Kitces & Carl Ep 143: Taking Over Clients From An Advisor With A Different Personality And Communication Style

***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.

Show Notes

• Kitces & Carl Ep 141: Creating The Space To Have More Meaningful Money Conversations With Clients
• Kitces & Carl Ep. 142: Carl's 13 Magical Questions Of Conversational Goodness With (New) Clients
• Master List Of Financial Advisor Conferences For 2024-2025
• T3 Tech Conference
• MarketCounsel Consulting
• Advicer Manifesto
• George Kinder
• Bill Bachrach
• Dan Solin
• Moneytree

Kitces & Carl Transcript

Michael: Well, good afternoon, Carl.

Carl: Michael, Michael, Michael, how are you?

Michael: I'm doing well. We're getting out of spring into early summer, probably a little ways into summer by the time this episode goes live. And albeit for the time, as fun as it has been in conference season and seeing a lot of the advisor community at probably almost a dozen different conferences over the past 2 months, looking forward to not getting on an airplane for about 6 weeks and just hanging out, getting caught up for the summer.

Carl: Yeah, for sure. Hey, when speaking of that, is there much speaking going on for you in December, January, February?

Michael: Some conferences run events in late January into February. Couple of broker dealers do top advisor events. T3 Tech Conference has been there a lot, but not much in December besides MarketCounsel and nobody really runs conferences in early January. Too close to the holidays.

Carl: Thank you.

Michael: I think there's something coming you'll be highlighting?

Carl: I think we may. We're trying to make a decision is to go. We got a chance to do a house swap in New Zealand, so we're like, "Let's go spend December, January, February in New Zealand." I went back and looked at my calendar and I couldn't find anything.

How Advisors Can Facilitate A Smooth Transition When Transferring Clients Away From An Advisor With A Different Planning Style [01:29]

Michael: Yeah, probably not much.

Carl: Yeah, it's perfect. But that's not what we're here to talk about.

Michael: No. So what we're here to talk about... We got a wonderful inquiry from an advisor. We get a lot of these that mail in to I guess either you or I or both of us to say, "Hey, I'm struggling with this. I'd like to hear the Kitces and Carl take on it." And I find this one particularly kind of amusing as a submission for reasons that will become evident in a moment. So, this is from Luke. First names only. So, Luke says, "I'm currently in the process of acquiring a portion of an existing older financial advicer." Shout-out because he actually used advicer.

Carl: Did he really?

Michael: He really did, on purpose. He even wrote in parentheses.

Carl: He's being silly. Yeah, he's being silly.

Michael: No, no, no. "So, I'm currently in the process of acquiring a portion of existing older financial advicer. I'm essentially buying his 'C' clients, which are kind of like, 'A' clients to me, so he can focus more of his time on his 'A' clients. And we're in the same overarching firm, while we're running our individual practices in it. So, my concern..." My, being Luke. "My concern going in the transaction is that there's an obvious personality flavor difference of financial advicer that these clients are going to be getting from me. Their current advicer..." So, the older seller, "is very analytical, whereas I am more purpose and relationship focused." And so, Luke's request is "I'd be interested in hearing a discussion about ways to navigate this." And I was chuckling when I heard this. So, I just read this basically, "What would Carl do if he bought Kitces' clients?" That's basically what I feel like this comes down to, right? And sort of, what I think is...

Carl: Sell them back to you.

Michael: No. You got to take them. I'm moving on to other clients I've got to serve. You got to take them. And I feel like what's implied in this, which I think is a fair reflection, is that the personality of an advisor tends to have some alignment or expectations with the clients, right? At best, that's the style of advisor they're used to working with and showing up with. Worst, maybe from Luke's perspective, "Well, that's the kind of advisor they sought out, am I going to have friction if I show up in a different way?" So, I really am curious, Carl, how would you handle a situation like this?

Carl: Yeah. Well, it's interesting is I just had this conversation. We had 2 advisors, a team came to spend a day with me here in the mountains, and we walked around and talked about what they're trying to build. And they were asking this exact question because the advisor that they are working with...that's not the exact question. The advisor they're working with handled things a little differently than they do. And so, this is a totally common question. And it's not just to keep kind of expanding the circle, it's not unlike people who are changing advisors are used to a certain way. But I think if we keep it really specific, analytical/numbers based, still, let's even stay within the planning world. So, it's not like, "Oh, you used to work with an advisor who was performance and investment centric. No. It's still planning."

