Welcome back to the 225th episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Matt Gulbransen. Matt is the President of Pine Grove Financial Group, an RIA in Minnesota that manages over $550 million for about 325 families.
What’s unique about Matt, though, is that despite the widely held belief that direct mail and educational seminars have gone the way of the dinosaur, he has continued over the past decade to see positive marketing results from using direct mail to fill seats at in-person seminar events geared towards educating people about planning for the plethora of life transitions they face as they approach retirement… and then convincing them to work with him to navigate those retirement transitions.
In this episode, we talk in-depth about the ROI that can still be generated from a marketing funnel built around direct mail seminars, Matt’s key realization around why fear-based marketing will only get you so far and doesn’t ultimately help clients move forward to do business, the reason Matt started to charge an upfront planning fee for new clients as he gained traction with his seminars as a means of demonstrating that the work he and his team was doing had value, how Matt has adapted his process in a world where in-person events haven’t happened for a year, and why Matt feels that pre-retirees and retirees are still an attractive target market despite the level of competition in the niche.
We also talk about the way Matt has been able to leverage a relatively lean (at least by industry standards) team of nine people to service $550M of AUM by building out workflows and integrations within their tech stack in order to become ultra-efficient at their most common tasks, why the firm’s desire to focus on tax-savvy household-level allocations led Matt to choose 55IP as their core portfolio management software instead of more popular alternatives, and the various other technology tools that Matt’s firm has implemented to support “tax alpha” as a key value-add they bring to their clients (especially given that Matt and his clients live in a high-tax state).
And be sure to listen to the end, where Matt shares the challenges of starting his career as a young advisor at a wirehouse, how the challenges of prospecting led Matt to shift to the bank channel that had a more captive audience of prospects that could be referred to him, how it was Matt’s initial success with seminar marketing and the realization that he could grow an advisory firm without having a big-name brand behind him that eventually led him to launch his RIA, and how Matt has started to further scale the efficiencies he’s already built in his practice by bringing on outside advisor teams who are able to bolt on seamlessly to his system.
So whether you’re interested in learning how direct mail is still a viable means of attracting qualified prospects, how advisors can still use seminars to demonstrate the value of financial planning, or how Matt has been able to manage a relatively lean team with workflows and automations, then we hope you enjoy this episode of the Financial Advisor Success podcast with Matt Gulbransen.
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Michael: Welcome, Matt Gulbransen, to the Financial Advisor Success podcast.
Matt: Michael, how are you?
Michael: I’m doing well. I’m excited to have you joining us on the podcast today to talk a little bit about…I guess it’s kind of become one of my favorite subjects these days because it’s bouncing around a lot in our advisor world, which is marketing and how to build your marketing, how to scale your marketing, how to systematize your marketing, how to actually spend some money on marketing and get some reasonable results. Because I think a lot of advisors out there have struggled with, “Spent some money, didn’t do anything for me.” And I know you’ve really spent the past nearly 10 years now kind of building and systematizing a marketing process. And, so, I’m just excited to talk about what that looks like and how that’s worked for you and what you found works when you want to put little dollars towards marketing to get something going.
Matt: Awesome. Well, I hope I can add some value to everybody out there listening. Marketing is not easy, it comes with a lot of trial and error, a lot of failure, a lot of frustration, but also some successes too.
Michael: So, as we get started, I think I’d love to begin by just understanding the advisory firm itself as it exists today. So, can you just tell us a little bit about the advisory firms, what’s the size of the firm, what do you do, who do you do it for? Just help us understand the context of today, and then we’ll talk a little more about where did all these clients come from to get it to that point.
What Pine Grove Financial Group Looks Like Today [04:32]
Matt: Awesome. Sure. So, we are an SEC-registered advisory firm, just as many of the listeners out there are. AUM-wise, I would guess somewhere in the $550 to $600 million dollar range, depending on where the market is at on any given day. And I’ll talk about how that’s broken down here in a second. But staff-wise, I have a team of nine at the office – out of my primary office here in Woodbury, Minnesota. Which is in the east metro for those people that wanted to look at that a little bit closer. To be more specific, we’re about 2 miles from the world headquarters of 3M, which is, obviously, a Dow company.
Within our team, I have essentially two, what I would call, lead advisors. So, they’re client-facing, they’re meeting with clients, they’re doing reviews, they’re leading the process, all that type of stuff. That does not include myself, so, including myself that would be three. And then around that is really built a specific team of people doing different things. I have another CFP, Michelle, who really is an advisor, but she handles all of our portfolio management, a lot of the technology that goes behind how we run our portfolios. And then I have a couple of just client service people who are on call to deal with whatever comes up that day with whether it’s opening new accounts, doing transfers, dealing with client needs, sort of being the front line people.
And then, to round out the team, I have sort of, what I would just call, an office manager. What she does is all the many things, I don’t even realize, she does for number one. But just kind of keeps everything going, deals with all of our vendors, deals with HR, that type of stuff. And then, lastly, I have a paraplanner in there who prepares all of our financial plans. And she also happens to be the person who is sort of the point of contact on our Salesforce CRM. So, that’s the staff. You want me to just keep going?
Michael: Well, the only other…yeah, but the one question I had tied to this, you had said kind of AUM of, well, $550m to $600m, depending on what the markets are doing for us this week. How many clients is that or households? How many people are getting served?
Matt: Yeah. So, let me break that down for you. So, last year, I was approached by two advisor teams who, I guess, just weren’t really happy with their current RA that they were operating under and were interested in joining my practice for the exact reasons that we’re going to talk about today is just marketing and ability to have systems and grow. And, so, we added them to our platform last fall, like September-ish, October-ish, and that makes up about $175 million of the total AUM within that team. And, so, I honestly don’t know the exact number of clients that they have on their end, but if you would look at, on my side of it, it’s probably in the 300-ish range.
And it’s tough to give you a hard number because we’ve got a lot of kids of clients or estates broken up and we’ve got four beneficiaries. And that seems to make up probably 50 to 75 households right there, but the reality is they’re kind of tied to one family. So, I’ll give you an answer of probably somewhere in that like 300 to 325-ish range.
Michael: Okay. So, kind of the original core portion of your business was like $375 to $400 million, depending on what the markets do for us this week? And that’s a base of about 300 clients. So, just doing my napkin math, average client household is $1.2-1.3 million dollars.
Matt: Yeah, probably somewhere right in that range.
Michael: Okay. And I’m sure we’ll come back to it a little bit later. And then another $175 million from some advisors who are sharing some of your systems in back office that comprises the other $175 million?
Matt: Correct. You got it spot on.
Michael: Okay. So, okay, so, tell us more about just overall then structuring of your firm.
Matt: Yep. So, we have one primary office, that I’m in right now, and that’s where all of my team is housed. Obviously, we’re spread out because of COVID and people are working at home, but this is really a home base. We do have a second office in the South Metro here of the Twin Cities, and the reason we have that is for marketing purposes. It allows us to cover more geographic territory when we’re marketing and it makes it easier for prospective clients, or people that want to meet with us, to have a convenient location to do that.
Michael: Because just Minneapolis is large enough and there’s enough traffic that saying like, “Hey, you’re on the south side of the city. Come on over to the east side of the city,” people are like, “That’s just kinda far…”
Matt: Yeah, it’s 25 minutes. The offices are 25 minutes apart but there are basically like three or four cities kind of southwest to get down there. So, it allows us to do more frequent marketing because we’re not hitting the same people all the time. And I can chat more about that. And where this other office, these other advisors really fit in is they’re on the West Metro, so they’re on the complete opposite side of town. So, from a marketing perspective, we’re not heading in the same territories, we’re not really competing for any of the same clients. It should work out pretty well in that regard.
Michael: Okay. Okay, makes sense to me. So, now talk to us a little bit about…well, so, I guess the first question, Matt, just listening to what you’re describing, if I even just boil this down to the core portion of your business, $375 million of assets, 300 clients with 3 advisors, including yourself, and a total team of 9…that is, by most industry standards, a pretty lean team just in total. Three hundred clients across three advisors is not unusual. That ends out about 100 clients per advisor if I include the paraplanner supporting that as well. It’s sort of 300 clients across four advice-giving professionals, which is an average of 75, which is pretty close to the industry benchmarking studies that are out there. But “only”, I’m putting that in air quotes for audio listeners, only five other people in total supporting everything else that goes behind the scenes though is a really lean office.
I know firms that are $150 or $200 million under management who’ve got 5 or 6 support staff for 3 or 4 advisor team members. And that’s before you bolt on, you’re presumably providing some crossover services and support for the other two advisors that bolted on their $175 million as well, which makes your staffing really just lean and efficient compared to typical advisory firms. So, I guess I’m just curious, from your end, does it feel that way to you? Is there something about what you’re doing that supports that?
