firm and don't necessarily have global national Fortune 500 resources. So, I'm excited to get to talk about how do we do this in the real world as an advisory firm of just taking this pretty complex financial planning thing we do for each client who's wonderfully unique and still trying to create some level of systemization and efficiency around it.

Michelle: Well, I think you've pegged it. That's for us been the most challenging part of this business. And we use a lot internally the Starbucks analogy versus, say, a cheeseburger at McDonald's because it is a customized process. But what we found is it's so challenging to make it efficient and to make it repeatable and consistent so that all clients get the same level of service, but it's individualized for them.

Michael: So, I guess I'm curious even how you think about repeatability and standardization and what the goal is. Is this an efficiency thing for you? Is this a consistency thing for you? "I'm not trying to be efficient. I just want everyone to get the same level of experience." How do you think about it?

Michelle: It's really a combination of both. First off, we don't want us to miss any of the pieces or the components. So, when you start focusing on what that client…is top of mind for them and what they really want, I don't want to ever not cover all the different aspects of what we think every client should have looked at at some point. And then what order you look at it sometimes varies by their needs on the financial planning side.

But the other thing is 'complex' is the perfect example or perfect word. I thought that I got my CFP and that you would move down, and this would be really simple compared to things I've done in the past and cookie cutter. And it's not. And I guess it makes sense because you are dealing with human beings, and we're all different. But there're so many moving parts, and how do you not let something fall through the cracks? That's been our biggest challenge.

Michael: Interesting. So, I feel like you come from it almost from an end of just I'm thinking checklist manifesto style. We're professionals. We know all the things to do, but there are so many things to do, and there's so much complexity in the moment that having a system to follow, just make sure we don't accidentally slip up and miss anything in the busyness and the complexity that we're going to come back three, six, or 12 months later and say, "Oh, we didn't cover that, did we?"

Michelle: Exactly.

Michael: "That's not good. Oh, shoot."

Michelle: Yeah. People's lives are at stake. And so, you want to make sure that you haven't missed anything and that nothing does fall. Fortunately, we haven't had that happen, but that's what wakes me up in the middle of the night, that it will happen at some point. And so, we do have almost, there're so many good books, but yeah, "Checklist Manifesto" is one of them that I read early on. And we've really tried to make sure that we've thought of all the different aspects and all the other places, other software, everything that could get touched by anything that happens with the client.

What Paradigm Advisors Looks Like Today [8:19]

Michael: Interesting. So, before we dive a little bit more into the actual process itself, help me just understand the advisory firm overall, the business as it exists today, who you serve, what you do, the clientele, and the team structure.

Michelle: Okay. Yes. So, who we serve are really high-achieving young professionals, great people that are very success-driven and young, primarily mid-career, say 30 to 45. That's one end of the barbell. Oftentimes have families, have sometimes dual careers, very engaged children too in their activities. And so, how do you balance all that and do everything successfully? Can we step in and take things off their plates and really help them to visualize what their future is going to be like, and are they living their best life? And then make sure that we're catching all the plates and everything's covered to help them achieve the results that they want. That's one side of the equation. Oftentimes complex compensation, some other things going on.

The other end of the barbell has turned into what I call the hedge fund veterans. It's people who have already been successful. A lot of times they're still really young because hedge funds is a young person's business, and private equity. But helping on that side and looking at having somebody that can understand the complexity of all their different investments. Not advise on those, but to look at their whole picture and once again make sure they're not missing anything, and just be another set of eyes to what they're doing. That's sort of been a surprise of where that side of the business came from because I was really originally geared more to the younger professionals.

Michael: And so, it was a surprise to end up with hedge fund veteran folks?

Michelle: It was so flattering to me and really the biggest compliment because it's people that I have known for a long time in the hedge fund world before I came over to this side. And I was talking to a lot of them and staying in touch with them of "This is what we're doing. If you ever come across anybody, or your kids, or..." We're helping some of their kids in some other things. "We're very interested in this." And they were like, "Well, why can't I talk to you?" It's like, well, yeah, I guess I just hadn't really thought about it, but that they would even look to us was such a compliment.

Michael: Because your background was hedge fund world. These were colleagues in prior life before...

Michelle: Exactly.

Michael: ...financial planning, CFP world.

Michelle: Yeah. And I sort of jumped ahead. Yes, I started in that. Well, I started in accounting, but after a few years in tax, I went to a family office and then another hedge fund and then started our own hedge fund back in '92. And that's Paradigm, what we call Paradigm 1.0. So, yes, I have a long history in the hedge fund. We ran a short-biased hedge fund for 23 years successfully, which is a feat in itself.

Michael: And so then help us understand the scope of the business overall of how many clients is it, revenue of the business, team size of the business. Just again trying to visualize who does what and what the firm looks like overall.

Michelle: Yeah. Today there's 4 of us: myself and my long-time business partner, Kirk Dunk. And Kirk and I have been together for over 30 years professionally.

Michael: Wow.

Michelle: Yeah. He started with me right out of college and was the other half of Paradigm 1.0 as well. And so, the two of us run it. He runs the investment side and really C-suite. He's more the visionary, and he's the... Is it implementer or integrator? Integrator.

Michael: Okay. Yeah. So, EOS world. I can see you're the visionary. He's the integrator.

Michelle: Yeah. And so, he's the CFO, CCO, CIO, CFO, CTO, whatever it is. He does all that behind the scenes, and then I'm sort of the face of the firm and do the financial planning. Then we have Monica is our director of ops, and she handles everything operationally, helps with the billing, and setting up the accounts, all that. And then we have Kathleen, who is our financial planner with me and our associate planner, and she is usually the second chair and helps me with all the meetings and doing everything in the financial planning side on that side.

So, right now, we have, as far as clients, we have 89 total clients, and of those, 70... I sort of break it down into total clients and fee-paying because we have a lot of little accounts that are friends and family-type things. So, I guess it's easier to sort of focus on the fee-paying clients. There's 71 of those right now.

Michael: Okay. Okay. And can I ask the revenue of the business overall?

Michelle: Of course. So, today our run rate is around $800,000, and it's been growing pretty rapidly. So, we look at more on the run rate. For example, in this quarter versus a year ago, we're up 30% on the run rate for Q4. And for the full year, our revenues are up 48% versus a year ago. So, we're having...

Michael: And is that some of the reasonable market lift we've been getting this year? I don't even know if you're AUM-based or if this is like it's been a growthy year and a lot of new clients are coming on board.

Michelle: It's been a growthy year. Well, we've had 11 new clients this year, which is actually a little low, not lower, but it's not higher percentage-wise because we started from a higher base. But the main thing is that we have a lot more financial planning and complexity of the client base.

Charging Clients Separate Financial Planning And Asset Management Fees [14:37]

Michelle: The way we charge is we really think of it as there's 2 components because, as you know, with a lot of the younger professionals, if you're charging on assets, they just don't have the assets to give you for one reason or another. And so we charge a comprehensive financial planning fee as one piece of it, and the other component is a reduced asset under management fee. So, when you put the two together, once you get up in assets, say a million or more, you're going to come out pretty close to the AUM method of charging on AUM. But it allows us to serve people that can't or don't yet have the assets to give to us.

Michael: So, where do you set those numbers in practice? Where does the planning fee start? Where does the AUM fee start?

Michelle: The planning fee starts at $5,000 for an individual, a more straightforward W2-type individual without a lot of complexity. And then, for a couple, it would be at $6,500 today, and it goes up. I think our ADV says it could go to $75,000. We don't have any $75,000 clients as of yet. But we do have a pretty wide range because with the complexity, obviously the time invested and the sophistication level of being able to understand it goes up as well.

