#FASuccess Ep 195: Own Your Future By Continuously Reinvesting In Yourself To Build The Advisory Career You Want

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Wealth Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

What You’ll Learn In This Podcast Episode

• Echo’s Journey From Arriving In The US With Only $800 To Providing Financial Planning For Fortune 500 Executives [04:56]
• What Led Her To Pursue Personal Financial Planning [16:10]
• How She Made The Jump To Work At An Intra-Firm Startup And Then Decided To Build Her Own Broker Business As A Solo-Practitioner [21:33]
• How Echo Weighed The Risk To Make Big Changes, Try New Things, And Move Past The Fear Of Failure [44:22]
• The Tech Stack And Solutions That Echo Chose For Her Firm [52:04]
• What Her Vision For Echo Wealth Management Looked Like Starting Out [01:00:35]
• What Echo Wealth Management Looks Like Today And How Echo Charges For Her Services
• How Echo Attracts Her Ideal Clients [01:17:07]
• How Client Referrals Have Fueled Echo Wealth Management’s Growth [01:23:53]
• What Surprised Echo The Most About Building Her Advisory Firm And Her Low Point On The Journey [01:31:04]
• What Advice She Would Give To New Advisors And How She Defines Success [01:44:30]

Resources Featured In This Episode:

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Full Transcript:

Michael: Welcome, Echo Huang, to the Financial Advisor Success Podcast.

Echo: Hi, Michael. I’m thrilled to be here.

Michael: I’m really looking forward to today’s podcast and talking about just the journey of building our own advisory firms and careers over time. I’ve often said in the industry that, particularly to younger advisors who are newer and coming in, where there’s all this focus on I’ve got to find the right job, in the right first firm I can stick at and be with for my career. And then, when I talk to so many advisors over the years, we virtually never stay with the firm that we start with and it’s not even a negative reflection of just firms that people start with but just, you know, we never really entirely know what we want to do in this industry and what kind of career or firm we want to build until we do something in a firm. And then, we kind of figure out a little bit of what we like and don’t like. And then, we pick a second firm, which, is usually the opposite of the first because we’ve just got to get away from whatever we didn’t like in the first. And then, we do that for a bunch of years, and then after that, we finally really figure out. Like, okay. Here’s, the part of this business I like and what I want to do or how I want to structure my practice, the kind of job that I want and we make this third leap. And then, by the third leap, it’s like, okay, now, I really actually found the thing I want to do and it’s off to the races.

And I know you’ve had I think kind of a similar journey to that of moving through a number of different firms in the industry over the years and having a whole lot of growth over the past couple of years as you finally made this sort of final leap to where you are, now. And so I think I’m just looking forward to talking about what that journey looks like of kind of building our career, while at the same time, just trying to figure out how do I actually want all this to look like, where do I want to work, do I want to be an employee? Do I want to be a firm owner? Do I want to be an independent? And all the, I guess, the trials and tribulations we go through along the way just trying to figure that out, and then where to land, and how to actually do it.

Echo’s Journey From Arriving In The US With Only $800 To Providing Financial Planning For Fortune 500 Executives [04:56]

Echo: Yeah, Michael, I feel like I have gone through so much. And I think maybe what I should say is, first, I should start telling people that I was born and raised in China, in the southern part of China, near Hong Kong. And I actually came to the U.S. by myself with $800 in my pocket wanting to study finance. So, skip forward, I landed in, well, first, at the University of Idaho for one year. And then transferred to Winona State University, in Minnesota, here. This is where I’m living, now, in the Twin Cities area. After school, I went to work for West Publishing Company, and now it’s called Thomson Reuters. So if you remember those legal books with “West” on it.

Michael: Yeah, absolutely. Yeah, yeah, I remember those as like reference books in studying really early in my career, yeah.

Echo: Yeah, business law books in college I paid a lot of money for, so I worked there as a cost accountant. Doing, you know, analyzing the cost of publishing a new book and determining the pricing. I did that for a year and nine months. And then, I decided that I really wanted to have ‘CPA’ behind my name. Even though I passed the CPA exam, I needed to have, I believe, at least two years of public accounting experience in order to use CPA after my name, so I, you know, started networking and I found KPMG. At that time, it was called KPMG Peat Marwick, one of the big six CPA firms in the world, I was able to get in there. They were able to sponsor me and give me a full-time work visa because, if I didn’t have that, I would have to go back to China. So anyway, that was a great learning opportunity and I started in auditing, but auditing wasn’t my cup of tea after traveling to different places and living in hotels for many weeks in a row. I just decided that wasn’t part of my passion.

Michael: Just curious, because you didn’t like the auditing thing or because you didn’t like the travel that goes with the auditing side?

Echo: I think, both. After six months I concluded that auditing – I was auditing financial services firms. Certainly, I learned a lot more about life insurance and mutual funds, so I certainly have learned something from that experience. But the hotel life? Remember, those days, we didn’t have, you know, today’s technology. So today, we could do a lot of things with a laptop and you could communicate with people virtually, you know? Earlier, we didn’t have that kind of technology to really enjoy life. I mean sometimes you could be living in a hotel. I remember my younger friends didn’t really plan and invite me to some kinds of events because most of the time I was out of town. So for someone who’s in their 20s that was difficult.

So after six months, I started networking within KPMG, and I found out about a group called Personal Financial Planning Group in downtown Minneapolis that is under their tax services. So just remember tax services – they do a lot of different kinds of taxation services –  but a specific group, about 20 people, mainly focus on doing personal financial planning for their executive clients, so Fortune 500 companies’ executives. So I was able to submit my resume and they told me that if there’s a position opening, I would be called back for an interview. So I was really fortunate nine months of auditing life ended. Then I moved to the personal financial planning group, and I became a senior tax specialist and I prepared tax returns, I did tax planning, I did stock option planning, and personal financial planning for a fee. At that time, we couldn’t manage investments.

I think I realized very quickly that I enjoyed the financial planning part of the work a lot more than tax season. The tax season is very difficult for me, I think, as I was thinking about my future. Some day I may have a family or child and I had to work at least 60 to 70 hours a week during tax season without a single day of break. And it was really difficult and I decided, no. After three tax seasons, I decided that would not be my long-term career path and I had to find something different. And that was my biggest kind of, I would say pivotal moment, in terms of my career because as a tax CPA that was probably the most secure position for life, right? You never get fired. I never heard people getting fired as a CPA.

Anyway so, fortunately, I met some people who have been successful in doing financial planning. Well, first, I actually changed my job to go to RSM McGladrey. That is also one of the very large CPA firms in the country and the recruiter told me that they started a new service, a wealth management service. And they want to hire people to start that service, brand new service within a large CPA firm. And my boss was the first financial advisor hired in downtown Minneapolis and so he hired me, so the two of us started this brand new service. We just have an individual office and a laptop computer, some equipment, and, “Here you go. Start a new service.”

And, so that was, for me, it was a great experience because I was able to do investment management but I didn’t have to do tax returns, so I was working with my colleagues who prepared tax returns and build the network, there. And, really build trust by telling them, “I have gone through all the training. I have passed my CFP exam before age 30.” And, because I was just looking very young when I was 29, it’s always difficult to – especially when I was – I consider myself a triple-minority in personal wealth management because I’m Asian, woman, and a new immigrant. And, you probably don’t find that many people actually doing personal financial planning, especially like in 2000.

So in 2000, I changed my career and started opening some accounts. I think the hardest thing for me entering this industry was the stock market started tanking. Remember the ’90s? Remember the ’90s, it was all up, right? Remember the ’90s when… I finished college 25 years ago. And, the market was always up. I had very little money to invest in the ’90s. And then, the moment I got into the financial services industry, it was all downturn. And, so I had to learn so quickly what I could do to help clients, in terms of managing their expectations because a lot of clients at that time forgot about market downturns after a long-term U.S. stock bull market. So it was very interesting at that time when I did financial planning – you know financial planning for a fee – the assumed rate of return was 8% per year. Quite a few new clients were saying, “Why would I hire you when you think you could only make an 8% return for me?”

Michael: I’ve been making 12% in the stock market by throwing darts at a dartboard for the past 10 years.

Echo: Yeah, they always come up with, you know, the hot stock they heard from a cocktail party or golf with their neighbors, right? So I think I had to learn so quickly and I read a lot more books about behavioral finance and what are the things I could do to help them manage emotions. One thing that worked for me was cash flow-based financial planning and so at that time, I don’t think it was as common to do a financial plan for a fee. Today, it’s a lot more common but 20 years ago, it wasn’t as common.