How A Small Team Of Staff Is Able To Support Matt’s Practice [11:03]
Matt: Well, I probably am not the person to ask if it feels too lean, you should probably ask the support team. But, honestly, I know that because I custody with Schwab, so, I read the benchmark studies and I talk to other advisory firms and I try to be a good observer of our profession and industry. And the first thing I’ll say, Michael, to just be super candid is I’m incredibly lucky that I have an amazing team of achievers who come to work, they work hard, they are dedicated. We work really well together, I don’t have any drama in the office, things work really smooth. My core team has been with me since 2013, we’ve really had very little turnover in that really in the last decade. Obviously, we’ve added people.
So, it’s hard for me to talk about the things I’ve done really well, it feels weird bragging or boasting, but I get what you’re saying. I try to create a really good environment where I expect people to work hard and I give them a lot of responsibility and I expect a lot out of them but I give them a lot of flexibility to do it on their terms. So, I tell my staff like, “If you need to run out and take care of something one day, just go do it, you don’t need to take official time off.” Or if some of our staff have things to do with their kids or grandkids, I try to be very flexible with them and I allow them to own their job, obviously, give them the tools and resources to be flexible. But, otherwise, I try to stay out of the way.
Michael: Okay. I hear you, but you’re getting a lot of stuff done across a lot of clients. How does it not get drowning? Just sheerly 1 person handling portfolio management across 300 clients, 2 or 3 people doing client service across 300 plus clients, plus the other 2 advisors that are bolted on, what’s the systems that you’re using to run the practice just to be able to get all the stuff done?
Matt: Yeah, so, that’s the other part here. And, honestly, the team gets a lot of credit for that, and I built some of that early. So, to maybe go back a little bit, prior to me having kids and really kind of just really building the firm, let’s call that like 2013 to 2015, I worked a lot, I was incredibly dedicated to building what we have today. If it meant someone doing financial plans on the weekend or getting review notes done or whatever, I carried a lot of the weight in those early years because I was so motivated at that time.
And then, obviously, as you grow and your life priorities shift a little bit, I slowly started to add teams along the way. But I think one of the benefits is we’ve had consistent growth. I didn’t all of a sudden just go from $100 million to $300 million or whatever, it’s kind of just was the slow pace of $20 to $30 million dollars a year for quite a few of those years, call it 30 to 40 clients a year. And we really were able to make adjustments in real-time, but it wasn’t a huge undertaking to make a change. And I think I was very mindful of growing strategically versus trying to grow as fast as possible, and I think that’s probably one benefit that we’ve had.
So, now fast forward, we’ve made some big changes. So, probably 2 years ago, we were on the Junxure desktop for our CRM, which is, obviously, the central nervous system of every financial planning practice. And we used it heavily. And we were of the mindset, “If it’s not in Junxure, it didn’t happen.” And everyone was really good about taking notes and reminding someone if they didn’t put their notes in. And, so, then I realized it was probably time to get off a desktop server-based CRM and get on something that is more mobile and more cloud-based. And, thankfully, I did that prior to the pandemic, otherwise, I wouldn’t have looked like a very good operator.
So, we use Salesforce but we use the Salentica version, that’s through SS&C, so, through Black Diamond. And then we have literally built out almost every single workflow that we would utilize on a regular basis. So, it’s very little effort, on the team’s part, to learn the CRM because we really…at the end of the day, you maybe use 12 to 15 workflows 90% of the time. And we just get really good at doing them and collaborating together so that things can get done very efficiently. And, so, Linda and our team deserve a lot of credit for building a lot of that out. And that has really accelerated over the last 2 years is really getting very specific on how we communicate internally.
We also use the Office 365 system. So, we’re on Teams, have different group chats. So, I feel like we’re doing a really good job from just a communication around the clients versus the traditional method of sharing a bunch emails or running down the hall and talking to so and so about one particular client.
From the portfolio-management side, I will tell you we ran into some issues there a few years ago because my portfolio manager, the person implementing that, Michelle…we just got to the point where it got to be too much. Rebalancing for her was taking over a month because we were doing most of it manually. We manage households on a household level, not on the account level. So, we’re doing asset-location strategies and things we feel are in the client’s best interest, but we realized that that got to be…it was just too much. I either hired another person to help with trading or we looked to just actually use a TAMP or some sort of platform that made our life easier, from an execution standpoint. So, today, probably 20% of our business now goes through that particular platform that we utilize. And a lot of our new business is flowing that way.
Michael: And, so, what’s the platform? What did you end up doing or restructuring or going to?
Why Matt Moved To 55ip For Portfolio Management [16:58]
Matt: Yeah, so, we decided on a fairly emerging platform, or technology, which was 55ip. And, so, I had met them at a conference. And we’re very much sensitive to tax planning and, so, we do a lot of Roth conversions, we talk a lot about managing tax brackets, we talk about having the right investments in the right account. All those little tax-planning techniques an advisory firm should be using, from a client’s perspective. That’s one of our main value propositions to clients.
And they allowed us to do many of those things. Michelle and I probably interviewed 30 different platforms, and the one thing we found…and I know that it’s very hard to do is to allocate on a household level versus an account-based level. Instead of just doing a model and account, we create a model for a household and we deploy it to each account.
So, they were willing to work with us to build that out. They, obviously, were just acquired by J.P. Morgan here towards the end of last year. And they’re more known as more of a tax-management tool out there today. But, so, we’ve utilized that and it’s been a good partnership for us as we scale and grow and aren’t able to sacrifice what we want to do for clients but still deliver a similar strategy and model.
Michael: And for that, if they’re doing the trading or rebalancing and kind of literally doing the implementation, managing part, I’m presuming that means they’re not paid a software fee per account, they’re charging basis points like a TAMP does?
Matt: You got it. Yep, you got it. Yep. So, that’s why I say it’s a little bit of a hybrid. They’re not really providing much beyond that. Which is fine, they give me a good portal to be able to do proposals and when I want. But they make it easy for us to manage the models and transition clients over from other institutions or whatever is going on in that person’s situation.
Michael: And then they’re trading overlays, whatever custodial platform it is that you’re already using?
Matt: Correct, yeah. So, we’re on Schwab, so, they just…they also have limited power of attorney on those accounts.
Michael: I was going to say, clients actually have to do LPOAs for them because they’ve got trading. So, you do have to kind of explain to the client who these people are and how they fit into the equation?
Matt: Yeah. Yeah. So, I’m by no means trying to be anyway misleading but I explain it as a technology partner. Because really we created the models, the portfolios, they’re helping us execute and do all the…things like automated tax-loss harvesting, they can do that for us in non-qualified accounts. Clients who have recurring distributions, well, they can do that on a regular basis while still keeping your model relatively in balance. Whereas us doing on our own, it’s a lot of heavy lifting to be able to go in and see, “Well, where do we sell?” We got to run a report and then we got to submit trades. And, so, it does allow us to be much more efficient in how we manage the client portfolio.
Michael: And can I ask just where does this price… what kind of basis point cost is this? Because I’m going to presume you were doing your own math of, “I can hire 55ip or I can get Michelle’s sidekick. And we can double up our staff and do this,” so, I’m presuming this had to be reasonably competitive from a price perspective.
Matt: Yeah. So, I tried to do my best there. And, so, what we have is just, as we bill clients, a descending schedule, so, as we have more AUM, that fee schedule goes down. And I think kind of like 20 to 25 basis-point range is sort of where things start out. And then it accelerates down from there.
Michael: So, I am just curious how you think about this when you had an existing team that was already doing some of this work and now, suddenly, you’re introducing another player into the equation. I guess just help me understand how do you think about this cost? Because just, well, granted, you’re still scaling because not all of your assets are on 55ip, but this continues to grow and goes well. By the time you put $300 plus million dollars on this platform, this can start adding up to hundreds of thousands of dollars. Do you look at that as, “That’s a cost of doing business? That’s something to negotiate with them on as the assets grow and get higher?” Is there a point where you’re like, “Yeah, if we get large enough, I’m probably going to take it back and do it internally.” How do you think about this from a costing…because I know, for a lot of advisors, if they’ve already got some trading team internally, it’s really hard to send that out because it just sort of feels like a duplicative cost or another cost layer. So, I’m just curious, you pulled the trigger, you saw something going that direction. So, what led you there?
Matt: Growing pains, to be completely honest. To me it’s like, Michelle, who’s my person that deals with that, I call her by name, but it’s to train new people to make sure they’re the right person, to get them up to speed, to make sure you have adequate office space, to all the things what many people refer to as human capital. That’s a lot of time effort. Versus a technology partner that you can just plug in and go. And then there’s maybe a month learning curve and you have a team that understands your needs on their end and then you’re just off and running. To me, that’s…I don’t know, I thought it was a pretty easy decision. It was like Michelle was overwhelmed, we needed to do something fast. And I just felt like this was a more efficient way to operate.
And I guess that kind of goes back to your early statements about us running a lean team and how we do it. I try to look at how do we scale without having to add too much overhead because that can also slow down the growth. It’s not just about having really good margins, it’s like, “How do we efficiently do this?” And if you have a good relationship with technology, there’s not a lot of pushback, whereas people are much different. Right? We’re not wired like a robot.