Michael: And is that a one-time fee for new clients, or is this like an annual planning fee ongoing?

Michelle: It's an annual planning fee. We've gone through several iterations. I think we spent way too much time on this.

Michael: So say we all, yes.

Michelle: But really, pretty quickly, we realized that charging an upfront fee and then converting to a concierge fee, it was hard to determine when do you go out of one and into the other and all those kinds of things. So, we just wiped that idea, and we charge an annual fee from when they sign the contract, and it's always cancelable with 30 days notice. Assuming that we've got a good relationship and nobody's unhappy, we do ask for a one-year commitment when they come on board just so we can get through the whole process and not leave them halfway done. And we've had very low turnover of clients.

Michael: And then nominally, they just keep re-upping at the same fee?

Michelle: Yeah, I probably have not spent as much time as I should have on the strategy. We were in Limitless for 3 years, I guess, and looking at how you get paid and stratifying the clients of the first ones that came on board and what they were paying versus what people are paying today. There's still probably more discrepancy than I would like to see.

Michael: Oh, so meaning it wasn't always $5,000. It was much lower early on. And some people who started early are still renewing at that rate instead of the current rate that new folks get today.

Michelle: Yeah, as far as the financial planning fee, yes, that's true. What I've tried to do is look at it more on what is our average and median per client and do they fit into that number? And so, as long as you've... A lot of them started with a really low fee, but over time more assets have come on board. So, if we look at the total fee, the fee's not that out of line. It's if you just were to look at the comprehensive financial planning fee, it would be lower than it's supposed to be.

Michael: And so then what's the AUM fee side of this?

Michelle: The AUM fee starts at 75 basis points and then quickly drops down at $500,000 to 60 and then eventually down to 40 basis points. And so, over time, pretty quickly you can get down to a much lower percentage, and as your assets grow, it does drop down below the 1% for people who've given us a lot of assets to manage.

Michael: Okay. So, I get it then. So, if I'm the proverbial million-dollar client that's got the planning fee and the AUM fee, I'm going to pay $5,000 to $6,500. On the planning side, I'm probably going to have a blended advisory fee that's 65 basis points or so as I go through the steps. And so, all in, I'm $10,000 to $12,000 of fees as a million-dollar client, which is pretty similar to most, and you've got a deep planning process to support it. You just get there with the 2 components separately so that when you've got smaller clients, smaller asset clients who don't have investible yet, but they have a lot of planning needs and a willingness to pay you, you can work with them on a planning fee side.

Michelle: Exactly. Exactly. And I found, especially with the younger clients, they are very willing to pay for the value of the services provided. This whole model started because when I was on the hedge fund side and I didn't have any time, and I was trying to do this on my own in addition to running the business, and I couldn't ever find anybody that would help me. And I had relationships with the JP Morgans of the world, but they're all like, "Well, our minimum's X, $5 million, $10 million, whatever it is." And not that I had that kind of wealth, but whatever it was, even if I did, as a hedge fund manager, there's no way I could give them my assets to manage. I wouldn't have any clients because my investors would all fire me if I'm not willing to eat my own cookie. So, it was I looked for this and looked for it, and I couldn't find it for years until I took this sort of change after the hedge fund days and started doing it myself. So, I built what I always wanted and couldn't find.

Michael: Right. So, out of curiosity, how do you bill planning this fee? Is it they cut you a $5,000 to $6,000 check once a year? Do you split it up to quarterly or monthly?

Michelle: We do it typically quarterly. Obviously, under the rules, you can't have over 6 months in advance. The nice regulatory rule. So, we have some clients that say, "I don't want to pay more than I have to." So we charge them every 6 months. But for the most part, our clients pay either monthly or quarterly, and it's just on an automatic renewal and pay. We use AdvicePay for the ones that don't have assets with us or assets that we can bill through. So, a lot of ours are on a monthly or quarterly and we just let the client decide how they want to be charged.

Michael: Oh, interesting. So, you don't have a particular view of we've got to break it down to monthly to make it smooth. Or monthly is too often. It bothers them. We need to be quarterly or semiannual. You just kind of let them pick and then click the button for whatever the period is in the software.

Michelle: Exactly. Yeah. Yeah. Because really people have different designs. It's really funny, and it's not necessarily based on the wealth accumulated or anything. Yeah, some people want to have...it's just like when they retire, they want to have a paycheck every 2 weeks. It's like, why? Because that just makes them feel better.

Michael: And I guess because you have the AUM component as well for clients who do actually have some kind of taxable investment account, you can bill the planning fee as well as the AUM fee from the account once they have one available. You just need an alternative mechanism because you actually work with people who literally might not have an investment account yet. They're just paying the $5,000 fee upfront to start.

Michelle: That, and then for a lot of our clients, we really don't want them dipping into the investment account as they're growing it. I know it'd be easier on us for them to pay from the investment account, but from their standpoint...

Michael: Well, it's fair. They see the investment account grow more if you don't hit that account for the planning fees.

Michelle: Well, I guess that's another benefit. But the main reason is we want the planning fee to be part of their ongoing expenses and their budgeting.

Michael: Oh, okay.

Michelle: And we want the investments to be forever money and foundation money that's continuing to grow.

Michael: Okay. That's an interesting delineation. We basically want the planning fee to be part of their spending budget. The AUM fee can come from the portfolio because that's the forever money that just needs to be managed itself.

Michelle: It depends on the client, but for a lot of our younger clients, yeah, they're doing everything they can just to save as much as they can. And if you start pulling back out of it, that sort of defeats the purpose.

Michael: So, if I just think about this mathing and the total $800,000 of revenue, 71 fee-paying clients. So, average client adds up to just over 10...close to $11,000 of revenue per client by whatever their combination is of planning and AUM fees. I know there's a dispersion around that. Obviously, we all have bigger and smaller clients, but that's kind of overall scope.

Michelle: Yeah, that's it, $11,285 if you want the exact number, average revenue per client. And then the median per client is a little...it's about $8,200. So, it shows you that it's definitely skewed too. We've got obviously some larger clients that skew the average.

Michael: Interesting. And so, I'm just, I'm struck. So, you actively track those two numbers because you know them off the top of your head. Average client and median client.

Michelle: Yeah. I think it's important to look at both because if you just look at average, you end up with that skewing of a few big clients that are supplementing ones that you're not charging enough for.

Michael: Yeah. Yeah. That's a fair point, right? If at the end of the day there's some level of overhead costs or just what it takes to run the business overall, a few big clients can make your average look really compelling. "Oh, I'm way above my average cost per client." But if it's because a couple of large clients are dragging the average up, you could be in a realm where your median client actually isn't profitable, which means your few very large clients are basically overpaying and cross-subsidizing 50% or 75% of your client base.

Michelle: Yeah. That's definitely one negative. And to your point, how much does it cost to serve the clients? And just to be cognizant of that, we don't track hours. We probably should, but my 3 years of nightmares of accounting, I don't know that I ever can bring myself to do that again. But we do pay attention to how much it's taking. And there is a level, which is what's so frustrating from when I started this business of I wanted to serve everyone. I think we all do. That's why we got into it.

But I really wanted to help people early on. And what we realized is that we're not running a charity. And as much as I want to, I can't keep the lights on if I'm not charging what it's costing. And so, we've had to modify that a little bit. But part of the challenge is to get the processing and the systemization. And to your point of customized, but with a systemized process like Starbucks, how do you get that streamlined as possible so that you can serve all your clients profitably?

