#FA Success Ep 368: Getting Real Social Media Marketing Results By Focusing On Your (Ideal) Client’s Desire To Learn, With Thomas Kopelman

Resources Featured In This Episode:

• Thomas Kopelman
• "Repurposing Digital Marketing Content: How I Grew My RIA Revenue To $16K/Month In Less Than 14 Months" By Thomas Kopelman
• Thomas' Sample Plan – Download (PDF)
• Thomas Kopelman on YouTube
• Kitces Report: The Technology That Independent Financial Advisors Actually Use (And Like)
• #FA Success Ep 350: The RIA Custodian As The All-In-One Investment Operating System Of The Future, With Jason Wenk
• #FA Success Ep 140: Transforming Your Advisory Business By Shifting Your Mindset After Hitting The (10-Year) Capacity Wall, with Adam Cmejla
• Samantha Russell
• The Long Game Podcast
• RightCapital
• Holistiplan
• AdvicePay
• Altruist
• Future Proof
• XYPN Facebook Group
• Canva

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

Are you a successful financial advisor, or do you know of one that would be a great fit for the Financial Advisor Success podcast? Fill out this form to be considered!

Full Transcript:

Michael: Welcome, Thomas Kopelman, to the "Financial Advisor Success" podcast.

Thomas: Hey, Michael, thanks for having me. I'm excited to do this.

Michael: I'm really excited for the conversation today as, I think, we're getting to talk about what actually works in growing your practice through social media. It's an interesting realm to me because we do our advisor marketing research on the Kitces platform. We run the study every other year. It's part of a four-study rotation over two years where we just ask about just all the different marketing strategies, how much money do you spend on them? How much time do you spend on them? How many clients did you get from them? Did you get any clients? Did you have a failure where you didn't get any? And so, we measure all these different strategies. And social media marketing consistently performs as some of the worst results for advisors of anything we measure.

It is the most common marketing strategy that the majority of advisors fail to get a single client in the span of an entire year of doing it. And I've long joked, I've lived, obviously, very much of a social media world for how I built my business or multiple businesses. And so, I used to get questions of like, "What is the magic thing that you tweet out that gets business, that gets growth?" And I used to joke, "Well, there really is no magic thing on Twitter. There's not 140 characters, now you get 280. There's not the magic 280 characters you just tweet where bajillionaires give you their life savings." And then I learned more about your story, and you basically have built your whole business with bajillionaires on Twitter.

So, I'm actually excited now to find out, maybe there really is the 280 characters that you tweet that gets really affluent people to want to work with you. I just wasn't smart enough to figure out what the 280 characters were. So, I'm excited just to learn, how are you actually turning social media world into business, into clients that are willing to pay material dollars for financial advice?

Thomas: Yeah. You teed me up perfectly. I actually just spoke at the Altruist Conference, and I don't know when this comes out, so, a week ago from when we recorded, and I talk about this a lot. I saw some research that says that 20% of your audience sees each post you put out. And so, we get all this information from advisors that social media doesn't work, but their content schedule is this, Monday, they put out a post from the blog post their company wrote, and it's like, "Check out this blog post on taxes." Okay, that's Monday. People scroll past that, they don't want to read it. You didn't do anything to get them excited to go learn from you. Wednesday, they post something about, "Our clients love working with us because we truly put them first and we're fiduciaries."

Okay. What are you telling me about that? And then Friday, they link out to something they read that they found that was interesting, and they'll be like, "Oh, inflation changes to social security." And they do this week in and week out. So, they put 3 posts out, so 12 times a month, audience sees 20% of those posts, so barely any. And maybe they didn't learn one thing from you that whole month. And then at the end of the year, they're like, "Oh man, social media didn't work." But they didn't add value for anybody, they weren't interesting, they didn't show their personality, and they didn't really nurture anybody. And so, I think there's all these advisors, they say it doesn't work, but they just don't understand the marketing funnel for us as advisors.

And this is where I start every speech where I talk about this because it's not like you're trying to convince somebody to buy a t-shirt. So, you think of your favorite brand, they can launch something brand new, somebody can see it, and they're going to on go spend $60 to buy that shirt. That's super easy. It's low stakes. They can return it. Worst case, they're out $60, but that's about it. For advisors, it's entirely different. My minimum fee is $12,000 a year. Nobody's going to see one thing of mine and decide they need to work with me. And in reality, you can't convince anybody that they need a financial planner. And so, knowing that, that's where I came to the realization that all my job is through social media is to stand out. And by standing out, you basically just have to not be selling like every other advisor.

And so, I just educate people, and I nurture them, and I teach them all these things that they need to know. So then, all of a sudden, they get that new job and they have ISOs, and they're like, "Wait, Thomas has talked a bunch about ISOs. He's the one that can solve my problem." And that's all I'm trying to do with my social media is nurture people so when they hit their pain point in life, they would not think about going to anybody else other than me.

Michael: I think that's interesting from a framing perspective. I like how you set that up at the end. You can't convince anyone to hire a financial planner. Your best opportunity, your best chance is to stand out, at least, to be noticed, to be memorable so that when they have their new job, instead of stock options, and you've been memorable as an expert in ISOs, and they go, "Oh, I probably need a financial advisor now because I have to answer all these questions about what to do with my options, oh, that guy I've been following on Twitter, he's kind of entertaining and seems to really, really know his stuff. I guess I should probably call him now."

Thomas: Yeah, that's literally my only goal.

Michael: And then in comes the prospects.

Thomas: Yep. Exactly.

How Thomas Uses Social Media To Let Prospects Know What He Actually Does [09:37]

Michael: So then, talk to us more about how you do that and show up that way in practice. I don't think most advisors that do the Monday, Wednesday, Friday thing you highlighted, I think most of them would say they're trying to do the same thing. "We post a Monday article to educate people. We post something on Wednesday to try to differentiate ourselves about how we're fiduciaries with high standards who take our clients seriously. We try to nurture them further with something interesting that we read on Friday." You're framing around, "I try to teach and educate and nurture and stand out." And I feel like a lot of advisors would say, "I thought that's what I was doing. I thought that's literally what I was doing. And the things that you just said and implied, I wasn't doing them." So, where's the gap?

What are you doing to educate and nurture and stand out that's different than those of us that do those things that I think we were doing because we thought we were educating and nurturing and standing out, but apparently not? What's the difference?

Thomas: Yeah. I think if you first realize that the goal of social media is really to let people know you. But the other part about it is, people are scrolling all day every day. You're on LinkedIn, you're on Twitter, you're on Facebook, you just continue to scroll until something grabs your attention. And we are fighting for people's attention. And I think that's the hard part. So, I think you can do some of those things that I talked about, but you have to get people to want to read that. And so, I think working on the hook of your post is really important. When I first started, this was about four and a half years ago, I started on social media, I felt like I was putting out good content. I'd put out informational posts about HSAs or Roth IRAs or whatever.

And I remember reaching out to Samantha Russell and I was like, "Hey, this is something I want to get really good at. What do you see that I'm doing wrong?" And she said, "Your content is really good, but you're not making anybody want to read your content because you're not giving them a reason why they have to. There's no hook, there's no interest, etc." And so let's say you have a post about HSAs, and I think it's really great to put out educational information about HSAs, but let's say you wrote a blog post about it. If you just go to Twitter or whatever social media platform you use and you say, "HSAs are triple tax advantage accounts. Here's what you need to know about them. Check out my blog post on it." I don't think that you did anything to get people to say, "Oh, I need to learn about this," or, "That really applies to me."

So, instead, you could write a post that...

Michael: Triple tax free isn't good enough. Honestly, I feel like some of us say, "How is triple tax free not awesome? It's clearly better than tax-free or double tax free." Is it that's not a hook?

Thomas: I don't think it's enough, to be honest. I think if you rewrite something that's more of like, "Everybody talks about the tax benefits of 401(k)s and Roth IRAs and all of these other accounts, but most people don't understand that there's an account that blows both of these out of the water with their tax benefits. Here's what you need to know about the HSA." And people are like, "Wait, what? What's this benefit? Why is it better than these accounts? I have to go read and figure it out." And I think that is a way for people to stand out, versus writes content that's very similar to everybody else.

Michael: So, I'm intrigued just around the hook, as you framed it here. Because maybe I'm projecting myself, my own experiences, but when I hear hook, my brain basically goes to Buzzfeed, like, "Bob invested in an HSA and you won't believe what happened next, dot, dot, dot."

Thomas: That's kind of a good hook. That would get me to read it.

Michael: You're framing this, to me, just a little bit differently. It is more educational and informative and in the way it tackles. This isn't a clickbaity title, this isn't, "And what happens next," kind of thing. You're just setting up the situation and the context and the contrast a little bit more.