Michael: Right, right. And, so, is the vision, over time, to get more of the clients and all of the portfolios over to 55ip?
Matt: No. And here’s why. A lot of our clients have been in our existing models and strategies for a decade, to be honest with you. So, to tell Mr. and Mrs. Smith to sell their $100,000 gains in their large-cap growth fund, or whatever it is, it doesn’t make any sense for them. So…
Michael: Because 55ip can…you can create similar models to what you already have but you won’t necessarily have literally identical to what you’ve already got?
Matt: Yeah. So, a lot of our clients have legacy mutual fund business. And, so, a lot of those funds already are charging the client, call it 60 basis points. So, to just kind of layer…it doesn’t make sense, from a cost perspective, to transition them onto that platform, so, I think it’s a good blended mix. And I guess I say this a little bit cautiously but it’s truly what goes on in my head is I think it’s a little bit of a business risk to just solely rely on one model or one strategy. And I think different clients want different things. And, so, I feel like how we manage these two different strategies that we run, they’re not that much different but they are a little bit different. So, I think it allows us to blend a little bit. We have converted a fair amount of clients over to the new platform but there’s some that will always stay in the existing models. Whereas new clients have come on, a lot of them are on the 55ip platform that we built out, but not all of them. Some of them are still going to our old one.
So, it really just kind of comes down to managing it. And I’ll be very honest, if you told me, “What do I think this looks like in 3 years?” I don’t really know. Because technology, as you’re more well aware than anybody, I have no idea what trading and portfolio implementation looks like in our profession 2 to 3 years from now. I just knew I needed something now and I needed it fast and this seemed to be the solution for us at this point in time.
Michael: Interesting. And just how do you decide…because you said not all new clients necessarily go to the new platform either, just what determines who’s a 55ip client and who’s a Michelle-will-manage-it client?
Matt: Yeah. So, I would say a couple things. One is is there a need for tax-sensitive management? That’d be a big one. How soon will they need distributions, that’s a big one. Just general conversations around how they have been investing and what they’re used to, we’ll drive into it. So, really the planning process drives what model and strategy we utilize with each client. And then we try to go from there.
Michael: And, so, just if you and Michelle were doing due diligence on all of the zillion different choices that are out there, because there’s a lot, I guess I’m just wondering what led you to this in particular? Just what made 55ip win the bid when there are a lot of choices out there?
Matt: Yeah. So, it really came down to two big things is that most of the platforms…and not everybody, so, I don’t want to insult those that are listening and say, “Hey, well, we do that or we don’t do that,” but a lot of them are very model-based on an account-by-account basis. And, so, we’ve been managing client assets on the household level. So, if you have a Roth IRA, we’re not going to put bonds in that Roth IRA. If you have a non-qualified account, we’re going to try to make sure that we have any dividend or long-term capital gains-oriented strategies in that account, and we’ll try to keep your fixed income more in your IRA.
So, what we found is just, quite simply, a lot of the platforms don’t have the capabilities to do that. A lot of them had model minimums, and that kind of disrupted things when you have that client that maybe has got that like $20,000 Roth IRA account and then they’ve got a million-dollar IRA. And just a lot of them felt very disconnected and we’d had to deviate from sort of our what we felt were core principles in how we manage the money. And 55ip offered us those two flexibilities. And the ability to have an influence on how we create the models was really nice. If we wanted to have any more control than we did, we would’ve just had to look at, “Hey, do we just want to use Orion more or use Black Diamond more?” just the more actual rebalancing or portfolio-management technologies out there. And I just knew, if I went that route, then I was still going to have to hire another person.
So, it was just sort of this process of elimination and they kind of just kept popping up on the radar. And I know they were a very young early company, at the time, and I just felt like…it felt right, I guess. And we rolled with it and it’s worked pretty well for us.
What Led Matt To Make The Switch To Salesforce And Salentica, And How He’s Structured The Rest Of His Technology Stack? [27:59]
Michael: Very cool. And I was going to ask as well, as you were talking about technology switches you made and what you chose, what led you to Salesforce and to Salentica?
Matt: Yeah. So, we’re a Black Diamond user, so we do all our reporting and portfolio management, our portal, billing, all of that goes through Black Diamond. So, in a perfect world, you hope that all of those partners eventually talk to one another. And, so, we went out and met with them in Atlanta, I think…no, it was in Florida somewhere. And just kind of I heard about the vision of how Salesforce and Black Diamond would talk to each other more. And I know they’re working on some integrations with RightCapital, that was sort of their vision at the time. And, so, we just felt like that version was most suited…it just suited us the best.
And again, kind of going back to my management philosophy, I have no desire to trailblaze and build a CRM from scratch, getting the base Salesforce and build it all out. And, so, we basically put together all of our core workflows and processes and steps that we were doing within Junxure. And then we went to them and we said, “Hey, can you create all of these things for us, and how will that look like?” And it wasn’t perfect at first and it took us a little while to get there. But it became a very easy decision for me, to be honest. Just I want something that talks to our other systems fairly well and I want a partner that knows our profession well as well too, so, as we build and things change, they’re, hopefully, at the forefront of that.
Michael: So, okay. And, so, that’s part of why an overlay like Salentica on top of Salesforce, and not just Salesforce pure or Salesforce out of the box, it’s, you liked the integrations that were already there.
Matt: Yeah, and we had some relationships there. Right? So, it’s nice to be able to call up and…we talked to our Black Diamond person and they say, “You should talk to this person over at Salentica,” and they know him by name, and we can have some cross conversations there. So, I felt more comfortable keeping…I know it’s a different company within the same company but I felt more comfortable knowing that, “Hey, there are going to be some integrations, they know our space well. They should understand the needs that we have.” And I just felt like it’s going to be an easier way for us to scale that quickly.
Michael: Okay. And, so, what’s the rest of the core technology stack? It sounds like RightCapital is there for financial planning software?
Matt: Correct, yep. So, I was a fairly early adopter of RightCapital. And for what we do, using or working with sort of the mass affluent baby boomers, focus on tax planning, doing a lot of probabilities-based, what we call, the retirement health stress test, it’s fantastic. They’ve built a great technology, in my opinion. And I don’t need all of the bells and whistles of maybe an eMoney, but I also don’t need something as simple as an InStream or something that’s a very, very basic planning software. So, this has worked out really, really well for us. I’ll tell you, a lot of moans and groans when I told the team we’re going to switch financial planning software, it’s just a lot of work to convert people over and learn the new system, but we’ve been using it for a few years now and it’s been a great asset for us.
Michael: And, so, again, it sounds like the layering of tax planning was a big part of the driver there. RightCapital’s tax planning drove you on the planning software, 55ip’s household-level asset location, tax savviness is what drove it on the portfolio management and that’s kind of the common theme here I’m seeing?
Matt: Yeah. Well, believe it or not, Minnesota actually is one of the higher state-taxed states in the country. Depending on how you measure it, we tend to usually be somewhere between 5 and 10 on most of those lists. So, we get a lot of people that are very sensitive to taxation. And you and I both know there’s really, at the end of the day, only so much we can do. But if we can show that we’re tax-focused and here’s the tools and resources that we have at our fingertips to make sure that we grab every little bit of…let’s just call it tax alpha for this conversation…we want to be able to do that for them. So, yeah, being very consistent in our messaging, which is a very important marketing tool, which I know we’ll talk marketing.
Matt’s Early Journey In the Industry And How Doing Seminars Eventually Led Him To Launch Pine Grove [32:16]
Michael: So, actually, I think, on that theme, so, let’s talk a little bit about the growth path of the firm. First, just for context, you said you started back in 2013. Was that transitioned from somewhere else and brought clients and then grew from there or was that a…were you starting from 0 back in 2013? What was the actual…what started in 2013?
Matt: Yeah, absolutely. So, this is kind of a cool little back story. I had been at a bank…so, I’ll kind of give you the long version but try to speed it along. So, right out of college I pretty much had my pick of all of the Wall Street firms to join. And the reason I had that is I was able to land an internship at Merrill Lynch in college and I actually had that internship for 3 years. So, by the time I graduated from college with my undergraduate, I for sure learned way more at my internship than I did at any academic class in college, no offense to them, just because I knew, at that point in my life, that’s what I wanted to do. So, when I did all the interviewing, they were like, “Great. You have experience, you know what it takes to be an advisor, you know how to do all the different marketing things to grow.”
So, long story short, I ended up starting out at Morgan Stanley for the sheer reason is, of the big Wall Street firms, the wirehouses, they had the lowest minimums to make it after the first year. Because here I am, 22-years-old, hadn’t shaved in a couple weeks because I looked like I was 15 and here I’m going to try to cold call and beat down doors for million-dollar accounts.
Michael: And do you remember what was the requirement to qualify, what was the magic number?