And I just decided that because based on my training as a CPA, I am extremely analytical and I pay attention to cash flow, especially when I was an auditor for like nine months, right? We looked at the cash flow of companies. So I decided why not come up with a cash flow-based financial plan to show them – especially the detailed cash flow for the next five to 10 years – because most of the people, when they panic and try to hit the sell button, right, they sell stocks when they were crashing. Because they are not very clear about where the money is coming from to pay their bills in the next several years, so that’s what I have learned that worked for me. So I was trying to tell people, “Okay, this is what you need to do. Financial planning is really important. Yes, I will diversify your portfolio but let’s come up with some kind of plan before we start talking about products.” So I was there for three years as a salaried employee but I decided to leave to start my own business in 2003.

Michael: So help me understand for a moment, just these changes and turning points of like, why? Well, I guess I sort of get why you’d leave the auditing side to go to personal financial planning because being on the road all the time for auditing was not pleasant. But like why personal? Like, what was the appeal for personal financial planning? You know, I know KPMG has a bajillion different departments, it’s an absolutely monstrous firm with I’m sure like a seemingly endless number of divisions and internal transfer opportunities. Like, why? What led you to personal financial planning? Were you looking for it? Or it just kind of landed in front of you and you went, “Huh, this looks interesting.” Like, how did you end out in that division of all the different divisions you might have transferred to within KPMG?

What Led Her To Pursue Personal Financial Planning [16:10]

Echo: I think, partially, it came from my background when I was in China. I was extremely curious about business. And, also, another thing I experienced was I actually took a job with, a part-time job with H&R Block doing the tax returns for one tax season, even when I wasn’t with KPMG. When I was at my first job with West Publishing. So I learned a little bit along the way by myself. I feel that I wanted because I had very little money to come to this country and I had to struggle so, in terms of how to make it to the next year and I did my best to get scholarships. And, so managing my own finances with limited resources to get through college within three and a half years, and I think I had experience that really made me believe everyone can do a little bit better, in terms of personal finance, even though I didn’t know that as a career path.

So when I was networking with KPMG-people, I know auditing wasn’t my passion so I was talking to people in tax services. They have international tax, they have, of course, state and local tax, they have people doing corporate tax returns and individual tax returns. And when I found that there is a personal financial planning group, that just stood out. Because I was learning a lot more about how to manage my own finances and how to help people with their tax returns when I had – you know – did one tax season at H&R Block.

So I think for me that is more satisfying when I can solve people’s individual problems and help them get to a better place, financially. Compared to when I was an auditor. You know when you go into a huge company like TCF Bank, or Wells Fargo, or whatever. When you go into those big banks, in general, yes, you’re contributing to the team, by gathering information, doing tick-and-tie, and everything. But at the end of the day, I didn’t feel the same satisfaction, in terms of what problems have I solved for people? So maybe, naturally, I am a problem-solver because of my own life experience that I had to solve all kinds of problems related to personal finance just to get through my college, and so I think that probably was the main reason. And then, you know, the transition of trying to find out, finding my sweet spot. You know, what is my sweet spot?

So I really took a deep dive into my own skillsets and my interests. So I enjoy the planning because planning means you can be proactive, now, to plan for your future and take the right action to improve your situation. So naturally, I am more interested in the planning part of the work compared to the compliance part of the work. So tax return is compliance, right? So that’s why, as I was thinking I was always passionate about finance. So even though my major was accounting, originally, I chose finance as my major. I changed my major to accounting because it would be easier for me to find a job as a foreign student and I only had one year to find a job in the U.S. Otherwise, I would have to go back to China. So I felt like, okay, now, I’m in a situation where I’m not running out of money. Let’s think about a little bit long-term, what would I enjoy doing for the long-term? And finance was always my passion because I was really interested in reading about finance, even when it wasn’t related to my job. So, then, I was like, well, maybe I need to change. Remove the tax season, that’s compliance work. Add, investment management. That’s why the job at McGladrey was attractive to me. It was a salary job but I knew that was a brand new opportunity for me to learn, how do I start a brand new service within this huge CPA firm with only my boss and myself, just two people? It was a good learning experience.

Michael: I was going to say, like, what was the next piece to that? What was the appeal to leave like a very well-recognized globally known incredibly reputable firm like KPMG to go to this ‘startup’ opportunity within McGladrey? Obviously, is still a very well established regional accounting firm but a very different kind of thing to say, “I’m going to go do this intra-firm startup,” as opposed to this incredibly well-established KPMG service with a steady stream of Fortune 500 executives that I get to work with? Like what led you to make the change and decide to take that kind of leap?

How She Made The Jump To Work At An Intra-Firm Startup And Then Decided To Build Her Own Broker Business As A Solo-Practitioner [21:33]

Echo: I think, mainly, it is because the daily tasks that I see are not as interesting to me anymore and I needed some change. Because  – you may know the compliance reason – KPMG, they cannot manage investment as a global CPA firm because of auditing clients.

Michael: There are conflicts of interest. You can’t tell people to invest in companies that you like, literally, will be auditing their finances at the same time.

Echo: Exactly. So, certainly, as you can see, after three tax seasons, I decided that’s not the part of the work I want to do forever. And, how do I increase the work that I enjoy doing every single day? And remove the things that I don’t like as much? So when the opportunity came, you know, the recruiter presented this opportunity, and I looked at that and initially, I said, “No, I don’t want to work for another CPA firm.” I just want to get out of CPA firms. You know, it was like, well, this is different. And, the recruiter said, “This is different. You’re not going to do tax returns anymore because your colleagues will be doing tax returns but you don’t do tax returns.” I was like, okay, that’s good. And then, so I think it was a really good way for me to learn what financial planning is as a service if I can incorporate investment management. So it’s not just a discussion about, “you should diversify this allocation.” It’s actually going through a process to identify risk profiles and decide how to construct a portfolio for this individual. So for me, the three years with McGladrey – I think I learned a lot more about how to network effectively with other professionals, such as CPAs and attorneys. Because that’s how I could actually get any client in that environment.

Michael: Because you had to network internally, within the firm, still, to actually get the other CPAs in the firm to refer you clients and introduce you?

Echo: Yes. If you think about, you know, let’s say for myself, as a 29-year-old brand new financial advisor, I studied the Series 7 for a week, and then took the exam on Monday. And I was like, okay, now, I think I can call myself a financial advisor. You know how that goes, right? It was like, “Oh my God, that wasn’t that difficult.” Compared to the CPA exam, it wasn’t. And then, I was like, okay, I could do that. And you know when I started the job, I knew I did not have wealthy family members and friends. I can tell you this for sure because I had no money. So 29-years-old, new immigrant here. Even though I was a senior tax specialist serving corporate executives, I mean I wasn’t the partner of the firm, right? I was just doing the work behind the scene at KPMG. And, I wasn’t able to manage these people’s money anyway at that time. I was always trying to find their tax cost basis by calling Merrill Lynch broker or somebody elsewhere they had the money, right, when I was a tax CPA.

So at McGladrey, I realized I have a lot more flexibility, in terms of what I can do to help people – so not only telling them to plan for the future, review their cash flow, and insurance. I could actually manage their investments on their behalf, so that’s why I was there. The good thing about, you know, learning that for about three years but, certainly, things change in a big corporation, too. That’s another reason I left. Because my original boss and I had a really great working relationship. And I felt I was respected and I had a lot more room to test different software and determine what financial planning software I wanted to use. And, we have done really well and he got promoted to be a regional director, so that’s a big promotion for him. But then, I had a new boss and, unfortunately, I just didn’t feel that – well, he didn’t hire me, really. So I just felt like we didn’t have the same working relationship anymore. And then, shortly after, another advisor, male – Caucasian male advisor – was hired from outside and, of course, I had to teach/train him about what we currently use. And then, later, when I found out, you know, his pay is like a manager-level and mine wasn’t, it just didn’t seem fair to me.