Thomas: Yeah, yeah. I think that's the perfect way to describe it. One of my best performing threads ever has 515,000 views on it. And here's something I would see people do. So, let's say you write this great blog post on tax planning. You could just post a link on Twitter or a link on LinkedIn and just say, "Here are 11 of the best tax planning moves for business owners." And maybe you'll get some people to read it. Maybe they're like, "I got to know about this." But I think the people who are kind of on the fence are not going to be the ones that click into it and get more views and more reads on it. And so, my post about it was, "I have clients making close to $1,000,000 a year as a W2 employee who are taking the standard deduction. Then I have business owners making a quarter of that with hundreds of thousands of dollars in deductions. The tax code is built for owners. Here are 11 of the best tax planning moves for business owners."

So, I think it's just a way of setting up your post for like if a business owner saw that, and they're like, "I don't even know what tax deductions I took, or if I really had anything. I feel like I pay a lot in taxes. I'm a business owner. I got to read this." I think there's just a way to have those first three or four lines hit people in a way that they think, "I need to go read this." And then once they read it, they get to know me better. Then they get to vet me of like, "Hey, is his education pretty good? Is he writing things that other advisors aren't really talking about?" Then I'm already starting to be in their mind. And then now I cut up that to be a bunch of other posts later on, and now I'm just nurturing them over time.

And eventually, they're like, "Well, now my business was 250,000 in revenue, we doubled. I really need to start to think about tax planning. Thomas is the person I need to go to for help on that." That's really just the system that I'm trying to create.

Michael: So, following, I guess this pathway, this thread, does all of this go on social media? Does this go on your website? What goes on social media versus your website? What goes where?

Thomas: Yeah. I have a lot. So, I do a blog post every single week. But what I know is that blog posts don't perform well on Twitter, links do not work. So, on Twitter, I basically write this blog post, and then I rewrite it and space it well to be a thread or a long post. And I put a different hook in because it's interesting to write a blog post and just have this three or four line hook. Typically, it's different. So, I basically turn it into a thread with a new hook. And then I'll go to LinkedIn and I'll post more of an intro hook. I'll set them up to want to read it, and then I'll have the link in the comments because LinkedIn, that still works well.

So, blog post wise, that's what I do. And then I have a podcast every week and I know that posting links isn't going to work well. So what I do is I cut video clips that are like, "Hey, some good parts about this that are going to make people want to go watch it." And then I'll quote tweet it and say, "Here's the full link if you want to go watch it." But part of the podcast to me is, it's doing pretty well. I have over 35,000 downloads. I'm happy with that. But I'm also happy with the fact that I can just cut good video from that naturally and post that. And then people get to see me and get to know me and how I talk.

And that's a lot of what I'm trying to build with my personal brand and my content is just that people really know who I am, so then when they come meet with me or want to work with me, they already know what they're going to get, they already know the type of person I am, they already know the way that I talk and that I can explain things pretty well and in a basic form. And the feedback I get from people is that because they come in from social, they're like, "I feel like I already knew you before I met you." And it helps with conversion because when people come to meet with us, typically, they already know they want to work with us. It's just, "What's the fee structure? And can I afford this?" We don't have to provide any value to them because we've already done that through social media.

Michael: So, what's the content, I guess, a cadence that you live in? I think I'm hearing weekly blog posts and weekly podcast?

Thomas: Yep. So, I have 1 podcast, 1 blog, and then I have 1 original long-form YouTube video. I have 1 YouTube short that's original. And then I repurpose an old thread. So, I basically have an original, somewhat long-form piece of content or video every single day which is obviously really active. And then I have scheduled 3 tweets a day, and then I tweet after a meeting when I have a takeaway or when a random thing comes to my mind. So, probably 6 or 7 times a day on average, I would say I post at a minimum.

Michael: So, how long does it take for you to do all this content?

Thomas: Yeah. This is what always surprises people. So, I was called out about this on Twitter of like, "You spend so much time on Twitter. Nobody else can do this." And I showed my phone statistics and I average under 5 hours a week. And so, that's also me scrolling at night because I don't spend much time consuming anymore, most of my thing is scheduled. And then I go on there and reply to stuff that I need to reply to. And then my podcast, I just show up and I do it for about 45 minutes. My blog posts on average take me 45 minutes to write and edit at this point because I feel I've been doing it for so long.

When I first started like four years ago on content, I wrote 1 blog a week and had 3 posts a week, and I spent 10 hours a week. And all I've done is just build it up and consistently do it and never take any weeks off. And I've just now gotten to the point where things are pretty easy and I'm used to doing it. And I'm not a perfectionist. I am fully okay with putting out good content, not spending double the time to go from good to great. And what I've found is, a lot of people talk about, only put out the highest quality content you can. And I've realized that I'd rather put out 5 times the content and it be good than significantly less and it'd be great. And it's worked really well for me.

Michael: I'm struck by that. That was the opposite of the compromise that I thought you were going to say. You are not trying to put out super-best, amazing quality thing that you spend an immense amount of time crafting. Just from my interpretation, you've got a good enough mentality here. I'd rather hold a steady volume that's good enough than do fewer things and try and to make them the most amazing.

Thomas: Exactly. Because what I realized is that most people don't read everything you put out. Most people are just skimming what you do. So, if I'm going to spend double the time to edit the sentence structure on my blog post to be perfect, textbook-written blog post, it's actually not going to help me anymore, to be honest. And that's at least what's worked really well for me. I don't know for other people, but I think a lot of this is a quantity game when stuff on social media doesn't stay up for very long. So, if it takes me weeks to write one thread, I'm better off getting 3 threads out over that time that gets to a bunch of different people and teaches them a bunch of different things. And for me, when I go through social, I don't read every part of it.

I'll look at somebody's thread on estate planning, and I'm just skimming to find some key parts. And so, I just assume that pretty much everybody is doing things in the same way. Or I go watch a YouTube video, I'm not going to watch all 10 minutes, and I'm also not going to search, did they have a pause in there? Did they say um? Could they have said one sentence better? We're all our own worst critics in these type of things. And I talk to advisors all the time, and this is what holds them back, is perfection.

Michael: How do you figure out where to do this quantity versus quality balance?

Thomas: Yeah, I think sustainability is really important. I don't want to set myself up for something that I can't keep doing because... When I worked with Justin Castelli, this was his big piece of advice to me is, "Start small, build from there, but have a schedule that you're always going to do." Because what happens with content is it compounds. The more you do, the more consistent you are, the better the results are, the more it gets pushed out. And what happens is a lot of advisors start, and then things start to go well, then all of a sudden, they have annual reviews, and then they take three months off. And it's weightlifting in the way that you take time off, you're not going to be as strong as you were. You might be better off than, obviously if you never started, and you might be able to get back there quicker, but you're still not at the same spot.

Michael: So, you'd commented that blog posts take you less than an hour. For a lot of advisors, that's a particular pain point. So, what are blog posts for you? What do you write? How long are they? What are you producing in less than an hour to get through these so quickly?

Thomas: Yeah. Well, I think one thing that I do that helps me is that I just write in my voice. I think if you go read a lot of advisor's blog posts, it really seems they're writing for other advisors. They're using really big textbook words, they're using acronyms. And what I found is that actually is not going to help you get clients because all you're going to do is push people away because they can't understand you. And I tell everybody, if anybody has to Google a single word in your content or your blog post, you've lost them. They're not going to spend the time going to Google something, they're just going to go back to scrolling and go to something else.

So, I think early on, it took me a long time because I tried to sound like a textbook. I wanted to have perfect writing, and then I realized that it's better just to come from my voice and be the exact same way that I talk. And so, what I do is I come up with an idea. And when you've done hundreds of financial plans in the last few years, I think it's hard to run out of topic ideas. And what I also do is I have a list of longer-form topic ideas, and then I have a list of short-form topic ideas. And by short form, I don't mean it's a really short post, I just more so mean topics that I could write really quickly. And so, like right now, last week I did 20 end-of-year tax planning moves for W2 earners to make. Next week is 23 end-of-year tax planning moves for business owners to make. I can sit down and write that in 10 minutes max...

Michael: It's because the article is literally just a 20-item bullet-point list?

Thomas: Yeah. And it's also what I'm doing with all my clients right now. So, it's pretty easy to talk about exactly what we're doing in every single review. The week before that, I wrote how to create your own financial plan. That one was pretty long, but it doesn't take me a long time to teach somebody and look at all the topic areas of our financial plan and talk about what they should do and how they should do it. I did one before, that's how to maximize your company benefits. We're reviewing everybody's company benefits right now. This is all things that are just in my head. I don't need to go research or look up. So, I just really focus on the things that I know and I'm helping my clients on, and I just write about them.