Michael: Yeah. I'm still planning, brought more spreadsheets than maybe Luke's preference.

Carl: Yeah. I think the words that came to mind are 'carefully' and 'over time'. That's how I'd handle it. I would greet with deep empathy. I mean, this is increasingly true for me. I just am so grateful and...I don't know what the right word is...deeply respectful of the work that people do in the world. And so, I would be focused on... What's the older advisor's name?

Michael: We didn't get an older advisor name. Let's call him Michael for the sake of example.

Carl: Yes. I would be deeply respectful of the work that Michael had done with his clients and greet those clients with empathy where they are. And over time, the same way I would do it if I got a new client or the same way I would do it if I was trying to activate somebody that might be a customer in the past and now I want to turn them into a more full client, I would greet them with empathy where they're at and be deeply....

Michael: What does that mean in practice, right?

Carl: "Yeah, stop with all the nice platitudes, Richards. Just tell us what it means in practice!" I think what I mean by that is I would probably take the same agenda that they had been having. So, let's just take an annual review or something. I'd probably take the same agenda that you had used. I would have just said, "Look, tell me what you've been doing with these clients." And I'd probably take the same agenda. And then at the end of the agenda, I'd just attached a 10-minute conversation. I mean, so it would feel very familiar.

I mean, I think there's another way to do this. And it's more like shock therapy. And that's my personality. I'd much rather just go, "No. We're doing it this way." But I found that it's much nicer to the humans that we serve to just take this over time. So, I'd take the same agenda. Here's our annual review you've done. Historically, you'll recognize all this, and I'd go through it. And probably even if you do this successfully, you're often doing it with Michael the first time, maybe even, right. And then at the end of that, I would just say, "Hey,..." And this is actually exactly what I would do. I'd go through that. If Michael was in the room, especially, I'd go through that and I'd have Michael be chiming in a little bit here and there and we'd probably plan this before, almost like a play. We'd think about it kind of carefully because the goal is to transition them. And then at the end, I would just say, "Hey,..." And I would use the fact that you've worked with Michael as my excuse for this conversation. It works perfectly. At the end, I would just say, "Hey, I know you've been working with Michael for years. And I bet Michael knows the answer to this question, but I don't. And I don't want to make any assumptions. And I actually didn't want to ask Michael. I just wanted to hear it from you."

And then I'd ask my favorite question, my favorite discovery question. And you can insert whichever one you want. But Dan Sullivan, "We're meeting 3 years from now." We got Dan Solin's, "What brought you in today? How can I help you?" Bill Bachrach's work, which I'm a huge fan of. That's probably what I would do. I'd say, "Hey,..." We'd do the normal agenda. At the last item on the agenda, I'd save 7 to 10 minutes for. That's it. And I would just say, "I know Michael probably could answer this question, but I didn't want to make any assumptions about it because it's so important. So, Jill and John, why is money important to you?" And I would lean into that conversation. And then at the end of that, I would just say... And they would tell me, "Time with my family, mainly outside." Write that down. And then I'd say, "Hey, would it be okay if Michael and I huddled after this meeting, and I looked too at 'your plan' based on what you just told us? And don't be surprised, this will come up again." And depending on what they told me, I might even be tempted to say, "Wow. That's really interesting. Based on what you just said, I can actually see some things we might want to tweak a little bit, just little adjustments we want to make. Can't you, Michael?" "Oh, yeah, me too." And then, "Hey, give us a couple of weeks to consider this."

Or, if what they told me was benign enough, not far off, I would say, "Oh, thanks so much for sharing that. That means a lot to me. This is the focus of everything I do. Is it okay if from here on out, we use that as the lens or the frame for our conversation?" "Oh, great. Okay, cool. So don't be surprised. This will come up again." End of meeting. No big change. No big dramatic shift. Just comfort, continuum, all of that stuff. That's what I mean by greet with empathy. I don't want to blow their worlds up. There's no reason to. They've been happy with what Michael's done. And Michael's done a remarkable job. And we're deeply respectful of that. That's how I'd approach it. What do you think about that?