I certainly felt that you know, I was the one who started from scratch, I should be considered for a promotion. Especially since my boss has been promoted to a much higher position. And, so one day I just came home and decided, you know, it’s probably not…if I already sense the glass ceiling when I was 32, I just felt like I probably need to do something different than just staying in a big corporation and trying to change it. And I didn’t see that I was able to change it as a really young financial advisor. So I also have done some of my own research that many limitations and restrictions within CPA firms – I don’t need to have those kinds of limitations if I go out to more like an independent broker-dealer. So I have done my research to compare which firm I want to go to. And, I decided at that time in 2003, March 2003, I chose LPL Financial. Because at that time, LPL Financial was very small. It was two small firms merged together. And, about 4,000 advisors at that time. So compared to those well-known broker-dealers, I decided that LPL was more independent, in terms of not promoting its own mutual funds and, at the same time, for me, it was just a good way to get into an institution that provides technology. And I was able to learn along the way and start building my own broker business as a solo-practitioner.

Michael: Back then, Linsco was, or – I guess LPL was still Linsco Private Ledger. You know, before the PE firms came in, before the IPO, before all of that change happened.

Echo: Yes, exactly. So I was a solo-practitioner for almost, I think – let’s see, almost three years, I was solo-practitioner with LPL. Initially, I didn’t have many accounts. Talking about how difficult it is to build a business before I quit my job, I took out a home line of, you know a home equity line – HELOC – home equity line of credit. Because I kept thinking, if I don’t do it now, when would I do it? Because at that time, I didn’t have a child. So I was thinking, well, I have some emergency funds because I can use HELOC. And then, I came up with a really bare bone budget. You know, how little can I spend to get through this because I really didn’t have a lot of AUM. You know, as you know anybody who wants to start is like, what’s your AUM? It’s like, I really don’t know because I have no clients right now, so.

Michael: Or, ask me in a year or a few after I go get clients and I’ll tell you if I’ve got any.

Echo: And then, Michael, this is another thing. One day, when I decided to –  you know, I need to start my own business, I called Raymond James. I just went searching online for these branch managers, you know, like LPL, Raymond James. And I just picked up the phone and here’s my speech kind of. You know, I have all these years of tax planning experience and financial planning experience but I do not have any assets under management, but I can build it up if you’re able to let me join your branch and maybe sublease an office for me. I would, you know, come up with some kind of agreement and say I will pay my share of the rent, maybe pay like whatever, 10% to 15% of my revenue to the branch manager. You can imagine, without any AUM, where do you start?

Michael: I would imagine for at least a few of those branch managers, the fact that you were literally willing to search them online and cold call them, probably actually made them more willing to work with you. If you’re willing to cold call them, you’re going to work hard to get some clients.

Echo: Oh my gosh, Michael. I don’t consider myself as someone who’s good at cold calling. However, for at that moment, I actually had to do it, okay? I didn’t have a lot of other choices because in my original business, I never had to do cold calling. As you could imagine, if you work for KPMG as a CPA, you never do cold calling, so I have never done that. So I would say, the first time I’m doing cold calling was trying to find a branch manager who would take me in to let me get into the industry. And, hopefully, I could build some kind of book of business. You know, that’s how I described it. Finally, I found somebody with LPL. I think Ameriprise wanted me too but then, I didn’t choose Ameriprise, I didn’t choose Raymond James, and I chose LPL. But anyway, so that’s how I started working to build my own book of business under one branch manager. And, I think I paid $800 for the private office, for rent. And, so that’s how I went. I think the first year, it was really…let’s see, how did I get through my first year? In the first year, I think I made $30,000.

Michael: Yeehaw.

Echo: I think I did, yeah. Yeah, that was – it was not negative but you know, as you can see, I think, for people, if they have a huge mortgage and they have several family members to support, I totally understand how difficult it is because when I did it, I was very frugal myself to get through this. And I had to come up with some kind of plan to generate financial planning fees. I charged $500 for a financial plan that I spent hours and hours to put together. Obviously, today, I can laugh at that, right? But at that time, when I told my colleagues, I said, “Oh, yeah, I’m charging $500 for, you know, a plan.” People were looking at me and saying, “You can do that?” I guess in the old days, a lot of financial advisors, they were giving away, you know, the advice for free, hoping to get some kinds of accounts open. So at least, I was charging something, so I give myself credit for that.

Michael: It’s an interesting snapshot in time that, you know, you – for the 1990s and 2000s, you started in one of the only places that actually routinely was charging standalone fees for planning, which, were the big accounting firms that had the financial planning divisions that were doing it for the executives because they had to because of the CPA audit conflicts of interest rule. But if you look at a lot of large independent RIAs today actually got formed in the ’80s and ’90s from people who came out of those divisions and had this fee background so they went in the RIA channel and built instead of the brokerage channel back then. But the average broker-dealer – the average independent broker-dealer – like there was no charging for financial plans. Like there were basically no hybrids. That’s a phenomenon of just the past 10 years or so. If you were an independent broker-dealer you got paid to sell mutual funds. Like, that was basically the deal, mutual funds and some variable annuities.

Echo: And you know, for me, it was initially, because I could not be picky about, you know, minimums and things like that. Initially, I had no minimum but what I wanted to do is, I tried to get every single client to pay me $500 so that I can go through the planning. Because my experience has been, regardless of how much money they want me to manage, if I actually get through the financial plan, they trust me a lot more. And then, over time, they are not going to just fire me because they lost money in the stock market.

So I feel like I learned, it took me maybe a year to two years to finally feel a lot more confident about raising my fee. But at least, I think the first year and two, at least, I had some income coming in when I had very little AUM. But then, three years later, I was able to get to close to $20 million, so that was three years later, you know, of hard work. I could tell you that I worked all the time. I really didn’t rest. That’s what I want people to remember.

You know, when you get something started, you believe this is what you should be doing. Especially – it’s like my baby and I feel like I have to succeed, right? So I’m constantly working. Because I was a solo-practitioner, I have no assistant, and I just couldn’t even take a vacation. Because I felt like if I take a vacation, what happened? Nobody could, you know, do this thing for me. So for three years, that’s how I did it.

And then, after my daughter was born, I decided to merge my practice with another firm. Because they just switched out of New England Financial, they changed the broker-dealer to LPL, and they wanted me to help them because I am so familiar with LPL’s system already. And, so in a way, I decided to merge with that firm instead of hiring someone as a full-time employee. So I merged with my last firm as a minority owner and so I had about $20 million AUM at that time when we merged together. And so I was at my former firm for almost 10 years, and I think, in terms of success and struggle I had for that new merger was, it took so much longer for them to transfer money from out of New England Financial to LPL. And as you know, those days, there was no DocuSign. Everything is paper. It just took a long time for the firm to truly get organized. For me, I felt like it was like one year not really being productive to grow, so I was there, just getting through the first year, trying, you know, to help them get organized as well, and while marketing to Fortune 500 Companies.

So because of my experience previously, working with Fortune 500 Company executives, I decided that would be my kind of like, sweet spot, in terms of marketing. Of course, after several years of being on my own, I had a lot more confidence to actually go out there and say, “Hey, you know, I’ve done this in my 20s for corporate executives for, you know, at KPMG, they charge like $4,000 to $6,000 for each financial plan.” And, so, then I was able to grow my client-base to have a lot more corporate executives when I was there.

The challenge there was – remember we went through this hybrid RIA phase – and I was part of the people who oversaw the entire transition at that firm because I was a back-up OSJ, so I had a Series 24 license. So one of my business partners has his Series 24, so he was the branch manager but I am the back-up if needed. And during this, we decided to go hybrid at LPL. Remember, LPL Financial, I think now, Raymond James. But I think it was 2010, decided to go, okay, since most of the revenue is from the fee-based program and the commission is pretty much dwindling to less than 10%, so it was a good decision to say, “Okay, let’s just do hybrid.” So the assets still remain at LPL, using LPL as a custodian. And, you know, then you kind of save some fees in a way. Yeah, so that took, what, probably 90 days to six months or whatever you have to go through a transition with paper. You have to do paper everything, too, so there’s no easy way to get around.

But anyway, I think, later, my major challenge was when two of the founding principals left and I was still a minority owner. And then, there were new owners coming from outside. I went through a period of transition – probably about two years. I was questioning why I was there. So when we are talking about success, I will have to tell you that on the surface, everything was looking great. But deep down, what I felt was that the new partnership just didn’t work as well as should be. And, as a minority owner, I was there for almost 10 years, but I have very little ownership and I helped the firm grow over a decade, right? So originally I thought I would be a really important part of the succession plan. You probably heard this story many times, when it didn’t happen as I expected.

Michael: Because there were older founding partners that are on a track to retire. And then, they finally left and they didn’t succession to you, they just brought in other new senior partners to take over their clients and their shares over the top of you.