How Thomas' Model Turns Into Business And Clients [35:34]

Michael: So, how does this turn into business? Okay, I get it. Social media posts with more interesting hooks to invite them in, then they're a little more likely to click on the article and read the article like 20 year-end tax planning tips. How does this actually turn into someone who is then willing to pay you many, many thousands of dollars a year for advice? How do we get to you nurturing them to the point that they're actually ready to engage or even reaching out to engage them?

Thomas: Yeah. I, every once in a while on social, share about myself and share about our business and the models that we have in general. But I don't do any messaging to people to try to convince them to come work with me. All of my clients, they see me on social, they go to my profile, they click to work with me, and they go apply online. And I would say 99% of the prospects I meet with, I've never seen their name on social media before. And this surprises a lot of people because I think a lot of people think you have to be trying to sell or like, "Hey, you should book a meeting with me, I think I could probably help you on this," from a post they put. And I just don't. I just think that there's such a lack of trust on our industry because of long times ago where people wouldn't do good planning or do the best things for them.

And so, I think it's a really easy way to stand out as to just not be the person that's selling them, because they have enough people in their life that are trying to sell them a product or convince them to give them their money to be managed.

Michael: I hear you. But then my brain goes to, well, countless advisors that we basically see in our research very directly that are spending many hours giving away all sorts of content for free to show their expertise, and their phone's not ringing or their emails not ringing. They're not getting the flow that you are. They're giving and giving and giving and stuff isn't showing up the way it seems to show up for you. So, for your process, how do they turn to business? What's the flow? What's the sequence? What's the funnel beyond just, I'm posting things on my blog and then I'm tweeting it out? How do they actually get to become clients?

Thomas: Yep. So, basically, they go to my profile. I have a link right on it, they click it, and it goes directly to our website and it has a schedule a call with me or let's work together. And because we were getting so many prospects, and I was saying maybe 25% of them were bad fits, I couldn't do 20 to 30 prospect meetings a month and sustain what we were doing inside of the business. So, we moved to an application system. So, now people come in, we highlight what the fee is, so everybody isn't surprised. Like at the bottom, we say minimum price is $12,000 a year. And we ask questions about who they are.

Michael: Oh, that's right on the signup page, like, "We cost this much?"

Thomas: Right on the signup.

Michael: Minimum.

Thomas: Yeah. We don't want people coming in and being, "Ooh, $3000 would've been the max I paid." It's like, "Well, then why did we really do this? We could've referred you out from the beginning to somebody that maybe would've fit your price point." So, yeah, we really ask name, email, where they live, what they do if they own a business, how many people are there, what the revenue is. We ask their annual income, their current net worth, and the type of model that they think they'd want to work on. And then what has led you to looking for a financial planner? And based on that, it comes to me, I decide, hey, that's a good fit for us. We should meet with them. Or I send out referrals to them based on their situation of where they're at that I think would be a better fit for them and why.

Michael: How do you make sure you're getting folks that are a good fit? Aside from, I get it if you put like, "We cost minimum $12,000," presumably, you'll screen some people out that don't want to pay that. I guess a simple way to ask this, how do people with money know that you help people with money?

Thomas: Yeah. Well, I think my content is really only...I always talk about millennials, I always talk about business owners, I always talk about equity compensation. I really specify over and over and over who I work with. And then, every once in a while, maybe once a quarter, I'll put out a post of who we do our best work for. I also do posts, like I had one that did pretty well last week of that was like, "Hey, we have a new client who's just had their second successful exit. Here's what we did to help them." And so, you're sharing some of the things that we're doing, planning ideas, stuff. Maybe I've had two retirees reach out to me in the last year. Pretty much everybody fits who we work with because that's all I talk to over and over and over again.

So, we really haven't had much of that issue. Every once in a while, we'll get people who are maybe a little too early on for us. I'm not in the business of charging people more than the value they could be provided. If you're 28 and you make $150,000 a year, a $12,000 fee is just not worth it. And so, I'll refer them to somebody else. But yeah, I think it's just because of our messaging. And if you go to our website, our messaging is very clear who we work with too, and I just always try to do that.

Michael: So, how do you frame the messaging of who you work with?

Thomas: Yeah. I basically say, "I work with 30 to 40-year-old business owners or individuals with equity compensation in that age range." It's very clear, just those two groups. And people say "Well, why both?" A couple of reasons. One is that both of them, tax planning is the biggest value add, and it's where we build our process around, what we're really good at. We recently hired somebody who's been tax filing and planning for $10 million to $100 million revenue businesses for the last five years. He's going to finish up his EA. And that tax planning is the way they relate. Plus the life stages are very similar. They just have a lot of changes.

Earlier on, I worked with more of the 25 to 30-year-old, they make $150,000 a year. What ends up happening is in a subscription or yearly planning fee model, they fall off because there's not enough changes after a couple of years. But with the group that I work with now, every year is drastically changing for them. So retention is a lot higher and the value add is a lot bigger too. And I do enjoy the complexity, to be honest.

Michael: I'm struck, that's helpful context that all this is built around a particular market you're trying to specialize in the first place of business owners in their 30s and 40s or folks with equity compensation, thus the articles of like 20 year-end tax planning tips for business owners and the thread you'd mentioned earlier of, "The tax code is built for business owners who get more deductions, are you getting yours," because you're trying to speak to business owners and folks getting equity compensation.

Thomas: Exactly. And on that application, we have the question that says, "Why now? Why are you looking for a financial advisor now?" I would say 90% of the people, tax planning is in that part. And so, the more I can talk about tax planning, the better because every single person I sit down with is like, "Big reason is because our taxes are so high." A lot of our clients are 100K to 500K tax bills a year. Our fee is $12,000, if just through tax planning we can help reduce their taxes a little bit through good planning, that fee is worthwhile for them to pay. $12,000 sounds a lot to a lot of advisors, but when some of these people are taking home $50,000 to $150,000 a month, it's not really a line item they think about much.

Michael: So then, what is the prospect flow for you? We've talked about this a lot in the social media realm. What does this add up to in terms of how much new client activity you've been getting this year?

Thomas: Yeah. I would say things have been going really well. If I look back at the last couple years, I would say we probably got 10% more prospects this year than last year, but the quality of these prospects are significantly better. They're higher net worth, they're higher complexity. But this year, at this point, I've had 130 qualified prospects come in from Twitter, and about closer to 170 to 180 total prospects from Twitter. And the rest of those were just probably not worth the fee and probably should be referred out, which is why we started that application system because that would be 40 to 50 hours of extra meetings when we could have known, "Hey, probably not a good fit, no reason to waste their time. We can send them to who would be a better fit for them."

Michael: And what defines qualified prospect to this context, qualified in particular?

Thomas: It'd be the ones that we think would be a good person for us to work with based on their answers. So, we read those and say, "Yep, they seem a good fit for who we work with. Ideal target market. Great, we'll sit down and have a meeting with them."

Michael: So, fits our targeted business owners or equity comp folks willing to pay the minimum fee, seems to have enough income and or net worth to be able to actually pay the fee?

Thomas: Yep, exactly.

Michael: That's a huge flow. 130 qualified prospects flowing through Twitter, that's just basically two or three a week every week that can pay a $12,000 minimum fee.

Thomas: Yeah. And to be honest, I always forget this too, but it ebbs and flows. So, I would say of those 120, there's periods where a lot of them come through. There's probably three months where half of them come through. I had a month where I...

Michael: Is that a seasonal thing or just posts that go particularly viral that draw more?

Thomas: People talk all the time about why impressions don't matter, but I will say for me, the months that I have the most impressions are the months that I have the most prospects. So, it's hard for me to argue and say don't care about impressions. Because when I look back, like last month, Twitter had been having some issues, an algorithm and stuff, and I was like "Man, I only have like 6 prospects this month," but then I got 10 in the last 10 days. And I had a bunch of good content that blew up and did pretty well, and I think that helped push it. But it's just how it works. I had a month where I had 32 qualified prospects, maybe in April or May. And then I'll go through a period where I'll be like, "Man, I only have 5 this month." Then I'm like, "Man, is social going to turn around? Is it not working for me? Do I need to diversify?" The whole advisor mentality where you get worried that everything was too good to be true all over.

Michael: Yeah, my business hasn't grown at the same pace for the past 2 weeks. It must all be going down the tubes. I got to do everything different.

Thomas: Yes, exactly. Luckily, we have a long waitlist. So, we bring on a household every single week when we're not in really big annual review cycle. And our next onboarding date is the third week of January. So, that gives us a good flow of, hey if we ever slow down for a month or so, we're still ahead. But I'm just every other advisor where things can be going amazing, all of a sudden, for two weeks, they feel they're not. And maybe a client fell off, and all of a sudden you're in your head and you're... It's what happens. It's not always this great thing where you're always confident, always feel good about yourself. With every few good positives, there's a negative, and the negatives, you feel way more than the positives.