How To Navigate "Push Back" From Clients Who May be Uncomfortable With A Different Planning Style [10:59]

Michael: I like the framing. I just feel like you have a gift for words and how you queue up the conversations. But to me, what I heard, right, just a comfortable way to introduce one of these probing questions, right? "I bet Michael knows the answer, but I want to hear it from him. I want to understand it from you directly because it's that important. So, what's important about money to you," or whichever leading discovery question you want to ask.

Carl: We're not question zealots here. So whatever question you want. That was just an example.

Michael: It may introduce an opportunity to do some planning work updates. So cool. Now I get to dig in a little bit further and do some planning and bring it back to them if they say something looks a little bit different than where the plan was. If not, again, I like your framing. This is the focus of what I do. Is it okay if we use this as a lens. Now, still, there's a part of me that hears this. All right. Someone's going to say no.

Carl: No, really? Well, let's push out. Give me an example. Who would ever say no to that? You just told me I don't want to be a burden to the kids, and I'd like to leave some to my favorite charity. Or give me an example of how you could see this going sideways.

Michael: I guess that's fair. I mean, I'm envisioning the subset of clients that just...I hate to overgeneralize, just are not into that side of planning, right? "I am a spreadsheet guy and I liked Michael's spreadsheets. That's why I work with Michael because we nerd out over spreadsheets together. What is this weird, awkward, personal question about what's important about money?" I guess be fair. You're right. I don't think there's pushback after they give the answer. I think the question is whether someone pushes back against the question [itself].

Carl: Yeah. No, that's fair. And that again, I think that's why I'm not a question zealot is that you can tone those questions back. I always think of this on the spectrum in deep respect to George Kinder and the work he's done. I mean, I think when we talked about this 15 years ago was even more of the case of "Wow, how do I do that?" That takes real skill and real comfort, and frankly, inclination and desire to be that kind of an advisor. And so, I put those questions out on the spectrum and then I tone in a little bit to go back to Bill Bachrach's work. And you can get all the way down to your favorite question, "What brought you in today?" We could say, "Let's just pretend we were meeting for the first time today." Or, you can say this at the end of the meeting. It's just a curious question. "Let's pretend you and I were meeting for the first time today. What's on the top of your mind right now that maybe we haven't talked about?"

So, you're just introducing some way, wherever you're comfortable, you're just introducing some way of... And then let's say you are comfortable with Dan Sullivan's question. "Hey, just curious, if we were to meet 3 years from today, a recording day, if we were to meet 3 years from today, June 11th, 2027. And let's say you were really happy with this relationship. What would have happened to make that so?" I think that's an okay question, even for a spreadsheeter, an engineer. "Oh, I love the spreadsheets and performance is really important." And I mean, what you'd try to be getting at is we met some of our goals. Maybe not crying on the couch and time with my family, but just like we met somewhere. "Oh, okay. Great." And that's what I'm saying with empathy is, that's fine.

And you've decided that you may not be able to pull those people all the way. But now you've got some spot where, "Okay. This couple really likes spreadsheets. They want to be able to track things. This is awesome. I've decided I'm okay with that." And so, you're just trying to get at "why"? I understand you want to build a really efficient ladder against this wall. Are we sure that's the right wall? To paraphrase [Stephen] Covey, right? So, I'm just suggesting maybe rather than being, "I know you've worked with Michael and he has lots of spreadsheets. I do life planning." I'm just suggesting maybe we could think of this as a 12 to 36-month series of righteous tricks. And that some people, the righteous trick may end with Jerry, my favorite example. Jerry, just saying, "Man, I don't want to be a burden to the kids." What pushback do you have there?