Echo: Yeah. So in any merger or acquisition, you know, obviously, there are conflicts all the time. Depending on, you know, hey, if I work so much I feel like maybe there should be some kind of compensation plan that would, you know, reward people’s hard work in a more equitable way, not just solely based on how much – what percent you own –  on the profit distributions. So it’s difficult when two of the original founders left. And then, there weren’t any legal documents that really guaranteed any additional shares for me because of my previous contributions to the firm. So there was some kind of verbal promises before, but as you know, that really doesn’t count. If you said something, “I will do this for you,” it’s not legally on paper.

So I think in the end, I think I probably struggled through about two years in questioning whether I could change the culture or change the system just by myself. But I think in the end I decided it’s probably better for everyone to have this divorce, I call this divorce because, you know, I decided to leave, let’s see, February 2015, so five and a half years ago. Five and a half years ago, I decided to leave and start Echo Wealth Management, an independent RIA on my own, without any employees. I feel like I’m starting things all over again, and I told myself this time, I’m older, I’m wiser, I think I have known people, in terms of networking in the community. I was also studying for the CFA designation. So I felt like, well, you know, maybe I would just start all over again. So that’s how I got started, in terms of that was, of course, another pivotal moment. Do I stay or do I leave? So if you ask me today, I certainly believe that was a really good decision for me.

Michael: I’m struck just you have had these regular turning points in your career. You know, you were at KPMG and decided that you weren’t happy with the kind of work and the travel life on the road, so you went and tried to find something different. And then, you build for a while at KPMG but decided ultimately that, you know, that sort of work wasn’t giving you the breadth of exposure that you wanted so you went and found something different. And then, you did that work at McGladrey for a while but, you know – feeling like you’re finding a glass ceiling, there, even though you were 32 – so you went and found something different. It’s just I’m struck. I mean there are a lot of us out there that for better or worse, like, we may get in situations where, you know, this environment doesn’t quite work for me or I’m not finding the opportunities I want, but change and taking that leap to something different is so hard for a lot of us that I’m just struck that you seem to have this ability to say, “Well, then, I’m just going to go do something different. And if I have to start over, I’m going to start over again.” You just seem to have a comfort in doing that that I’m struck by, so I don’t know if that’s like a natural inclination or something you do to psych yourself up when you’ve got to make these changes. Like how do you get to the point of making those leaps when a lot of us really have trouble making those leaps?

How Echo Weighed The Risk To Make Big Changes, Try New Things, And Move Past The Fear Of Failure [44:22]

Echo: Yeah. Maybe, I also should tell people that even though I’m very analytical, I also have done some assessments. One earlier assessment is called Kolbe. I did that right before I started my first business with LPL. So I did the Kolbe test. I think today, it’s still about $50 for a Kolbe test. It’ll test, it’s a natural kind of strength and how you, you know, how you take action and stuff. But anyway, there, out of for the score, I had the highest score in Quick Start. So Quick Start, you know, if you look at the definition there is where I thrive. I love, you know, trying new things, taking on new challenges, and constantly having new ideas.

So for myself, before I quit my job, I knew that’s what I wanted to do, but then after I have, you know, that assessment done and I was reading all these things. And, I said, “You know what, I think my natural strength is to try new things,” and because I’m not afraid of trying new things and I am okay if some things do not turn out exactly as I have planned. I think I get a lot more energy from knowing that I’m actually creative, you know what I mean? So I can be really creative, in terms of ideas, the things I want to try, and I don’t find energy if I am in a box that I have to follow very rigid rules without any flexibility.

So I can already see myself in, you know, like my early 30s, I will do better, in terms of being more productive and more creative if I’m in an environment where I can be… I’m okay to fail. that’s really important for me to tell myself, “It’s okay to fail.” And then, decide what I have learned from this failure and what I will change going forward? So I think as I look back right now, 20 years in wealth management and I certainly have made enough mistakes. I’m sure I could probably pinpoint a few mistakes I made but I just don’t want to let myself down, you know. I don’t want to criticize myself too hard because I just made a few mistakes. Because I think if I pick myself up and move on and it will be okay. Maybe, Michael, another reason I want to let you know maybe people can kind of think of. If I came to this country with only $800 in my pocket and my English wasn’t good and I had to make it, hey, what could be worse than that?

Michael: Yeah, this industry is hard but it’s not that hard, so if you got through that, like this isn’t going to be that bad at the end of the day.

Echo: I know. That’s actually when I decided to quit and start Echo Wealth Management. I had some time to reflect, in terms of my life. Because I said, you know, “What is the worst situation?” And the worst situation is not as many clients want to work with me because I am going out and hanging my own shingle, right? The worst situation is the people you think they want to work with you, but in fact, they just say, you know, maybe I don’t. That’s one risk. The other risk would be, I may have to work extra hard for another year before I could afford to hire an employee. So I was trying to think of, you know, hey, a business plan I wrote for myself this time, you know, is more thorough than the first time I started a business.

I actually spent some time interviewing custodians. I went to the Schwab conference and I interviewed different vendors for technology and I have done some due diligence before I actually launched my business. Because in my mind I said, “You know what, this time, what are the major things I need to make sure I make the good decisions?” So I ended up with several decisions – I still believe I made a really good decision today.

So one is custodians. So LPL – when I was at LPL, LPL was a really good choice probably for the five to six years when I was there. And then, later, when I realized the limitation with LPL was its own technology – what they created on their own does not really integrate very really well with any outside technology. So unlike TD Ameritrade, as you probably are well aware of, you know, when a company decided to be open architecture, you are able to get all these creative solutions, other vendors. If the outside vendors develop technologies that your advisor may want to use and they all can integrate. So I think for several years, at LPL, I went to the national conference. The biggest complaint that I wrote in, you know – suggestions for improvement – was integration with outside technology. How can you make that easier for me to do business every day?

So as I was looking into custodians, I think TD Ameritrade was my top choice, in terms of custodians. You know, if I’m going to start, I have to paper everything anyway, so why not choose something that I believe I can do very well, especially when I had no employees. Practically, I have to learn all the technology on myself. This is very crazy when I think about it, Michael. I had changed every single technology except financial planning software and Microsoft Outlook. I changed every single thing, so let me name it okay. I changed my custodian, so I used TD Ameritrade as my primary. I used Schwab as my secondary.

Michael: I’m sorry. And just out of curiosity on that, like why two? Why TD and Schwab?

Echo: I probably didn’t really need two, but at that time, I had a relationship with Schwab. When I was with my former firm, I had already built that relationship with Schwab at that time so they knew me. So I felt like, well, I’m going off on my own, they didn’t say they would cut off. So I was like, well, if they didn’t cut me off, I have some accounts at Schwab and those clients don’t need to change to TD Ameritrade. So for me, at that moment, it wasn’t a difficult decision to have two. It wasn’t like I have to try really hard to go and get Schwab because that was the relationship I actually have.

Michael: So you weren’t going out to pick and start with two custodians? You just already had a relationship with Schwab from the hybrid times of LPL and said, “Okay, I actually want to build with TD Ameritrade when I go out as an independent RIA but I’m not going to terminate my Schwab relationship or my client assets that are there.”

The Tech Stack And Solutions That Echo Chose For Her Firm [52:04]

Echo: Exactly. It wasn’t a lot of money. They probably would not cry today if I just moved the money, you know what I’m saying? It was just there. It wasn’t a big chunk of money but it wasn’t like I decided to go and start a brand new relationship at the moment I start my business to go for two. Normally, I would suggest people start with one because it’s probably simpler for people if they really need to come up with it. I like the relationship with TD so that’s one thing major decision I had to make. The second decision I have to make is CRM, you know.

As you know, on your podcast, many people have said what tools they use, they cannot live without. CRM is one. So I decided to use Salesforce and that is the version created by Concenter Services XLR8. So they branded it because they modified Salesforce for financial planning businesses. So based on my research, that probably is easier for me to use. I know TD Ameritrade has its own version, too. So as you know many companies have their own modified versions of Salesforce. So I think that was a good decision because, before that, I was using Juncture for almost, I think nine years or eight years, so I was used to Juncture. But, unfortunately, I think Juncture didn’t do as a good job, in terms of migrating to the cloud. And so they actually just continued the desktop version. And obviously, you know, today, everything is in the cloud so I was actually happy that I changed to Salesforce the moment I started my business.