AllStreet Weath's Business Model And Service Offering [37:41]

Michael: So, talk to us a little bit more about now the business and service model of what you actually do for business owners in the 30s, 40s, and equity-compensated millennials who pay a $12,000 minimum fee. What's the actual service offering?

Thomas: So, we have two, we have just a financial plan model, which is actually pretty popular, especially with equity-compensation people. Most business owners do ongoing with us just because every year is very different, and they really understand the value of outsourcing and saving their time. But we do have a lot of equity-compensated people who do our financial plan only model. And that's either $8,000 or $12,000 depending on their complexity and where they're at. But both of these models are the exact same process in the beginning. Because what we believe is that everybody needs a detailed financial plan. And I love the idea of one-page financial plans, but for the people we work with, doesn't work because they have so many changes needed.

So, process for this is, they decide to become a client, they get everything in the RightCapital for us. We create client folders, they get tax returns, every insurance document they have, every investment statement, debt statement, their estate plan, etc. We meet and we spend the whole first meeting just going over their goals and values and what's important to them. A lot of advisors do this later in the process, and I used to, but I found that doing it early in the process, one, buys in a spouse who is not as into financial planning because they think you're just going to talk about taxes and investments, but instead, we talk about them and what's important. And they're like "Ooh, this is refreshing." But also, another reason is that almost everybody does not get us all their information by that second meeting. So, now it gives us a touch point to remind them on here's the added tasks that need to be done before we go through the financials.

So, that's our second meeting. Our third meeting, we spend the whole time going through all their financials as much as we possibly can. And then after that meeting, myself and my team, we start to go into their financial plans, start to work on it. And then we sit down for another meeting with them of, "Here's some questions we uncovered or things that we still feel are missing or things that we need to talk to you about and get your belief and viewpoint on." Then after that, we work on the financial plan together. So, me and my new full-time hire, we create all of them. And then I have a background CFP who reviews every plan. I really love having a bunch of sets of eyes on every financial plan to make sure that we do really good, detailed, deep financial planning. And I know in the show notes for this episode, we have a sample of our financial plan that we use that people can check out.

Michael: Okay. So, folks who want to check it out, this is Episode 368, so if you go to kitces.com/368, we'll have a link out for a sample version of what this plan looks like.

Thomas: Yep. And so, our next meeting then, we deliver the financial plan. And our financial plans, we literally go over everything. We go from their cash, to what cash accounts they should have, to how much should be in them, to how much should be saved into them monthly or quarterly from distributions or bonuses, etc. Then we go through retirement planning and what changes they need to make there, Roth versus traditional max-out 401(k) versus not, everything about that. Then we'll go through all the investment changes. Then we go through all of the debt and what they need to do there. We go through every type of insurance from homeowners and auto, umbrella, health, life, DI, business insurances, etc.

Then we go through college planning and the analysis for their kids. We go through and analyze their estate planning and what changes they need to make there if they need to get it done, and whether they should be considering trusts or not and educating them on that. We go through surplus planning, business planning, tax planning. We try to be really, really deep with what we do, and we always get the feedback from people that, "Wow, this is a lot." So, what we're finding is that for a lot of these complex clients, the plans are not overwhelming, but they just need a really set way to implement those plans, which is hard for people who just choose to buy a financial plan. Which has gone really well.

And then we have all the tasks and due dates built into RightCapital. So, we have a really good task management system. Because before, with less complex clients, you can hand them a full financial plan with 12 things to do. But with really complex clients, we want to give them all the information, but then we want to boil it down into, "Here's what we need to work on in this season. And then here's what we work on in the next quarter." And so we found three to five tasks per time is what clients receive really well and they get done.

Michael: So, all this is built around just RightCapital's planning software of choice. So, you said at the beginning they're putting everything in the RightCapital. So, I'm presuming then RightCapital portal, RightCapital account aggregation...

Thomas: Vault.

Michael: RightCapital vault. Just all that's RightCapital world for you?

Thomas: Yep. So, we do all of them in RightCapital. Then we obviously use Holistiplan for some of the tax stuff. Our financial plan that we custom build is in Canva. We had a lot of advisors ask for it, so we sold them and we still have them for sale for people who want them. Just because we were like, "Oh, I feel bad selling these to people," but it took me 25 iterations to get there and hundreds of hours. And for most advisors, even looking at ours to go create it in Canva, even if they copied it would take them probably 30 to 40 hours to do, where most advisors were like, "Oh, we'd much rather pay for it than do it ourselves."

Michael: So, what's the plan? What's so special about the plan that you have handcrafted this plan with many, many, many hours of building? We'll get to see in show notes for people who want to go check it out visually, but just can you talk us through, what did you build, and how is this different than "just getting the output from RightCapital?"

Thomas: Yeah. I don't think a financial plan is the output from RightCapital. Sure, hey, you have a 65% chance for retirement is cool and all, and maybe here's the numbers that you need to change. But there isn't a good way to put all of the inclusive. Where do you put the insurance changes?

Michael: So, what is your plan?

Thomas: Our first page is the key things that you need to know. It starts with two key goals. We have a nice looking thing that has effective tax rate and their marginal tax rate, how much room they have left in that bracket, what the next bracket is. We have a good-looking spot with net worth and tax allocation and asset allocation. We have key statistics for them, which really for most people is like, "What's your investment rate and how far are you away from it or are you ahead?" Our next page we have this really nice looking thing that has all of their goals and a progress bar and whether it's in green, if they're on track, yellow if it needs work, red if they're behind track.

We have a calendar that shows them all the key planning dates of things that they need to be aware of from RSUs vesting or ISOs when they have to exercise or hitting 529 plans or backdoor Roths, etc. The next couple of pages are all the action items. So, we have just topic area cash and then we'll go through that and then we'll have college planning and we'll have the bullet points and then we'll have a really nice looking visual of what needs to be saved per year per kid to be on track. So, then we'll go through all those action items, and then we have just a bunch of different spreadsheets and not like projections, but it'll be more spreadsheets of....

We have a client we're working on now, he'll make $1.7 million in attorney, really complex situation, and we had to help show him exactly. He gets paid 4 big quarterly payouts, but it's 15% in Q1, 15% Q2, 20% Q3, 50% Q4. So, we have to have a spreadsheet of, "You haven't been paying quarterly taxes, here's how much you need to set aside for quarterly taxes. Here's what's left over. Here's what goes to fund your life. Here's what goes to an account that's now going to be paying out your salary. Here's what goes to pay down your lines of credit. Here's how we're going to amortize those lines of credit over two years. Here's when you get out of debt. Here's what you can start to invest when that happens."

There's just a lot of things going on where we need a lot of different sheets versus just telling people like, "Hey, you need to accelerate paying off your debt." Or, "Hey, you need to set up a salary account to pay yourself." Like, "Well, what does that look like? How do I do it?" Or, "Hey, you need to save for taxes." "Well, what dollar amount? Where does that come from? Where is the account does it go to?" We want everything to be super easy to understand for our clients, and visuals are typically the best way to do that.

Michael: So, how long does one of these documents end up being at by the time you put all those pages together?

Thomas: I would say it's somewhere between 6 and 9 pages. We also have a page at the end that's just like, "Here's all the action items from the plan, and here's how we'll prioritize doing them in different phases." Instead of them like, "Well, what are all these action items?" So, then we have a page that's surplus breakdown, bonus breakdown, and then here's a conclusion of how we feel you're doing, where you're at, what needs to be worked on, what worries us. And then the second page of the goals is not overly busy. It has the five to eight goals that they have. So, there's probably like three pages of action items and charts to help explain those action items. But they take a long time to create for sure.

Michael: Well, I was going to say, I'm just wondering about the creation end. So, on the one end, why Canva and not good old-fashioned Word? It feels like you're talking about things that classically are stuff we type in the Word documents where we can also copy-paste some graphics in. Why Canva versus Word?

Thomas: Well, we actually have made ours in Word, and I think if you saw the two you'd be like, "Wow, that looks 1,000 times better in Canva," because it really does. The long part about it isn't actually putting it into Canva, the long part about it is doing the planning because there's just so much going on with these clients that there's so many parts that we have to look at and help on. Because we have the Canva template, you basically just copy that template, it's all in the right order and you just have to change the numbers. But all of the spreadsheets we make in Excel or Google Sheets, and then we snip them and put them on there. So, not every part is in there. If you've ever tried to mess with, where is the graph goes on Word?" It's horrible. And Canva, you just drag things to be the exact spot you want. So, I don't think it would be any...

