#FASuccess Ep 093: Building A High-Income Lifestyle Practice Efficiently By Running It Like A Real Business with Sunit Bhalla

What You’ll Learn In This Podcast Episode

• Oak Tree Financial Planning’s unique service model and fee structure. [05:57]
• Why Sunit only offers one service. [12:50]
• Key questions he asks at the beginning of each client relationship. [18:04]
• How he disengages from potential clients that aren’t a good fit. [22:45]
• Why he doesn’t need to know right away how much his clients’ assets are worth. [28:41]
• The six key meetings Sunit has with all new clients. [38:38]
• Technology tools he uses to keep his practice running efficiently. [46:53]
• How Sunit talks to his clients about risk [56:12]
• How he developed his planning process. [1:09:40]
• Where he finds his clients. [1:15:15]
• Three areas he has focused his goals around. [1:19:36]
• Why Sunit feels it’s important to do a formal business plan every year [1:27:35]
• The reason he doesn’t like the term “lifestyle practice.” [1:29:16]

Resources Featured In This Episode:

Full Transcript:

Michael: Welcome, everyone. Welcome to the 93rd episode of the "Financial Advisor Success Podcast." My guest on today's podcast is Sunit Bhalla. Sunit is the founder of OakTree Financial Planning, a highly efficient solo advisory firm based in Colorado that oversees more than $40 million in assets under management.

What's unique about Sunit though is the way he's been able to build to nearly $300,000 in revenue with a whopping 85% profit margin as a career changer who works with just 17 affluent clients in a hyper-targeted niche of engineers, as a former engineer himself. In this episode we talk in-depth about how Sunit has built his hyper-efficient solo practice with the relentless focus on staying focused: The technology tools he uses to stay efficient in delivering services to clients, his simple fee structure to keep even his billing process simple and efficient, and why he offers all of his prospective clients one and only one comprehensive financial planning and investment management service that they can either take or leave.

We also talk about Sunit's unique financial planning process with clients, the key questions he asks at the beginning of each client relationship to really understand their needs, the six meaning process he uses that starts with a discussion about goals and exploring possibilities, even before gathering all the client's data. And how he ultimately delivers the financial planning results to his sophisticated engineer clients, not by producing and printing out detailed financial projections for them, but using his planning software interactively to model their various what-if scenarios live on the spot.

And be certain to listen to the end, where Sunit talks about how he went about building his unique lifestyle practice the way that he did, the way he very deliberately manages his lifestyle practice as a business, and why he isn't concerned at all that his advisory firm may not necessarily have any salable value at the end. And so with that introduction, I hope you enjoy this episode of the "Financial Advisor Success Podcast" with Sunit Bhalla. Welcome, Sunit Bhalla, to the "Financial Advisor Success Podcast."

Sunit: Thank you, Michael, I'm really excited to be here with you. I'm a huge fan of your podcast and it's an honor to be part of it.

Michael: Excellent, I'm psyched to have you on because you truly have one of the more fascinating practices and niches to me in the advisor space. One of the first things I learned when I was starting my career was something to the effect of, “You gotta watch out for those engineer clients. You know, they're a real pain to work with. They scrutinize every number, every projection, everything you put in front of them. They're really time consuming. They can be really difficult to work with, so ideally you kind of avoid those clients or at least be prepared for long meetings.” And your niche is engineers.

Sunit: Yes, it is.

Michael: These are your people.

Sunit: Yes, and actually I am a former engineer. I spent 18 years at HP and then Agilent Technologies, an HP spinoff. So I'm a former engineer and I found that client base to be awesome for me. I love working with engineers. They ask great questions. They're often very smart. It seems like that sometimes they want to know that I know what I'm talking about but once they know I do they don't need to get told details. So often times they are very smart. They want to offload this part of their life to me and I can just handle that. Once in a while they want to, sort of, dig a little bit deeper, but I often find it's not a big deal. And one thing I do make sure I do is when I have a presentation prepared I have tons of backup slides in case I want to go deep into something, but I often don't need to do that. But it definitely fits me personality-wise, and I love working with engineers.

Michael: Okay, I do think there's a good point there that part of the challenge really with all clients, it's just maybe more noticeable with engineers because of the depth and the discernment of the good questions that they ask is a lot of it really actually still comes down to trust. Eventually the engineer figures out you are a fellow engineer, you are their people, you really are as thorough about things as they are and expect will be done. And then once you prove that you've earned their trust you really will do a thorough job, you will meet their engineer specs as it were, then they trust you and that's that. And then suddenly they don't ask all that many more questions than any other client. It's just maybe a slightly higher trust hurdle to clear, at least on the technical end because they're sharp people who are used to deconstructing numbers and projections. So if you put a bunch of math in front of them you'd better be prepared to defend it if you want to gain their trust.

Sunit: Yeah, I think that's definitely true. One thing I need to keep in mind though is that they might be married to somebody who's not an engineer, so I can't focus my communication onto just engineering types. I need to make sure that I'm communicating to both of those spouses in a way that they will be able to understand and appreciate what I'm talking about.

Michael: That's a good point. So maybe to dive in, just talk to us a little bit about your advisory firm. You run OakTree Financial Planning in Colorado with a niche for engineers. And I love it, like, you go right to your homepage, you are not bashful, "Financial planning and portfolio management for engineers," like, right there on the homepage. So describe for us OakTree Financial Planning, your firm as it exists today.

OakTree Financial Planning’s Unique Service Model And Fee Structure [05:57]

Sunit: All right, so right now I, as you mentioned, work with engineers, and I have 17 clients right now. All but 2 are engineers, so 15 are engineers. They have between about $1 million and $7 million in investable assets. My revenue this year will be right at $300,000, and that's based on around $41 million of assets. So it's around $17,500 per client, on average. My expenses are a little bit under $44,000, so that makes a profit of around $256,000. And that's sort of the solo way of computing profit, right? So it's revenue minus all my expenses for my office, and software, and things.

But that's an 85% profit margin. If I do it, sort of, the correct way for maybe firms where I look at, you know, my salary being, I don't know, $100,000 or something and I have overhead but also my company's 401(k) contributions, then my operating profit seems to be around 40%. So it's around 33% for my direct compensation, 50% for overhead, 12% for my contributions to my 401(k) from my company. And then the rest of that, the 40% is operating profit. So it's a pretty efficient firm.

Michael: It's a fascinating one, like, I'm going to imagine even as people were listening to you describe that, like, first you said you have 17 clients and people are like, "Oh, he's hardly got any clients." And then you said they all have $1 million to $7 million in assets, I was like, "Oh wait." And then you said you have $300,000 of revenue, like, "Oh wait, that's a lot." And then you said you have an 85% profit margin, and suddenly we get to the end of you're netting a quarter of a million dollars out of your practice with 17 high-value clients.

Sunit: Right, yeah, and I'm happy about that. I'm a nerd like you. One of the things I have started to compute is what I call my marginal profit margin. So for taxes, we have an effective tax rate, which is what people pay over all their income. The marginal tax rate is what they pay on their next dollar. I've computed my marginal profit margin, so what's my profit margin on my next typical client? So if I have a $2 million client coming in, I do have expenses that go up. I have per account fees for Black Diamond and By All Accounts accounts and other things. My E&O might go up a little bit.

I do gifts for clients, but if I look at my marginal profit margin it's around 97%. So that means with every $10,000 a client would give me all but 3% of that goes to my bottom line. So I'm pretty, I think, have a high profit margin now, and as I add clients it gets nowhere but higher.

Michael: It gets better. Yeah, oh, I guess, with a caveat that you can only repeat that so many times until eventually, you hit capacity and then you have to start hiring staff. And then you gotta deal with some of the margin compression and just the complications that come from hiring staff, but you got a pretty clear run from here to capacity. Like, do you have a view or a target of, like, how many clients can you serve doing this? Is there a top end of where you can go?

Sunit: So I'm not sure. From a high level, I'm thinking maybe I could double my client bass. That's not really my goal. My goal right now, I have other company and life goals, so my goal has been to add zero or one clients the last few years. I'm thinking of changing that to try and get a new client every year just so I don't stagnate, but my guess is that I'll get to 20, maybe 25 and then re-evaluate. But I've not really been actively trying to find new clients the last couple years. I've been pretty happy with the revenue and the ability to do other things besides work with the clients as part of my job and my business.

Michael: So I'm just, again, even more, fascinated with this phenomenon where you're like, "My goal is maybe I'll increase my growth goal to a client a year." It's like, maybe if you sort of feel like it. It's a fascinating practice and structure to run this incredible high-margin, high-revenue, high-value practice with a small, focused client base. To me, is sort of the ultimate epitome of having a hyper-targeted niche and just going after the people that you're really good at and getting paid really well for the clients that you serve.

Sunit: Right, and I think it's also trying to figure out, what is enough for me? So I think if I wanted to maximize my income I definitely could add clients and maybe staff and make more money, but I am making enough money for me and my family. My wife also works and her job is less flexible than mine, so I can do other things with the kids that she can't do because of her job and issues there. And so I think what's enough for me isn't just about money, it's about other things. I want to make sure that I have time and energy for things besides just working with clients and making money on those clients.

Michael: I think it's the balance point that a lot of us tend to talk about the challenges. We tend to get there, I don't know, slower or with more clients, and it's one thing to say, "I'm comfortable with my work-life balance. I'm making good revenue, it's not taking a huge amount of my time. I'm happy with this." And then it's another to say, like, "Okay, I've gotten the good money but I'm working with 117 clients and I'm kind of drowning in my business but I really like work with my clients and I don't want to fire any of them. And some of them have been with me for a really long time so I don't think it would be right to let them go. So that whole work-life balance thing sounds great except I've got 117 clients I can't fire, so I'm not really sure what to do."