Michael: Yeah, I find some firms get really complex with how they evaluate cost of every client, but as you say, you can start measuring hours and really drill down. But to me, the simplest way, literally take all the expenses on your P&L, just the total expenses of your business, divide by how many clients you have. And that gives you at least the...

Michelle: That's basically simple for you, Michael.

Michael: It at least gives you a decent baseline to understand roughly how much expenses does it cost to carry this client load and do what we do for our clients. Even when you start there, you start, and then you make a list of all your clients and the revenue that they generate. You start seeing that there's some clients that fall below that line, and then have to decide what you want to do with them.

I'm struck that you also seem to delineate them pretty deliberately. I think you'd said 89 clients, 71 fee-paying clients. So, you just sort of own, "I've got this base of 18 clients that I've just accepted are not my clients that generate a profit. These are my clients that I'm not even trying to make profitable," or the friends/family exceptions that you want to grant to yourself.

Michelle: It is. It's a pretty close, tight little group, but you start taking the employees, and if we have kids and different other entities or whatever, it adds up pretty fast.

Michael: Yeah. So, I'm just curious, do you set parameters around that? Do you set limits around that? Is there a limit as to how many people are allowed to be in that bucket before it's a problem for the business?

Michelle: Well, and that's part of the way we grew this. We came about this business as any advisor would tell you not to do, but Kirk and I viewed ourselves as the private equity firm and built it. We built a million-dollar revenue business without any revenue. So, we knew going into it that we were going to grow the business first or build the infrastructure first and then grow the revenues into it.

Changing Her Business From A Hedge Fund To A Planning Firm [28:48]

Michael: So, tell us a little bit more what that means. What were you building and investing into from scratch?

Michelle: Well, because we were already an existing business, we didn't need the big office anymore, of course, but I still like a nice office. And to me, that's a perk to me. I want a happy place to come to work in a place that's pleasant, enjoyable, and it's close to my home. So, that was if you look at our rent cost and we had no revenue, it's like, "What are you doing? Go back to your basement." But that was not something I wanted to do. So, we have a nice office.

I also was one of those... One of the things I saw early on said, "Don't even think about hiring anybody until your revenues are $350 [thousand] or whatever the number was." It's like, I'll never get to $35 [thousand] if I don't have a director of ops to help me get there. I'm not a detailed person, and it takes me 10 times as long as it takes somebody else to do some of the stuff, and I don't enjoy it. So, I needed to have the support on the front end.

And then there's the software. Yeah, we use eMoney and some of the other software. It's not inexpensive. Obviously, the more clients you have, the more you can spread that cost. But in the early days, most of our initial part was just us. So, we were more of a family office that didn't have the assets to support a family office.

Michael: All right. So, I've got to ask if you recall, so how far in the red did the business run in that first year? How deep was this hole, or how long did it take you to dig through it?

Michelle: I didn't consider it a hole. I considered it an investment.

Michael: Okay. Fair enough.

Michelle: Because we already had the infrastructure in place, we had the reputation, we had the presence here. And if you were really starting a business from scratch and you had no resources, you would have shut all that down and started at ground zero and built it back up. And given my age and stage in life, it's quite the luxury to be able to do this, but it's really no different than if you had an outside private equity person that funded it for you for the first few years, and then you bought them out, but we just didn't have to buy ourselves out.

Michael: So, because you're building from what was previously a hedge fund business, so you had the business name, the reputation, the personal network. You were just literally reformulating the business to say, "We're not managing a short bias hedge fund anymore. We're doing holistic financial planning. This is our offering now."

Michelle: That sounds so smooth and easy. It's not the way it happened.

Michael: So, how did it happen?

Michelle: So, after 23 years of the hedge fund world, Kirk and I had accumulated enough wealth. I was looking at everything on the numbers, and I could retire. And so, we weren't enjoying the business as much as we had. It was becoming more challenging to do what we did. And we just decided that it was time for a change. And so, I retired from something, not to something. And so what I did is when we gave all the money back, this is '15, '16, I started looking for... I thought I had it all figured out. I had the numbers figured out. This is how it's going to look. And then I woke up, and I had no purpose and no reason to get out of bed. I always felt it was missing.

Michael: That's the challenge when we retire from something, but not necessarily to something.

Michelle: To something, yes. And not that I'm that old, but financially we could have done that, but emotionally I wasn't done. And so, I started taking some CFP classes on the side just to fill my time and so my brain didn't atrophy. And no intention of sitting for the exam. I just was curious. And so, I started taking these classes, and it's like, "Oh, my gosh, this is even better than my last career as far as what it does for me and how fulfilled I am. I want to do this full time."

And so Kirk and I started talking, and that's how we got from Paradigm 1.0 to Paradigm 2.0 was that process of what would that look like? Although I had the reputation and I'm well known in the investment community, the people we're serving are very different. We started with zero clients, and the ones that have come on that have known me for the prior years are pretty recent additions, seven years in. So, the first six or seven years was really starting at ground zero and hoping that people find you on the internet and that just being out there and doing the right thing, it's going to grow. So, it's a slow process.

Michael: And how long did it take before you felt like it was actually there and starting to math okay, or at least not drawing the retirement nest egg down?

Michelle: Yeah, we're definitely there now. We're not paying ourselves as much as you would normally get paid doing it for somebody else. But other than that, we're where we want to be. Your chart that you show and some of the XY [Planning Network data on] the 3-year mark, it was uncanny. I thought, "I've done this before. I'll just turn on the light switch, and it's off to the races." And it really did take 3 years for people to realize that this wasn't just some pre-retirement thing that I was just going to dabble in and then leave. And we really are a real business, and we're going to keep doing this forever, whether it's me or somebody else in the seat.

So, it just took a while. The first three years were just like your chart shows. They were ugly. I guess I didn't focus enough. Well, I think entrepreneurs, if we... Sam Zell had a really great quote that if we knew what we didn't know, there wouldn't be any entrepreneurs or something along that. I'm totally forgetting that, but...

Michael: Yeah. If anybody actually did the full analysis, waited for the risk of failure, no one would start a business.

Michelle: Yeah. No one would start a business. And so, I've really jumped in blindly. I could emotionally afford to jump in blindly, but I can't say that I mapped it all out. It worked. Well, if I would have, it wouldn't have worked that way anyway. So, that was not the way it came to be. But, yeah, once you're probably five years in, three to five years in, it's like, "Oh, my gosh, this is really humming and working."

And where the additional growth came for hiring Kathleen, that was two years ago. We used to use paraplanners. So, we were hiring people to do the deep work with me to free me up to do other things and to get out there and really be the rainmaker. And that's our next goal is to start marketing, which we're looking forward to.

Paradigm's "Get To Know You" Meeting With Prospects [36:04]

Michael: So, now take me back to planning itself. You said part of what you differentiate on is this deep, comprehensive planning, thus being able to charge the fees that you charge and even the clients that "just need the planning because they don't have an investment base yet." So, help us understand more what deep, comprehensive planning is to you if I'm going to be a client of Paradigm. What do you actually do? What do I get? What do I go through?

Michelle: So, we've sort of customized. It's called the Paradigm Guides is the initial onboarding and six-month thing. And I'll go into the detail on what those different steps are. I'm also a Rich In Life planner. I do all the Kinder. We really go in and try to help people where we understand them as a whole person, and the finances and the money is just their tool, which a lot of people use. But it really is true. It's you and your life and being balanced.