Matt: I do, I do. So, I’ll tell you two crazy stories about that. So, $4 million dollars was the minimum tier. And then, at that time, this was like 2005-2006, they gave you a $24,000…you know what? I take that back. Most people were getting a $24,000 salary, and I think mine was like $30,000 or $32,000. And the only reason I got a little bit more was because I had like three offers and they all kind of knew that, so, I got a little bit better of an offer. I think Merrill Lynch was offering a better base, but the minimum was $8 or $10 million that first year, and I was not ignorant enough to think that I had any chance of doing that right out of the gate.
And, after my first year, my first year anniversary, I remember there were 32 people in my recruiting class through our region and I was one of three people left. It was me and one other female advisor, she had made it. And the third person actually was still there but he had taken a job as a client-service person, he wasn’t even practicing as a financial advisor anymore. So, it was literally less than 10% after the first year.
Michael: That’s… brutal. So, where was your number after the first year?
Matt: I was right at that number. And, so, I knew like, “All right…” The problem with that is that sounds deceiving is because, once that year is up, there was like a 6-month transition. And I’m probably missing some of the details here. But if I didn’t really hightail my AUM pretty quickly, I might still have a job but I wasn’t going to eat because I wasn’t going to make a whole heck of a lot of money. It’s like basically your salary went to a draw after a certain period of time and then you basically needed to get your AUM or your brokerage commissions, or whatever you’re doing to generate revenue, needed to be enough where you could offset the draw.
So, I had a pretty honest conversation with myself. And I had been solely focused on becoming an advisor. I was laser-focused on that. In college, I just kind of knew after a while, liked the markets. But it was kind of tough because it was like, “All right, I got to figure this out.” So, I started looking around to see what other advisory positions are out there. Because it’s obviously more than just being in the wirehouses and what I was doing, right? And Minneapolis is a very, very competitive market. We’ve got Ameriprise here, Wells Fargo has a huge base, Thrivent, U.S. Bank, the list goes on and on. Today, wealth enhancement is a huge huge presence here in the Twin Cities.
So, basically, long story short, is I found this job as an advisor at a bank. And I was smart enough to realize all I just really needed, at that time, was practice, right, on-the-job training. And, unfortunately, there’s no way to do that very well in the financial-services world other than just literally meeting with lots of people. And I thought the bank, it was just a small community bank, would offer me that opportunity to have lots of conversations. I had a built-in target market of these bank customers and I felt like it was a great transition for me.
And, to be honest, it was. They were affiliated through LPL. So, I started there probably maybe 6 months after this 1-year number at Morgan Stanley. I’m probably off a little bit on the dates but I think close enough for the sake of the conversation, and made this transition to the bank. And then what sort of happened next was it’s true, they did have a target market and there were people to meet with, but this was a more of a small-business community bank. It wasn’t a retail bank that there was a line in the lobby to go see the teller and there were tons of introductions. Literally, after about 2 years, I had met about every single customer in this bank that was ever going to come in. And, so, one day I’d be doing an IRA contribution for $5,000, and then I would be talking to a small business owner about his simple IRA plan, and then I would be talking to a person who is serious about retirement. There were just no consistent conversations.
And then, as you were probably impacted and everybody else in our space, the financial crisis hit. So, not only was it incredibly difficult for everybody in our profession, but, when you’re an advisor in a bank, people who would do advisory business with someone in a bank are already probably pretty conservative by nature. And, so, now to try to get them to do something in the middle of the financial crisis, that was not going to happen. It was more like, “Hey, do you have any brokered CDs that are paying better than the bank’s rate at that particular time?” So, I kind of had this second point in my very young career of, “All right, Matt. If you’re truly going to make it in this profession and field, you need to do something different. You need to figure it out pretty quick.”
So, I had a lot of time there in 2008 and 2009 to sort of figure this out. And, to be honest, I was doing enough business with a little bit of a base salary to make a living. I wasn’t doing well but I could pay my bills, I could take my wife out to eat once in a while. We were getting by. She was going…I was putting her away through grad school at that time. But just I didn’t feel like I was building a sustainable business. I didn’t have confidence my career was progressing, I was sort of I guess treading water, for lack of a better term.
So, long story short is, after all this research and reading, I decided I was going to try seminars. It was like this, “I don’t know what else I’m going to do. I hate networking,” I didn’t want to go bother people who didn’t want to be bothered. But I was like, “All right, seminars. If I can get people in a room, that probably means they want to listen and I’m more aligned to want to talk to people that actually want to listen.” And, so, basically what I had done is I had, at that time, I…but I didn’t know anything about seminars. I didn’t know anything about direct mail, I didn’t know anything about how to give a presentation. At that point, I hadn’t even given a presentation before. But I was desperate and I was willing to get out of my comfort zone. And, so, I bought a couple of seminar systems and I dove into them and I immersed myself in it.
And, in 2010, I held my very first live seminar on financial planning. At that time, it was actually “Six Ways to Manage Your Money During a Financial Crisis” was what the headline of the presentation and the mailer were because fear-based marketing tends to work best. But I had an “aha moment” there, and I’m going to come back to my story, but I was like, “At some point, we just aren’t going to be in a financial crisis forever, and then what am I going to do?” And, so, that’s when I made the shift to doing more educational seminars.
But what’s a funny story, and this is a great lesson for anybody just on being prepared. So, at this point, it was a dinner seminar. So, I’d kind of paint the picture, I had sent out this mailer. I think I’d sent out like 7,000 postcards for this mailer, it was at a local restaurant down the road, that was pretty nice to me, it was a good setting, it was an Italian setup. They had a room in the back that would hold about 50 people. And I remember this, I paid for that very first seminar with a credit card because I didn’t have all that cash to be able to do it. But I was desperate. Right? Not a smart decision but, in hindsight, it makes a good story to tell today. Right? So, I’d practiced my seminar, I don’t know, a hundred times, and I made my slides and I made this amazing presentation. And I’ll tell you, the most uncomfortable thing to do is giving a seminar presentation in front of your wife who knows nothing about personal finance. So…
Michael: Well, it’s a good way to get some feedback from, quote-unquote, a “retail audience”, right?
Matt: I’ll tell you what, it’s a good way to get rid of feeling uncomfortable. I literally, as I’m telling you this, I can envision we’re in our little townhome and I’m standing next to the kitchen bar counter and she’s sitting in a chair, in the living room, looking at me like, “I have no clue what you’re talking about right now but I’m going to smile because I’m happy for you.” So, the day before I go to the restaurant and I check my AV, I talk to the manager. I’m trying to be organized and prepared because I was so nervous, I was so prepared for it. So, then, the night of the presentation, I get there early, do everything that I’m supposed to do to be responsible and prepared for it. And my PowerPoint doesn’t work, my laptop is not syncing up with their projector. I’m stressing out, it’s not working, it’s like 30 minutes from start time. I’m like, “Oh my God, what are we going to do?” And come to find out, minutes before we start, that, literally that day, the company that services all of that technology came and did some sort of upgrade and they thought they had left with it all working. And it wasn’t working. So, here I have a room of…literally I had like 50 people there that night, Michael, I was so jacked up, I was…
Michael: That’s a good turnout for the first stab on seminar marketing.
Matt: Oh my god, I was so ecstatic. It was probably one of the most excited I’ve ever been in my life. Because I could tell you every step of what I did that day. I remember driving home that night and I remember who I called after I finished that seminar that night. So, here’s the crazy part. So, through this seminar system I had bought, it had told us to print out all of the slides and put them in a folder along with your feedback form and I’d wrote a little letter to everybody. And, basically, what I had was each…when you print PowerPoint, you can do three slides to a page, and then you got some lines for some notes to the side. I literally gave that my very first seminar ever using that handout. And I was like, “If you can look really closely to that slide, you can see these words right here…and I kind of turned it into a little bit of comedy. But had I not practiced that seminar so much where I knew it in and out, I would’ve been petrified to stand up there and try to give a presentation where I didn’t have any slides.
Michael: Right, you’ve done it so many times where it’s like, “I already know what the points are and the lines are and the jokes are and all of that. I just have to get up and say “and a totally awesome picture, on the next slide, that you probably can’t see because it’s in 2-point font on this printout.”
Matt: Yeah, “If you get your magnifying glass out here.” I made a joke about how the dinner was going to be on the restaurant that night because they screwed up the projector for me. But long story short, is I got…I think I got like about 19 appointment requests that night. I think I had got about half the room to book an appointment with me. And I remember I got like six new clients and roughly three and a half million of new assets from the very first seminar I ever did.
Michael: Wow. Those are some big numbers, right, just the general advisory fee schedules, that’s tens of thousands of dollars of new revenue.
Matt: Yeah, that night I kind of felt like, some stress relieved, and I was like, “I’m going to make it. I think I’m going to make it.” Granted, it’s just one, but I’m like, “I feel like I have something to run on here,” like, “this is a start. I can get going from here.”