Michael: And out curiosity, why Salesforce and not Redtail, Wealthbox, all the other independent advisor CRM systems that out there?

Echo: I didn’t look at Wealthbox, but I looked at Redtail. My conclusion is this. I think for people who want their firm to remain relatively small, I think that Redtail is fine. I think the learning curve for Redtail is probably not as steep as Salesforce. But I have a big dream for my firm. I don’t want to switch to another CRM if my firm gets to a really large size. And based on my research, Salesforce is the leader in this area. So that’s based on my research of where this company is going. Of course, there are some features probably much easier to use in Redtail but I personally look at it and say, “You know what, I talked to different people about Salesforce, and I realize Salesforce is something that can be for very, very long-term and the way they have how much money they have put in.” And, it’s just more robust, just in case my company gets beyond this 10 people firm or whatever. You know what I mean? So I just didn’t want to be someday and say, “Oh, why didn’t I choose something more robust that can be customized?”

Michael: Because you had aspirations for growing very large over time.

Echo: And I believe that if a company that has that capability to serve, you know, like Fortune 500 companies, they probably will invest in the latest technology, and the cloud, and all the innovation that we see in the future. So I’m trying to look further down the road than just this year or next year.

Michael: So what else? I’m kind of struck by this journey of choosing systems. So, custodian, you went with TD Ameritrade, it sounds like primarily for just the sheer openness of how many integration partners they had because you wanted integrations. That’s what you felt you were missing at LPL. You chose Salesforce because you wanted something that could grow with you and scale with you. You did the accelerate overlay from Concentre. So that’s a little bit more out of the box relevant for the industry than Salesforce-based, which is not always terribly tied into our industry if you just buy the plain vanilla out of the box. What else was part of the tech stack when you went out and launched?

Echo: Very important to me was having a paperless system. I had decided that from day one, I’m going to go 100% paperless for my office. It’s not just for, you know, cost-cutting, it’s for the environment. And I am a true believer that if I invest in this technology, we will all be more efficient. I did not know the pandemic is coming, obviously, but just think about how crazy it would be if I’m not paperless, right? So anyway, so I decided… So currently, what I use as a paperless solution is Laserfiche. So Laserfiche is a technology you could, you know, meet the SEC requirement to have everything timestamped in terms of not keeping paper files. So that’s really important to me. And then another piece, remember I had to learn everything within like three weeks because I have no employee, right? So I had to learn DocuSign because previously, at the former firm, I never had to worry about preparing account forms and transfer forms. So I didn’t do it for like almost 10 years and then suddenly, obviously, the technology has changed so much. And I had to learn DocuSign and I had to learn how to do FedTax too, which I never needed to do myself.

Oh, another – really two –  important decisions. I do not want to deal with billing. I do not want to worry about account aggregation every single day. So I interviewed BlackDiamond and Orion. So I interviewed those two before… So I decided to choose Orion. And without Orion’s support, I would not be able to grow my business today because I realized how much time…I think at my former firm, how much time spent on, you know, if you just hire someone, an employee, to sit in a back room, you have to make sure account aggregation, portfolio, you know, performance reports are all correct. And then you have to worry about quarterly billing. I mean, quarter billing is like a major project. So with Orion, I don’t have to worry about downloading data every single day. I don’t have to… The billing quarterly billing went just relatively small. And then also I had a client portal that is an iPhone app – mobile app – it works on Android too, that client can use the check their – you know, look at their transactions and everything. So that was a really important decision for me to make right from the beginning.

And then another important decision was to outsource IT. So I decided to work with a firm in…it’s not in down here. It’s called RightSize Solutions. The company mainly serves, I think, small to mid-size financial services firms as their IT consultant. So I don’t have to have any data or server in my office, because everything is in, you know, it’s a remote desktop. So because it’s a remote desktop, it doesn’t matter if I was working in my physical office, or home office, or a hotel. So I believe those executive decisions I made five and a half years ago, made the big difference in terms of what I’m doing today.

Michael: Interesting. And so help us understand as you were taking this leap, like, how the leap and transition go, I guess. Like, did you have clients as you got started? What clients came with you? Like, what did it look like as you were getting going in 2015 from a client and revenue perspective?

What Her Vision For Echo Wealth Management Looked Like Starting Out [01:00:35]

Echo: Yeah. I think, fortunately, this time, I didn’t have to start 100% from zero. So in a way, I think a year later, if I counted back, I think I probably had about $25 to $35 million that came with me. But that was, you know, it didn’t come with me like day one because I remember I really had… I didn’t pay myself until the ninth month. So, in a way, you know, finally, if I look at 12 months in the business, and I said, you know, hey, what type of client decided to actually work with me? And then I think I had anywhere between $25 to $30 million came from the, you know, the client I used to serve.

Michael: And so as you went out on your own, what was the vision for the firm at the end of the day? Like, what clients were you going to go after? What kind of firm or vision were you building towards? It sounds like as you were getting to this point, you had a pretty strong sense of what you wanted to go after. So what was the plan for the firm when you went out on your own?

Echo: I want to take the complexity out of wealth management for very busy, successful professionals, mainly corporate executives, with stock options and equity compensation, because… And in general, the age is normally 45 to 55. And they are the people I have enjoyed working with the most. And also I have seen I can actually maximize the benefit the most. Because in general, when people face complexity, especially if they get promoted to director or VP, now they have a whole range of compensation. They need to understand stock options, restricted stock, performance shares, and then they have to decide, do I elect to defer income? There are different compensation plans. And then they also have a pension. So in a way, because I used to live in that world when I did the financial planning for those people. So for me, it wasn’t complicated, especially when I decided to use… I started using eMoney in 2005. So, when I started using eMoney in 2005, it was so expensive because I was with LPL.

Michael: You paid like, per client, I think, back then, right?

Echo: Oh, let me tell you if I’m not wrong, it’s somewhere between $300 or $350 per client per year.

Michael: Per client per year.

Echo: Per year. And you know when I… This is really funny as we started talking, I can tell people I’m a power user of eMoney, simply because when I tested different software, obviously since 2000, and then on my own, 2003, I was looking at it, I was like, well, for the clients I was serving, executive clients with stock options and all these grants I want to monitor. Many software options do not even have a place for you to enter equity compensation. So that was one thing. I eliminated a lot of software when they don’t even have a place for me to put that. And the other hand, I said, you know, if we ignore that component, the financial plan is not even accurate. It’s a major compensation for these people. And then I decided, after a while, I said, you know, cash flow planning is so important. That’s the lesson I have learned, myself, and for my client. So eMoney is a cash flow-based financial plan. So every single thing I can see and I can dive in the casual detail year by year. You know, I can see exactly how I want, when to exercise options, when the restricted stock last. And I can build in pension and everything in the cash flow.

So I decided to, at that time, as you could imagine, that was a lot of money for the fee. So initially, I was doing that for mainly these executive clients. So I decided that I had to charge more fees because this overhead cost was, you know, just way too expensive. So I had to raise my fee in order to justify it. But after several years, I would say three or four years, I was talking to LBL one day, I was speaking to the Financial Planning Department. I told them, I said, “You know, you guys need to negotiate a corporate contract with eMoney.” Either I made a difference or somebody else said the same thing. But I think that year, LPL had a corporate contract with eMoney. So then all the LPL financial advisors just pay monthly fees for unlimited clients. So I felt like I did something and probably helped out a lot of financial advisors and LPL because I was the one…

Michael: And a significant fee break for you, if you have a lot of clients. Like, a couple of hundred dollars per client adds up real quick.

Echo: So because that was the main tool for me to help clients and charge a fee, so of course, the fee increased to where a complex case could be $4000 to $5000 a year if it’s very complex. The simple one we may charge $2500, you know what I mean? So you can kind of see depending on complexity, is it two…husband and wife work for two different companies, that will take a lot more time for me to understand the corporate benefit and everything. But at least I was charging a fee to do financial planning and offering, you know, this cash flow-based financial plan that they can see. I love the account aggregation feature. I think today…at that time, that was probably most cutting edge, because I was able to see all the positions and have everything pull in, from the 401(k), from the bank account, and whatever, each account where they have, you know… So I was able to offer something at that time, I think may be relatively new. And because I was able to learn this tool very well, I became pretty efficient when I, you know, did the presentation, or teach my colleagues how to do it.