Sunit: Yeah, and I think part of what made it easier for me was that this was not my first career, you know? I used to be an engineer for, like I said, 18 years. And when I started my business we had money saved up so we could last for several years without me earning a dollar. Again, my wife worked in health insurance, that made it easier. And so I could be very intentional when I started of, okay, what kind of clients do I want? What kind of business do I want? What are my short-term and long-term goals? And so I wasn't ever in the mode of just adding a lot of clients whether they were a good fit or not because I knew I had the luxury of both time and money to be intentional and to build the way I wanted to build for the long-term.

Michael: So I want to talk more about this building path but first let me take a little step back to just talk a little more about this core base, 17 clients, 15 engineers, and 2 interlopers who managed to get in the door. You've got investable assets, you're averaging about $17,500 of revenue per client. What are you doing for these clients? Now you talked about it in terms of investable assets but you talk about financial planning and portfolio management for engineers on your website. So what does the service model look like in terms of what you actually do for these high-value clients to justify $17,500 a year in fees from them?

Why Sunit Only Offers One Service [12.50]

Sunit: Yeah, so one of my themes of my business, I think, is being focused. So I think being focused allows me to be more effective, be more efficient, and also to enjoy my work more. And as part of my focus I only offer one service, and that's a full financial plan plus portfolio management for engineers. And so I do both for all my clients, so if somebody comes to me and wants a plan only they're not a good fit for me. If they want me to manage just their money, I'm not a good fit, so what I get energy from is helping clients develop their goals and working with them for many years to help them reach those goals, both financial and life goals.

So I don't really get energy from just taking a pile of money and making it bigger. I want that money to be going towards something that improves their life. And so for our clients I have this one service, the first phase is the financial planning phase where I would do a plan which we can go through in detail if you want to.

Michael: Finish, kind of, describing the what you're doing throughout. But then I do want to understand more about what does an engineer financial planning process look like?

Sunit: Okay, great, and I guess that then a final part after the planning phase is when we then sort of execute on the action items that we develop through that planning phase, and then I do portfolio management for them and also manage changes to their lives, whether it's a career change, or retirement, or whatever else.

Michael: So talk to us about a financial plan. What does a financial plan look like that even an engineer will love?

Sunit: Well, so it's not a big stack of papers. Maybe I should walk through the process and then point out some things that I do maybe that aren't as typical. So when somebody first calls me we typically have a phone call just to see if we're possibly a good fit. So I talk about what I offer, what I do. I find out about them, what they're looking for, and making sure it's a good fit from a high level. If it seems to be a good fit we get together for an initial meeting where I want both spouses to come. There's no pre-work involved but they just come and they just talk. And the main goals of that initial meeting are to see if we're a good fit for each other, so are my services a good fit for them? Will they be a fun client I would want to meet with many times in the future? Do I seem to be a good fit for them personality-wise? So that's the main goal of this meeting, and the first part of the meeting.

Michael: So will you, like...

Sunit: Go ahead.

Michael: When you sort of said, "Will they be a fun client I actually want to meet with on an ongoing basis?" So do you get clients that come in and, like, "Yeah, you'd pay me $20,000 a year but I just don't like you and I'm not going to work with you?"

Sunit: So I'm not sure I would say I don't like them, but I have had cases where they have ways of looking at things that don't align with my ways of looking at things. So I had one client come in and they were saying, "We have quite a bit of debt. My sister has a lot more debt, and we don't mind running up our debt. That's fine for us, we want to have a certain lifestyle." So that wasn't a good fit for me philosophically. I've had prospects where they come in, they seem very arrogant and they're treating me as their work staff, and that's not a good fit for me either.

I want to make sure that the client and I are on a peer kind of level, not a one-up, one-down kind of relationship where they're...I mean, they obviously are hiring me and they can fire me when they want to but I want to make sure we're similar on a peer level as far as we're helping each other. “I'm helping you and we're working on this together. It's not you're hiring me, or I'm really good and you should be lucky to work with me.” It's more of a peer kind of relationship.

Michael: And I guess the dynamic, again, is when you get launched with enough savings that you don't need to drive a lot of revenue for the first few years and you know what your enough goal is about what you're shooting for. You have the opportunity, or I guess some would say the luxury of being pickier about, "I'm going to work with the clients that are the right fit for me. I don't have to take the next client that's marginal because I just need the marginal revenue to pay some bills. I can be more deliberate about choosing the clients I want to work with because I've positioned myself to do that."

Sunit: Yeah, so I think it is a luxury or has been a luxury for me but I think it's also good business to try to filter people coming in. Because I think what's painful for advisors is when you find somebody that you sort of know is not a great fit but you take them anyway for the money. And then over the next one, or two, or three years there's a lot of energy spent or maybe wasted on things that don't really go to the client's benefit. And we ended up firing them, or they fire us, or what if something happens? And looking back in three years you've maybe made some amount of money but was it worth it from a time and energy standpoint? So I think I feel like I have been very lucky to be able to be pickier, but I think all advisors should have some kind of filter where they are looking at prospects and making sure that might be a good fit for the long-term.

Michael: And so your filters are kind of this combination of just, "Can they pay for my services but also am I going to like working with this person?” Do they come with the right attitude? Do they come with generally the right money attitudes that this will be pleasant to work with them as we work through problems? And not dragging them through to say, "You've gotta be more reasonable with your spending." And they say, "No, no, we like running up debt." So now this isn't going to end well.

Key Questions Sunit Asks At The Beginning Of Each Client Relationship [18:04]

Sunit: Yeah, and actually sort of being a fellow nerd I do have certain personality aspects that I actually do try to think about when I look at prospects or even current clients. So do they communicate well? Do they have high integrity? Are they fun to work with? Do they seem to have the ability to delegate work to me? Will they appreciate the help? Will they actually get things done versus just putting things off year to year? And one thing I also think about is, "How much do they make me worry?"

So if they are a client that's on the fringe of not being able to retire but they really want to retire, maybe they're spending a lot and not willing to cut back, that's a client that will make me worry more. So I do look at these personality aspects when I'm meeting with prospects. And that's sort of hard to do in an initial meeting but also to do that for clients that have been around. Some advisors offer a service of doing a plan for clients, and after the plan is done they talk to the client about maybe becoming a longer term client. So I think if I offered that service I'd have the time to evaluate clients more thoroughly, but again, I'm trying to be focused on what I offer and so I don't have the luxury to have that three, or six-month, or nine-month time period to evaluate clients. So I try to do that somewhat in the initial meeting by, again, going back to that asking them questions that will help me evaluate them both individually and as a couple.

Michael: So with this professed niche around engineers as well, is that also a requirement and one of your filters? Like, "I'm pretty much not going to work with you if you're not an engineer?" Or is it more that just your niche is engineers so that's how you market, that's how you get your name out, so you would take anyone who otherwise fits, you just get engineers because you're the financial planning for engineers guy?

Sunit: Right, it is the latter. So if somebody's not an engineer but they're a good fit for other reasons I would take them as a client. My website and my marketing is targeted towards engineers but it's not a requirement for clients to be an engineer.

Michael: Okay, it's just practically speaking engineers, and frankly, engineers with a pretty good sized pile of money and financial wherewithal are finding their way to you anyways because that's how you market and that's how you hold out. And so if they're an engineer who's been frustrated with other financial advisors that didn't understand or connect with their engineering style you are the perfect advisor for them, so here we go.

Sunit: Right, and it goes back to what you've written about in the past where if there's an engineer here in Fort Collins, Colorado that's looking for a financial advisor or planner they might find 5, or 10, or 15 of them on a web search. If they see me and see that I used to work at HP and I specialized working with engineers they'll at least call me. So they might end up working with me but they'll at least call me and we'll probably get together and at least talk and see if we're a good fit or not. So that definitely does help with the...

Michael: And being a former engineer that knows and understands engineers there's a pretty good chance that if you get to meet and talk you are probably going to connect well and probably better than other advisors who either are not built for serving engineers or just aren't a good fit for them at all. Because the engineer is one of the things on their filter list.

Sunit: Right, they're probably comfortable with me and they can look at my background and see how I talk about their questions and that kind of thing, and that is probably a good fit for them. Again, there's sometimes a spouse involved that needs to be also part of that discussion, but yeah, I think it will get me at least a call and a meeting. And in most cases I think you're right that it does lead to having the client wanting to work with me.

Michael: So out of curiosity when you're kind of looking at clients with this filter and your filter isn't just, are they engineer, or do they have X million dollars to meet my minimum? You're talking about these sort of softer values filters, do they communicate well? Are they high integrity? Do they delegate? Will they appreciate my help and the work that I'm doing? Do they treat me like a peer? How do you say no? You do the screening call, it seems reasonable. You do the first meeting, both spouses come. They're terrible, you do not want to work with these people.

I mean, just the actual process of saying no, I know is really hard for some of us, especially when you're sitting across from a prospect who came, or found you, or got referred to you, or whatever the means was. So how do you actually disconnect yourself from these prospects? I'm presuming you don't say, like, "Well, you have enough assets, but you just don't seem like a very nice person," right? You can't do it that way. Well, I guess you could but it kind of cuts down your referrals. So how do you disengage from these folks?

How Sunit Disengages From Potential Clients That Aren’t A Good Fit [22:45]

Sunit: Yeah, so thinking back, I've never really had to, in a meeting, have a case where a client says, "Yes, you sound perfect for me," and then I need to come back and say, "Well, I don't think we're a good fit." That's never happened, and maybe part of it is I often, at the start of that initial meeting, say, "I don't want you to make a decision today. You should go home, talk about it in the privacy of your own home and then come back and talk to me about it later." So I don't try to push them in that meeting to make a decision, and I think that if they're not a great fit I can help them at the end of that meeting try to find another advisor who's a better fit for them.

So certainly if they don't want my services the way I offer them we can talk about other people that offer different services than I do. The cases where I've had people that were not a great personality fit I think that it was pretty clear at the end of the meeting that we're not going to be a good fit. So they didn't call back or it didn't work out.