So, I kind of I kept doing that same seminar for a while and, ironically, for like the first year, year and a half, the best result I ever got was from that first seminar. So, sympathy is probably how I did really well on that first seminar. But I was smart enough to realize this type of presentation, this format of fear-based marketing, unfortunately, it got people there, it was a good presentation, it wasn’t going to be sustainable longer-term. Because, as the economy changes, the topics were going to change.
And, so, I had seen a few different more educational class-based marketing systems, I’m like, “This is much more of my style. I can run this year-round, it doesn’t matter what market conditions are like. There’s always going to be people needing retirement planning. And, as people get closer to retirement, they’re going to want to come to classes like this.” And there was, from what I learned at that time, nobody really doing anything similar to that in my area. And, so, when I started running those, it became very predictable for me to know, “All right, when I send out 10,000 mailers, I’m probably going to get between 30 and 40 households that sign up. And from those 30 to 40 households, if I do a good job of presenting, I should get probably roughly 60% to 65% of those people to come in to have a first appointment with me. And of that 65, probably two-thirds of those will go through our…” what my planning process was at that time. “And then, from there, I should be able to, hopefully, close half to two-thirds of those clients to become long-term relationships with us.” I literally just got better and better at managing the data and knowing what to expect each time I did these seminars. And then, as I got better at it, I was able to scale from maybe doing two mailings a year to three, then to four. And I believe the most I ever did in one year, I think, was eight. But really it was usually kind of in the range of four to six.
The Economics Of Matt’s Seminars And The Growth He Was Able To Generate From Them [46:45]
Michael: So, let me run through these numbers because I’m just trying to process. You sent out 10,000 mailers and about 40 households sign up, I think, if it goes well, like 60% of those make an appointment. So, of the 40, 20 to 25 make an appointment? Of those, it sounds like, your process was you do an initial appointment, then you invite them to go through an initial planning process with you? So, two-thirds of those do that appointment. So, maybe like 16 of the 24 move forward to that stage and maybe half of those, ultimately, become clients. So, half of the 16 is 8. So, you do the whole run with all the refinements that you did over time, like six to eight clients pop out of it?
Matt: Yeah, and just to be very transparent, it’s like, when I gave you that number of 40, that’s…when we do a mailer, we’re always doing two classes, so, you have like a Tuesday or a Thursday class to go to. So, all that isn’t happening in one seminar, it’s spread over two groups.
Michael: Okay. So, in practice, you’ll do 2 dates and you’re hoping to get 20 people to show up at each of 2 dates?
Matt: Yeah, yeah, 20 households. So, probably 20 households would usually equate to maybe 30 people. That’s a good seminar class. What I learned is actually, when the room gets really big, you actually get worse numbers because it’s less engagement and people don’t feel as connected to you because you’re in this auditorium setting with all these different people. So, I think kind of right around 20 to 25 is sort of that sweet spot where you’ve got enough people that are there to, hopefully, get something out of it but, at the same time, it allows you to still have some engagement, answer some questions, try to build a little bit of rapport and relationship with the people as you go through that class.
Michael: Interesting. And, so, you’re doing two to four of these a year because I guess it takes what, a month plus just to gear up for the whole thing, I’m presuming. Right? To figure out what your topic’s going to be, prepare mailers, get them sent out. You have to send them out a few weeks in advance, then they do their sign up, then you get them to the webinar, and then you meet with them afterwards, then you do the follow-up planning process, then you do the follow-up meetings. Then, if they become clients, you got to onboard them. Just it takes a couple of months to kind of run the cycle from start to finish. So, you run one of those in a quarter and you pick up one the next quarter and now you’ve basically done four in a year?
Matt: Yeah. Basically. I think it’s never perfect but you’re probably looking at like a 60-day cycle that people go through. Right? You wrap up the class, they request an appointment, it’s a week or 2 to get them in the office. Then they decide to go through the process, it’s a couple more weeks. And then another couple more weeks pass before you get to the proposal phase. And then, once they implement, you got to do all the ACAT transfers, which take a couple more weeks. Right? So, it’s really probably a, in some cases, a 60- to 90-day process with people. And not everybody’s just champing at the bit to come in a week later, and, so, there’s a little bit of chasing involved. And we built out systems and how we want to try to do follow-up and get people to come in and…it’s not perfect but I think, generally, you’re on the right track there.
Michael: And what kinds of assets would you see flowing from this, or revenue flowing from this? Just, when you get close to 6 to 8 clients out of this and then wash, rinse, repeat. Is that still similar to the earlier numbers like 8 clients averaging half a million each is about $4 million of assets, those kinds of numbers or higher or lower? What would you…
Matt: Yeah. I would say a lot of years that was probably very close, it was very close to that number. But I don’t want to overshoot, so, I’d probably say a little bit maybe 10%, 15% less than that. And, so, here’s the cool thing about the market that we target is we’re targeting that pre-retiree. Typically, the people coming to our seminars don’t have a financial advisor currently or have never had one before, or a planner. They’ve been more do-it-yourselfers just because they’re just basically saving in their retirement plans.
So, when they start out with us, we might not capture all of their wealth, at that point in time, they might just have…Bill and Sally have this $300,000 rollover that they need some help with. But they also have a million dollars in their 401(k) plans that we’ll help them with right now but it’s obviously not something that we’ll have under our direct discretion and bill on initially. And, so, in those early years, to be completely honest, I took on everybody that I thought was going to be a good long-term client. And it’s the same, whether it’s a mistake or not, it was totally a volume thing for me in the early years.
And, so, as we’ve grown, I’ve become much more selective. And, so, I would say, because of that, my numbers have actually, when was doing seminars, would be a little bit less just because I was just making sure we were finding the right fit for the people that I wanted to work with. But, yeah, it seems to be that, more often than not, we’re capturing a portion of their assets, at that point in time, but there is future potential to help them more. Which also then, obviously, equate to us capturing more revenue.
Michael: So, what does this look like from a numbers perspective? So, I guess I’m just wondering how this gets down to the math of what you spend, and what you get, and how you think about it. So, if you go through the cycle and you get your 6 to 8 clients of a couple hundred thousand dollars each, kind of probably like $3 million dollars of new assets, give or take a little, roughly $30,000 of new revenue for just pegging 1%, to make the math nice round and easy…so, do the seminar get through the process you may end up with 6 to 8 clients, 3 million of new assets, $30,000 of revenue, over the next 12 months…because these things stretch out over time, right? It’s not like we got the dollars up front, so, you get your first quarterly billing 3 months from now. But, so, I guess, A, does that kind of sound like the right neighborhood of what you would see? And then what does it actually cost you, on the front end, to do this whole process to get down to $30,000 in new revenue?
Matt: Yeah. So, when I first started, I’d say seminars are probably in that…keep in mind, dinner seminars are completely different than just doing an educational seminar. So, let’s just talk about educational for this conversation because it’s basically where we spend all of our efforts. A mailer today, I want to say, costs us in the low $7,000 figure to do the full mailing, get the brochures, first-class mail, have it delivered when we want to do. Right? To me, that’s probably a good figure. Maybe another $500 to $1,000 of additional supplies, course books and printouts and those types of things. So, somewhere in that $7,000 to $8,000 range.
So, from a recuperation of cost, how you laid it out is very similar to how I think about it. So, we don’t do any annuity production or anything like that. And I don’t mean this in a condescending fashion, but the majority of people out doing seminars today are typically bolting on fixed index annuities with that. That’s especially true in the dinner seminar circuit, if you will. So, I don’t have that incoming commission right off the bat when a client comes on that basically pays for that seminar right off the bat. So, we’re really doing the majority of our revenue in these recurring relationships.
But one of the things I decided to start doing in…boy, maybe 2014, 2015 is I was getting a lot of volume. I was seeing a lot of people, things were starting to really accelerate. And, so, I decided to start charging a planning fee on the front end. And really what it was was just really…in the internet marketing world they call it a “liquidator offer” but it’s basically is, “Hey, I want to charge them enough to show that they’re serious and that they’ll value this financial plan that will put 6 to 8 hours of time prepping for them.” But I’m not trying to make it a profitable endeavor for us and our team, I’m just trying to kind of cover my staff’s time for doing it. But I know that, if they’re willing to pay, I started out doing $500 plans, then I tested $750, I’ve tested $900. We typically do $750 today. But what that does is I know they’re much more likely to become a client now because they have bought into the process. They’ve at least made some type of commitment, although it’s not a huge financial commitment. And then it’s our job to demonstrate value and allow them to, essentially, test drive how we work with people.
And what that’s done is it’s made our marketing much more predictable in the fact that, “All right, when people sign up to do a plan with us, we know roughly how many will become clients.” And we know that, “Hey, when we do a seminar and X amount of people come in, roughly this is the amount of people that go through our planning process.” So, we’ve been able to refine the metrics to continue to make them predictable but now we have a little bit more control over our time.
Michael: Because you’re making sure you’re not working with clients or prospects who, at the end of the day, aren’t really actually going to move forward?