So I think looking back, I started this from scratch. It’s not 100% scratch but on the technology front, I started from almost everything brand new. So I only remember my Outlook is still the same, my eMoney is the same. Not exactly the same because I went for the straight version, as an independent person. I’m not using the LPL version anymore. So I just went straight to, you know, eMoney, to be able to use the eMoney version. They call whatever straight version or full version or something like that. So only two things that I didn’t change, everything changed. So I was watching tutorial videos. I think the first four weeks of my… Let me try to remember, March and April – March and April five years ago, I was learning everything about technology and trying to set a goal and say, I need to get to $25 million AUM someday, then I’m going to hire a full-time employee. I was just telling myself because…

Michael: And then they can deal with all this technology stuff.

Echo: I worked 12 hours a day, six days a week, for the first six months. And my daughter has her little office in my office suite where she could play with her…whatever, games and stuff, all day on Saturday. And for Sunday is the day that I actually said to myself, I have to exercise. I need to exercise and I need to sleep. Thankfully, six months later, I get to the milestone that I set for myself. It was $25 million. And then I started looking for my first full-time employee. And then, yeah, so that’s how I got started in this whole thing.

Michael: So talk to us then about what the business looks like today. Like, what’s the current snapshot of Echo Wealth Management?

What Echo Wealth Management Looks Like Today And How Echo Charges For Her Services

Echo: Right now I manage close to $120 million. So that’s the AUM piece of the business. So 76 clients, and out of 76 – I just counted today – 9 of them are the young adults because they are children of our clients. So in my head, you know, I need to count them as a client, but they are not really the same as my other full planning clients.

Michael: So kind of, the core business is about 67.

Echo: Yeah. I would say we have 67 clients. And I counted – I still have three planning clients who don’t have money invested yet. So they’re still in the planning phase. And I have two small 401(k) plans because those two clients are business owners. So there are really small 401(k) plans. So that’s where I am in terms of AUM. But I think I mentioned to you that the way I offer services, I want to break it apart into two services with separate contracts. I choose the financial planning service as its own contract. And then the investment management agreement is separate – that’s based on AUM. And the way I… There is no perfect way to charge. I have thought of different alternatives and I decided to stick with this for now because here’s my rationale for doing this. Because for the financial planning fees, based on my experience, especially the clients I target –  that I want to target – there is no easy way to do a high-quality job without spending X number of hours. There’s no easy way. I just can’t tell people, “Oh, you give me the money, I’m just going to do planning for you, by the way.”

So I decided that should be separate. And for every single new client, they will sign a financial planning agreement to pay me for the first 12 months to go through what I consider about four meetings the first year and address their financial goals in different areas of financial planning using the eMoney platform. So that is the first year fee. As I said, $2500 to $5000 is normally the range depending on the complexity. And then for the investment management, my fee schedule is published right on my company website. We charge 1% for the first million, 0.8% for the next $2 million, and then 0.6% for the next $7 million. So it’s pretty easy for people to read. I decided to just put it out there for transparency. And it’s probably easier because if people read the website, they say, “Well, the fee is spelled out.” I guess if they are not interested in paying fees, they don’t really need to call me, right?

Michael: It makes it a lot easier. You don’t talk to a lot of people who aren’t qualified and willing to pay for your fees when you just put your fees out there. Because if they see that and it’s not going to work for them, if you’re not even in the right neighborhood, you’re not going to have the conversation and save yourself some time. If it’s at least close and they have to be convinced, well, then they’re probably going to call and you can have a conversation, and you can try to convince them.

Echo: Yeah. And also, on the other hand, I decided that earlier in my career, there were some really good clients for me to have, but they didn’t have much AUM. Let me give you one example. Let’s say 42 years old, newly promoted director for a Fortune 500 company, and has three young children going to private school. You know, but that person wants a trusted financial advisor to build a long term relationship and just monitor everything for him. So, a lot of criteria I want to check in terms of certain clients is, number one, first, I need to enjoy conversation with that person. I need to be able to…you know, if somebody calls, I actually want to pick up the phone and talk to that person. That’s really important. And the second thing is, I really want to explain my business philosophy in terms of transparency and more comprehensive financial planning, and building a long term relationship based on trust and integrity.

So I really want that person to understand that I’m in this for the long haul. And these are my philosophies. And those are a lot more, like, important criteria. And then by the time I get to the bottom and say the AUM, here’s my requirement, I said, you know, I can promise you that if I am able to manage your money more proactively, I certainly believe I can do a better job because I am actually helping you grow along the way. So I want them to believe right away at the beginning, that if I waive this kind of, you know, AUM requirement for like, a lot of big firms have a million or half a million, whatever. I just need them to understand from the beginning, if I take you on as a client and you see this as long term relationship, I want you to know I expect you to let me manage your surplus savings going forward. So as long as the conversation is relatively clear, I think for the right type of people, they go through the financial plan and they see the value. And then in the long term, they are like, “Yeah, Echo, I want you to help me save more.”

You know, the example for this 42 or 43-year-old director initially, probably has like $150,000, because after the 401(k), you know, all the money is in stock options, but just hasn’t received it yet, it’s not vested until like, you know, many years down the road. So, I think right now, even today, I still look for the right type of client that’s not as simple as AUM. So I want to find the right type of client I see has a really great long term potential, and I will enjoy working with this family. And I really want to focus on the people I enjoy working with. I think that’s more important than anything else.

Michael: So help me understand just this growth path. Like, I’m really struck that at the end of the day, you had this risk pathway of some time in KPMG, some time in McGladrey. Ultimately, you went out on your own in the early 2000s. Over the span of like 10-plus years in the business with LPL, you’d grown this like a $20 or $30 million client base. You made the transition in 2015. You went out on your own. You brought $20 to $30 million with you. And then like, poof, five years later, it’s gone from twenty-something to $120 million, when it took you 10-plus years to get to the first 20 or 30. So I guess I’m wondering, like, what changed and where on earth are you going and finding all these executive clients when you’re out on your own, hanging your own shingle and representing yourself.

How Echo Attracts Her Ideal Clients [01:17:07]

Echo: I am quite amazed as I look back. You know, the stock bull market certainly helped. It’s true, right? You know, the market growth has been a big component as well. But I think I only have two clients who found me on the internet. All the rest of the client is word of mouth, mostly is existing clients. I think existing clients are the major source of referrals. I believe that if I do a great job for my clients, they actually do want to help more of their friends, or families, or colleagues, just by telling them that, you know, “Hey, I can trust Echo. You know, this is my experience in terms of working with her team.” And so I personally believe that referral from existing clients is still going to be the most important part of my growth plan. And so I looked at this and say, I have more than 50% of the clients are actually corporate executives with Fortune 500 companies. And the others are some successful entrepreneurs, and some from other companies – maybe not Fortune 500 companies. But since the majority is Fortune 500 companies, I just believe that you know, if I do that so well, I need to keep doing it. Right?

So I’m trying to think of new ways, how I can talk to more of this type of people. So online, I have been trying… I’ve been working on my online, you know, they call it what? Digital footprint, my digital footprint. So what I have done is for the past year, I have decided to do a lot more in terms of more engaging in social media. And I certainly hope… I mean, my recent client last year-end, found me on the internet, and very high net worth, successful entrepreneur. So, in a way, I feel like, wow, these successful entrepreneurs in their 40s actually Google me on the internet and somehow found me on the internet, and then interviewed another firm in town, and then interviewed me, and then chose me. So I feel like, oh, maybe that’s a really good sign. For the past five years, I’ve been writing my blog and put it on my website, and thinking, well, someday maybe some people will read, right? So I was just sowing seeds for five years. So I was sowing seeds for five years. And then finally, now I think I have 2200 connections on LinkedIn, maybe 1600 on Twitter or something. Instagram is still very low. I think I got into Instagram really late.

But anyway, so I feel like the main reason is still doing a great job to get referrals from the client. However, when someone received my name from a colleague or their boss, right? They got promoted, the boss says, “You should talk to Echo.” And then they were like, “Who is Echo?” And then obviously, they have checked online before they make the phone call. So for me, even though they didn’t find me on the internet, whatever I have done on the internet, at least attracted them to come to my office for the first meeting. So I still believe that I need to continue working on, you know, getting the message out in terms of what we do well and how we serve our clients. And in terms of investment management, Michael, I took the challenge to study for the CFA exam in my 40s. I can tell you that a lot of people were surprised when I decided to study for the CFA exam when I was a partner at my former firm. I really did not need a CFA to put on my resume to look for a job or anything.