Michael: I guess that's a good point. When you're not setting them up to say, "You gotta make a decision this meeting," and you're not literally going for the hard close at the end of the meeting anyways, if it really wasn't a good fit there's a decent chance it's not a good fit for them either and they're going to walk away. And at worst if it's even vaguely not a good fit you've left the door open now to sort of say, "I don't know if this is a good fit but I'm going to help you find the person who is," which is a much more gracious way than just saying, "No, I'm going to help you find the person who is because someone out there has a different style with their clients who will be a great fit for you," and you can shepherd them along accordingly.

Sunit: Right, this might be a fault of mine but when somebody calls me I do feel a certain obligation to help them find somebody that will help them, whether it's me or somebody else. So I'll often refer to other NAPFA members because I don't want them just to be stranded and not have anywhere to go. So if I'm not the right fit I want to help them find the right fit, and I'll often talk to them and say, "These are people you can call. If they don't fit for you call me back. We'll find some other names that you can contact."

Michael: Yeah, I do something similar. We're not the fit for everyone as well, both for our advisory firm and a lot of the other businesses I'm involved with as well. But I've got the same...I don't know, either mentality or dysfunction I guess depending on how you want to look at it. It's very, very hard for me to not try to at least help them find someone else who is a better solution. If I know anybody out there who can actually solve this problem to be able to say, like, "Look, I don't know if I'm the right fit but here's someone to call, or here's three people to call. One of these folks should be able to help you." And I realized I went back and looked over the past year. I've referred out literally many multiples of how much business we've actually taken in. And we're growing well but a lot of people reach out and they're not always the right fit, but I feel compelled to make sure that they find some place to land.

Sunit: Right, yeah. I think advisors tend to be helpers and I think that part of our value to society is helping people get financial help, whether they get it through us or somebody else that's also competent.

Michael: So you do an initial screening call just to see if there's generally a good fit. You do a second in-person meeting, both spouses come just to really figure out, like, "Is this someone I want to work with? Am I a good fit for them?" So what comes next in the process for you?

Sunit: Yeah, so by the way, back to the initial meeting for a second. So I think that's where I get a chance to really understand the individuals and the couples. So I ask them things like, obviously, "What brings you here?" But I also ask them things like, "How are the two of you similar and different? How do you make decisions together? What three things are you putting off, or what three things are you excited about?" So things that will get them to both hopefully engage and talk, and I can see both how they're talking about things and how they act as a couple. So I think that's really important for me to get in that initial meeting. And then obviously I talk about my services, and my process, and my fee structure.

Michael: It's an interesting set of questions though, "What brings you here? What makes the two of you similar or different from each other? What are three things you're putting off? What are three things you're excited about?" Are there other, kind of, I guess, like, ice breaker opener questions like that that you've found are effective for getting prospective clients talking?

Sunit: Yeah, so I ask them, "Well, do you feel like you're saving enough?" And so I just leave it very vague and they can talk about, "We feel like we are about to retire, or we're not sure," whatever. But I hope to understand where they think they are financially. I ask them how 2008 affected them, and that's meant to ask them not just financially but also emotionally. Were they up every night worrying about their portfolio and checking it? So it gives me a sense for how nervous they'll be as a client, which isn't a bad thing necessarily. It's something I need to help them manage. I ask the question, I think that I've read other places, "So say we work together and in three years you're thrilled with that relationship. What would've happened in those three years that would've made that so successful?"

Michael: Yeah, I first heard about it as the Dan Sullivan question from Strategic Coach, that, like, if it goes well in a couple years, what went well to make you happy with this outcome in a couple years?

Sunit: And I think I heard that from you as well, so I've heard that several places in the past. And then obviously when they answer questions that leads then typically to other questions. So I have a starter set. I don't ask every prospect the exact same questions. I let the conversation flow as it needs to to help them understand what kind of planner I am in part. I'm not asking about their money at all yet, and just finding out more about them as people.

Michael: So is there a point though that you ask about the money just to qualify them, just to make sure you didn't do a phone call and a prospect meeting and it turns out they have $72,000 of total assets, which is a meaningful life savings for them but just is not going to work for the math of your business and then you're already an hour plus into a meeting, they're like, "We really like you," and they don't have the assets at this point and it's not going to work. So do you screen them at some point around asking questions about the money and the financials?

Why He Doesn’t Need To Know Right Away How Much His Clients’ Assets Are Worth [28:41]

Sunit: Yeah, so in the initial phone call we'll talk about, "This is what I do," and what they're looking for in things. And I'll mention that I don't have a minimum account balance but my minimum fee is $10,000 a year. Actually I don't say that. What I tell them is that my services and fees are appropriate for people that have $1 million and more. And then during the initial meeting where I talk about my fees I talk about my fee structure and I also mention that my services are appropriate if you have $1 million or more, or maybe $800,000 and saving a lot. And I do have a $10,000 minimum fee, so they do know that.

I did have a client that started last year and we had a great initial phone call, a great meeting with both spouses. He called back and said, "Yeah, we'd love to work with you." And I said, "Great, I'd love to work with you." And he was at that point surprised I'd never asked him the exact dollar amount he had in his portfolio. And so I think that, again, I have certain criteria that I communicate to them on my website and in-person on the phone, but I don't want to be an advisor that's stressing, "I only work with high net worth people and if you don't have $1 million you're not worthy of working with me. I want to make sure that they know that I have certain guidelines for clients but that I'm not going to focus on the money. I'm going to focus first on the planning part. And even when we do the plan I'm actually not moving money over until we've done the whole planning process.

So until we've gone through and talk about the portfolio and understand that they have their goals in place. We talked about taxes, and inflation, and insurance, and estate planning. And at that point is when we start moving money over. So I think it's important for me to focus on the planning piece first and then the portfolio piece, sort of, second.

Michael: So how does that get reflected in your fee structure then? Are you charging separately for the financial plan since you're doing all this work up front and you're not necessarily moving assets yet? So best you're not getting paid yet because money hasn't moved and there's no AUM to bill, at worst you do the plan and then they don't follow through and move money. So are you charging a planning fee up front, or a planning fee that's separate from an AUM fee? How do you actually structure fees for this?

Sunit: Yeah, so what I do is just have them estimate their assets when I do the first billing, which is... well, let me go through the process in a minute. But at the goals meeting we sign the agreement. At that point they have some kind of listing of their assets perhaps, and then I start assessing fees basically from that goals meeting on. So even though I'm not managing the money I am charging them based on my normal fee structure.

Michael: And they essentially just estimate, well, "We're going to end up putting about $2 million with you." So you pull out your fee schedule, say, "Okay, well, that means the next quarterly fee is going to be 5 grand, or 7 grand, or whatever the number is so I'm going to be billing you that. You can pay it separately. Eventually if we're managing money going forward I'll bill that from your account in the future."

Sunit: Yeah, that's mainly correct. The one change, I guess, would be that my fee base is all investable assets. So it's money I manage directly, that includes their 401(k) plans, their checking and savings accounts, even 529 plans. So it's not the money they're going to move to me but basically all their money that they could invest in the markets or in support of their goals.

Michael: Okay, so all investable assets, does that even include, like, investment real estate? Are you going down that road as well? Anything that besides the net worth of your house sort of structure?

Sunit: Yeah, so I don't include the house value. I used to actually and I made that change about five years ago. What I say is that if they had businesses or investment real estate that's on a case-by-case basis. So it sort of depends on the client and how much I'm involved, but typically it's not...for most of my clients that are engineers they don't have real estate investments. They don't have other things that I would want to charge on. So typically it seems like they've got a big 401(k) that they've, if they're billing the company for a long time, rollover IRA, and if they're good savers have good taxable accounts and things, but they don't have other things typically like businesses and real estate that I would assess on. But if they do I would look at that on a case-by-case basis.

Michael: So can I ask, like, what is the fee structure you actually charge at this point? Are you still a classic 1% AUM fee regardless of whether you're managing or not? Are you a lower fee? Do you tier it between or otherwise distinguish between what you actually do end out managing versus what you don't?

Sunit: Yeah, so it's basically 1% for the first million, 0.75% for the next 2 million, and then 0.5% above $3 million, again, with a $10,000 minimum fee. And what I do is I set the fee every April 1st for the next four quarters. So basically I set the fee in April, calculate the fee then, and then use the same fee for the next four quarters. And then next April I will reassess or redetermine their fee.

Michael: Okay, right. Because you can't just bill on a current balance of AUM on a quarterly basis because you're not necessarily managing all of it directly. The assets could be other places but you're still billing on it, so you update their household balance sheet once a year, get estimates of the total values of assets, set your next annual fee based on this graduated fee schedule, bill them for increments, and then repeat next April?

Sunit: Yeah, although I actually could do that quarterly I do have my own accounts in Yodlee, so I do have access to all those different accounts. But again, part of the focus is I don't really need to worry about quarter by quarter billing. It's like once a year is fine and then the billing cycles for the next three quarters is very efficient. I just need to make sure I send them the statement, send them the calculation, maybe ADV form if it's a certain time of the year, and that's it. So it's a very easy process for me to do, and I might be getting a little bit more if the markets go up typically but it's not a big deal to worry about. The simplification is more important to me than optimizing every dollar.

Michael: Interesting. And as you bill, like, are you ultimately billing some investment account if you're actually managing it? Or do most of your clients just write quarterly checks? How do you collect these fees when you could be billing some or all of the fee could be assets that you're not managing, so there may or may not be an account on the table?

Sunit: Yeah, so fortunately all my clients I have now do have taxable accounts and IRAs that I can bill from. So in the past I was typically billing or taking my fees from taxable accounts. With this latest tax change obviously that's changed a little bit, but even clients that have maybe $1 million 401(k), they have money in their taxable account that can be used too for my fee. So again, that's part of the focus that makes it easy is that all my clients allow me to take money out of their accounts for my fees. Obviously I'll document them as very transparent, but that makes my process so much easier than it would be if half the clients needed statements that would send me checks, and the other half were people that I took money out of their accounts for.