Matt: Yeah, I’m very happy that I’ve been able to provide a lot of goodwill and help people over the years. I don’t want to give off that impression. But, at the end of the day, I’m still a business and I was doing a lot of free financial plans. And you would be sitting there with this lovely couple that you’re like, “We can help you in so many different ways, but how in the world can you not see that you should hire us?” I think it’s frustrating after a while. So, what I just sort of realized, if the people aren’t bought into the fact that they maybe either want help or need help, I’m just not going to give them 5 or 6 hours of my time and my team’s time in order to do that.
Michael: Well, and, so, I guess, in practice, that also helps shore up the amount of revenue that drives from a seminar because now there’s a couple thousand dollars of planning fees that may come through as well. Which just smooths out first-year revenues since assets may not always move quickly or maybe they do part with you and you’ll get more later, but it takes time to get there. So, it just stabilizes the revenue a little bit more.
Matt: Yes, you’re right though, it did end up having an influx of revenue that allowed us to cover a lot of our marketing costs, which then, in turn, really make our internal rate of return numbers look really well when you look at return on marketing spend.
Michael: I’m just thinking of the math of this. You’re in for, call it, $8,000, right, mailer plus supplies, for events that may kick out, technically, not even just $30,000 over the next year but much of that is in assets-under-management clients. That’s annually recurring, right? You’re building your business, you’re building your recurring revenue over time. So, if a client’s going to be around for many many years, that could ultimately be like $100,000 plus of revenue over the next several years, cumulative off of one $8,000 marketing event.
Matt: Yeah, life’s pretty good because of that today, Michael, is because we’ve built awesome relationships. I can’t believe that I’ve met some of these awesome clients that work with us. And it’s not just clients who have millions of dollars, literally, I’ve made friends with so many of these people. And I can’t believe that they came to one of my classes because of a brochure, they entrusted us with their wealth, they’ve worked with me now for…some of them over 10 years, and I know them as well as anybody. And it all started from a mailing that showed up in their mailbox one day. It’s pretty cool.
Michael: And, it makes an interesting point as well of just how it adds up over time because, as you noted, a lot of seminar marketing gets driven these days by folks that are selling annuity products. So, just think about the math again, if your seminar is going to produce $3 million dollars of new assets, right, if you charge the traditional 1% of advisory fee, it’s $30,000 over the next year. And if you do a good job serving them over time, you get to earn that fee again in future years and it can add up to a big number over time. If you’re in the…I’ll call it the “traditional” world of annuity sales with upfront commissions in a 5% to 7% commission world…I know some annuities are at lower payouts today, but if we go back 10 years to when you were starting out or higher, right, $3 million dollars is $210,000 of new revenue for what might be an $8,000 marketing spend. So, if you ever wonder why do you see so many mailers for seminar dinners for annuities, just think about that, think about that math. Right? Even if maybe the product doesn’t convert as well, even if you’re doing $2 million of new assets, and it’s $140,000 of commissions for a $7,000 mailer. You could be doing 20x the return on your marketing spend. That’s why you see so much marketing, that’s why you see so many of those events.
Matt: Yeah. I’ve been to some of these FMO/IMOs, the insurance marketing organizations that really help groom, and they’re really the marketing engine behind a lot of these advisors or agents, however you want to label them. But literally, thankfully, people aren’t putting 100% of someone’s wealth into the annuities, right, so, that would be a very extreme example, but a lot of them are doing 30% to 50% of a client’s assets in there if the client was bought into it. But there’s a lot of them that would literally just…you can be like, “Oh, if I can get a $100,000 or a $200,000 annuity sale, that will cover my marketing costs.”
Michael: It would take literally just one, one person who strokes a check for $250,000 of premium can still 2x your marketing investment.
Matt: Exactly. So, there’s a lot of these guys or gals that are fitting this model that we’re discussing. And, quite frankly, they seem miserable to me because they’re now doing 50 plus seminars a year because, once that sale is complete, they have to go to the next one. And I was like, “Number one, I have no problem owning…” I’m not a huge fan of annuities, for a lot of different reasons, I think there’s a very small group of people that they’re suitable and make sense for, but that’s just my professional opinion. I just didn’t think it was right for people and I want to have long-term relationships with these folks. And I just knew like, if I could just incrementally grow that over time, not only it would create a better business because it’s more consistent revenue, I’d be happier because of it because I wasn’t always having to chase, it was in the client’s best interest. So, I felt like, if I could just kind of keep going at this slowly over time and, thankfully, I had a big enough base that I could continue to reinvest those marketing dollars, it really would start to compound on itself.
How Matt Differentiates Himself From Other Seminar Providers And The Systems That He Uses [1:01:35]
Michael: So, I guess my question is how do you think about seminar marketing and distinguishing yourself and what you do from all the other people who are using dinner seminars to sell annuities? Just it’s…if you’re trying to differentiate to people for an advice service and that’s their prior experience around seminars, that even gets tough in and of itself because they’re expecting something very different from you. I guess just how do you think about and look at the seminar space and just being competitive with someone who can 5x your return on the same in marketing investment and might outspend you, out-compete you, try to out-market you, whatever it is, because they just actually make a heck of a lot of money to do so?
Matt: Yeah. So, I think, at this point, I’m fairly confident I don’t want to spend with the best of them, but if I really need to, I feel like I can reinvest what we need to be able to grow. Look, marketing really, at the end of the day, it’s a numbers game. And I don’t think that’s a surprise to anybody. And there’s all these little things you can do to slowly stack the odds more in your favor. Right? Have a better copy, have a better offer, design a better mailer. But I think really how you stack the odds more in your favor is the authenticity of the presentation and how you connect with the audience.
At times, every mailer for any financial seminar is probably going to draw people. And certain mailers are going to do well in certain times, and other ones are going to do better in other times. And, so, I’m not going to sit here and say, “My mailer always draws the best,” because I know that’s completely false. I’m sure there’s plenty of people out there that, at least from a direct-mail perspective, draw better than me. But I feel like with the authenticity and the education and stating that we’re a fiduciary and explaining our financial planning process and literally like, “Hey, you’ve been to these presentations before, they talked about annuities. Let me make sure that you really understand what an annuity is, what it really does, how it works, how much it costs, and who are the people that it might actually be suitable for.” Right? So, if you just do those types of things, you now build trust with that person sitting at the table. And I’m fairly confident they’re much more likely to come and talk to me versus that person that is trying to convince or sell them what they should do, all I’m telling them is, “Hey, we’re here to help and we’ll give you advice if you want it.”
Michael: And, so, I guess what systems do you use now to do this? Have you built your own thing or are there vendors out there that you find and kind of work for queuing this up?
Matt: Yeah, I’ve tested everything under the sun, multiple mailing houses. I’ve tested digital ads to webinars, pretty much anything that’s out there I have most likely tested it at some point. It’s part of marketing is you got to always be testing and trying to see… So, there’s probably one company out there that a lot of people have heard of, and this was something I kind of modeled after, in the early days, and it’s a company called FMT Solutions. They basically have a canned retirement planning course and they’ve built a whole business out of this. So, back in 2010 when I first started doing these, that was really useful for me because it was already FINRA-approved because I was still duly registered with LPL.
And then, as that has progressed, we mostly utilize all of our own content. So, I have a retirement tax class I’ve built, we have a class on social security, we’ve got a Medicare class, we’ve got a 2-night retirement planning class that we’ve built out over time. And, so, you see patterns and consistencies of the things people are interested in hearing about, the questions that they ask. And then we usually tailor our content to those topics.
Michael: So, you started kind of buying, I guess, just pre-built PowerPoint presentations from FMT, and now you’re in a world of, “I’m pretty used to what works and what doesn’t. We’re building our own things based on the kinds of questions we get from the clients, we know these things resonate…”
Matt: Yeah. Honestly, in full disclosure, I haven’t probably done a live seminar in over a year a half because of the pandemic. And Jeff in my office is doing most of those today. But when I went and spoke, I might talk for a half-hour and never have left one side, I might just have the whiteboard, I might just be talking…and, so, you need to have content. But, once you start doing these, you start to tell a story the whole time and you start to give examples. And before you know it, you’re naturally going through what you want to talk about and you’re not stuck going from slide to slide.
I can say with certainty, there’s probably nights where I’ve spoken, I used less than a third of the slides that I probably should’ve shown the people because I was just talking about what needed to be talked about and the questions that came up in that presentation allowed us to have an in-depth conversation about a certain topic. And, so, I’m much more of one that kind of lets things sort of happen organically and flow from there. And that’s really where just owning our own content makes it easier for me to do.
Michael: So, what about from the mailer end of just…just how do you get your 10,000 mailers out there? Who does that and how does that work?