How Advisors Can Manage The Risk That Some Acquired Clients May Not Be A Good Fit [15:59]

Michael: I don't know that I have pushback. I feel like it's a comfortable way to approach the issue that Luke is raising, which is, how to navigate this difference in styles. I feel like it doesn't necessarily solve the underlying implicit fear, which is some of them may not like Luke and his style because that just wasn't what they signed up for. And even as I hear this, I don't know that there is a solution to that. I mean, when I hear a situation like this with Luke, my nerdy spreadsheety brain then goes to, well, I wonder how they structured the terms of the agreements and whether there's a contingency on the payment so that if a subset of clients just don't want to come along, you're not stuck on the hook, having taken on debt or an upfront payment for clients that decide that they're actually not a fit in this transition, right. So, what have you done in the terms and the structure of the deal maybe to have the payments be based on revenue that actually comes over or a portion of the payment upfront and then a portion at the 12 or 24-month mark with a contingency on how on whether a certain percentage of revenue stuck around. And just build in some preparedness that there really might be a subset of clients who aren't going to come along.

Carl: Yeah. I'd love for you to talk real quickly about what you... Because I remember often those structures were basically a three-year earnout and I'd love for you to talk about what you're seeing. But I had the same thought was it's going to require adjustment from either the clients or from Luke and probably both. And the question is, did Luke want to make that adjustment? Is Luke thinking I'm going to get every client to come all the way over to where I want them or I'm not going to be happy? Or, is Luke saying, "Hey,..." And I love that game. The "game" and I've used that word very carefully. I mean, look, abusive, unprofessional performance chasing, there were certain things where "Hey, this is not a good fit." But then there's a whole bunch of room in the middle that's interesting. I kind of enjoy that chess match, if you will, of can I still serve you in a way that makes you really happy and maybe just maybe sneak some little things?

Michael: Yeah. I mean, the thing that makes me nervous on behalf of Luke and the Lukes out there in situations like this is... So, me paraphrasing a little bit, I feel like, Carl, part of what you're saying is, "Hey, Luke, you might have to adapt your natural style a little bit, at least initially. Because we've got to give these clients some comfortable transition." And you can start introducing the conversation even at the end of the first meeting in the ways that Carl, that you highlighted. But that this is probably going to be a transition period where you might have to be a little bit outside of your natural zone and style while you transition these clients. And on the one hand, to me, I could think of a lot of situations where business change was happening, and stuff was going on. "Okay. I got to get stretched a little outside my comfort zone for a while." But only because it's for a while.

And the part that I get nervous about in hearing situations like Luke's is unless I did this whole transaction for a fixed upfront payment, and now I really have to keep them. Because I need the revenue from them to pay the notes that I took on because I did this as a purchase acquisition, and I lose the flexibility to make the call that some of these clients just really might not be a good fit. Maybe they were they were a little too Michael and not enough Carl or not enough Luke. And just I worry for people in situations like Luke's, be careful that you structure a deal in a manner that allows you to decide some of these clients really aren't a good fit and that you're not stuck with them. And Luke says they're at a similar overarching financial advisory firm. I'm not sure if that's a framing to a broker dealer. In a lot of the BD world, these types of transitions are done with split rep codes as percentages of revenue. And so, if someone's not really fitting, you just give the client back. You give the rep code back. You give the revenue back if it's not fitting.

For other deals that have more of an upfront, it's been common for a couple of years now that you might have a payment that is 60% or 70% up front, 30% on a contingency that at least 90% of revenue has stuck around after 12 or 24 months. Adjust levers as you wish about the percentage and the time period but something to that effect. So that on the one hand, if you try to make a good faith effort to get some clients that don't come along because they just don't want to be transitioned, you haven't paid for revenue that doesn't stick.

But it also helps in situations if there are some clients that you don't want to continue with because that relationship isn't working and you don't want to indefinitely adapt yourself to something that's not a natural style that you have left yourself the means to say, "Hey, maybe this client isn't a good fit." Because I find overall, for firms to really get good transitions, you basically have to line up across 3 dimensions. You need some alignment in your planning service philosophy. How you do planning, how clients should be served. If you're at least AUM model or AUM related, you have to align on investment philosophy, whatever it is. There's not one that's right or wrong, but if yours is polar opposite different than the person you're acquiring from, that usually doesn't go well and you need some similarity in communication relationship style or you tend to get some friction. And you can navigate some of those differences with some clients, but it navigates smoother when you're more aligned and so, not everybody can find the perfect match. That's why if you're going to do a deal where it's maybe not the perfect match, there's some contingencies in how the deal is structured so that you're not stuck on the hook with people that you find you really don't want to work with in the long run.