Michael: Right, then you gotta do billing reconciliation, like, "Okay, we sent out 17 invoices, 12 of them billed the accounts, 3 of them have mailed their checks back, the last 2 haven't so now I gotta send a follow up." I mean, would you actually screen out a client that doesn't have the available taxable account assets to bill at this point because it would be more administratively challenging? Or would you just adjust their fee to recognize that? Or how would you handle it?

Sunit: Yeah, so no, if they were a great client from other perspectives I wouldn't not take them because of that. When clients are starting up I don't manage their accounts yet, and so I do have to send them an invoice and get checks, so the process is there. So it's a nice thing that all of my long-term clients, or all of my clients now have either the ability to take out my fee from their accounts. But there's start-up times where that's not true and that would not be a disqualifier for a prospect.

Michael: Well, so I guess I have a question. If you're charging the same overall fee regardless of whether they're actually giving it to you to manage or you're just advising on it, so essentially you're billing on assets under advisement as opposed to assets under management. Do you see an impact of what clients do or don't choose to give you to manage in this world where you're going to bill them the same thing either way, right? I can imagine some clients say, like, "Well, you're billing me the same way I might as well give it to you." And then other clients will say, "Well, you're billing me the same way either way. Why would I give you any of it?"

Sunit: Yeah, and I think so most clients that work with me are looking for a simpler life, right? So they might have an IRA that they might want to have as a play account, but typically they don't. They just want to make sure that their money for retirement and their other goals is being managed in a diversified, tax efficient way. And I do tell them that if I have a mix of Roth IRAs, and IRAs, and 401(k)s, and taxable accounts, I can be more tax efficient for you. So typically this has not been an issue. I've had clients wonder about maybe having a play account that they can just buy stuff with, and that's fine with me.

But nobody now has an account that they would probably want to manage themselves. I do have one client now actually that has a friend of his is managing his Roth IRA of $50,000. It's not a big deal but every other client I think I'm managing everything I really can manage. So I think because of my fee structure it's not a power struggle. I'm not saying, "You have to let me manage it." It's more of, "These are the benefits if you let me manage this account. If you don't want to, that's fine but my clients typically want to."

Michael: I'm going to bill on it anyways, it's all good.

Sunit: Right.

Michael: So take me back to this process then with a new client. You've got the initial call, you do your in-person meeting. If it seems like a good fit from there you're going to sign them on, so what comes next in that new client or acquiring a client process?

The Six Key Meetings Sunit Has With All New Clients [38:38]

Sunit: Yeah, so my next meeting is the meeting to develop goals. So let me just give you the high level and then I'll go back and talk about maybe that meeting. So the next meeting is developing goals, then it's my fact-finding meeting where I get all the information for the analysis. Then there's retirement planning to come up with a good retirement plan that makes sense, the meeting after that is investment planning. And then the last meeting of the process is taxes, insurance, and estate planning. And from then on we sort of manage changes and manage this list.

Michael: So you essentially end out with six meetings, so I guess, like, five meetings once they agree to become a client, a goal's meeting, a fact-finding, data gathering meeting, then a meeting on retirement or meeting on investments, and then a meeting on, sort of, the rest, taxes, insurances, estate?

Sunit: Right, and sometimes I do add another meeting. So if retirement planning isn't working out in that first initial meeting in that meeting with them, we will meet again and try to figure out, you know, maybe look at cash flow sum, maybe look at other things. So sometimes I do have to another meeting in the process, but that typically is five meetings.

Michael: Okay, and what's the timing and cadence of these meetings? Like, you meet once a month with them for five months? Are they packed in tighter than that? Do you stretch them out more? It sort of seems like it's just a lot of stuff to get through.

Sunit: Yeah, so I let the clients dictate the timing. So some of them want to work really quickly and we can meet every couple weeks. More often they have busy lives, and they have kids, and they have jobs, and they don't have time to meet as often so I sort of meet on their schedule. So typically the process can be done within three months, it might take as long as nine months but I don't want to rush them through that process because it is a pretty intensive process. I want to make sure that they have time to do it correctly.

Michael: Okay, so now walk us through a little bit more of the meetings. I mean, I'm struck even right up front, you said you've got a goals meeting and then you have a fact-finding meeting. I think for a lot of advisors we tend to do those as one and the same, like, this, sort of, data gathering/discovery meeting where we talk about goals and gather the financial info. You're separating these and the data meeting comes second, so what's going on in this goals meeting?

Sunit: Yeah, so that first meeting I don't want them to have to do a lot of pre-work, right? So my first real meeting with them basically I want it to be, sort of, a looking forward meeting. So basically we sign the agreement in that meeting. I do talk a little bit about how I'm keeping their information safe, so what I'm doing on my end to make sure that their information won't be out in the world because of me. I also talk about what their responsibilities are as far as not emailing me with account numbers and that kind of thing, so I talk about security. Then I talk about their values with money, so the kindred type of questions plus a few more maybe.

Then we actually work on developing goals, so I tell them, "You haven't done any work on this yet. Don't worry about this too much. This is just estimating. This is our first time of doing this. We're going to refine this over time but just we'll come up with these goals. You can put approximate dollar amounts on them, approximate time frames on them." And so we work on that as a couple. And I can, again, see them as a couple working together and debating things. The values discussion, the intention of that is to open up their minds, not to just buying cars, and traveling, and retirement. It's more of what they really want out of life, what brings them energy, what do they want to do? What have they always dreamed about doing that they never got to do?

So I want to make sure we think about broadening the discussion rather than just listening to their goals that they come up with on the spot. And again, it's not a stressful time where you have to worry about getting these right. It's just the first cut at it. We'll do this many times again as we need to.

Michael: And so this is, like, just, sort of, a conversation back and forth and you're taking some notes about some of the goals and numbers that they're setting forth? It feels strange to me, and maybe that's just because I'm stuck in my old way of doing things. It feels strange then saying, "Well, talk to me what some of your retirement goals are," and they're going to throw out some number that may or may not be connected in any way, shape, or form to the amount of assets they actually have, except I haven't asked them about that yet.

So I could say, "What are your goals?" And they say, "I want to retire with $2 million at 65." And I have no idea whether they've got 100 grand or $1.9 million, and I feel like that would influence the conversation. Is it not unsettling that you don't know more about where their finances sit when you start talking about these goals?

Sunit: So what I want to do with that discussion is talk about what they would like, and then in other meetings we talk about, "Can we get a plan that gets them what they really want?" So I haven't had many cases where they want to spend $5 million in their lifetime and they only can spend $1 million. Typically it's reasonably close to what they can afford to do, and if I limit it too much by what they have now they may not have these goals that really give them a lot of energy and that are really fulfilling to them. They might say, "Well, we can't afford that. Let's cut it out now."

So what I want to say is, "Let's open up discussion. Put everything you could think about that could be important to you, and, again, we'll go back and refine that in a couple meetings but let's talk about what you will want to do with your life and your money first?" And as far as the process, so I typically use MoneyGuidePro and actually enter the goals in front of them. So I basically with the entering screen I drag the different things and I enter in dollar amounts, and time frames, and how often things repeat. And I think that helps them, sort of, visually see that. And again, I'm working with engineers so they're used to working with software and sort of a tangible thing that they can then review at home. The spouse has a chance of looking at that, making sure that makes sense to them.

Michael: And so that's part of the nice thing about the MoneyGuidePro process is you've got some modules there where you can jump directly to goal setting, needs, wants, wishes, framework, and you don't have to pre-enter all the data first to get to that conversation.

Sunit: Correct, yeah, and actually I even use the MoneyGuidePro gold cards. I'm not sure if you've ever seen these but these are basically the list of typical goals going from retirement spending to weddings, to cars, to travel, to home improvements, to starting a business. So if they're not really sure where to start these cards are a good way of starting the discussion. And what I typically do is have the couple work together with me being quiet for a change, and I say, "Okay, let's play a little game. And you have these cards, put each of these cards in one of three stacks. One stack is things that we definitely want to do. Another stack is things we definitely don't want to do, and the third stack is things we might want to do." And again, that sort of forces the couple to talk about these different things instead of having the dominant spouse be the one determining all their goals.

Michael: Okay, interesting. So the end point of this meeting is just, "Alright, well, we've set some initial goals. Don't really know if we can achieve them yet but at least we've dreamed a bit." You get to some end point in that MoneyGuidePro module where they've set their goals and that's the wrap-up for that meeting? "Okay, we've set some goals so next meeting you're going to come in and we're going to talk about the resources you've got and start mapping out how we get from here to there."

Sunit: Correct. So the next meeting then is to think, "What do I need to do the analysis?" By that meeting they run FinaMetrica so I can get their initial risk tolerances individually. They've entered some information in PreciseFP. A lot of my clients have things electronically so they can deliver them to me electronically. I've had some clients that bring me a box of stuff and what I end up doing is I buy a binder for them and I organize that stuff for them. So I organize things based on investments, and taxes, and insurance, and these are the things that I don't think you need to keep if you don't want to.

So they come to me with this big box of mess and at the end they get this binder of well-organized documents. I know it's something that you've talked about in the past, too, about having to get organized meeting with clients. And I typically do that alone when it needs to be done. But again, most of my clients don't need that. Most of my clients have folders on their desktop or on their computers with all their documents.

Technology Tools Sunit Uses To Keep His Practice Running Efficiently [46:53]

Michael: So you mentioned a few tools in there as well, a FinaMetrica questionnaire, so FinaMetrica's risk tolerance questionnaire. Out of curiosity, just what led you to FinaMetrica versus Riskalyze, and RiXtrema, and all the others that are out there in the space?

Sunit: Yeah, so I started my business 10 years ago, and so that was sort of the standard back then and it was part of MoneyGuidePro suite.

Michael: Yeah, there was no Riskalyze or any of the others yet. Yeah.

Sunit: Right. And so I have looked at those other ones, well, especially Riskalyze a little bit, and I wonder how my nerdy clients would do on that risk tolerance survey. Because it asks you, "Would you rather have an X percent chance of this, or Y percent chance of this?" And I can see my clients just doing the projected outcome probability.