So, one of the first things we do when people first reach out to us, they talk to Monica, and assuming that they might be a good fit and that we can do something for them, then they'll set up a Get-To-Know-You meeting with myself and second chair, which is Kathleen. And in that Get-To-Know-You meeting, it's really just some of the things that you've been so good about talking about before of "What brought you here today?" And then just shut up. That's hard for us to do. But let the client talk. So, the first 10 or 15 minutes are the client just telling me what's top of mind for you. What brought you here today? What keeps you up at night? Anything that we can pull from them to understand them better and what's top of mind for them.

And then I switch it to an exercise called the Wheel of Life that really looks at... I'm sure you've seen different versions of this over the years. I got it from an FPA seminar I went to. But just looking at finance, career, attitude, let's see, social life, relationship, family, health, and personal growth. And on this Wheel of Life, you've got all these different pie charts. And you figure out on a scale of 1 to 10, not how good you are, but what's your level of satisfaction and contentment to these areas today?

And it really doesn't matter. For career, a lot of times people, if it's you have one of the stay-at-home spouse will say, "Well, I don't have a career." It's like, "Absolutely you have a career. You've got the hardest career on the face of the earth. But this what you do for your purpose and profession is what I consider your career." And so, where they fit on those, and what you obviously don't want to see is somebody that's real lopsided because it's not going to be a very comfortable ride through life.

And so, we talk about all the different aspects of their life and making sure that family... Your career's a 10. You're humming on career and finance, but your family sucks. You're on your 4th divorce. We don't have any of those clients, but that would not be my ideal client. I want somebody that is more balanced than that. So, we look at that, and then we switch in the Get-To-Know-You just to tell them about us and answer any questions they have. One thing I do include in that handout, there's NAPFA has this questionnaire of everything you should ask your advisor. And we've gone through and actually answered all those questions for them. And then it has a diagnostic in the back that tells them why those questions are important, because we really want them to do the research and make sure that, yes, we are the best fit for them.

Michael: So, you're actually... I'm fascinated by that. So, you take NAPFA's "What You Should Ask Your Advisor" handout. You talk them through it in the meeting, or you've written all the answers, and you give it to them as a handout?

Michelle: Yeah, we try to have the meeting focused on them, and then we give them the information that they will need to do the research later to make a final decision.

Michael: And so you basically have created your own equivalent of a... I was going to say a 1-pager. It might be more than 1 page. But "Here's the NAPFA questions. Here are our answers to those questions. Feel free to go forth and ask other advisors these questions and see how their answers stack up."

Michelle: Well, and to make sure because there's a lot of other good... No, there aren't as many as there should be, but there are so many really good advisors out there. And it's really a long-term relationship with your advisor, and so it's so important to have the good personality fit. And we've always viewed this with abundance. We can only serve so many people, and I really want them to find the right fit for them. And we get really excited when people tell us that they're talking to several advisors, not because they're going to choose us over them, but because they're going to find the right fit for themselves.

Michael: So, I'm struck at the beginning of this. I think you said when they initially reach out, they don't actually get you in the first place. They get Monica, who is your director of operations.

Michelle: Yes. And that's really just a 10 or 15-minute call. I don't want to call it a screening, but it's really to make sure that it's worth their time and our time to move forward. Because a lot of times people will do searches, and even though our fees are on the website and everything's apparent and we try to be very transparent, sometimes people are not in a position...a lot of time most people are not in a position to pay those kinds of fees. And so, to be able to talk to people early on, if they just want investments, there's plenty of good people out there that want to give you investments. That's not what we do.

So, really to understand the client and the potential client and their needs. And then we refer, I'd say 7 out of every 10 maybe, just guessing. I haven't looked at Monica's information lately, but we refer a lot of people out at that stage. And I have a nice email that I send out, or she sends it out, that says, "Here's how to find XY, NAPFA, CFP Board, FPA, these other resources. And this is the difference between a fee-only, fee-for-service, and a fee-based [advisor]."

Michael: So, you don't necessarily send them to a particular advisor. You're sending them to other advisor directories like NAPFA, XYPN, CFP Board.

Michelle: I really struggle with that because I'd love to put them in touch with a specific advisor. If we have somebody, like in Dallas and in Fayetteville, which is our 2 offices, I have people there that if they want somebody in person, I can refer them to. Sometimes they probably can't afford very much, if any, of the services. And so, maybe they need a one-time, more of a Garrett-type approach, a one-time service. And some of the XY members do those, too. So, it's easier just to send them out. There're so many good ones out there, and I don't really know enough about them to tell them, "This is the best person for you."

Michael: Right. So, I guess I'm struck by this that a lot of advisors I know really like to do that initial screening call themselves because the concern is sort of the reverse of what you said. Yes, a lot of people aren't used to paying the fees that we charge, particularly when you've got an outright upfront planning fee that starts at $5,000. And so the feeling is like, "Well, I have to be on that call to explain our value and what we do, or they're not going to understand why there's this $5,000 fee. And then I won't get them. And I have to do that as the advisor to make that case. I don't want to delegate that to the team." So, I'm fascinated that doesn't seem to be a concern for you, or you have some different lens that you look at it.

Michelle: Well, I guess what we found in the early days, we were always pretty discerning on who we would take as a client. But in the early days, we got some people in here that probably weren't the best fit for us. But more importantly, it wasn't in their best interest for us to charge them those kinds of fees given their stage in life. And so, I really want to make sure that that's first and foremost. And I guess if you remove... I love everyone, so I have a hard time. If I meet them, I want to take on a new client. So, I guess maybe it's a protection for Michelle.

Michael: Well, I like that. I like that.

Michelle: Protect myself from myself.

Michael: Yeah, I know a few advisors over the years that have said, "Yeah, I don't decide who we're going to take or what fees we're going to quote because I want to help everyone. And then I compromise all my standards. So, I gave it to another team member, and I told them to hold the standards, and they don't have any problem doing that."

Michelle: Yeah, Monica's too nice also. And so a lot of times we'll give knowing that it's not a good fit. If it's somebody that she thinks I can help in an hour and then send them on their way, a lot of times she'll tell them that they're not a good fit, but she'll talk to me. And then I love working with people...

Michael: "Oh, I can help them a little bit. Let me just do something with them for an hour."

Michelle: Well, a lot of times just to give them some confidence that they know... You've got to ask a lot of questions, and it's intimidating. And just to give them the confidence to move forward is a lot of it. Once they have a little education and understanding and the confidence that they're a lot smarter than they're giving themselves credit for, they're going to be so much better off.

Using An "Uncluttering" Process To Gather Client Data Efficiently [46:04]

Michael: So, now take me further through the process. How does this meeting wrap up?

Michelle: So, the way we leave that meeting is we give them a...most of those are virtual and always have been virtual meetings. But if they're virtual, then we look at it on the screen share. If they're in person, we give them a handout, and that handout is just the packet that I was talking about that shows...we call it the Paradigm Guide is what we call our initial process. So, it gives them...we go through what the guide looks like. Then we tell them, "We don't think we're the best person for you, and this is why."

And at that point, I know enough about them. I can probably send them to somebody else that I think would be a good fit. And then we tell them to sleep on it, take at least 24 hours. But there's no hurry. when you're ready to move forward, just respond to the...we send them an email afterwards that has the... It has the ADV, a blank agreement, and the client packet so that they can review it on their own time. And then when they're ready, they email back and say, "We're ready to go." And so, that's when they sign the agreements. We kick off at that point a Docusign with all the information in there.