Michael: Right. Word, it's all like it's anchored to a piece of text and then you type words and the text moves to a new line, the graphic moves, all those wonderful challenges

Thomas: Canva's like you're painting a picture, you put everything exactly where you want it, how you want it to look. And so, we just like that better. And so, our process is like, when I work on the plan, I sit down with my new hire and I go through every part of creating the plan so he can learn through those reps with me and then he takes the written plan. We don't start in Canva, we start in Word just getting all of the written like, "Here's the recommended action items, and here's what we do." And then he goes and puts it into Canva to make it look good. And I think if you'd look at the plan that we start with in Word and then look at Canva, you'd be like, "Oh, I can see why you'd much rather put that out," because it's way more digestible and it's easier for clients to understand, and it's something that they would keep.

And so, we always put our clients' financial plans in their vault and capital as well. So then when they have any questions, they always just go right back there to reference it. And also, I guess for us it makes it easier too and we're prepping to review their financial plan's right there with all their other financial info.

Michael: So, how much time does it take to just build this custom Canva layer plan, output deliverable every time you go through a plan?

Thomas: Yeah, it probably takes, I would say, an extra hour to do that. But again, I think it's a good selling point for us, is clients come in wanting a financial plan. That's what they ask for, like, "I just don't have a plan. I need a plan." And when we show them this plan, they're like, "That makes sense. This is what I need, this is what I'm looking for." And I think for...

Michael: Because it's very built around just what they should do because it's got such an action item focus?

Thomas: Yeah. I think if you go through it, they're like, "Oh you actually are going to talk about all the topic areas." Because if you sit down with an advisor and the advisor says, "Yes we do financial planning. Oh yep, we talk about investing. Oh yep, we talk about cash flow." But how do they know? How can they feel that? So, what we do is we're able to show them exactly what they're going to get. So, then what they can say is, "Oh, you are going to talk about those things." And then if we didn't deliver it for them, they'd be really mad. They would give us a zero-star review on Google, which we've never had any of those.

Michael: So, you actually have a sample version of the plan that you are pulling out for prospects in a prospect meeting to show them, "This is what we do?"

Thomas: Yeah. First half the prospect meeting is, "Tell me about you, where you're at, your family, where you're financially, what concerns do you have?" All the get-to-know--them-well. And the second half of it is, "Let me show you exactly what it looks to work with us. Here's what we do in every meeting. Here's what we do in between the meetings. here's what the output is. Here's what it looks to be a yearly client." And the feedback we always get is like, "Well, hey, you're the first people that ever gave us a tangible feeling of what it looks like to work with you. We really like that and now we don't have to guess." And so, they come in...

Michael: Because you're just literally showing them, "Here's the deliverables, here's the things you get, here's the process?"

Thomas: Yep. Exactly.

The Implementation Phase And Prioritizing Action Items For Ongoing Clients [01:04:56]

Michael: So, now talk to us a little bit more about the implementation phase. You've mentioned a few times accountability meetings and prioritizing action items in the phases and moving through phases. So, take us through all this in a little bit more detail now. Like, I'm getting to the end of the planning process, I've got my 17 action items of all the ways that I'm not doing my financial life properly that I should be doing better with you as my financial advisor. So, I guess, talks a little bit more, how does this action list get presented initially with the phases and the priorities, and then how does this actually start working ongoing?

Thomas: Yeah. For the ongoing clients, I think the time of the year matters because if you're starting with us in January and you get your financial plan in March or April, the priority checklist is different than if you're getting your financial plan in November. So, a lot of the clients we're delivering with now phase one is end-of-year tax planning moves, like, have you maxed out your 401(k)? Have you maxed out your HSA? If you're a business owner and QBI is going to be 50% of W2 wages, why are you paying yourself $100,000 distribution versus paying that all out in salary to maximize QBI?

So, we'll do all of the end-of-the-year things. For a lot of people, it's also rolling old IRAs. Well, pretty much IRAs will be set by IRAs into their 401(k) so we can do backdoor Roth's for this year. So, I think the most important things is a combo of where are we at in the year. If somebody we're delivering a plan to them right now, it actually might be company benefits that we really start with, like, "Hey, next meeting, let's make sure we implement all your company benefits and do some of your tax planning." If we meet with you in the beginning of the year, it might be more of like, "Hey, reallocate your investments, get your 401(k) percentages set up and maybe switch from Roth traditional or traditional Roth or whatever those are." But we always start with those key wins.

So, I think you have to combine most impactful things based on time of the year with also what they're telling you is most important to them. I think that seems obvious, but I think a lot of times advisors don't listen to what their clients are telling them is most important.

And so, we just build it out. So, we'll have like, "Here's what we're going to do over the next two months." Then we're going to meet and we're going to review those things you were supposed to do. What did you get done? What did you not get done? What do we have to help you implement? Great. Now we're setting you up for what we have to do in between this meeting and the next. Here's those action items. Then we meet, what did you get done? What still needs to be there? Is there anything that needs to be changed, be over the last three months in your life that now that your plan has to change? Then we move to the next phase.

And then we just keep doing that until basically their whole plan is implemented. And then that's when they start to just become regular yearly ongoing clients. How many action names typically end up in your recommendations list? I joked 17 action items. Is that actually typical for you, or is it less or is it more?

Thomas: I would say more on average.

Michael: How granular do you usually have? More on average?

Thomas: Yeah. I would say most of our plans are like 20 to 40 action items of things that need to get done. But remember, with the audience I'm working with, they've typically never worked with an advisor before. They typically have the same auto insurance or homeowners insurance they signed up, that was the cheapest. They don't have umbrella, their businesses don't have the right insurances. They have rentals that are not in LLCs. They have one savings account for everything or maybe all their money is in their checking account. Their investment portfolio is all one company stock or random five stocks that make no sense.

So, there's almost never, besides some clients have like, "Your debt situation looks good, no changes need to be made here," most of the other ones have a ton of action items that need to be done, which is why we have to break it up this way.

Michael: Okay. So, then how do you do the break up? I guess in other terms is like, you sort of mentioned phases, but is this literally like, we have a 25-item action list and we just put 5 are phase 1, and 7 are phase 2, and 8 are phase 3, and there might be 8 phases to get through them all because there's just that many? How do you break them down the phases? How many phases?

Thomas: I would say typically it's about 3 to 5 phases depending on who it is. But we obviously try to group it with similar themes. So, let's say we start phase 1 is like cash and retirement accounts. So, it's set up, the right high-yield savings accounts, move to get out of one account, move them to all the right ones, set up the automations, and then we'll be like, switch your 401(k) from Roth to traditional because you're in the 37% tax bracket in California. And let's set up your backdoor Roths. That's phase 1. Phase 2, now that all of your accounts are in the right place, whatever, let's now make all the investment changes we need to make.

Okay. Great. we did that. Phase 3, maybe that's all the insurance changes. So, we go through all the insurance change in phase three. Phase 4 might be only estate planning because that's a big topic area and a lot needs to get done there. And so, we break it up like that where certain ones are all of them together. And then maybe phase 5 for a lot of clients is, "Hey, we're going to go through your business. We're going to buy-sell agreements, we're going to fund it with insurance, we're going to make sure you have the right liability protections. We're going to go meet with the CPA and talk about maybe why you should be considering moving to an S-Corp next year or not etc."

Michael: So, how do you set, I guess the priorities? Do you invite clients to prioritize? Do you prioritize for them? How do you set the order, like the sequencing of phases?

Thomas: I definitely think it's a combination of the 2. I think listening to clients is really important. The one I was just talking about before where they really wanted to work on estate planning first and the asset protection side. But I think a lot of them are like, "What is the most impactful thing to do?" And so, sometimes the most impactful thing to do is, "Hey, we really need to focus on your investment portfolio first because you've held onto your employer stock and only your employer stock for 20 years or whatever, 10 years." I had a client come in where he found from an old wallet, he found $5,000,000 of Bitcoin and his net worth's $5.1 million. Well, let's focus on that.

We need to make changes to that right there because if I say phase 4 is investments and Bitcoin went down 50% because I just threw mine in there, that probably isn't the best decision to make. So, I think typically it's like cash, and retirement savings is where we go first for a lot of people because we can get a lot of that done in a month. Insurances typically take a longer time or estate planning typically takes a longer time. And so, we can get a good start on getting them used to getting things done pretty quick with those 2 points.

Michael: How long do you typically give clients or sit with clients to get through all the items in a phase? How long does it take you to work through 20 to 40 action items across all these different phases?