But I think I was just really curious about portfolio construction. I was reading a lot more books about, you know, using options, puts and calls, and all kinds of stuff. And then I said to myself, “Oh, remember years ago, I payed for the level one CFA thinking that was the exam I should take so I can change my career. Ended up that was not the best one in my study group. My study group – I’ve got to tell everyone – is my Goddesses of Financial Planning. You may have heard of it because now I think it’s getting more and more famous because we are all very involved in financial planning and association here in the Twin Cities. I told them, “I’m going to take the CFA exam. I just paid for level one, all the books and stuff.” And they looked at me and say, “Echo, it may be more helpful for you to take the CFP exam.”

But anyway, so you can imagine that you know, I did not take the CFA exam, and years later, I decided to do it again. And I later realized I really underestimated the time. It took more than a thousand hours, it took absolutely more than a thousand hours. So anyway, so investment construction, portfolio construction, for me, is an important part of the service I offer in-house. So in a way, for executives who have concentrated position like employer stock, I can customize their portfolio to be more mindful of tax efficiency, and also to be mindful of what position they already own. So in a way, I believe that I’m offering a very comprehensive service that is very in-depth in the financial planning area, and then the portfolio is customized for each household.

Michael: So help me understand though, you said you’re driving growth from word of mouth referrals from existing clients. Serve them well and they’ll refer you. Lots of advisors do great work for their clients. They don’t 6x their business in six years. What’s making the outcome for you different than all the other advisors who serve their clients well and hope to get referrals, and are not going from twenty-something million to $120 million in five or six years?

How Client Referrals Have Fueled Echo Wealth Management’s Growth [01:23:53]

Echo: You know, I will have to take a guess, like, maybe focus on a few things I believe I do well. Right? I’m very consistent in terms of the message, why we do what we do. So I always start with a financial plan. So I’m very consistent because if you’re very consistent and you actually get paid for giving that advice. So my financial planning fees – not just once a year – because for these corporate executives, their lives change, right? We always need to monitor stock options and be proactive when to exercise them. So in a way, I have discounted the financial planning fee when we manage their investments –  ongoing. So, like, the first year, they pay me $4000. In the second year, it may go down to $2200 or something. But we still work around the financial plan and continue to update that plan. So in a way, I think I’m very clear on the message that we always do financial planning very well. Of course, implementation – part of the human implementation is investment management.

So that’s one thing I believe I probably do better than an average financial advisor, is just being consistent to deliver the financial planning service as well. And I’m very proactive and pay attention to the details. And because of my tax background, I also communicate with the tax CPAs. And I am being proactive to introduce to the estate attorney as we work on the insurance and estate planning. So I see that maybe I’m offering a little bit more than what a traditional financial advisor is offering. So that’s my guess, number one. Number two, I think the clients I have attracted… I mean, if I look at 50 clients, right, if I look at their profile, many of them are savers. So in a way, either they naturally are good savers or because of me, they have become better savers. You know what I mean? Just over time, they have learned more about why they need to be consistent in terms of investing in the market.

And if they do have a pension, they don’t have to withdraw much from the portfolio when they retire. So, I feel pretty grateful in terms of…as I was looking at the challenge of many firms when their clients retire and the minimum withdrawal is so big for the firm. They have to go out and find new clients just to replace the distribution. At this moment, my firm, the clients are very young. So my average client probably 53. So they are very young and they are saving. They’re at their peak earning years. So I think a lot of growth in the AUM is not just from the new clients, it’s from the existing clients. Every time they get paid a bonus…actually, today, for one company, today is the bonus day. So I already have a few phone calls with clients and say, “How are you investing your bonus you just got today?” You know what I’m saying?

So in a way, I think the clients you choose matter because if they are consistent in terms of saving because of your coaching, and then they are able to have the income as well to save consistently over time, and they don’t withdraw very big amount immediately after they retire, that helps. And also I have generated very great performance as well. That’s another thing on the AUM. As I said, you know, 2019 was such a great year. So also, a significant portion was the growth of the market.

Michael: And why is it so much faster growth for you now than, like, the preceding 10 years in the LPL days?

Echo: You know, at LPL, I actually grew close to, I will say, $80 million when I left. Because of that decade, many earlier clients simply kind of dropped off because they were… For example, there were some people… Remember, I opened accounts without any minimum and their income level was not high at all. So after a decade, with my former firm, because my focus was corporate executives. So in a way, you know, some earlier clients did not continue to be my clients. And then of course, when I left that firm, a lot of people, even though I was managing, I will say above $80 million at that time when I left, it’s not as simple as people will just come with you. What I have learned – this is something maybe your listeners can take from this too – is, you must be prepared. If they don’t come with you, what are you going to do? Because for me, the good scenario is, what if the $55 million came over, right? You know what I’m saying, Michael? If $55 million came over, I didn’t have to suffer for six months, right? Remember my suffering for six months.

So in a way, I had to be prepared for something that’s not as ideal. No matter how I do it, you know, sometimes things don’t turn out exactly like what I have planned. But things could be a lot worse if nobody came with me. Right? So in a way, I think the good news for me was, the people who chose to come with me, maybe the first six months, they are normally very influential people. They are the advocates for me, meaning that, I get a lot more referrals from the first 15 clients who decided to come with me because, in a way, they have demonstrated that they didn’t even care where I would have my office. They practically said, you know, “Echo, I don’t care. I just know that you have done great work for me. I will sign the paper. Tell me where to sign the paper.” So I think it is critical to have that trusting relationship and nurture it. And most challenging times, that’s when they really need us, right? They need our services. And I think over the market downturn, you know, the global crisis, 2008 and 2009, I probably had really demonstrated what I have done for them that helped them to serve them well during the downturn. And a few very high net worth clients just decided to come with me. I think that helped me a lot from the beginning.

Michael: So, what surprised you the most about trying to build your own advisory business?

What Surprised Echo The Most About Building Her Advisory Firm And Her Low Point On The Journey [01:31:04]

Echo: Ah, let’s see. Surprised me. If I think back to five years, these five years, right? What surprised me would be how little I thought I had accomplished on a quarterly basis. But then now I have five and a half years to look back, I actually have accomplished so much. So, Michael, talking to you right now, I realize I need to give myself more credit for what I have done. I am just trying to be honest because I try my best, like, I would put in 120% if I believe in something, and I’m very, like strong-willed. You know, not many people can stop me from what I decided to do.

Michael: I think we’re getting that feeling here…

Echo: You get that feeling, right?

Michael: …talking about the journey.

Echo: Right. So in a way, I’m also very critical of myself. The loneliness, for me, in this journey is, I have one side of my brain debating with my other side of the brain constantly. Because when I am a solo owner of this firm, when I made such a big transition, I feel like I’m a planner, I should be planning meticulously every single step, right? So, I’m very careful in planning. But at some point, you need to pull the trigger and you actually have to act. So, my left brain and my right brain could be debating, but then nobody is going to tell me when I need to make a decision. And ultimately, I have to do that. So I remind myself sometimes, I say, “You know what, nothing is going to be perfect.” Don’t even start out thinking it’s going to work exactly as what you have planned. My principle is to be adaptable. So be adaptable. And if I have a new idea, remember, I have several problems I want to solve. And I would come up with, you know, several alternatives. And then I try to analyze it as pros and cons, and then maybe I talk to a few people I consider to be experts, right?

And then, in the end, I have to decide for myself, for my own firm, which solution makes more sense. And then I just need to go for it. But I give myself the freedom to pivot. I give myself the time to come back one day and assess the situation and say, “You know, is this something that is…is it on track or off track? By how much? Is this still a good decision? Is this something that’s completely failed and I just need to pivot and go in a different direction?” And I constantly remind myself, even during very bad days, I need to tell myself, this is a temporary situation. It’s not permanent. And if I give myself what, grace? I need to forgive myself for making certain mistakes. I think the journey is a lot better. So, talking to you and listening to your podcast sometimes, kind of learn about other pain points people go through. And when I encounter that, I just say, “You know, I’m not alone.”

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

Echo: Career-wise, I would say the last two years at my former firm, when I didn’t feel that I could make a change, but I saw what I had done for that firm like it was my baby. It’s very difficult when you feel that at the beginning of that journey, that merger, I felt I could take the firm to a totally different level in terms of innovation and technology, in terms of using eMoney to deliver services to corporate executives. So I had a very big dream early on, how to make this work as a team. But when things didn’t go well, as expected, I think I was extremely emotional to get to the point where I felt this has ended badly, and I need a divorce from this business. It was such a struggle. So I would say my low point would be, you know, if you’re talking about tears, I probably cried several times. You know, it just didn’t feel good that I have to give up something I believed very strongly and couldn’t convince the other people to do the way I want to do it. So that was my low point professionally.