Michael: Oh, I see. Yeah, they're going to calculate the mathematical expected values of each of these, yes.

Sunit: Right.

Michael: So I don't know if that means they will give the most accurate answers or if that messes them up.

Sunit: Right, yeah. And when I asked Riskalyze about this they would say that these people probably would end up in the very high-risk category because they're just playing, doing the numbers. And the emotions of losing 40% won't impact them as much because...well, the survey would say it won't impact them as much, so I have not tried that yet with clients but that was my fear of working and using that. But FinaMetrica seems to do a good job in assessing each spouse separately.

Michael: You gotta see if you can find one client who wants to be a guinea pig and then just give them both and see if they match.

Sunit: Right, yeah.

Michael: And then you mentioned PreciseFP as well which I suspect is not as familiar with for some advisors. So can you talk about what PreciseFP is and how you actually use it?

Sunit: Yeah, so that's an online questionnaire where I can create an account for a client and they can go in and enter in information about themselves. And I use it in a pretty stripped down version, so you can have it take in all their investment accounts, and their loans, and all that kind of stuff. I typically just limit it to demographic information about them, and their spouses, and their kids, sort of, their driver's license, their address, their birth dates, that kind of thing. I think I also have them input their insurance information, but it's a starting point for getting their information. And that along with their statements and things that I'm getting typically gets me what I need to do for the analysis.

Michael: So it's basically it's an online data gathering form for clients to enter their own financial planning data as opposed to giving them the MoneyGuidePro portal and having them log in you just send them to PreciseFP to enter the information there instead?

Sunit: Correct.

Michael: And then as memory serves you can port that from PreciseFP back over to MoneyGuidePro?

Sunit: Right, and actually I send it to Redtail instead of MoneyGuidePro. So I have Redtail, my CRM being the central data place for all my client information. Yeah, so you can send it to MoneyGuidePro if I wanted to.

Michael: But I guess when you're getting things like client demographic information, like, contact information, and kids' names and all that, that's kind of CRM data so you push it to Redtail?

Sunit: Right, and then I also use Laser App when I want to open up accounts for clients or create my custodian's paperwork. So Redtail needs that information anyway to do that paperwork, so that's a good place for it initially.

Michael: Okay, so you've got Laser App for account applications integrated to Redtail so when I need to do an account opening form, hit the button, push the data from Redtail to Laser App, and that queues up for the client to sign?

Sunit: Correct.

Michael: Okay. So you do a lot of this data gathering, I guess, up front, but after the goals meeting and before the fact finding meeting you're sending PreciseFP so they can log in and enter some stuff. You're having them bring statements for the financial information, so what actually happens in the fact finding meeting? I feel like by the time they arrive at the meeting holding their statements you already have all of the information between what they just physically brought that you can now read, or what they pre-entered into PreciseFP.

Sunit: Yeah, so I do go and I make sure I have everything I need, and that things aren't missing. We also in that meeting...well, for that meeting I've developed a cash flow statement and a net worth statement. So for cash flow I tell them that there are two reasons why I do the cash flow statement. One is to help validate their goals, so if they're saying they want to travel internationally every year for $5,000 and now they're doing that but spending $10,000, it's probably a mismatch there. So you do that to validate their goals. And the second reason is to make sure that they know where their money is going, so I don't judge them on where the money is going. If they're saving enough to meet their goals I don't really, you know, try to guide them on spending less on certain areas or more on other areas.

But sometimes they say, "Oh wow, we spend this much money on eating out every year. I was surprised by that. That's more than I really think makes sense." So I want to make sure that cash flow statement is used to help validate their priorities about their money.

Michael: There's always, I think, a lot of fear in the advisor world of, like, "I'm not comfortable trying to give clients spending advice because just it feels judgey, or it feels awkward." Or they may reject it or you may blow up the whole client relationship because they don't want anybody to tell them what to do with their money. But sometimes we underestimate... if you just help show them what they're spending and where the money is actually going sometimes people are actually quite capable of modifying their own behavior. They just literally never realize how out of whack it was, right? When you spend from hour to hour, day to day you just often really have no perspective on how it adds up for a year until someone helps you capture that.

Sunit: Right. And I think that some clients go back and look at checking account statements and credit card statements from the last year and do a detailed analysis. Some do a more high-leveled analysis, so I don't dictate how much energy they spend on it as long as it seems reasonable for what they want to do. But yeah, I think I've had clients that one of my clients had a cabin in the mountains that they really couldn't afford. And looking at that cash flow statement and saying, "We're not saving any money now. We need to save X dollars and meet our goals. What should we change?" And it was pretty clear to them then that that cabin should be sold. They almost never went there. It was $1,000 a month for the mortgage and other things for taxes and things. And they said, "Yeah, we can't afford this cabin anymore," and they decided to sell it.

Michael: So you go through this fact-finding meeting, get your data, verify your data, talk through any items. I guess obviously sometimes you're just looking at stuff and it kind of raises a question to talk about on the spot, like, "Explain to me what's going on with this account or these cash flows." So what comes next after the fact-finding meeting? You said the next meeting is your retirement planning meeting but is there stuff that's happening with the client in between the fact-finding and retirement planning aside from literally doing your number crunching in MoneyGuidePro?

Sunit: It typically is just me doing the work and they're not really involved until that retirement planning meeting. So in that meeting, we start by talking about risk tolerance, so we do the talking about...so I have their survey results from their second meeting, the fact-finding meeting. But now we talk about them as a couple. So the goal is to get to some kind of initial guess at a couple risk tolerance, so I look at each spouse's individually and we talk about their differences. I ask them, again, about 2008 and how they reacted to the markets. I just ask them how often they check their accounts and things like that. So I try to come up with some kind of way of trying to get to an initial guess for a portfolio for them.

And of course, we haven't looked at their needs on their portfolio as far as growth and things, whether they have...they're overfunded and they can have a very low-risk portfolio. They haven't looked at that yet but just trying to figure out how much risk they could afford to, or are able to take.

Michael: And there's an interesting point you made there that you actually give two FineMetrica questionnaires, one to each spouse separately?

Sunit: Correct.

Michael: Okay, just to kind of see, did they line up or not? If they don't, you all gotta figure this out for yourselves?

Sunit: Yeah, and often times they're pretty close but I've had some where one of the spouses is super aggressive, the other one is super conservative. And if we don't talk about that the portfolio we come up with is not going to make either of them happy. So I want to make sure that they're, sort of, both bought in to what we're doing. And again, in the next meeting we talk about actually...well, and part of this meeting, too, risk they need to take to meet their goals, we can see what makes sense. But if one of the spouses is at 80% stock, the other one is at 20% stock, we need to have a discussion and talk about things and have them both trying to figure out what makes sense for them as a couple. What I don't want is the dominant spouse to say, "Well, I think 80% is the right answer so we'll go with that." That's not the right answer.

Michael: So what are you delivering in the retirement planning meeting? Are you making and producing a plan? You said you do some of the other MoneyGuidePro stuff with them more interactively on the screen. So what do the clients get in that retirement planning meeting?

How Sunit Talks To His Clients About Risk [56:12]

Sunit: Yeah, so going back to risk for a second because this is related. So one thing I show them is...so say they think that 60-40 stock seems to be right for them based on an initial discussion about risk tolerance. One thing I show them and give them is a graphic that I call the Risk and Opportunities Graph, or Chart. So I use the MoneyGuidePro projected returns, which I'm not using their portfolios but it's a good baseline portfolio to use, and say, "In an average year we should expect to have this kind of net return after my fees."

And I show them the two standard deviation band. So, 95% of years we could be within this range to this range, so down this percent to up this percent. And historically in 2008 plus a few months, if you had a portfolio like this it would've been down 27%, or whatever it is. So I do that in percent terms and then use their portfolio size to give that in dollar terms too. So for that $3 million client, you might expect to gain $150,000 in an average year. You might be down $600,000 and that's to be expected once every 20 years or so. But in 2008 you might've lost $800,000.

And so that person, I think in real terms for them and then I ask them three questions. "How would you feel if that happened, if you were down $800,000? What would you want to do, and what would you want me to do?" So we talk about risk tolerance not just in the theoretical standpoint but actually in the dollar standpoint that leads them to think about their action. And if they're saying, "Well, I'm 30 years old now, that's not a big deal," that's helpful. If they say, "Well, I'm going to retire in two years, that would be devastating," that's also helpful.

Michael: So essentially you ask them, "How would you feel? What would you do? And what would you want me to do if this bad market thing happened?"

Sunit: Correct, yeah.

Michael: It's an interesting way to frame it, particularly to ask, "What would you do and what would you want me to do?"

Sunit: Yeah, and I think it's interesting seeing some of them say, "Well, nothing. I know this is possible. I'm looking at the long-term and in 2008 I was never affected." Some of them might say, "I just want you to touch base with me," or, "Let's get together for a meeting or whatever." But it helps me sort of understand what they want me to do. And it might be they might tell me, "Don't let us sell." They might say, "Well, I'd want to sell but I know that I shouldn't so I want you to prevent me from selling."

Michael: And you're doing all this in the retirement planning meeting because ultimately you're trying to build towards what portfolio policy and asset allocation will fit your retirement goal, and what growth number should we put in your projection?

Sunit: Right, so this is the second validation on the risk tolerance discussion that we just finished a minute ago. It was like, "So we're thinking maybe a 60-40 portfolio. Let's see what that looks like in percent and dollar terms."

Michael: Okay.

Sunit: And then the final part of that meeting then is to develop the plan to reach their goals, and so I typically pull up the Play Zone in MoneyGuidePro, which has sliders for spending amounts, and retirement ages, and savings amounts. And we work together to figure out how to make things work. And again, what I want to do is get to the answer where everything works but also make sure both spouses are a part of that discussion and have it be their plan, not my plan. So if they say, "I'm fine working two more years later," for me to say, "No, it's not okay," it's up for them to say that. So I'll let them, sort of, let their priorities dictate the plan that we come up with.