So, once I get past that Get-To-Know-You meeting, then the process is pretty streamlined as far as the guide. So, it's Get-To-Know-You. The second one is Unclutter. And Unclutter is always done by Kathleen in that we send them a document. This is another area that has taken a lot of work as to how to make it as painless on the client but yet give us the information we need to do a good job. And there's a real disconnect between that, because for some of these clients, it's very painful because they don't have that understanding. They don't have a lot of access to this information. So, we try to reduce the obstacles there.

And then Unclutter, they upload what documents they have. Then we have an Unclutter meeting with them, and that's Kathleen. And she goes in and she helps them to link the documents. But then she's put all the information in eMoney. They link the documents or link the accounts in eMoney. She asks any clarifying questions and anything she still needs information on. Sometimes if they're having a hard time doing it on their own, we'll do sort of a pre-Unclutter where she goes in and helps them pull documents and that type of thing. We get authorizations from all their CPA, their insurance, if they have an insurance or estate person, somebody that they like, we use theirs. If they don't, then later we'll have a way to refer them out.

Michael: So, the authorization is like a pre-templated form of "Dear professional, I'm now working with Michelle Gass and Paradigm. I grant you permission to talk to them about my situation."

Michelle: Correct.

Michael: You made the form, and they can sign it. Then you can send it to the right people.

Michelle: Right. So, there's a form for each type of provider. And so we do that sort of on the front end. So, a lot of that's covered. And that's after the Unclutter meeting, but in that first Unclutter process to get all that lined up. And Kathleen's been really good. It's so interesting to me how much this industry, how complicated it is, but how much it's like what I did before. Which you probably think, "Wait a minute, short seller analyst to financial planner." But in both instances, you're looking... You've got the tea leaves, and you have these little clues, and you have to turn over the rocks and be very, very curious and dig deeper and deeper and deeper. And that's a lot of what that clutter is. On our end is, "I see this one line on their pay stub. What does that mean, or what else might be going on?" Or in their tax return there's a schedule C on there that we didn't talk about. What's going on there? Are there opportunities here to really go deeper into all the different aspects?

Michael: So, I guess I'm just trying to visualize this Unclutter meeting. Overall, am I taking it too literally to think we're literally uncluttering them?

Michelle: Well, it's more the step or the process is to Unclutter, which means bring me your shoebox. Obviously, we prefer to have a PDF online format, but bring me all your PDFs and everything you've got and just dump it in here. We do the Unclutter. It's not so much them doing the Unclutter. It's us, but it's taking the tidbits that they... The pieces that they've given us and being able to put the whole picture together financially.

Michael: And I'm presuming you do all this with eMoney Vault?

Michelle: We put those into eMoney Vault. We've gone through several iterations. To make it easier on the client, where we go now is it's just a very simple format of "Are you employed? Upload your last 2 pay stubs. Upload your last 3 tax..." And they sweep it all into almost a ShareFile-type setup. So, they don't have to worry about where do I file it? What is this? Do you need this? It's like if it has a number on it, sweep it into this vault or into the ShareFile.

And then once they've done that, we're the ones that go through and decipher what's what. We then put it into the format of we've got several other files of its investments, employment, estate, insurance, and taxes. We have the different folders. And so when Kathleen goes through and does that whole Unclutter process, she gets everything aligned the way it should be. And then we are the ones that actually put that into eMoney into their vault. So, when she has that Unclutter meeting with them, which is part of the process, she shows them where all their information is in the vault, and they start linking their accounts.

Michael: Okay. So, I guess I'm trying to just think through sequence of process. So, the client says they want to move forward. They get their DocuSign envelope with agreement and the rest. After they finish that, they get some kind of initial onboarding document that says, "Here's all the things that we need, and here's how you create your ShareFile account and begin to upload them. Just please dump everything into this folder. We'll sort through it for you, and then we'll schedule a meeting in 2 weeks or whatever it is to have this Uncluttering meeting and talk about all the things that you uploaded and ask whatever questions."

Michelle: Right. Yeah. More or less. And we don't make them set up anything in ShareFile. In this one document, which is part of PreciseFP, they just sweep it in there, and it just, poof, it goes to where it needs to go. We've really tried to make it as painless as possible for the clients.

Michael: All right. Wait, so then help me understand what the tech pieces are that are getting used here. So, now there's ShareFile, there's eMoney, there's PreciseFP. So, how does this look like? What am I seeing from the client end as you go through it?

Michelle: The only time clients see ShareFile is at the bottom of all our signatures. It says, "Upload files." So, they can upload that way. That's as close as they come to really know in ShareFile. The PreciseFP is a form that we've used. I have a love-hate relationship with PreciseFP. It's not as pretty. Visually, I don't like it, so we've tried to make it as simple as possible. But it's a form that just asks a few questions, and you just sweep your PDF into this spot, and then it all comes back to us.

Michael: So, you make your onboarding questionnaire in PreciseFP. It prompts them to upload 2 pay stubs, 3 tax returns, all that good stuff. But they're just uploading it into or through PreciseFP, and then you've mapped with PreciseFP, "Please dump it in this ShareFile folder over here."

Michelle: Correct. Yeah.

Michael: So, the client's primary interface for onboarding is the PreciseFP forms?

Michelle: That's correct. On the onboarding process, that's really what they see.

Michael: And you don't actually have them start linking accounts until they're actually in the Unclutter meeting with Kathleen?

Michelle: That's correct. Because what we find we've tried... It's been through several iterations or more than several. But we kept trying to make it so that the client was doing this on their own. And the hurdles were too hard for some of the clients. We don't take clients that aren't tech-savvy, but at the same time, their time is very precious. And so, anything you can do to make it as simple and time painless for them, the better. And so, we found that if you do and go on with them to link just even 1 or 2 accounts. You turn them on to eMoney while they're there. You show them where it is and link a couple of accounts. Most of our clients are like, "Okay, I got this. I'll do the rest of it on my own." Some clients want more handholding. And at first we were like, "The only way to make this happen is to streamline it and let the client do all the work on the front end." And we're like, "No, it's real money. We don't want to incur a lot of fee, time, and cost to do it, but we want to make it feel as painless as possible for the client."

Michael: Well, and if you get certain clients that really have challenges with getting things linked or getting their data gathering done, you can get to the point where a handholding process actually is the faster of the 2 than...

Michelle: Totally, and it's more fulfilling for the client. Yeah, it's much faster to spend 45 minutes or an hour with a client than the alternative for sure.

Taking Clients Through An "Intrinsic Discovery" Process To Get To The Heart Of Financial Planning [56:09]

Michael: So, then what's next after the Unclutter meeting? So, now I've got documents, we've linked accounts in eMoney. I've got authorization signed.

Michelle: The I is Intrinsic Discovery, which is really getting at your heart's core. And this is really the heart of financial planning in my mind, because it's putting all the numbers aside and really understanding who are you as a person and what's your vision for life today. It's going to change, but what's your vision at this moment? And what do you want most out of life? And it's been transformational. I can't say enough good things about the whole Kinder process. And we've taken it's the Michelle version, so I totally butchered it. He'd probably cringe. But it's my version of the Kinder version. And we go through and we do the Kinder questions. We do the Goals for Life. We really get in there and understand what makes them tick and why that matters.

Michael: So, what do you call this next meeting?

Michelle: The Intrinsic Discovery.