Thomas: I would say a year to 2 years to be honest, especially because of estate planning, I feel people always drag their feet on estate planning and insurance changes. I can send them the brokerage and they could like, "Hey, you're supposed to respond back and do your health questionnaire or whatever. Okay. Well, you took 2 weeks to do that." And then they get back to you and they need to schedule a call. And then you take 4 weeks to do that. And then you do schedule the call. And then they're like, "Here's the prices." And then you think about it. That's why I start with the most fun things because I know that we'll make the most progress early on by the things that they feel are moving the needle. And then the things that they're checking boxes, they know are important, but it's like they just have to do, we start to move into there.

So, our first phase is 1 month, and then we meet and then we give them 3 months to work on phase 2, and then 3 months to work on phase 3, and then 3 months to work on phase 4. But sometimes life gets in the way. I was meeting with a client this week and sister just got diagnosed with brain cancer. That's going to obviously take his mind off doing his tax loss harvesting that he's going to self-do because he just got a financial plan or whatever. So, sometimes things just take over priority and that's okay.

The Ongoing Work Thomas Goes Through With His Clients [01:00:50]

Michael: So, now catch us up, how does ongoing work after you get through 3, 4, 5 phases of this?

Thomas: So, all of our clients that are coming on, that are paying the $12,000 a year fee, they get 3 review cycles a year. So, what that looks is we meet in the beginning of every year, we get an update of goals, financials, what the year's looking, we're forecasting for the business, etc. And we get them a brand new financial plan for the year. Those plans are definitely can be smaller because we've implemented so much. And so, now we do that whole review financial plan inside of RightCapital in the snapshot because we can build our own custom templates. It does not work for our original one because that's too much information. But now when it's like 10 to 20 recommended action items, we can do it there.

And so, now everything lives in RightCapital for our review, our ongoing clients with their tasks right there at the top of their plan that they can just mark off and it sends reminders. And I love that. So, we do that, give them a brand new financial plan for the year, then we meet with them, post their taxes has being done. We internally review, look for mistakes in their tax return, which we find very often to be honest. And then we explain to them what happened last year in their taxes and we do their tax planning for that year. And then we meet with them in Q3, and we do company benefits, insurances, estate planning, obviously, we review investments and tax loss harvesting and stuff and any end-of-year tax planning moves.

And so, that's what our yearly review schedule looks like. But most of our clients meet with us a lot more than that. So, they always have a link to our calendar. Something comes up, "Oh, we we're going to buy a house, so how much should we put down? Which of these loan options should we pick? Can you connect us to somebody to help on the loan?" Or, "Hey, we need a new car," or, "Hey, we're going to hire somebody. How much can we pay them? Do I have to change my salary?" Etc. And so, most of those clients, we have about somewhere between 7 to 8 touch points a year with them. And I would say 5 or 6 of them are hour-long meetings and the other ones might be a 20 to 30-minute phone call.

And that's why our fees are pretty high is because our clients need a lot, and it's just if we couldn't work with 200 clients with the needs that our clients have. And so, if you can only work with 100 clients at capacity, you need to have a pretty good fee for it to be good for you, have the employees that you need, and have the business that you want.

The Fee Schedule For The Offering and Capacity On This Model [01:03:19]

Michael: What is the fee schedule or business model for the offering.

Thomas: Yep. So, our financial plans, we have the $8,000 or $12,000 financial plans, and those are paid half upfront, half on the day of the accountability meeting at the end. We tell everybody you have a money-back guarantee

Michael: What makes it $8,000 versus $12,000?

Thomas: So, $12,000 is typically business owners with more...typically business owners, more advanced tax planning and a lot... If you looked at who we did plans for at $12,000 versus $8,000, the last two we did at $12,000 were almost $2 million in income, post couple business exits, advance estate tax planning, just so much more time, probably double the time. Most people fit in the $8,000 though. I'd say 20% of people fit in $12,000, and it's typically more that business owner route with a lot of complexity. And then ongoing, we just have a yearly fee to work with us that's broken up monthly.

I really believe that to best handle your finances, you want to make things as regular as possible. It's why if you're going to save for a $20,000 trip, you should save for that monthly versus all of a sudden December comes and you're going to pay $20,000, harder to plan for. So, we don't call it a subscription, we call it a yearly fee to work with us. So, $1,000 dollars a month gets you to $12,000 or $1,500 a month if they're in the $18,000 model.

Michael: Okay. And where does investment management side of things sit? I'll call it good old-fashioned portfolio management. Is that a service or you advise only, not managing portfolios? Is there also an AUM component? How does the investment management side work?

Thomas: So, we have an investment side where we charge 0.35%. And for basically the whole time we've been working, I've been telling people, "I don't care if you have us manage your investments, we will show you exactly what we do. If you guys want to self-manage, you can. We want to be planners." And I think for me, for the longest time it was because I wanted to be the deepest financial planner I could. So, I spent all my time learning how to be the best financial planner I could. But I do think adding AUM more over time is going to be a goal of ours, but we don't push for it. I never tell somebody, "We have to manage your investments." We end up managing a lot of clients' backdoor Roth's just so they don't screw them up to be honest.

But with a lot of our clients with equity compensation or their business owners with a lot of value in their business and their retirement plans, a lot of their Roths and their taxable accounts are not as big because of where they are. So, it doesn't feel like we're giving up much revenue. But we now added an AUM model that we're still going to do all the financial planning for them. They can just pay via AUM. And that would just start at 0.9%, but our minimum fee's still 12K. So, it would've to be like 1, 3, or 1.4 for them to cross over into that threshold.

Michael: So, why offer it if it's going to add up to the same fee anyways?

Thomas: I think it's just a convenience thing. I mean, you know this better than anybody, but research shows that AUM is a way stickier relationship. I think people feel it coming out of their pocket more. So, with recessions or if they lost a job or something, they're more likely to cut it or their business is doing well or not doing well, they're more likely to cut it than to stick with it when in reality they would benefit a lot sticking with it through those tougher times. And so, then eventually, my clients will, what if they retire at 45? Are they going to want to pay from cash flow? It's basically the same thing as paying from their taxable account because they'd have to take out of their taxable account to pay us anyways.

But we're going to give people an option. If they want to only be 12K flat fee and they want to manage their own investments, that is fine with us. We will do the work. We love doing the planning work. If you want to pay through assets, you can pay through assets. It's really about giving people the choice of what fits them. And as long as our minimum fee is hit, we feel good about that.

Michael: And how do you actually do just billing for this at $1,000 or $1,500 a month? Are you billing investment accounts because they tend to have dollars anyways? Is it more complex? Because some people are investment accounts and some people are, "Bill my business," and some people are, "Bill my bank account," and they're all over. How does that billing work?

Thomas: We basically do all bank accounts or credit cards from AdvicePay. We don't really do it any from taxable accounts for actually a single client. Their 0.35% obviously comes from those accounts, but all of the yearly flat fees are billed through AdvicePay.

Michael: Okay. So, from that perspective, giving the AUM-only option is effectively...that's a new billing pathway for them because they otherwise probably wouldn't be paying from investment accounts if you're doing mostly bank accounts or credit cards.

Thomas: Yep, exactly. So, if they did, we'd use Altruist and they'd be billed directly from Altruist. And we do monthly fees on AUM as well. So, it's just everything is spread out like that, not quarterly.

Michael: Interesting. So, why monthly? I mean, traditional world is a quarterly AUM fee. Why monthly AUM?

Thomas: I could be wrong, but I feel like a big reason why people do it quarterly is because billing has been a nightmare forever. And so, going through and doing all that every single month is terrible. But now Altruist, you basically click a button and it does it for you where people pay for softwares, where I don't know what the research actually says, but I feel like that gets you to a pretty fair average fee where like, what if that quarter you're up 20% but the year you're down 10 or vice versa? So, and we pay ourselves monthly. So, I think it just naturally fits the best and is easiest to plan for as a business owner.

Michael: Well, yeah, it certainly smooths the cash flow of the business. And I guess just in practice, I know a lot of firms, multiple fee schedules, multiple breakpoints, all various householding issues that we do is we make arrangements with clients and it sounds like you don't have a lot of that, it's 0.35%. That's the deal. It's a pretty simple schedule at that point. I'm envisioning you just have less AUM fee complexity than a lot of us probably inflict upon ourselves, we have to deal with.

Thomas: Totally. We totally do. And maybe over time, that'll change a little bit as we start to focus more on AUM, but for the longest time, I just didn't focus on it because none of my clients where they were like, they make $200,000 a year, they should just be doing Roths. And now the clients there's a lot more wealth coming into us. I think a lot more people are going to want us to manage their assets and just be like, "This isn't really worth my time, I want the tax loss harvesting, I want the rebalancing, I want you guys to handle all of that." And so, I think next year, that'll start to be a focus for us. But 97% of our revenue is from our planning fees. So, it's not really big money.