Michael: And so are you also, like, producing the traditional financial planning project printout as part of what you come into the meeting with? Or is the whole point, like, no no, we're not actually printing and doing a plan presentation for this meeting because the whole goal of this meeting is to do this in the Play Zone and you're going to figure out at the end of the meeting which projection you're going after and I'm not going to bring one into the meeting with me?

Sunit: Yeah, so that's true. I do not have something coming into the meeting. I probably run the scenarios and things myself before the meeting, but in the meeting we start from scratch and have them, sort of, use their priorities to dictate how things get changed.

Michael: Okay, so how do you bring closure to that? Do you print off the final version and say, "This is the keeper plan?" Or you just don't even really need to produce a plan at this point because they literally just did it interactively or already picked their goal on the big screen, so they're done, we're onto the implementation phase. You literally never make The Plan, capital "T," capital "P," Plan?

Sunit: Yeah, I don't make the plan. They come up with kind of MoneyGuidePro, or Monte Carlo probably of success, or I guess probably of excess in your terminology. And they know they're 90% likely to meet their goals, or 80% likely, or whatever. And that's sort of the output. And so if they want me to I can print out...well, I have given them the goals so they have that to...I typically read email to them so they can review those before the next meeting in case things come up or whatever. But typically I don't give them anything besides the answer.

Michael: So I think that's fascinating. You don't give projections to your engineer clients. I mean, I guess they see projections, like, they do projections live with you in the meeting but you literally don't produce a plan with all the projections numbers to give to your engineer clients?

Sunit: Correct, that's true. I don't. Sometimes they want to dig deeper into, "Well, how was this model and were taxes accounted for? And what's my percent I'm taking out on the portfolio of retirement?" And I can show them that in the software, but typically they don't want or haven't asked for a print out of that stuff. It's sort of what they want to know is, "Are we okay or not?" And that percent number seems to be sufficient to give them confidence that they're okay or not.

Michael: I think it's a fascinating phenomenon and process, like, when you look at financial planning for advisors, like for most advisors, that plan creation process. Like, literally get the numbers in there and produce the plan, and write it out, and print it up, and make it polished, and all the rest of this stuff. That's one of the most time consuming parts of the whole thing. And you take what for a lot of advisors is a multi-multi-hour production process of creating and crafting the plan and literally just handle it by doing it live interactively in the meeting itself and just eliminate all of that plan production time.

Sunit: Right, so I'm not doing a plan for them and giving them the answers, the results. I'm doing a plan with them where they're involved in the process and they sort of know based on the end Monte Carlo percentage that, yeah, we're okay, or no, we're not okay. We should meet again to figure out how to make modifications so we are okay.

Michael: I love that framing, "I'm not doing a plan for them, I'm doing a plan with them." Which means very literally, like, you're not producing a plan to give to them, you're doing a planning experience with them, with MoneyGuidePro, with Play Zone. Let's walk through and get to the answer for you. So now I understand the context of why you said sometimes a second meeting shows up after the retirement planning meeting because they're so far off track that you have to do a second meeting to figure out what else you're going to change and move in order to get this to work.

Sunit: Right, so if the goals were higher than they really can afford, in the first meeting they can say, "Okay, say we save $5,000 more a month. Would that make up for the difference?" And retire two years later. But if things are really out of whack enough where it doesn't fit, they will want to at some point go back and have another meeting, and, "Let's talk about this and see what does fit." So that is a danger, I think, like you mentioned before, of having the goals meeting without really looking at what they have yet, or net worth statement, or anything. But I think what I want them to do is start broad and not limit themselves too much, and then limit if they have to.

I do have some clients where they're big savers their whole lives, now they're retired. And my goal is not to have them spend under a limit, but to make sure that if they can spend more money and be happier and more fulfilled, that they do that. So I have a client now who goes to Disney World every year or two and he sent me an email last year when he went saying, "This is the first time I went to Disney World and didn't worry about what things cost." Because I've been encouraging, "Find things that you can do that will make you more fulfilled. And don't waste money but if you can do things that will make you happier go do that." And that client is now going to take his kids and other family members to Disney World next Christmas and pay for it and not worry about spending the money because it's what brings him joy and will give other family members joy as well.

Michael: So do you produce any kind of, like, action items, recommendations piece to the plan?

Sunit: Yeah, so that comes at the end. So after I do the investment meeting and then the taxes, insurance, and estate planning meeting, the last part of that last meeting is to have what I call this action table where I have been coming up with things along the way through the process of the plan. And at that meeting we, sort of...I show them the list and say, "Let's prioritize these items. Feel free to take things off the list if you never want to do them. Add your own things on the list and that's what we'll work on over the next six month, to a year, to two years, getting things completed." So it might include things like an estate plan, or looking at term insurance, or selling my cabin, or whatever it is. That's not on the list. We prioritize it, put dates on things, and I use that as a basis for future meetings and work.

Michael: Okay, sorry, and then I just kind of skipped you ahead. So you get through a retirement meeting then you're doing an investment planning meeting. I'm presuming that's the relatively standard, like, "Here's where your portfolio is. Here's what we're recommending to you or what we have figured out you need based on that retirement planning process and our risk tolerance process, so now we're just going to help you kind of map out here's where you are, here's where you need to get. We'll explain investments, and process, and such," and try to get them there?

Sunit: Yeah, although I do quite a bit of education in that meeting. So I talk about stocks, and bonds, and cash, and they're volatile but stocks typically return more of the long-term. So we talk about stocks, and bonds, and cash from a risk/reward standpoint. We talk about inflation and how that impacts their portfolio. We talk about interest rates and how or why when rates rise bonds can go down. We talk about diversification and why holding different asset classes makes sense, so it's a pretty technical discussion and I do have a longer version and a shorter version based on the client. But I want to make sure they have some understanding of those basic concepts before we actually work together on the portfolio.

So when things were down 20% in a given year they're not freaking out. They've already seen that that's a possibility and likelihood at some point in the future. And then I show them the proposed portfolio and why we're holding these certain securities. And the final part of that meeting is to show them a picture of their different accounts and how we're possibly going to consolidate them. So clients sometimes come to me and they have different stock plans, they have several IRAs or 401(k)s and part of what our job is to do in the first year is to consolidate that, simplify it, and make it lower cost. So I show them graphically a picture of their different accounts now and how that could fold down into 5 accounts instead of 15 or 20 accounts.

Michael: And then the final meeting of this process is the taxes, and insurance, and estate meeting of just figuring out all the other stuff? Which I guess that portion of the meeting is less interactive than exploring retirement planning possibilities and just a little bit more granular and tactical? Like, you can do a Roth conversion, and you need more term insurance, and your will is outdated, bam, bam, bam through these items?

Sunit: Yeah, it's a drier meeting from that perspective, but the way I show that, I think, is interesting. And I use a mind map to show them their situation. So this mind map has their names in the middle and then all these different branches that list their goals, the family members, their advisors, and then assets, liabilities, insurance, taxes, and estate plans. So the way I show them their estate plan, and their insurance, and their tax things is using this mind map to explode out different parts of the branch of the mind map and they can visually see those things.

Michael: And is this, like, a mind map template you build, or an industry software? What are you using to do this?

Sunit: It's one that I built myself.

Michael: Okay, is it standard industry mind mapping software? Or just you built the whole thing from scratch?

Sunit: No, it's called iThoughts HD is the version I use. It's a product sold for Macs. It also works on my iPad and my phone. So I don't use it on my phone very often but certainly my iPad and on my Mac, it works well for that and syncs up together. So I have a template that I use and then I fill in the client information as I know it and as I discover it reading the estate planning documents, and tax forms, and things.

Michael: Okay, interesting. And then you come to the end of this and now you're producing your action table of all of the various action items and figuring out how they move forward from here?

Sunit: Correct, yeah. And so then it's working through that action tables, and future meetings, managing changes, and then obviously the ongoing portfolio management.

How Sunit Developed His Planning Process [1:09:40]

Michael: So I'm curious, as you said earlier you were a career changer coming into the industry. So, like, how did you learn, or figure out, or develop this planning process and all this stuff that you're doing? Did you start in the industry working for another firm and training there or did you just kind of figure this stuff out through repetition with clients? It's a pretty involved process, so I'm just wondering, like, how does it come about?

Sunit: Yeah, so I did not work at another firm, so I was working at HP. In 2006 I started doing web searches on a possible career change and talked to some NAPFA members in the local area that helped me talk through what they liked and didn't like about the profession, and what they learned, and what software they use and things. But I think that, yeah, I did have a mentor. I met somebody at a NAPFA conference, Seth Davis out of Denver, who was very willing to invite me down to his office. We met for a couple days initially and he went through his process and things to think about, and I could ask him questions.

And just basically with my initial clients, I would just work on the process and document that process. Whenever I had my first goals meeting I would document my outline and the process I used, and then for my next goal meeting if things changed a little bit I would just change my process and change my outline. So I was always incrementally improving my process. So initially I'm sure it wasn't as clean as it is now but I think that over time to build up these processes or workflows where it's pretty easy to make sure I don't miss anything during those meetings.

Michael: There's an interesting phenomenon to me that one of the indirect benefits you get when you force yourself to standardize down to a consistent planning process or just consistent workflows and processes in general is once you do it in a standard way you can actually sit down with it as a standard process and say, "Okay, on the next client I'm going to focus on this step of the process. I don't like how this fact-finding meeting is going. We gotta do something different so I'm just going to think of some new things to do or some new ways to run this part of the fact-finding meeting." And then you figure out a new thing that works and that's now your process, and then you can focus on some other part or step of what you go through.

And the more that you run it as a standardized process the easier it is to, in a very literal sense, do process improvement and just think about it as, "Here's a part of the process I need to improve," not just, "Hey, I'm going to do something new. Hey, I'm going to do something new," and then you kind of struggle to figure out how to fit it altogether if you're doing a bunch of new things.