Michael: Intrinsic Discovery.

Michelle: So, that's the I.

Michael: So, we've done the external data-oriented discovery part. That was the Unclutter meeting. Now we're on the personal side of discovery.

Michelle: Right, right. And once you have that, it just the bond and the level of trust, it's just amazing how much people want someone to listen and to be understood. And you just give them that space and the connection that's created there. So, then when you come back and you have some of those tough discussions, once you get to the financial planning process, you understand their why, and you can help them understand why it's so important to do this, even though it sounds like a pain in the ass, i.e., insurance or some of the other stuff that they have to do or estate documents and some of the things that people don't want to have to mess with.

Michael: So, I know just Kinder questions can kind of be weighty questions unto themselves. So, I guess help me understand how do you set up the discovery meeting and this conversation? Like, how do you...

Michelle: They know what's coming because in that first, when we did the Wheel of Life in the beginning, as I wrap that up, I tell them that this gives them a little taste of what life planning is and what our approach is. And if people are really uncomfortable and they just want the numbers, there's plenty of good people out there that can help them. It just doesn't need to be Paradigm.

So, we'll know that on the front end. And we do let them know sort of what... We walk through these Paradigm Guides. On the call that Monica does, the initial screening, she pulls up the website and walks through the steps, what complexity looks like, all the different things. So, she's told them, then I've had the Get-To-Know-You, and I've talked through these processes. And then with every email with a follow-up, we say, "This is your Get-To-Know-You. Do the contracts." And once they've signed, "Welcome aboard. The next step is... And this is what we're going to do in this process." And then when they do the Unclutter, same thing: "Thanks for completing this. The next step is... And this is where we learn more about you and get deeper." And then 48 hours prior to the Intrinsic, we kick off their Kinder questions, and those go out to them.

Michael: Oh, you send it to them for the meeting?

Michelle: And this we went through several iterations, too, because otherwise you spend half the meeting watching them write down stuff. And sometimes it's uncomfortable. They need time to digest it. It was just, it was a waste of their time and ours, and we weren't really getting the most out of that meeting. So, now we send it to them. Some people give you one-line answers or fill half of it out. Other ones write a whole dissertation. But that tells you a lot about the client, too, how they approach it and what they write in there. And it gives them some time for self-reflection to really think about this before we walk in and talk about it.

Michael: Interesting. So, then help me understand a little bit more what the actual flow of the Intrinsic Discovery meeting is. What are all the things they answer in advance? And then how does that meeting and conversation flow when they come in?

Michelle: So, when they come in, I spend a few minutes just reminding them why we're here today and that we're putting all the numbers aside and really focusing on them and what they want their journey...because it's like walking into a room and saying, "I'm going on a trip. I don't know where I'm going, or a beach, a mountain, or whatever. I don't know how I'm going to get there, but it's going to be fun." So, you have no idea.

So, really, to be able to chart that journey for them, we have to have what matters most to them. And so, I start... I ask them to take everything if we start. And we read through. You do one client first. And a lot of it is the Kinder, but with Michelle's butchering of it. But I do one client first and have the other one sort of be quiet and just focus on them and walk through some of their other answers to the questions, and then focus on the other client and do theirs. And then we do a Goals for Life. That's a handout that they sort of chart out what their goals are over their lifetime in all these different categories.

Michael: Can you explain a little bit further what that sheet or exercise is just for folks that aren't familiar?

Michelle: Yes. So, Goals for Life really it sets up whether it's career, some of the things we talked about with the Wheel of Life, your career, your family, your relationships. Can't remember what else on there, but spirit, some of the other things that are on there. And to help them to track in one week, one month, one year, three years, ten years, lifetime, they pick out just a handful of boxes that resonate with them and rank them from 1 to 8 what their top goals for life are.

And by then we've talked about so much of this that it's not like just putting this sheet in front of them and telling them to fill it out. It's pretty fast. They can just whip out what matters most to them in those, and we talk through those. And then I do what Kinder calls a torch and really light a fire of give them the vision of what they want their life to look like in a year or 2 or some elements that...just some experience that you can sort of talk to them about and get them to really taste and feel what that's going to look like.

Michael: Okay. And so is that largely how the Intrinsic Discovery meeting wraps up? We start talking through Kinder question responses because they answer them in advance. Then we're going through some Goals for Life exercise. What are you trying to achieve over what time horizon across these various dimensions, whichever ones are important to you? And is that kind of is that where we finish?

Michelle: Yeah. That is where we finish. If at all possible, I love having that in person. It's our one meeting that's a 90-minute meeting just because, especially with a couple, there's enough...and so, we make sure that they have blocked off enough time uninterrupted that they can devote the full 90 minutes, if needed, to that. And then as that's wrapping up, we set them up for the next meeting: "And now that we've done this, this is what it's going to look like next."

Holding A "Discover Opportunities" Meeting To Prioritize Planning Opportunities [1:04:11]

Michelle: And that's when we go. The next meeting for them is called Discover Opportunities. And that's been through lots of iterations as well, because there's so much information to talk about. And so, we've stepped it back and used a lot of the statement of financial purpose and what matters most to them. Just summarized their main goals. And then we go through and look at each category, like cash flow and estate, and insurance. These are the top things. And we try, by that point, we know enough about them that this has been top of mind for them.

And so, by the time we have Discover Opportunities, we've done a complete insurance analysis of their P&C [Property and Casualty]. We've looked at hopefully some of their life and disability, if they have it, if they don't, why that might be important. Reviewed their estate docs. We don't go over this with them. We just have it all the work done so that we can tell them, "This is what could get in your way. This is where we see potential landmines. And these are the things we're going to be working on together over the next year."

And then we, with them, decide what's their top priority. And from that point, it's very, very high level. We used to go too deep. And now we're just really high level. "You're going to get a lot thrown at you in this next hour. Just remember, these are just topics and all...it's a smorgasbord." And so, then together, we're going to decide what's the top priority and what are we going to work on first.

Michael: Interesting. So, I'm just trying to envision flow. So, this is basically like a prioritizing meeting.

Michelle: Exactly.

Michael: We've done some preliminary analysis. We found potential things for you across all these different areas. Which one do you want to tackle first? But you're not doing an entire one- or two-hour financial plan presentation and then saying, "Which of these recommendations do you want to act on?" You're kind of starting with the "Here are areas that we think may have some planning issues or opportunities. Here's a little bit about it. Which of these do you want to spend more time on?"

Michelle: Yeah, because we did try to conquer the world in 1 meeting, and it just doesn't work. And everybody leaves deflated and overwhelmed. And we realized that we were throwing way too much at our clients, and it wasn't fair. So we've stepped back and really gone from a bird's-eye view, a very high level, and then hone in on what matters most.

Michael: So, what do you bring into this meeting?

Michelle: We prepare, it's a sheet that just starts with the statement of financial purpose, their top objectives. All that came from the Get-To-Know-You, the Unclutter and the Intrinsic, and really honed in on what's top of mind for them. And then we have a list of the categories: cash flow, insurance, estate, and we may put a couple of things in there. We also have a SCOT analysis in there of what could get in their way as far as….strengths, challenges, opportunities, and threats. And so we go through and look at that. And then that sort of summarizes what's going to be on the next page by category. And by category, we really don't go too deep. We just talk about what was top of mind for them, and this is what we're going to do in this area. We try to customize it for that client of what is most important for them at this stage, but not ignoring things that we see are major red flags. If there's something that's really critical that we see that could really jeopardize their future, then we'll tell them the importance of putting that higher on the list. A lot of times that would be something like no life insurance or no disability, things like that, that we just, whether you want to work on this or not, we can't in good conscience not bring this to the top of your list.