I would say personally, personally is my own divorce during this journey. And it’s not something I was comfortable saying, but I also need to come to a place where I need to acknowledge it. Similarly, when my marriage didn’t work, as I said, you know, at some point, you know when it’s not working, because it’s just like shoes, you know. When you wear a pair of shoes, they’re uncomfortable, people can’t tell, but you know. So I would say, personally, my low point was divorce and moving on.

Michael: I guess, particularly, in the context of the firm when there are all these changes going on and new people coming in. Like, how do you get to that dividing line or point of saying just, okay, I don’t think it’s going to change and become a thing. I want it to become…I’m just actually going to have to cut the cord and leave. Like, was there a transition moment or an event or something? What gets you over that line?

Echo: Are you talking about that thing, leaving the last firm and start again?

Michael: Yeah.

Echo: Okay. Here’s how I feel. If every day when I get up, if I feel joyful, looking forward to a new day, either I have new ideas to do things or I have new people that I can learn from and cherish. I can feel it. I get up, I can feel this is going to be a good day. But if constantly I have trouble just dragging myself to go to my office and thinking, what problem am I going to have right now? It’s the mindset. So once in a while, I will exam myself and say, am I actually really happy going to work? Because money at some point is enough, right? You know, as we all know, you want to have enough time to do the thing you enjoy and you want to make enough money to pay bills. At some point, money is part of the equation for happiness. But there are many other things that could make you happy. So for me, it’s really important for me to reexamine my work/life, truly important because I enjoy what I do. So I need to look at it, do I enjoy going to work? Do I enjoy what I think… Do people around me respect me in terms of, if I bring up a new idea, do I have the room to try something new and be able to fail, and still get up and do something?

So I think it’s really important for me to feel that the work environment is positive. The positive vibe for me anyway is so important for me to be positive and creative. And when I didn’t sense that, especially if I have a conversation – multiple conversations – in terms of bringing ideas about technology changes, or compensation structure, or business ownership succession plan. If things are not working well and I didn’t see progress for a long period of time, that’s when I have decided that it’s probably not going to change for the following six months if I only try for nine months. So at some point, I have to call it quits. And in terms of taking risks, the way I view risk may be a little bit different than some people. So I can share with you how I view risk. The way I take risks, I always believe, if I know what I want, and I have done enough fact-finding, and I have done the analysis to see what is the worst scenario, what could happen. It’s a calculated risk I’m taking. It’s not reckless. I’m not taking reckless risks just to see what happens.

So for me, if I am able to use my brain and knowledge and consult experts to make these important decisions, I am taking a calculated risk. And in my life, I’ve done it many times. So if I believe in myself that this is better than not doing anything different. So not doing anything different is a choice, right, is a choice you don’t because risk, oh, it’s scary. So I’m not doing anything. I’m doing the same thing over and over again and hope maybe it will turn out to be different, like, a better result. So I think not doing anything in my mind is actually taking more risk because sometime down the road, you may reflect and say, why didn’t I do anything about it? Because we don’t know how long we’re going to live. And for me, I just question if I’m not in a happy place, I would ask myself, if I have five years to live – or even one year to live, especially with the pandemic, right? You ask yourself a question and say, am I happy where I am in terms of work, and personal life, and friendship, and family life? And if I’m not happy, I want to identify why. But then I ultimately need to make a decision, should I be taking some kind of risk to change it?

So that’s that my view of, you know, taking risks and maybe not really jumping off the cliff, you know –not exactly jumping off the cliff without a parachute. But that’s how I kind of view it. I think my personal life experience coming from China, and experiencing dramatic changes when I was growing up, probably gave me some guiding principles. And I decided to write a book about it, “Own Your Future: One Woman’s Story of Immigration and Financial Freedom.” So I spent a year to a year and a half and the book was released last month. So I’m hoping people can check out the book because my first purpose of writing the book is to educate and inspire more people to start personal financial planning now. And the second purpose is to encourage more women to get into personal wealth management. Because only 23% of CFP professionals were women 20 years ago when I passed my exam. And I think it’s still at 23% for women. And so that is my second purpose of laying it out.

So I told my story about my personal experience in the first two chapters, but the remaining chapter is to lay out the financial planning framework from the point of view of a fiduciary financial advisor like me. So it’s one way for me to educate the public, and also talk about different tools to use to make financial life simple, so that they can make wise decisions. So that’s where… I’m very passionate about sharing lessons I have learned and guiding principles I use in life in this book. So hopefully, people can learn from this book, especially during this kind of pandemic when people are not very hopeful about their future. And I have very low, you know, in terms of down days, certainly – I worried about money every single day the first three and a half years when I was a student in this new country. So I know how hard it is to face living without much money. So hopefully, this book will give people more hope.

Michael: So what advice would you give other young advisors looking to get started and build credibility? And I’m thinking particularly, from the context of when they’re coming to the table as minorities, whether that’s, you know, women as a gender minority in our industry or racial minorities. Or being an immigrant, as you said, you have the triple minority phenomenon. It’s hard enough to build credibility when you’re getting started in the business. What advice do you have for minorities, in particular, trying to build credibility and get going early on?

What Advice She Would Give To New Advisors And How She Defines Success [01:44:30]

Echo: My first advice is to respect education and get as much education as you can. You know, my example is Certified Financial Planner is probably a very good education program for everybody who is serious about this business. So I would encourage that. And learning is continuing education. It doesn’t stop by the time you get one designation. So another advice I want people to know is you must believe in yourself, you are good enough. And if I had to tell my younger self, you know, if I go back to the days that I was very conscious about my Chinese accent, I had a hard time picking up a phone to answer a phone because I just was concerned that people wouldn’t understand me. So I would be a very terrible person to do cold calling. So, anyway, if you believe in yourself, you have the knowledge, you have the training, and you are passionate about helping people, now is about learning more about what education and skills you need to obtain by networking. And become maybe a member of the Financial Planning Association, because I certainly believe that my involvement in FPA has helped me build a network of other financial advisors I can share experiences. And without these people, I probably would have made even more mistakes on my own.

So, in a way, I think it’s really important for them to know that they need to allow themselves to make some mistakes. It’s okay. In terms of where to start, I really want to give more employment opportunities to people like that who want to help people. So I certainly would encourage these younger people and say, “You know what, there are a lot more independent RIA firms now compared to 20 years ago.” So I would say, go and start knocking on the doors or like me, go on Google or the internet, and start picking up a phone and start talking to some people. And if you make 10 phone calls, you probably end up with, you know, five conversations, and then maybe turn up with two meetings. It’s okay, right? Because you learn about what they do. And you can certainly ask for advice and say, have a coffee. So I would say, be adaptable, believe in yourself, and respect education.

Michael: I love it. Be adaptable, believe in yourself, and respect education. So, as we wrap up, this is a podcast about success. And one of the themes that always comes up is just the word ‘success’ means very different things to different people. And so, you built this successful advisory firm and it sounds like still in the early stages of what you want it to become from your Salesforce infrastructure plans. But I’m wondering, how do you define success for yourself at this point?

Echo: Yeah. Success to me is to live purposefully every day and have the freedom to choose what I want to do, including helping people with money, pursuing my hobbies, such as like ballroom dancing and playing the piano, traveling around the world. Ultimately, I really want to help more people take the complexity out of wealth management by growing my team and share my knowledge with more people.

Michael: I love it. I love it. I’m excited to see where it goes for you from here. Maybe we’ll get to have you back in a couple of years, so you can talk about what it’s like with the next doubling or two of your firm as you continue down this trajectory.

Echo: Oh, I will be glad to. And I need to recruit more members to join my team. So if I have a plug here, I will say, please check out my company website. And I also have my personal website in the show notes. And connect with me on LinkedIn. And if people who are interested in working for my firm, let me know because right now, in my mind, I need to keep meeting new people and finding the right people to join my team.

Michael: So for those of you who are listening, this is Episode 195. So if you go to kitces.com/195, we’ll have links out to Echo’s website and LinkedIn profile, if you want to connect. Thank you so much, Echo, for joining us on the “Financial Advisor Success Podcast.”

Echo: You are very welcome. My pleasure.