Sunit: Yeah, I think that incrementally improving the processes over time helps a lot, and especially is important during my annual meeting time where I meet with every client in the first part of the year. And I typically choose a couple clients to meet with first. I have one client that's awesome about giving me feedback about the meeting, and so I meet with him and show them the information I think I should show him. And from that meeting, he often asks questions and things that I then add slides, or add information, or I delete things. So I can incrementally improve that even meeting to meeting throughout that month or two time period. But I think having that standard process that I use with every client, having standard information that I show makes things much more consistent and easier for clients to follow from year to year and even from meeting to meeting.

Michael: And so you got some mentor time, made your initial process, and just started doing it and tweaking and iterating as you went?

Sunit: Yeah, so I was taking the CFP classes. I was actually enrolled in the master's program at the College for Financial Planning. And my plan was to pass the CFP classes, take the test, and then start taking clients. But one of my professors said, "Hey, why don't you just start now? Get a couple clients and get your feet wet with what financial planning is all about." And so that was really helpful because, yeah, I didn't know anything. I didn't want a lot of clients but I got one client and another client maybe six months later, and that was an easy way to, sort of, lead into building up these processes.

Both of these initial clients were friends of mine and so they could give me feedback and things, but I think it's better than starting out, "Okay, now I want to make money. Let me get five new clients this year." I just got one or two for the first year or two and then I could incrementally improve things and sort of get things figured out. So starting slowly was definitely a benefit instead of having this on rush of clients where I had to figure everything out and I was overly busy and I couldn't work on those processes.

Michael: And because you built up savings and had a spouse with some income to stabilize the household as well, like, you were able to do that transition slowly. You weren't worried about, like, "I gotta get to X clients, or Y revenue in 6 or 12 months to pay my bills," because you had runway for yourself?

Sunit: Yeah, part of one of my early tenets of my business was I never cared about this year or next year's revenue and profit. What I always focused on was my revenue profit in five years. So if a client would be a good fit in five years but wasn't perfect today as far as revenue or whatever, that's okay. And if there was software that I wanted to buy and would need in three to five years, I didn't mind spending the money now to start using that earlier. So my focus on five years out, I think, was helpful in making sure I didn't focus on year-to-year things and getting this bad client that wouldn't be a good fit long term because it was revenue. It was, again, building intentionally to what I wanted over the long term.

Where Sunit Finds His Clients [1:15:15]

Michael: So where do these clients ultimately come from? You've got this base of 17, by U.S. standards, very affluent clients, millionaires or multi-millionaires that lets you get $17,500 of revenue per client on average. So where are you finding $17,000 a year clients to do financial planning for? I mean, I get your niche is engineers but I don't know if they're just literally you're crushing it on the financial planning for engineers Google search and that's where they all came from. How do you get these affluent clients, I guess, niche or just in general? How are you finding these people?

Sunit: Yeah, so I guess the other benefit of having my niche and working in a technology company was that they're people that knew me. So when I was working at HP and then Agilent there were people that knew I loved financial planning stuff. We'd talk about things. When people had questions they'd sometimes come to me and get my unofficial advice for them. And so when I started up my business and I left HP there were people that knew that I loved doing this stuff, and those were many of my early clients.

So I think now maybe half my clients knew me from working in those days. The other half are people that found me through the website, or referrals or things. But I think I was very lucky or very fortunate that early on my first few clients were people that knew me and knew I loved financial planning, and I was learning the stuff and they could trust me from working with me for 18 years.

Michael: So does that get particularly awkward when your natural base for finding clients is, sort of, former co-workers in this natural market you have in your old career, except you've got this, like, asset or fee minimum of, like, "Oh, look, now Sunit's out on his own and I can't afford his fancy financial planning firm?" Was that a concern or a stress point that you launch this business that goes back to your colleagues you knew when you might out-price some of the colleagues that you knew?

Sunit: Well, I never went out and tried to convince people to become clients. I never really marketed to them directly. But I think if you look at the average engineer, when they start working in their early 20s, they earn a decent income, they save. Most engineers are pretty good savers. They save pretty aggressively. Getting $2 million is pretty common for most engineers by the time they're in their 40s or early 50s. So that normally is not a stretch for most people that are good savers. So HP had a stock plan and people had stock options back in those days, and a fully funded 401(k) plan and taxable savings got $2 million fairly easily for the average engineer client.

Michael: Interesting. And again, that's your natural market and that's your niche so if they find you then it clicks pretty well from there.

Sunit: Right, it does. Again, I'm fortunate that the career I used to be in was engineering and that's my current niche. So it was a natural flow in some ways for...I understand these plans you have at work, I know how to optimize them. You probably trust me somewhat because I'm an engineer like you, or used to be at least. When I meet with them I'm not wearing a fancy suit with a tie and a little pocket handkerchief. I'm wearing clothes similar to what they're used to at their work. And so it's hopefully an area where they can come and feel safe to talk about their financial issues, and people issues, and personal issues, and I can give them advice. So I think having that, the fact that I chose engineering as a well-paid profession, and used to be an engineer, I think, has all been to my advantage.

Michael: So talk to us a little bit more about just the growth of the business, this sort of work-life balance dynamic to it of deciding that you're happy at 17 clients and just adding maybe 1 a year because the income is really good and you're doing $300,000 of revenue with an 85% profit margin. Do you continue to grow from here? Are you done? How do you make that decision about how you're structuring the practice when it's high income and so efficient?

Three Areas Sunit Has Focused His Goals Around [1:19:36]

Sunit: Yeah, so I think part of it is based on my goals of my business. So I mentioned that I try to be very intentional in creating the business of making sure it fits me. And when I say starting I don't mean day one maybe but the first few years it took me a while to figure out what I really wanted. And I developed goals around, I guess, three areas, obviously financial goals about revenue, and profit, and profit margin. I had goals around making an impact and then goals around my own personal goals.

So with that making an impact goal, I certainly want to make an impact on my client's lives in a positive way but I also want to help my local community. I give 5% of my companies profits to a local food bank. I volunteered, I think, over 400 hours in my kids' elementary school in field trips. In classrooms I used to help them with math and I proposed and ran a programming class for a few years for fifth graders. So I definitely wanted to give back to the local community.

And then I wanted to help a profession, to make impact on a profession. So I've been on NAPFA committees over the years. I was a NAPFA study group leader here in Fort Collins for eight years. I've spoken at 10 or 15 different conferences and now I'm on the National Board for NAPFA. So this making an impact part of my job isn't going to make me money but it's part of what makes my business a success to me. And then my personal goals revolve more about work-life balance. I have three kids now. When I started Grady was four, Caitlin was three, and Tyson was one, so they were pretty young and I wanted to spend time with them and enjoy them while they were young and wanted to hang out with me.

My wife, and I, and the kids love to travel. We've been to India, and Italy, and Greece, and Alaska, and Hawaii, and now we're finding we have more places to visit than years left with our kids and that's disappointing. But I love the fact that I can spend time with them when they're out of school in the summertime. I think I've taken off 49 days this year and my 50th will be on Friday when Tyson and Caitlin are out of school. So being able to spend time with them is also a goal of mine, and I love to run and obviously work with really enjoyable clients.

And so these goals of financial goals, impact goals, and personal goals I think have driven me to say, "Well, financially I'm doing well enough. I don't need to make more money. What would make me happy now is giving back to the community or to NAPFA, or giving back and spending time with my kids."

Michael: I know, I guess, this is a very meta question, but how do you find that line for what's enough for you?

Sunit: Yeah, so the interesting thing is enough has changed over the years. It used to be $100,000 that would be enough. So with my wife's salary and my salary we'd be earning enough money to do the things we want to do personally, and then as my business sort of changed and I went from a $3,000 minimum to $10,000 minimum my practice has become more efficient and more profitable. And so now I'm to the point to, "Okay, I'm earning $260,000 a year roughly. Is that enough or not?" And I think it's to the point now I could add more clients. It wouldn't impact my ability to help other people, or make an impact on my community, or volunteer, or see my kids, or whatever.

But if it was like now, "Okay, now is a good time to sort of pause." And my sort of official goal is to add three clients over the next few years. One thing that struck me was when I did my business plan in January or December last year I said, "Let's look at five years, where am I going to be? And in 5 years I'll be 58 years old. My kids will be out of high school or finishing high school. My NAPFA board time will be over. What will my life look like then? What am I going to do then? Am I going to want to grow my practice and add staff and things, or am I going to want to scale back, and travel more and things with my wife?" And the answer is I'm not really sure.

So I can see doing my job forever, whether that's 65, 70, 75 or longer, I'm not sure. But as long as I'm healthy I love what I do, I love working with my clients. At some point my wife will want to retire and we'll want to travel and see grandkids, but my practice is set up where I can work anywhere. I can meet with clients remotely. I don't meet with them that often where being gone for a month or two would impact things too much as long as I'm available by the phone or by GoToMeeting meetings. So I'm not sure where I'm heading with my business long-term. I don't plan to ever add staff. I would rather add processes, and workflows and software to become more effective than adding staff. I don't really plan on merging. I love having my own business.

So I can see either maintaining where I am now or growing slightly. I can't see doubling my client base ever just because it would reduce time for other activities, or hobbies, or volunteering. So I'm at this point now where I'm not really sure where I'm heading. I think getting to 20 or maybe 25 seems to make sense as far as a number of clients and then pausing and seeing what comes next.

Michael: Well, it's kind of an interesting phenomenon that most advisors even with a "full book" and coming on 100 plus clients, you know, the 80-20 rule tends to hold where we get 80% of our profits from the top 20% of our clients. So you just have this practice where you took the 80-20 rule and then just got rid of the other 80% of the clients or just never took them on in the first place. Your whole practice is the top 20% of the clients without the rest. But at the margin, like you talked about earlier, you've got this essentially 97% marginal profit margin, where the next new $17,000 client that comes on board you'll probably net $16,000 off of it after a couple of software costs.