And because you're working with younger clients that are planning-oriented and not investment-oriented, or may not have an investment balance. I'm just struck. The whole investments, retirement production side, it sounds like, is not really here or at least not particularly high priority because that's literally not the priority for the clients that you're working with that are coming in in the first place.

Michelle: Yeah. To the extent it's not an "is there going to be enough in retirement" high priority, but they are coming to us because they're making more money than they ever thought they would make. And they get to the end of the day or the end of the year, and what do we have to show for it? A lot of ours are really pretty good savers, but they also have, if you can catch them early, they're just starting those high-income years, and you can help them to understand compounding and the benefits of saving while their lifestyle is down here. You can avoid a lot of the lifestyle creep that comes with real high earning over the years. And then you get stuck on the treadmill, and you hate your job, you hate your career, and "Sorry, Charlie, you dug your grave."

Michael: So, I guess I'm just trying to visualize how much, I guess, either eMoney analysis are you doing or any eMoney output that's showing up in the meeting at this point? Or are we not even there? The whole point is we're prioritizing and picking before we start digging into the analyses.

Michelle: Yeah, we've done some of the analyses, and so that's how we can help them prioritize. Because we can tell them at a high level, "You're saving 3% right now. That's just not going to cut it. Or, "You're saving 19%." We'd like them to save 20% if possible, but if you're saving enough, then I don't care what you do with the other 80% of your income. As long as you're spending it in a way that's aligned with your values, then it's yours to do whatever. You've worked hard for this. You can do whatever you want with it. Just make sure that they're saving enough.

So, we are using behind-the-scenes a lot of eMoney analysis. We're just not giving them some brick or something printed out. And even when we do the analysis going forward, we will pull up stuff in eMoney and show them different things, but we don't give them a printout of really anything. We'll sometimes do a screen capture if there's some things that we're interested in the meeting, but it's a planning meeting. It's a verb.

Finishing The Initial Planning Process By "Establishing The Plan" [1:10:44]

Michael: And so what comes next?

Michelle: So we've gone through Get-To-Know-You, Unclutter, Intrinsic, Discover Opportunities, and then Establish the Plan. These are steps. They're not so much meetings because the Discover Opportunities, to get from that to establish the plan, it all gets sort of commingled, and it depends on the client. And so all those sort of mix together once you move past the first introduction to Discover Opportunities and Establish a Plan. Those are maybe multiple meetings or emails and things going back and forth to get all their ducks in a row and get everything lined up for them. It just takes a while. And then the most important part is to make sure the analyses move into action, that to actually implement these and monitor them and make adjustments as life continues.

Michael: So, what else happens in establish the plan phase?

Michelle: After you've done Discover Opportunity, it's really going in, and we've told them these steps that they need to take. We love using the planning toggle in eMoney, and we can show them, "Okay, this is where you are with these very conservative assumptions that we've shown you. Here's your planning opportunity. If you save another $30,000/year or whatever it is, this is what your future is going to look like. And then you can show when you can retire and how much you have to save and how much you have to spend, those different tabs on there. They love the Decision Center. We use that a lot in our meetings.

Michael: Okay. So, you've got a heavy focus on the, "Here's your current trajectory. Here's how it changes with our recommendations." And since you've got younger folks with 40, 50-year time horizons, the numbers really change...

Michelle: Oh yeah.

Michael: ...when you put the recommendation comparisons.

Michelle: Which is why you can't assume, "Well, the market's done 8.7%, I'm going to say that going forward." You can't do that. And we don't know what the future holds. We could end up in a 10-year low-growth, no-growth period, which for a lot of our clients, one thing I tell them is that would be amazing for you to be in a period where you don't have markets going way up every year because you're going to be adding to it over time. And if you can use this period to be able to buy everything at a discount for the next 5 years, you're in great shape.

Michael: So, I guess I'm just trying to envision, because you've got this Discover Opportunities framework with some prioritization, are you like you tackle one thing and do one thing and then iterate on the plan again? Or are you still ultimately trying to build up to the comprehensive plan that covers all the areas?

Michelle: We're building up to that. But depending on each client and what they need, like some clients, it's a hard sell to tell a client that, "Yes, you've got disability at work, but we think you need supplemental disability because 80% of your income is incentive-based, and it's not covered by your disability at work, and this is why." And you tell them to pay these $8,000-a-year premiums or whatever they are. That's a lot of money, and they don't want to do it. So, you have to use the Decision Center as you go, "This is our recommendation, and this is why," to actually show them so they understand what the repercussions are.

So, in that meeting, we're not going to show the whole plan. Our Decision Center would just have the toggles needed. So, save more money, toggle, or put more away for the 529, or you're getting this big windfall from a sellout of a company or a public IPO. What's that going to look like, and what are my one-time things I can do, and how's that going to change my future? So, the whole plan hasn't been done, but that aspect is top of mind for them. And so that's what we need to be addressing at this moment.

Michael: So, then is there some iterative cycle recurring meeting of, "Okay, we did Discover Opportunities. You don't have life insurance. We're just going to spend the next 3 months solving that, and 3 months from now we're going to pick another thing and do it over again." Does it...

Michelle: Hopefully, not 3 months at a time. Yeah, so we give them, depending on how fast they move, Kathleen's been really good at spoon-feeding 1 thing at a time. We go through the process, and then once they've gotten through the initial guides, we have Fall and Spring meetings offered for all of our clients. And we do it's sort of a modified...

Michael: Is it like "surge" style you...

Michelle: Surge style, yes. That's been through a lot of iterations too, because, yeah, first I tried to conquer the world in my first surge meeting, and it killed us all. So, now what we do is we know what the clients tasks have been and what the Paradigm tasks have been. So, it's an update of "You still have these outstanding. Here's what we need to do." We look at tax estimates, make sure they're withholding enough. Some of the things that are going to matter on an ongoing basis and get an update from them before they are...hopefully by then they've gotten through or at least they're in the insurance process. We've moved over what accounts or set up new accounts.

One thing we just started doing in the last 6 to 12 months is we used to tell people use these money market accounts for high-yield savings. And it was another pain point for the client. And so, what we started offering now is a cash management account that's a separate account under the Paradigm umbrella, but they're not being charged on it. So, it's like a retail account, but we can see it. And that's where they can keep their emergency savings, and then it's invested just in Treasury obligation funds. And it just makes it a lot easier for them. One less thing that they have to worry about.

Michael: And I was going to ask, what are you literally using?

Michelle: So, it's a Fidelity account that we code in the description cash management, which means that it's their account. We can just see it. But it's the Treasury obligation fund type investment, which I don't believe personally in taking risk on yields. You just aren't rewarded enough. So, I want to keep your cash management very, very secure and then use your longer term to build your foundation and to do your investments.

Using Hubly To Create Customized, Streamlined Workflows [1:17:23]

Michael: So, now help us understand how this stays efficient as you're going through again what sounds like a lot of customization that's specific to the client, right?

Michelle: Yeah, that's the biggest challenge of all. We use Wealthbox for the CRM, and it integrates with Hubly. Hubly's an option that you're familiar with. But for everyone else, it's a relatively new software, and it does the workflows, and then it integrates in with Wealthbox. And it's been a total game changer. And Monica and Kathleen have really spearheaded this with my input. But to figure out every step of the process for everything we do, let's get it all lined up.