Matt: Yeah. So, that’s actually much easier than people realize. A lot of printing companies will do direct mail for you. There are a few vendors out there that will do it specifically for a financial-services company. I find them all to be very similar. So, my criteria is really simple, we don’t get as granular as some of the other…I think maybe you had John Wernz on once, the old Chief Marketing Officer for Wealth Enhancement, who’s also in town here. He is an incredible marketer, there’s a reason why they’ve grown. And I remember listening to that one and he was talking about how they knew what type of car they drove, and they got very very granular in what they were looking for. I didn’t do it because they were then peppering that person with lots of mailing pieces and different content and they’re hitting them from every different angle. What I did is I was very simple. You needed to own a home, there were certain income requirements that I had arranged for, and then there were age requirements that I went off of. And then, lastly was just geography basically, like what ZIP codes were in. And I just literally went based off of that because it gave me enough people in that market to make it work.
Michael: And that’s all criteria that a mailer firm would have or can manage because welcome to the marketing world, marketers actually know creepy amounts of stuff about us already and this exists in large databases.
Matt: Correct. So, InfoUSA, if you’re someone that’s listening and just kind of wants to know like, “Well, how many people live in my area based on this criteria?” you can go to InfoUSA for free and it will…it won’t give you the names but you can do a sorting list and it’ll give you a number of individuals that live or households that live within that particular demographic group.
Michael: And then can they actually do your list and mailer, if you want? Is InfoUSA actually a…
Matt: I haven’t used them personally but, yeah, I’m pretty sure that you can buy the list. For those that are thinking of doing this, you can call your local printing, there’s printing companies. I have a guy here, in town, that does some for me. He doesn’t know anything about our profession, he’s just a print guy. I get him my mailer, they’re able to mail them out, we just get the list. That’s one solution. I have another person out on the East Coast who I just basically give him my demographics, he runs with it, does them all for me, and away we go. So, just with a little bit of basic market research, I think that anybody that wants to do that will find a reasonable solution right out of the gate.
Michael: Okay. So, this whole like, “I have to find a super-specialized company that does mailers in the financial-services world,” we’re totally overthinking it. You can get a list from InfoUSA and take it to your local printing firm and just say, “I want to send these things to these people,” and do it. Who designs the mailer and the solicitation? Is that another…that’s a thing I would get from FMT kinds of companies?
Matt: They’re a company that does do that, I know that for a fact. But I kind of enjoy that stuff. I’ve read a lot of…I guess probably anything by Dan Kennedy, if you’re a marketing person, Dan Kennedy is one of the best direct-response marketers that’s probably ever, ever lived. So, any book by Dan Kennedy is really good. And, so, I’ve just basically took what I learned from him and other marketers and just sort of, again, kind of using my basic compound-effect type principle like, “If we can just do all these things a little bit better, let’s test this a little bit differently. And if that draws a little bit better, we start to get these incremental results that start to improve over the course of time.” So, as far as the brochures, I pretty much kind of own all of that myself and just work with a graphic designer to create those on my end.
Michael: Because you got used to how to do them after you did it a while?
Matt: Yeah, yeah. And I want to own it. I want it to be a little bit exclusive and I kind of feel like that’s a little bit of our intellectual property, although not that hard to find them if you know somebody that is getting them in the mail. But marketers are…Tony Robbins calls it “modeling” but good marketers are good at copying what everyone else is doing that works. And, I’m totally guilty of doing that too, so, I try to be a little bit different, from time to time, and at least give myself a little bit of a leg up there.
Michael: And just the whole idea of…we get so much mail, we get so much, frankly, just junk mail that hits all of our mailboxes over time. Every time I talk to advisors about…and we’ve seen this in our Kitces Research on marketing as well, that just seminar marketing with paid mailers continues to show up with solid metrics. I feel like the average person just like, “Really? In 2021, when there’s email and digital and all this?” and so much of what comes through our mailbox feels like it’s just solicitations that we throw out. Your numbers kind of speak for themselves but I guess I still feel like I have to voice the collective question asked, like “Really? Mailers in 2021 is still a thing?”
Matt: I’ll just leave it at that. If people want to think that, that’s fine by me.
Michael: Just fewer people sending competing marking. But do you worry that this saturates or oversaturates at some point? Or just like, “Hey, we’re still on the tail end of 10,000 baby boomers turning 65 every day.” It doesn’t matter if they’ve gotten their mailers for 5 years, they only got close to retirement this year, so, they’re going to notice for the first time.
Matt: I’ve told my team that this is going to stop working for like 6 or 7 years now, and we’re still here. So…I guess you keep riding the horse, I guess. Right? It’s, honestly, basic…I try to practice very basic business principles, if it’s not broken, don’t fix it. If it works, just keep doing it until it doesn’t work, even though it’s super boring. I’ll be completely honest, I got so sick of doing seminars after a while but I was able to impact so many people. And it was a very emotional process because I would literally dread going to these seminars because my kids were young, I’d literally maybe get a chance to run home and see them and shovel down some food quick before I go and do my seminar for the night. But then, when I’d get done with that seminar, people would come up with a smile on their face and they’d say, “Thank you,” and be like, “this was really helpful.” And then I’d leave feeling like I was on top of the world. It was such an emotional rollercoaster. But I knew we have to keep doing these, in some capacity, because it is such a benefit to the community, and we’re not stuck having to force some sort of marketing that doesn’t work or anything like that.
And, so, that’s where I just, essentially, I hired another advisor to help me do these classes. And I taught him all the tricks and things that I’ve learned to sort of get better at it and position yourself well. And he’s doing 90% of the speaking and teaching that we do today. And it’s working amazing. Actually, he just did one on Zoom last night. And one of my staff listened in on it because she had never heard him before and she had commented how he’s such a…he’s incredibly well-spoken, does an amazing job talking and explaining everything. And, so, that’s my way of not trying to break something that is working is by really just shifting to who’s doing it.
How The Pandemic Has Affected Matt’s Seminar Marketing [1:13:56]
Michael: Well, and then that was going to be my follow-up question as well is just…so, now we’ve had a giant pandemic, no one can show up for a seminar. So, did you pivot to a virtual world in doing webinars, have you just decided to take a pause, is this death of seminar marketing? Or are you just raring to go as soon as we can gather in physical locations again? What has the pandemic done to your marketing world?
Matt: Yeah. So, obviously, last year, it brought it to a screeching halt. But I think, by and large, most firms were…or at least those that were doing outbound or direct-response marketing of any sort were in the same boat. We just also went through this period where we kind of were in our own little zone for a while and just kind of waiting things out. So, I’ll be very clear, digital seminars, webinars, whatever, they don’t work as well. At least for me they don’t, I’m sure somebody has perfected it and is doing incredibly well. And, to your statement on direct mail works there, they can say, “Nope, digital marketing doesn’t work,” and it’s working just fine for them.
So, we’re testing right now, so, we’re in March as we’re recording this, but we’re testing some direct mail to Zoom class is what we are testing right now to see how that will produce. And I don’t have results for you yet, Michael. Our attendance rates are actually about the same. We had probably 40 or so households sign up. I can tell you with probably 90% certainty that the appointment-request rate and the amount of people that become clients likely will not be as high as live just because you miss the human element. I don’t think digital will ever produce as well as in-person because people want to work with people they like. Know, like, and trust, right? It’s the Dale Carnegie thing. And, so, it’s hard to do that when you’re looking at somebody through a computer screen.
Michael: So, I guess the good news at least is you can do more of them faster because there’s less logistics and stuff to coordinate. If you’re sending them to a Zoom class, then…a physical setup at a restaurant or other location for an educational event, but you may have to do them on a faster cadence because the conversion rate you’re just not expecting to be as high when you don’t get the in-person connection.
Matt: Yeah. It’s great, the fact that we’re still able to help a lot of people and provide value and do all of those things, which I truly feel a sense of responsibility to educate our community and help them with it, I’m very lucky the way we can market the way we do. And even if people don’t become a client, I think they still leave with a good experience and they’re thankful for the time and it was a good investment of their time. But yeah, I think, when I look at it, if we can produce reasonable results, and it’s obviously not as much time-intensive to do it, we’ll do what we can to try to just keep moving until we can get back to whatever that new normal is.
And if that’s a long ways out, then I’m going to have to make some adjustments and change. And we’re trying to do better about being more SEO-friendly, have more digital content, things like that that I probably was very much behind the ball on for a lot of years. But to be candid with you, I was growing at the rate I wanted to grow at. And, so, going back to “if it’s not broken, don’t fix it” mentality. Right?
What Surprised Matt About Building His Advisory Business [1:17:20]
Michael: Right. So, what surprised you the most about building your own advisory business?
Matt: Boy…it’s really cool to be a boss, be able to have a…this may sound weird but I didn’t know that it would be this rewarding to provide careers for…speaking to the business we’re in, it’s really cool to have people that will work hard for you and dedicate a lot of their time. And I love them like they’re my own family. And it’s really cool to be able to provide people that opportunity. That’s probably the number one thing that I’ve learned in the last couple years.
Michael: And I guess I am wondering about the corollary to that, just we never really got into when you were sharing your story earlier, but when did you switch to being the boss and not with the bank anymore?