So I don't know, are you managing the growth in part because just you've never been a high-growth firm and there's not a ton of people coming along beating down the door in the first place? Or I mean, do you actually look at a client and say, "Yeah, this would be the second new client this year. I'm not really sure I want to take a second one so even though I have 97% marginal profit on the next $17,000 of revenue I'm just not going to take this client this year?"

Sunit: Yeah, so I have enough capacity now where if somebody came to me and they were a good fit for now and in the future I would work with them. So as long as they fit my personality, demographics and things, I would take clients if they came to me. I think what I have not had to do is marketing outwards. So I do have a website, a LinkedIn profile and things, but I never go out to find clients. So, that part of an advisor's job that people typically have to do, I don't feel like I need to do.

So I think in some ways I wonder, I built this very efficient practice. Am I wasting it on not growing my client base? If I could handle 30 clients why not help those people make more money and things? So I do wonder about that once in a while but again, I think especially when the kids are still around and fun to hang out with, and I want to take off days when I want to take them off and hang out in the summertime and things and go on these big trips, I want to have that flexibility. So enough for me isn't just about money. It's about maximizing my time with my kids and my family, and giving back to my community and the profession.

Michael: Well, and it strikes me that you're still doing formal business planning as well, you know? As you said, you have your formal business plan that you did and you're updating, right? I think for a lot of advisors we sort of flesh these things out in our head, like, hopefully, kind of have a sense as to where we're growing, but I'll admit I don't see a lot of solo practices, particularly ones built the way that you are where you're not necessarily gunning for high growth, still developing formal business plans.

Why Sunit Feels It’s Important To Do A Formal Business Plan Every Year [1:27:35]

Sunit: Yeah, and for me it's important. So I definitely want to run my firm as a business so I do a business plan every year. I review it and update it at least monthly. I create goals for the quarter and even every week I create goals for the week that I then check it on Friday. I do tons of metrics that I do for fun, but also for information. So this last year I did a little look at, what's my profit sensitivity to market changes? So if my portfolios go down by 10%, 20%, 30%, 40%, how's my profit change? At the end of the year I look at all my metrics, I update them, I compared my predicted to actual to see why things were different. I definitely have business goals. I do projections on revenue and on my spending. Part of my business plan includes a don't do list, the things I don't want to do.

And so I do, I think that even though I am small and not growing a lot, doing a business plan is important to make sure that I do have goals and that what I'm doing is aligned with those goals. And in my case, the goals aren't super high growth or profit. It's good profits and other goals, and I just want to make sure that the business plan reflects what I really want to make sure that I have plans to get to where I want to get.

Michael: So there's a label out there for high-income solo practices with a focus on work-life balance, you know? The label out there is lifestyle practices. I'm just curious, do you like that label? Do you think that's a good and fair description? Is that the wrong way to think about it to say you have an incredibly successful lifestyle practice?

Why Sunit Doesn’t Like The Term “Lifestyle Practice” [1:29:16]

Sunit: Yeah, so I actually don't like that term, and so I have a soapbox that I could get on if you wanted me to for a couple minutes to talk about that. I don't know if you have a desire to hear about that.

Michael: Sure, you're living it. You're living the dream. Your $250,000 of income and 17 clients and 50 days off, and we're only 2/3 of the way through the year. So yeah, right? I feel like this is the dream for a lot of advisors, right? There's some that just are wired to grow a big business. They want to grow big, they want to add staff, they want to do all that stuff, grow, grow, grow, so more power to them. But I think for a lot of us probably the overwhelming majority, like, I want to help my clients. I want to make good income. I don't need to grow to the moon. Eventually I would like to actually get better work-life balance. I'm maybe stuck because I have too many clients. It's hard to go backwards. I think most advisors, I think most human beings frankly would love and dream to get to this practice that you've created. So yeah, I'm very curious, like, how do you talk about it, or describe it, or think about it if particularly if lifestyle practice is not the word?

Sunit: Right. Yeah, and so let me talk about that term and why I don't like it. And I know what I'm saying isn't quite fair, so it is a soapbox, which is, I know, tainted a little bit by a little bit of unfairness. But when people talk about businesses they often talk about a spectrum with the business on one side and lifestyle practice on the other. But to me, the opposite of business is not a lifestyle practice. The opposite of business is a recreation, and what I do is not recreation. So I'm very serious about the business parts of my company. And I show that, I think, by the business plans. I collect tons of metrics. I really run my firm, I think, as a business.

So what I'm really not doing though is maximizing my earning potential or making my business one that might last long after I'm gone. So I definitely could make more money by adding clients, but for me, I decided not to do that. I want to make good money and have, like I said, a balanced life. So that's right for me, but I think that all advisors should be defining our priorities and deciding what makes sense for us. It's like you said, some people might want to work tons of hours and grow this huge business. Some people might want a more balanced life. So it's not really important what advisors choose but that they choose.

But I guess the point is, though, we should all be making sure that we're living the life and the lifestyle that we want to live in. So for all of us, we should have our work defined to fit our ideal lifestyle, and similarly, we should all be running our firms as businesses. We should do the things that business owners should do. So, you've talked to Eric Roberge and Anjali [Jariwala] in previous podcasts. It's pretty clear they're pretty serious about the businesses they're running even though they're not really huge. And so there is a difference between what I do and what a big firm does.

So for me, I'm definitely small. I don't want to add a lot of clients. I might not have my business around after I'm not here anymore. And there are other companies that are enduring businesses where they add staff, and management, and they scale to billions of dollars, and both of them, I think, are businesses. So I think I guess my main thing is my lifestyle is important to me and I run a business, and that's not in conflict. And I think everybody should treat their firm as a business, and I think everybody should make sure that their work fits their lifestyle.

So I'm not a big fan of this is a business, this is a lifestyle practice. We should all be looking at running our firms as businesses and making sure that what we do fits our lifestyle that we want to have. So that's the soapbox that I'll get off of now.

Michael: No, I like it. I mean, it's a fair point that regardless of whether you're running big or small you should still run it as a business. As you've shown, you can do some pretty amazing things when you run it efficiently as a business and keep your metrics. Although I guess strictly, like, I don't know that that literally makes lifestyle practice the wrong label or just the connotations we tend to attach to it when we put it on the opposite of a spectrum from capital "B" Business to label these big growth-oriented enterprises.

Sunit: Right, well, I think the big growth-oriented businesses also have this part about lasting past their founders, which I think is a valid difference between my business or my firm, and those businesses. The enduring part of it, my firm probably won't survive me as OakTree Financial Planning. And the scaling of our businesses are different as far as raw dollars. They're making many more millions of dollars than I ever will make. But I think the fact that everybody should think about their firm and make sure it makes sense for them, have goals, and have strategies for those goals, whether they're small or big, that's important to do.

And again, every advisor out there, whether they're in a small firm, an employee of a big firm, or running a big firm should make sure that they're not just maximizing their income but maximizing their happiness. That they're really getting out of work what they want to get out of work, and getting out of life, maybe more importantly, what they want out of life. And if they're working tons of hours and it doesn't fit their lifestyle they really want to have, they should make a change.

Michael: And do you worry that you won't necessarily be able to sell this business at the end and that it may not endure beyond you?

Sunit: No, I don't. I think that the business and my firm has been great at helping me support my family and giving me work that I love doing and clients that I love working with. It's also obviously helped many clients reach their goals. And so it's served, I think, a great purpose, and it's enabled me, again, to give back to the community, to the food bank, and to my schools and things. So I think, for me, this is what success is, it's those goals are laid out. I'm trying to meet all those goals, and if those goals are all laid out and working, that's what I think success is for me. So if it doesn't survive me, I'm actually okay with that. I think as long as my clients are taken care of when something happens to me, my name at the firm, and my office space and things aren't as important as the intangibles of helping people and having a great life.

Michael: So as we wrap up, this is a show about success and you kind of articulated what success looks like in the business context about serving clients. But at the personal level for you, or I guess the personal level is the business level because you're a solo practice and it is you. Yeah, I guess can you just say, like, how are you defining success for yourself at this point?

Sunit: Yeah, so I think it's back to those goals I mentioned about my goals for the business are having financial success as I define it, having an impact on my clients' lives, the local community I have here, and my profession. And then my personal goals of running, and spending time with the kids, and traveling, and enjoying life. My kids often ask me in early March what do I want for my birthday, which is March 15. And I always tell them the same answer, "I want you to write me a letter." And in those letters, I love what they write, basically that they appreciate that I work and I'm helping people. But they love that I can spend time with them when they're off of school. I take trips with them. I have energy to see them and spend time with them, and to me, that's a mark of success.

Tyson, who's now 11 was doing the early in the year kind of report for school and they asked him a bunch of questions. And they asked him, "Who do you admire and why?" And he could have picked my wife, Janea, or me, but he picked me and said he admires my...he says, "My dad because he works but still has time to stay home with me." And to me, that's success. That's something tangible that they're seeing that I'm spending time with them at home, that I'm taking off time, that I'm there for all their games, and tennis matches, and cross-country meets, and things. I'm driving carpools once in a while. I'm around for them.

And so again, from the personal standpoint, I feel like I have success there because in part of what they have said and how they are living. Financially, again, the money seems to be enough to support what we want to do now and in the future. And I do feel like I have helped my clients' lives. I have impacted our community. The food bank is a great organization here in Fort Collins. I'm giving 5% of my company's profits to that food bank every year. I think it makes a meaningful difference in people's lives. And then being on committees and speaking at conferences, I think, helps other advisors get to where they want to get to, so that's how I sort of define success.

Michael: Well, and hopefully having you join us in the podcast here and share this story gives a few more advisors ideas on what they're working towards and how to catch their own definition of success.

Sunit: Yeah, I hope it does. Again, this is a model that works great for me. It's not for everybody but for advisors out there that want to have a smaller practice, helping people and making an impact on the world and having a great life, I think that hopefully, this conversation will give them some things to think about.

Michael: I hope so. Thank you for joining us and sharing your story, Sunit, on the "Financial Advisor Success Podcast."

Sunit: Thank you, Michael.