One good example is you set up a new account. Say you do an IRA rollover account. What's involved not only for Monica to set it up, Kirk to invest it, everything you think of setting up an account, but it impacts so many other things. It impacts our ecosystem of what's the strategy for that client, so that going forward we know exactly what their strategy is and we've got it all documented.

So, to update your ecosystem, to go and update Holistiplan, your tax letter, so that at year-end you've already got in there all these things going on. To go into eMoney and put it into eMoney and make it a managed account. There's just all these different steps. And if you try to remember them all every time, you're going to miss something. And so, it's got automatically for whoever's in charge of that step, kicks off, and they have deadlines and the bells, reminders for it, alerts to get those done.

Michael: What lives in Hubly workflows and what lives in Wealthbox. Where do you interface?

Michelle: All the workflows are in Hubly, and then Hubly reports to Wealthbox, and you see it in the feed that this Hubly task was completed by Michelle or whatever. It feeds into Wealthbox. So, Wealthbox is really your timeline of everything and anything that's a note. Any interaction you have with the client is going to be in Wealthbox.

A lot of times those same notes that we've put in Wealthbox when we go to make a Hubly task, we'll just cut that note literally out of the meeting note and drop it in for Monica, "This is what's happening with this account." So, it actually is in both places, but it's really fast. It's faster to just cut and paste it over there than it is to type it in over there of what the account is and what's going on.

Michael: And then just why Hubly workflows versus the workflows that are already in CRM, that are already in Wealthbox?

Michelle: I would argue with you that there aren't good workflows in the CRMs. That's another area. That was one thing that was so crazy to me coming from an industry that had so much money flowing into it for systems and everything, to come over here where people are so cost conscious and every penny matters. All the systems and how they don't solve all the problems. It's just mind-boggling to me.

But I tried. I was at Wealthbox because I joined XY [Planning Network] very early. When they first came out with Wealthbox, I tried that. I wasn't happy. I went to Redtail. I was less happy there, so I came back to Wealthbox, and it's much improved over the past few years. But they still don't do workflows like a workflow should be done. I know you could do Salesforce, and you can hire programmers and all that, but that's not doable for us at this stage. Plus, I don't like anything I can't control. I'm sort of a control freak, and I don't like something I can't understand. And we tried...

Michael: And so, Hubly, from your perspective, it's like a workflow augmentation. "This just does more and deeper workflows than Wealthbox, so I'm willing to buy an additional piece of software to overlay Wealthbox."

Michelle: Oh, it's been worth every penny. It's totally customizable. You can modify and add to your workflows at any point in time. So, every time we're going through these, we'll notice, "Oops, we forgot about that." And you can just go add it in, and it repopulates. And it's easy for me to say because I'm a visionary, but it happens on the other side of the wall. Everything gets updated accordingly. So, yeah, that's really important to us to be able to systematize it as much as possible.

What Surprised Michelle The Most On Her Advisor Journey [1:22:14]

Michael: So, as you've gone this journey with the advisory firm, what surprised you the most about the path of building the advisory business over the past, I guess, almost decade now?

Michelle: Well, I guess one is how challenging and hard it is. It's as hard as any business I've ever built or harder. So, that was unexpected and a fun challenge for me. But the thing...

Michael: Why was it unexpected? What were you expecting it to be? How is it different from what you expected?

Michelle: I don't always evaluate things in the detail that I need to. One perfect example, when I started the hedge fund Paradigm 1.0, I had a four-year-old, a one-year-old, and a self-employed husband. I still have a self-employed husband and no longer one- and four-year-old children. But I thought that parenting, we weren't planning to have any more kids, and I thought parenting, I'd done it. Ready to go. Let's start a business. How naïve was that? Thank God it worked. But it was because I'm overly optimistic and overly naïve that that happens. I guess I approached this business the same way. I thought, "Okay, so I built one business. How different can this be? How hard can this be? I've done that before." And obviously every business is going back to ground zero. So, that was really a surprise.

The other thing is how fulfilling it's been. I love people, and I love hearing their stories and watching their journeys. How fulfilling it's been for me. But then from the client standpoint, how open they've been and how thirsty they are for someone to share a vision with. And especially the guys, the males. You think of women like to talk all day, and we really get into all this Kinder stuff and the deep thought. It's actually the guys that enjoy it more and get the most out of it a lot of times, because as a male, you've never really been given that opportunity to pause and reflect and think, "What do I want, and what does life look like to me, and who do I want to be?" It's really been an amazingly rewarding experience. So, that's the most surprising thing. As hard as it's been, it's been way, way, way better than I ever imagined.

Michelle's Advice For Her Younger Self And Newer Advisors [1:24:47]

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

Michelle: It's really what led me to take the CFP of being a retirement failure the first time and naively thinking that if I had the money and the finances figured out, that's all that mattered. That's the least of your worries. It's really having purpose and passion and a reason to get out of bed every morning.

Michael: So, what else do you know now that you wish you knew then? What do you wish you could go back and tell you 10 years ago as you're thinking about retiring out of the hedge fund business and coming this financial planning path?

Michelle: To go back and tell my younger self that you don't have to have it figured out and that it's a journey. It's okay. Well, a couple of things. One is that, and that it's okay to be B-plus. And by that, what I mean is when I go back and I think of all my birthdays, my 26th birthday, which is a really odd birthday, but that's still to this day the hardest birthday I've ever had in my life. It's really weird that I had just left...

Michael: Just like a quarter-life crisis. What was going on?

Michelle: I thought I was supposed to be an adult and have it all figured out and know who I was going to be. I was supposed to be all grown up and be mature and have the world figured out. And I had a master's in tax. I had just left public accounting, changed careers, taken a pay cut. Not careers, but going to a family office and ultimately hedge fund, but changing trajectory. And I had no clue who I wanted to be or what we wanted in life. And I felt like I was supposed to have all the answers. And so I guess you'll never have all the answers, so don't worry about it.

And the B-plus part is you're never going to be as good as you want to be at everything. It's just humanly impossible, especially if you're a working spouse, a working mom with a challenging and demanding career. If I could do B-plus most days in everything, that had to be okay.

Michael: I like that. I like that. So, what other advice would you give younger, newer advisors looking to become a financial planner and start their career?

Michelle: Be curious. Ask lots of questions. And you never, never stop learning. You start with where you are and put one step in front of the other, and don't worry about focusing too far out. The CFP is really just that's the base minimum requirement is to have the technical expertise. That's probably 5% of what we do. The other 95% is really understanding human behavior, having a really high EQ [Emotional Quotient] and critical thinking component, and getting out there and looking at all the different aspects and always being thirsty for knowledge.

What Success Means To Michelle [1:28:02]

Michael: So, as we wrap up, this is a podcast about success. And just one of the themes that comes up is that word success means very different things to different people. And so, you've been down the path of building more than one successful business over the years, so it seems that the business is in a very good place now. How do you define success for yourself at this point?

Michelle: For me, it's using the gifts that God's given me to make other lives better and to really have an impact on other people. Most importantly, my kids and my grandkids, and helping them to really be the best they can be and to be a good role model for them. But then also just to brighten the lives of anybody I...just by being, having my presence there in their lives, whether it's somebody I pass on the street or whatever, to really make their lives a little better as a result.

Michael: I love it. I love it. Thank you so much, Michelle, for joining us on the "Financial Advisor Success" Podcast.

Michelle: This has been such an honor, and thank you for all you do.

Michael: Thank you, Michelle.