Matt: Yeah. So, one big transition in there…and this goes back to the first time you and I ever ever communicated, I wrote you a little email asking about buying a practice I think back in 2012, and you had wrote me back a short essay.
So I had this idea, when I left, I wanted to leave the bank to start my own practice. And I knew that, because the seminars are working and I’m on a grid at a bank and I’m paying for my own marketing, and, so, I was like, “It’s a natural progression.” But if I could find a practice to buy that had some basic infrastructure and staff and play in place, then I’m going to be able to grow a lot faster and it’s going to be a lot stressful than me literally getting off of space, hiring support staff, doing IT, all those things. And to me that was worth a fair amount of money to do that.
So, I was able to find, I got very lucky. I’m a big believer, it’s like, in order to get lucky, you have to take risks. And if you take risks and position yourself to get lucky, lo and behold, luck happens. So, I know there’s a lot of advisors out there today that are trying to buy practices. And based on what practices are selling for and what we’re seeing, it’s clearly very much a seller’s market. I wanted to buy a practice but how I found that practice is I was very diligent and did a lot of networking with the people that would be in the know and those particular practices became available. And I started to kind of build a little mini list of potential candidates. And then I just did a really good job of building relationships with those people, over a year or 2. And then, all of a sudden, I found one that was really a great fit, and it was in the town that I had already lived in and I was doing marketing already there. And, let’s put it this way, I did what I felt like I needed to do to make sure that I got that practice because I knew…hey, I don’t even think I was 30-years-old yet.
Michael: And just how did you find the prospects you wanted to go after in the first place? Was this a search around on the SEC’s IAPD website where you were networking your way around FPA chapters and looking at who seems like they’re within retirement age?
Matt: Right. Well, a little bit of all of the above, to be honest. And I kind of say that tongue in cheek but I know that there’s a lot of people out there doing that. So, I looked at…there’s different recruiting people for different firms and just starting to have a few conversations. So, thankfully, I probably had about five or six reasonable conversations. And the practice that I purchased was the one…when I left that meeting, I was like, “I got to get this practice.” I remember telling myself, “I need to figure out a way for this to work for the seller and for this to work for me.” It made sense. I could tell it had a great staff, it was a great location, similar views on how we do business, planning oriented, mostly fee-based. And, so, hopefully, I don’t think I came across too aggressive but I was very open I really want this.
Michael: And just how big of a team was it? What was the structure that made it so appealing?
Matt: Yeah. So, it was three staff and it was probably roughly 100 clients. And it was mostly already advisory-fee-based. Most clients had a financial plan that was created. And they…very similar in how we managed portfolio models, which, to be honest, at that time, most of us were running very similar models regardless. But I could tell that this individual always did the right thing, I had a good vibe about him. And when I met the staff…they joke I was very quiet at the beginning when I was going through the process with the seller. And it’s like I just wanted to be a really good listener and, so, I just wanted to ask questions and observe. And I had a hunch that they would be a good team to work with. And, although I definitely wanted the assets and the revenue and the base, I was more concerned about getting a good stable setup for people to sort of help me transition and get going again and pick back up on the momentum that I had been building over the previous couple years.
Matt’s Low Point On His Journey And What Success Means To Him [1:22:13]
Michael: So, what was the low point for you on this journey?
Matt: Boy…there’s always a lot of them. But I would say…honestly, I’m pretty fortunate, I haven’t had a lot of low professional points in the last couple years. But it’s hard to make it in our business, Michael. It really is. I would say, although there’s a lot of work that all of us, that our practice owners, myself included, could do a better job to groom financial advisors to be mentors, to do all these things to help the younger generation progress, but it’s really a sales job, those first few years. And…sorry, you’re going to have to edit that out. But it’s really a sales job, those first few years. And if you’re not really good at selling but you’re a really good advisor, then it’s kind of tough. And, so, I feel like, for me, just sort of failing those first couple years was sort of my low point. It was like I had this dream and I wasn’t sure if I was actually going to be able to fulfill it.
Michael: So, anything then that you wish you’d done differently? Or I guess, what do you know now you wish you could tell you from 15 years ago to maybe make it slightly less sucky in the first few years?
Matt: Yeah. All of it sooner and faster. Should’ve done more seminars faster, should’ve scaled up faster. I wish I’d found Jeff, who’s my other advisor, faster. I think it seems to be, when people make that big transition or that big career move, they look back, if it was successful, and they always say, like “I just wish I would’ve done it sooner,” and I’m completely guilty of that. But, to be realistic, I was still in my 20s and I needed to mature and get more experience. And I’m pretty lucky, Michael, it’s worked pretty well for me and I don’t think that I have a lot of regrets when I look back on what we’ve done building a practice. And I feel like we’ve done it the right way and we’ve always tried to do what’s right for the client and never sacrifice those things to try to move the business forward. And I’m pretty proud of that.
Michael: So, any other advice you would give just younger or newer advisors coming into the business and trying to get their career started today?
Matt: Yeah. Get a mentor. Get a couple of them. Just be a sponge. And I know that’s a very cliche simple thing to do but what I did…one of my big breaks was getting that internship when I was 19-years-old at Merrill Lynch. I got lucky. Why did I get lucky? Because I put myself in a position to get lucky. The reason I got that internship, believe it or not, was not because I had the most impressive resume, I didn’t really have much at all. I grew up on a farm, so, my references were my dad. And I built houses in the summer, so, I was a part-time carpenter. Not really anything that a financial advisor at Merrill Lynch was going to be like, “I want to hire this guy.” The reason I got it is I wrote that guy, that gentleman, a handwritten thank you note. And I was the only person of all the people that applied for it that wrote him a handwritten thank you note for the interview. And I got it. And that probably was very instrumental in my success. I hope I would’ve still been successful had I not done that but it definitely helped.
So, I thank my mom for that one, she always made me write handwritten thank you notes for all these gifts and things that I had done along the way. So, I owe her for that one. But get a mentor. I was fortunate to…I had this mentor when I interned and then that little bit of time I had at Morgan Stanley. I wasn’t afraid to ask some of the higher-producing advisors at that time, “Hey, can I just sit in your office for a couple hours while you’re working and, if you don’t mind me, asking you a few questions or just sharing with me what you’re doing at that point in time?” You can learn a lot from those successful people.
And, so, I could go on and list a whole bunch of people that, even to this day, I’ve built a good network of people that I bounce ideas off of. And, even though we’ve built friendships, I still view them in a mentorship fashion where I want to learn from them and pick up on things that they’re doing well that we maybe could also replicate.
Michael: So, as we wrap up, this is a podcast about success and one of the themes that always comes up is just even the word “success” means different things to different people. And, so, you’re on this great track with the growth and the success of the business. But I’m wondering, how do you define success for yourself at this point?
Matt: Well, I think you have to be succinct about it, I think you have to break it into a couple categories. I think, professionally, it seems like all the gurus and teachers tell you to set short and long-term goals. And the way I look at success professionally is, if you’re changing your goals over time or you’re raising the bar, that probably means you’re having success. Right? So, if an advisor’s goal is to get 100 clients and then, once he has those 100 clients, that’s not the goal anymore, the goal is to get more clients, or whatever, just as an example…
Michael: You reset the goalposts, yeah.
Matt: Yeah. So, if you’re resetting the goalposts, that probably means you’re having some success. I think it’s a good way to look at it. Personally, I think, personally and professionally together, if you can wake up every day and not agonize what you have to do and you’re excited about what you get to do for a living and the people that you help and the people you get to work with, I think that’s considered success.
Personally, I think it’s awesome that I can provide a good life for my family and we get to have some of those experiences. My wife is a school principal and a director of a special-needs school and she was able to take some time off because our kids started kindergarten this past year and it was just too much to manage. And I’m incredibly grateful that I’m in a position where we can do that and it doesn’t put extra stress on our family. So, I think being able to provide a good life for your family is incredibly important.
And success really, to me, is just freedom. Having the ability to do what you want, when you want, and being able to help and influence those around you along the way, I think, ultimately, leads to a lot of fulfillment.
Michael: I like that. Freedom to do what you want, when you want, and be able to positively influence those around you along the way.
Matt: I mean, Michael, we’re happier when we make those around us happy. Right? That’s one of the key…and, to be honest with you, not to get too emotional here, but it’s been a tough year for everybody. Right? We’re all stuck at home, we haven’t been able to…you’re used to doing 50 conferences a year, or whatever you do, and we miss seeing everybody in person. And I’m a very manly man and I’ll say, we miss that human interaction and we miss having laughs in the relationships that we have. And I think part of being happy is being able to help others and have positive influences on other people’s lives. And that, ultimately, leads to our own success and happiness. And it’s taken a lot of years to make it that simple and succinct for you but I’ve learned that. And I try to live by those principles, as I go forward.
Michael: I love it. I love it. Thank you, Matt, so much for joining us on the Financial Advisor Success podcast.
Matt: Yeah, thank you for having me, Michael.