Carl: It's really interesting to me. I want to make sure we save some time to talk about what would happen if Michael bought Carl's clients. But I am curious about... There's part of me that just doesn't want to buy that whole... I'd love the challenge, because at the end of the day, I don't believe that there's some sort of archetype engineer. Listen, I am almost always wrong. I'm just never in doubt. So, what I'm about to say is... I haven't even thought it through, but it's just a feeling, a sense I have that I want to just say it and see what happens. I'm just not sure that... Even as I'm saying it, I know I'm wrong because I've had conversations with a few people. But for the most part...

Michael: You really don't think there's an engineer archetype?

Carl: No. No, no. For the most part, what I hope that we're pointing at is humans. And even the most data driven, robotic...just paint the most engineer, deeply stereotypical engineering sort of driven person, I love the idea of having the challenge unless they're just... I won't use any foreign language on our podcast. But unless they're just people, miserable people, I would love the challenge of being, "What's it all for? What are you doing this for? Why?" I would love the challenge.

Michael: Hey, I hear you.

Carl: I can make you cry.

Michael: I hear you until, okay, there's doing the challenge and then there's doing the challenge with 2X revenue or 3X revenue and you're up to your eyeballs.

Carl: Right, it's fine. It's not what I would prefer. But I just wondered as you were talking, "Wait, wait, wait, are we...?" Behavioral finance, values, purpose, these feel like human things, not one human. Now we feel differently about them. But if I can make you cry, then... I'm just trying to get you to respond to that. I said it earlier and you just went right past it. All I mean is I think... Okay, tell me this. How is this different? I think it is. So I'm asking for clarification. From what I heard for the year I was in London, "We don't talk about such things in London, this feeling, this purpose thing. The U.K., we just fold our arms and we don't." Guess what I heard in New Zealand? "We don't talk about such things in New Zealand." Guess what I heard in Wisconsin? "We don't talk about such things in Wisconsin." I think these are human, purpose, sense of purpose and contribution and values. Are you just saying, "Well, yes, some people are interested in talking about them and some people aren't?"

Michael: Yes. And/or some people are at a stage in their financial and life journey where they're ready to navigate that conversation in that stage of life and others are not. So, it's one thing to say, "I'm going to hang my shingle around a firm that has those conversations and take anyone who comes in. And I'm going to take a crack at an engineer stereotype that comes in. But they came to my doorstep, so apparently, they're interested in something," and start that conversation. I feel like it's in a different context when it's "No. No, no. I'm acquiring Michael's practice as Luke in this example. And I'm getting a block of clients who didn't choose me." By the end of the conversation, "They didn't choose me. They chose Michael and I'm not Michael. I'm different than Michael. And I'm trying to win them over."

Carl: Yeah, fair enough.

How To Give Clients The Opportunity To Say How They'd Like To Relate To Their Advisor [27:23]

Michael: I do feel like that sets up somewhat of a different context. Although at the same time, this reminds me...so, an advisor friend that went through a version of this years ago. So, his wasn't the communication style shift. His was the I'm a really planning-centric advisor that's buying out a very investment centric book. And it was basically, "How do I get the clients away from the investment reports that they've been getting beautifully printed at every single...?" I mean, I think his was literally the old advisor sent them investment reports and I literally don't have any software to do that. I don't own performance reporting software. And so, part of me was saying "That's a very bold choice of an acquisition to buy that person's book." But you be you. But what he did... This advisor's name is Brad. Brad just went into every meeting when they started out and he just said, "Look, as we start to work together, help me understand what your expectations are and how you would like our working relationship to work. I know you did certain things with 'prior advisor'. I don't remember his name. I know you did certain things with 'prior advisor'. Maybe you loved all the things that he did. Maybe you actually wish he did some things different. But this is an opportunity for us to reset as we start working together in a new relationship. How would you like this to work?" And he just let them start saying it and got some people that just said, "I'm here for investments and performance, and this is what I expect," because that was the book that he bought into. And then he found, in his words, a shocking number that just outright said, "Old advisor brings all these reports and we don't really care about them. I just want to know how we're doing. Can you tone down the investment-speak?" And he basically found that a bunch of the former clients, the old advisor was just talking over their head on investments. They trusted him because they left the money with him, but they didn't actually value the investment talk and reports that he was giving them.