Michael: It's a small piece for you guys right now.

Thomas: Super small right now. Yeah.

Michael: So, what's capacity in this model? How many clients can you sustain on this fee model before you hit a capacity wall?

Thomas: I would guess we're going to be in between 100 to 150 that we can do just because I have a good team. So, I have a part-time CFP. He owns his own firm, but as he builds his firm, he wanted to have a second job. And it's pretty great. He reviews every single financial plan and then some financial plans we just have him do and then we'll review them. Then I have my full-time hire, and then I have an assistant who works 10 hours a week. So, I can always add those. I really like Jason Wenk, is somebody I talk to a lot and I really look up to. And he had a really great firm, but they could work with a lot of clients. They had a lot of planners in the background.

And so, what I'm building towards and what I talk about all the time is, part of building my own business is creating the ideal job for me. And the ideal job is a combination of what I think I'm uniquely good at and what I enjoy to do the most. And those two things for me is grow the business through social media and be creating and meeting with clients and talking to them. The rest of the job, I am totally fine, outsource to people who love that. So, my new hire, he loves being in spreadsheets, he loves analysis. That's great. I like getting the analysis to me and then explaining it to clients. I don't really like scheduling and some of the admin work and making sure everything's in the client folders and signed and whatever.

So, I have somebody doing that as well. And so, I think if we hit capacity on my hire on planning, I'll hire another planner that will help do that planning in the background as well. And my hire will be able to teach that other person that as well through reps and we'll all meet and we'll all have those reps. And so, that's really what I'm continuing to build towards. And then I just think naturally in a subscription or yearly planning model, we will lose clients, but the best thing is that when we lose clients, we actually get higher fee, better-fit clients.

And maybe it's because we have a good marketing funnel and we have tons of people coming in that that doesn't bother me. But it really doesn't. I feel good about people being okay to be on their own when there isn't a lot of complexity.

Where Is The Business Now In Terms Of Client Revenue? [01:13:09]

Michael: So, where is the business now just in terms of client's revenue? I guess AUM is not a good way to measure and frame because that doesn't fit your model. So, can you share client count revenue where the business is now?

Thomas: Yeah. I'm at just under 70 households I work with, but that doesn't count people who already signed up, that's just who already started to work with us. So, probably a little over 70, somewhere between 70 and 75 ongoing households. And started this year at about, I did like $13,000 revenue in January, but about $10,000 of that was ongoing. December of this month it'll be about 32-ish reoccurring, but we'll do somewhere between 47 and 48 because of one-time financial plans. But I think for me in the future, we will hit capacity, but when we hit capacity, that will make three seasons of the year busy.

So, we'll be busy February, March, June, July, and then we'll be busy September, October, November. So, that rest of the year, I'll just do financial plans. And so, if we can do, let's say three financial plans a month at an average of 10,000, that's a lot of added revenue we have. So, we won't be at capacity not working with anybody, we'll just be at capacity for ongoing clients. And three years ago, I said I never wanted to be a business owner and then Justin was like, "You know, man, you should go start your own business. I think you're ready for it," and basically pushed me to go do it.

And so, I have this realization that right now I don't want to hire more advisors and manage more advisors, but that might change too. But the best step for me forward is to build my whole client revenue. So, I have the ability to make that choice at that period of time. And I know you've had Adam Cmejla on. He's a mentor of mine. I spend time with him, and he's done a really good job of moving to be business owner and not the advisor. And the planner I have working with me now, he's on every client meeting. So, there is a reality where he might take over half those clients and then I have room for another half of clients, or maybe I'll bring on another advisor and say, "You take the equity comp people and I'm going to stick with just business owners," and I'll only bring on business owners who are willing to pay me $25,000 a year or something like that.

I know that I don't know for sure what it's going to be, but I'm just going to keep building and see what excites me because I think that's part of it is I just want to do something I love, and right now I'm doing exactly what I love, but if I get to the point where this doesn't feel something I love and I need to either work with less clients, or I want to move more into business owner route, I'll let myself pursue that.

Michael: And so, 70 households now, is that a mixture of ongoing and one-timers, that's all folks in the ongoing?

Thomas: That's just ongoing. We probably do... I would say this year we probably did maybe 12 to 15 one-time plans. It's actually a pretty popular model, more than I thought. And I know a lot of advisors are anti-one-time plans because they're like, the second you hand somebody a plan, it's outdated, but I really try to foreshadow the next few years for them and they're like, "Hey, well maybe in a couple of years my spouse would want to stay at home." "Okay. Well, here's what I would do if that was to happen, here's the levers I'd pull back on." Or, "Hey, maybe I want to start a business." "Okay. Well, when you start that business, here's what I would think about. Here's what I would do. Here's why I would do Roth conversions. Here's why I would do only Roth contributions in those years."

I try to not be like, "I'm only going to help you with exactly what you're facing now, but I want to help you handle what you think is going to come. And then if you need my help, just reach back out and we'll figure out a way to help you in that situation."

What Surprised Thomas The Most About Building An Advisory Business [01:16:55]

Michael: As it sits now, what surprised you the most about building an advisory business?

Thomas: I think for me, I really didn't expect to grow this fast. When I started I was like, "I just want to be a solo firm. I don't really want to hire anybody." Well, solo with trading. But I didn't really want to hire anybody. I just wanted to make $100,000 and work with some clients and enjoy my life. And all of a sudden growth just really, really happened and I had to figure out, how do I work with these people? What's the right process? I had to get used to like, are you going to lose some clients while you figure it out? And of course, you're going to lose some clients while you figure it out.

And I think for me, a lot of this has just been like, "I want to be the absolute best I can possibly be at this job." And so, I created some study groups with some really great advisors where we could run through, talk about some client cases. Not obviously specifically them, but how would you think about this? I think there's so much to know in this industry, and then all of a sudden, you feel like you know it and you get a new client who has some nuance you've never heard of, and you have to go figure it out. And I feel like every year you realize there's more that you don't know. And that's exciting and fun.

And I also didn't think I would like doing social media. Before I started creating social media, I didn't even use it. I lost my Instagram password two years before that, never logged in. I didn't spend a minute on Twitter, I didn't like social media. And then I realized man, I love creating content and educating people. It's for me, one of the most fun things I do. And I would say, those are the biggest things that surprised me, I guess.

Michael: Interesting. So, I'll just ask a little more, what changed so much in social media realm to go from, "I'm the person who doesn't log in and look to social media at all," to, "I'm building my business on social media?"

Thomas: I think it for me was how much I was learning. So, I feel like for a long time people are like, "Man, Thomas knows so much stuff." But in reality, I was just writing about what I was trying to learn. And to become a really good financial planner, there's so many topic areas. So, I'd go through a series and write about estate planning and I'd do five parts and start with the basics, all the way up to the complex. And for me, that was my best way to learn. And so, I think I started to get addicted to the learning and how much faster I could learn by, instead of just, I listen to a podcast or I listen to a blog, or I talk to a client about this, it's, I do that, I have to refine it, learn more about it, write about it, make it concise, and then apply it to clients' lives. And so, I just realized, "Wow, this is the best learning mechanism possible and it's really fun for me to just create and share those things." And I don't think there's any denying that the more positive feedback you get, the more fun it becomes.

What Was Thomas' Low Point On This Journey? [01:20:00]

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

Thomas: I think there was a few low points, all the way from when I first started at a broker-dealer and just hating everything about it. And I think this is why I am so passionate about social media is because I started in a sales world where...I talk about this all the time, but basically, project 100 started, blah, blah, blah, call everybody you know, and I already had a bad taste in my mouth, to then I remember sitting down a couple months into my job, I just got back from my best friend's wedding and my manager was like, "How many leads did you get at the wedding?" And I was like, "Leads? I was in the wedding, no leads." And they're like, "You should come away from every event with leads."

And right away I was like, "Everybody sits here and talks about how valuable financial planning is. If financial planning's so valuable, why am I selling it to everybody I know versus attracting the people who need my help?" And so, to me, I was like, "Well, how do I do that? Social media is the best form for me to attract people who want my help." And so, I think a lot of it was that my managers, they were like, "We built these businesses without social media." I'm like, "Okay, you built these businesses before social media existed." So, I don't know if that's a fair reason to say it. And they're like, "You don't need it. And we can't do that here." And so, I think part of it was a little stubbornness of me, of like, "I think this is the best way to do it. You're telling me that I'm wrong. I'm going to prove that this is actually the best way to do it."