Carl: And it's a shocker.

Michael: And they were totally fine that the reports went away. They basically just came down to the infamous one that we've all experienced at some point, which is most clients just basically want to know that everything should be okay. But it started just asking them, "I know you've worked with your prior advisor in a certain way, what would you like our working relationship to be? What are your expectations?" And just let them clarify and then you can decide whether you want to change any of those expectations depending on what they say.

Carl: Yeah, I love that. And even, "What have you liked? What have you not liked? What could improve?" All that, all those conversations. That's nice.

Michael: Nothing negative to the prior. Just saying, "Hey, this is a new relationship opportunity as we begin working together. And I want to start off on a great foot doing what's most meaningful for you. So just tell me what's most meaningful for you? How would you like our working relationship to be?"

How Michael Would Handle The Onboarding Process For Clients That Are Used To Carl's Style [30:48]

Carl: Love that. Now, everybody's dying to know what would happen if you bought Carl's clients? "You want some rigor? I'll show you a spreadsheet, man. I mean, that guy, I think all his feelings with it during yoga... I don't have any crystals. All right?"

Michael: I'm slightly torn by this only because the way I would show up to this now is probably different than the way I would show up to this 10 or 15 years ago in my career because I still love me my numbers, but I lived more in my spreadsheets than I do now. I think probably the biggest distinction is, back then I said, "Tell me your goals and I'll do the analysis and make a plan for you." And now I say... Well, I probably wouldn't say it this way. But now I say "Tell me your goals," and then say, "I don't believe you. Now tell me why those are your goals and where they came from. And let's have more of a conversation, because I want to get to what your real goals are, because I don't actually believe that the first version of your goals are really your goals." Because now, I've done it long enough to have clients that said what their goals were, and then we helped them achieve those goals. And then they weren't happy when they got there, and they made new goals. And so, I fundamentally distrust clients' first statements of their goals at this point, which means I have to have more of a conversation before I get to the spreadsheety stuff.

But I think what that means is, "Look, I'm still going to have some of these purpose kinds of conversations, because I want to get to my version of what are your goals? Okay. You want to retire at 65. Okay. Why 65? What are you actually trying to achieve. What do you want that to look like really. If I could show you a way to get there on a different timeline, would that be of interest to you?" And then when we get to some goals I believe are goals, I'm still going to go back and do my analysis and I'm still going to come up with some numbers. Again, the tools and tech have changed. Now, I'm probably putting it up on the screen and we're looking at it a little bit more collaboratively which, to be fair, is more engaging than when I used to print 57 pages from Moneytree and put it in front of them as I did many, many years ago. So, I'm still bringing numbers because I don't think I can get away from that. I think I've gotten better at presenting them in a way that's more engaging to the conversation.

Carl: Hold on. Do you think I'm not bringing numbers? Bro, I got numbers.

Michael: You give them after....

Carl: I give them a T-shirt that says, "Bro, I got numbers."

Michael: You want to give them the numbers after the meeting. I want to put the numbers in the middle of the meeting.

Carl: That's what I'm pointing at. I think it's much closer than what I think.

Michael: It's the conversation piece.

Carl: Hmm, the numbers are.

Michael: I want to be able to get numbers to be able to talk about. So, if I move this number here, what does that mean? So, I need numbers. And I can't have that conversation if I know that the number is not sound because then I'm going to be all in my head. So, it has to be sound.

Carl: Okay. Now I got it. You got to have some place to...something to anchor the discussion around. And for you, that's numbers.

Michael: Yes. Or charts or something to that effect.

Carl: That's amazing. So fun. Bro, I got numbers.

Michael: All right. You got numbers. We have to make that a T-shirt for you now.

Carl: For sure.

Michael: Thank you, Carl.

Carl: Cheers, Michael.