And so, I left that company and that's why I joined Justin is, I had a bunch of different offers to go work more at a corporate firm, be a junior advisor, but I knew that Justin was what I wanted to be. He was a great guy, a great advisor, had great content, he built things the way that he did. And I begged Justin to give me a job. I asked him, "Will you pay me $2,000 a month?" He basically said, "No." I begged him like five times. And eventually, he's like, "Sure, you can come work for me." I didn't care at all about the money, all I cared about was the learning. So, I think maybe low point was feeling just depressed about the fact that I'm just harping on all these people and selling to them and I just felt gross doing it and didn't feel me.

And then I don't know if it was a low point, but when I was with Justin, we were very siloed. I was working from home a lot. I would see him, probably we talk once a month. And so, I loved it. He gave me all of the frameworks of what to do, but also let me be me and work on my clients. And when I needed him, he was there. But he had a lot of guilt. He had a lot of guilt that he wasn't being a good manager and that he wasn't putting enough time into me and that it was unfair. And so, he was like, "I don't really want that guilt and you're also ready. You learned everything from me you needed to learn. You need to go start your own firm."

And to me, it was like, "I never wanted to start my own firm. I had it great there, we had a great assistant who worked with us and I was like, "Oh my gosh, I'm 26 years old and I need to go start a business in financial planning. That's scary." But it ended up being really the best thing for me because it drove me to be like, "I have to figure this out." And that's typically what ends up the best for me is, I'm not a textbook learner, I'm a learn by, "I have to do this." And so, it just pushed me into doing that. And so, those were maybe two of the low points, but they were also the biggest things that helped set me into the right direction of what I needed to do.

Advice Thomas Would Give His Younger Self Getting Started Down This Path [01:23:24]

Michael: So, what else do you know now you wish you could go back and tell you from 5 or 6 years ago as you were getting started down this path?

Thomas: I think one of them for me is, I wish I would've started creating on Twitter earlier, but I didn't because other advisors told me it was a bad idea. So, early on, I had advisors tell me that, "LinkedIn is where you get clients and Twitter is where you network and that's how it works, listen to me." And I was like, "Okay. I guess that's what they say." And then eventually I was like, "I just don't believe that. I don't spend any time learning on LinkedIn, I spend tons of time learning on Twitter. I think there's probably other people like me learning." And so, for two years I just didn't spend any time there. And then last January of 2022, I was like, "You know what? I'm going to do this. I'm going to really get into it."

And obviously, that ended up becoming the best thing for my business. And so, I think part of it is, there's older advisors that you should absolutely listen to and take things from, but then there's also people who are willing to give advice who are maybe not the best people to get advice from. And you need to understand like, if Michael Kitces is giving you advice, you should probably listen. But if random advisor who you know nothing about is going to sit there and DM you to stop doing something, maybe they're probably not the best person to listen to, because there's always going to be opinions. And I get people on social media telling me all the time that they hate my social media, but I have tons of other people who absolutely love it.

And so, I'm like, "I'm probably going to tune out the people who are just going to hate on other people." Or I have people on social media that try to call me a liar and that my business isn't where it's at and I'm making up numbers, and I'm like, "Okay, I don't know why you say that. You think I'm going to sit here and risk my reputation and when I get audited that they're going to look and be like, 'You've been lying about your firm?'" I don't think that'd be a risk that I'd be willing to take. But it's funny that people will tell me that I'm lying. So, I'd say that's probably one. And two is just understanding the power of study groups.

I remember when I was talking to you at Future Proof, you mentioned this study group that you've been in forever, and I would say study groups are by far the most valuable thing for me because I've created ones with advisors that all have different things that they're better than me at and maybe I have certain things I'm better than them at, and we can all learn from each other and be brought up to speed quicker. So, I think advisors getting started, you're starting your own firm, you need people around you that can help you because your spouse doesn't understand this, most people don't understand the financial planning to be able to help you, and you're going to face challenges that you need people in your corner that can help.

Michael: So, how did you find your study groups? So, if you have a lot of advisors, like, "That sounds awesome. I don't know where to find one."

Thomas: For sure. I think XY, obviously, I'm in that Facebook group, I see people talk about it all the time. But for me, I actually found advisors that I admired and I just messaged them and said, "Hey, I'm starting a study group, I'd love for you to join." And some of them were people that I vetted through social media and I knew really well. Some were a couple advisors that weren't big on social media, but I had talked through some complex stuff with them. I shout out Ben Lake all the time. He's an advisor that I partner with on my ultra-high-net-worth clients. I work with him at their firm.

And I would say nobody has taught me more about financial planning than him. And he's in my study group, he's the first person I go to when I ever have a complexity that I don't know about. And somehow, he always knows the answer. And having somebody like that is just really, really valuable.

Michael: And just what does the study group do? I'm just envisioning, you reached out to them and said, "Hey, be in a study group with me." What does that mean? What do you do? What was the ask? What was the commitment?

Thomas: Yeah. So, we were going to do... I think early on, you can do a lot in the study group, but eventually, every two weeks, you're not going to have enough to talk about. So, I think it was a mix of, we did every two weeks, and one time we'd be like, "Somebody brings some complex financial planning thing they're trying to solve, and let's talk about it together. How would you think about this differently than me? What am I missing?" Etc. And then the other time would be more about practice management, maybe we're talking about, what does your process look like? Maybe we're talking about marketing, maybe we're talking about, what does your first meeting look like? How are you converting? Or all of those different types of things.

And we did that for a while and now it's like, "Hey, if you have a client case that you're struggling with, talk about some hard parts with you, and let's explore this together." Or everybody shares one key win they have and one thing they're struggling with that they'd love to get other people's opinions on. I do think that's the hard part is picking the framework because if you just say like after four years, if you just show up and you're like, "Hey, we're going to talk," you might have nothing to talk about and then people are less excited to come.

So, you need at least some framework. And I do think Jacob Turner is in mine and his idea was like, "I think this would work really well if we all talk about one win and it's nice to share wins with other people who get those wins." And then also one thing that we're struggling with that we want to figure out. And so, maybe for somebody that's like, "I just feel I'm not converting enough people in that first meeting." "Okay. Well, show us your first meeting and we'll give you feedback on what we think that you could do better." Or like, "Hey, I'm losing clients after year one. I'm not able to convert people to stay for year two." "Well, what's your language and what's your service model, and are you proactively reaching out? Do you have every client know what they're going to do in each part of the year, etc.?

So, we just work through things together and you just get a lot of little nuggets from other people who are in a similar spot. And the big thing for me was being with people who are in a similar spot, because I think it's really easy to either be the farthest behind in a group and then you feel bad because you add no value, or if you're the farthest ahead and then you feel like you're teaching a class, neither of those work out very well. And then you either are resentful that you are just giving everything and getting nothing, or you have some guilt that like, "Gosh, every question is about me and these basic things that everybody else knows." And I don't think either of those end up working well.

How Thomas Defines Success For AllStreet Wealth [01:29:44]

Michael: So, as we wrap up, this is a podcast about success and just one theme that always comes up is the word success means very different things to different people. And so, you're on this wonderful path for successful growth with the business itself. How do you define success for yourself at this point?

Thomas: I think to me it's not size of a business or an income level or a revenue level or an AUM level. So, when I was in college, I did six internships and I hated every single one of them. Dreaded every day going to them, I didn't feel like I had any impact, I didn't feel like I was doing something interesting to me. And so, I was like, "Man, is this going to be my whole life?" And then I went to my first job and it felt like that's what it was, it just felt like something I didn't enjoy doing. And now I feel like I'm one of the lucky few who loves what I'm doing.

If you'd asked my fiancé, she'd say I work way too much, but it's because I almost feel like I'm playing a video game not like I'm working a job. So, to me, the definition of success to me is every day I do enjoy what I'm doing, but I'm also realistic that of course, 10% of the job is going to suck. I might have to do random paperwork for a client that's not fun to do, but that doesn't mean I don't like my job, it just means that there's always going to be some parts of the job that are going to be a job. And the other part about it too is I maybe take different advice than others where you're like, "Don't ever hire anybody you know or a friend or a family member."

I want to build a business that I'm proud of with people I love. And I've done that. My planner that I hired, he's one of my best friends since I was 11 years old. He had a cancer scare in college that I was the only one with him in the hospital, one of my absolute best friends. And it's been amazing. We have such a good trust level. I know how hard he works. We're able to do that together. My dad is the outsource CFO for some of my clients. I get to work with him. I really enjoy getting the added time with the people I love.

Michael: Oh, that's awesome. That's awesome. Well, thank you so much, Thomas, for joining us on the "Financial Advisor Success" podcast.

Thomas: Yeah, thanks for having me, Michael. And as always, I mean, everybody tells you this, but thanks for what you do. I've always loved listening to these episodes and they've been really impactful for me and my business.

Michael: Awesome. Well, thank you. I'm sure this will be for many who listen in the future. Thank you.

Thomas: I hope so.