#FA Success Ep 228: Accelerating Growth By Paying To Outsource Lead Generation And Prospect Follow-Up, With Jeremy Keil

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

Resources Featured In This Episode:

Full Transcript:

Michael: Welcome, Jeremy Keil to the “Financial Advisor Success” podcast.

Jeremy: Thank you, Michael. It’s fun to be here.

Michael: I’m really looking forward to the discussion today, and talking a bit about marketing. Marketing has become a little bit of a topic du jour these days, both on the podcast overall. I admit I can be a little bit of a marketing nerd, talking about this stuff. But I think the whole shift to the pandemic over the past year has just forced so many of us in the advisor community to rebuild our marketing, to revise our marketing, maybe we’re getting more digital, maybe we just have to change the way that we’re doing things before because literally, a lot of maybe in-person stuff that we can’t do or haven’t been able to do for almost a year.

And I know you’ve been doing a lot of work in the marketing realm and really, actually spending some dollars on marketing, on leads, on business development. And just so much of the advisor world is built around, we do business development with our time, not our dollars. We prospect, and cold-call, and network, and all these different things that I’m fascinated about the conversation when you say, My time is worth more than my money. So I’m actually willing to spend money on marketing to save my time. What does that look like? And what starts to change? And what happens with your growth when you say, I’m ready and willing to reinvest in this and see what we can do?

Jeremy: Yeah, well, definitely, I’d have to say marketing is my second favorite topic of all time. Number one is retirement planning. And you don’t quite get too many opportunities to talk retirement planning if you don’t do the marketing to get in front of people. So, love to get it started.

Michael: So basically, marketing advisory business for you is just like a giant excuse to get to talk to people about retirement.

Jeremy: That’s about right. That’s a good way to sum it up.

Michael: I love it. I love it. So to get us started, help us understand just your advisory firm, as it exists today. So I want to understand the context of the business as it exists, then we can talk a bit about marketing and growth and what you’ve been doing over the past few years to get it to where it is.

What Keil Financial Partners Looks Like Today And Who They Serve [05:12]

Jeremy: Yeah, for sure. Well, we focus exclusively on retirement planning. My niche, which is one of your favorite words, I believe, is retirement planning for people with pensions, or employer stock, or charitable gifting goals. A lot of times it’s all three. And many of them might have a Christian connection, we’ve got a connection there, as well. And it’s interesting, I did a study of my clients. I was trying to figure out, who do I actually attract so far. And maybe that means I should go out and find some more people like that.

And it turned out people showed up at our door when they’re either 54 or 62. And basically, they were 54, because their kids got out of college, and it was time for them to focus on their retirement, they had like one sprint left to get ready for their own retirement. So they’re just planning it out ahead of time. And if you’re 62, it was a matter of I’m retiring next week, or next month, or next year. And so we’ve really tried to help out those specific people. And we’ve built our business around helping out people that are in those shoes.

So numbers-wise, because I know a lot of people like to hear that stuff. It’s myself as an advisor, another CFP advisor as well named John, we’ve got a full-time client service person. And as I’ve been reflecting and preparing for our conversation, I realized I have a lot of outsourced help. Some people might look at us and say, you only have three full-timers for the people you’re serving. And, well, we’ve got a part-time salesperson, a part-time admin person. And when you add up the number of vendors and the amount we’re spending on marketing, we don’t have any marketing employees, but we probably pay for about three marketing employees just in the universe out there through the part-timers and the vendors that we have. So that’s a fun part of our team.

So one of the things that might be interesting is that, well, numbers-wise right now, we have 170 clients, $85 million for assets under management, and we’re helping them all get ready for retirement.

Michael: Very cool. Very cool. So, 170 clients, $85 million. So if I’m just doing my rough math here, like a typical client household has half a million dollars, give or take a little. So you’re squarely, at least what the industry likes to call the mass of fluent space with $100,000 – $2 million clients?

Jeremy: Yes. Yeah, I’d say, for us, if you have $300,000 to $3 million, you’re right in that area. Certainly, wouldn’t mind working with others that have three or four, or five, but we just really focus on those people that have some good savings, not crazy high-income. It’s not so many corporate executives. It’s maybe someone that was a middle manager, maybe they’re just the level below where they start getting some stock options, or they just hit that level, or they start getting some stock options, that’s pretty typical. And I just love working with those folks because I feel like you can really move the needle for them. You make a decision on somebody’s social security or their pension, and it increases the present value of their retirement by $100 grand or $200 grand, and all you’ve got is $1.2 million. Like, that’s a huge help. And so that’s what I love to do. I’m just trying to add a bunch of value to those type of people.

Michael: Yeah, I spent a huge portion of my career early on in, and I used to call it the 2-to-2 client range, $200,000 to $2 million. And it was always the segment of clientele that I found I enjoyed working with the most as well, just as you said, for the sheer impact effect of when we found planning strategies and did stuff for them, it mattered. It could change the trajectory of their life and their retirement and what they were doing. And not that you can’t come up with some even bigger dollar strategies when you work with more affluent clients or just if you add some zeros or a couple of digits to the net worth and the opportunities, anything you do mathematically has a lot of financial impact because there are big numbers at stake. But never felt quite as rewarding the same way for me of I made your financial balance sheet that already had a lot of big numbers have some slightly bigger numbers, versus that two to two realm where there’s some material dollars at stake and good advice can materially alter the outcomes with the resources that we’ve got.

Jeremy: Yeah, that’s exactly it. You’ve got a million dollars, and you go through and figure out a social security decision that makes you $100 grand, a pension analysis that makes you $100 grand, some tax savings that helps you with $100 grand. You may as well throw it on the balance sheet. It’s just a huge, huge help to a lot of these people. And it’s a fun thing to do. And it seems as if, and I’m sure we’ll talk about it, later on, a lot of the people we’re working with are evaluating us and a few other advisors out there. And it seems like consistently, the feedback we’re getting is they’re not seeing other advisors doing it this way. They’re not hearing about social security and pension and tax savings from the other advisors. In my book, that’s unfortunate. At the same time, we’re standing out a little bit.

What Jeremy Does For His Clients [10:06]

Michael: So, talk to us a little bit more about just what you do for clients at the end of the day. Like when you say you’re focused on retirees and these 2 sleeves of perspective retirees, the mid-50’s empty-nester who’s doing the final sprint to retirement, and then the early-60’s person who is about to retire and trying to evaluate the transition and make a good decision and comes to your firm to work with you. What do you do for them? What does your advice offering look like?

Jeremy: Yeah, well, we call it the five-step retirement income plan. And we believe you should focus on the things that are most important first because those decisions will impact the remaining parts of your decisions. So maybe decision-based financial planning is the way to go through it.

And the first decision is, how much are you going to spend in retirement? The second one is, how much are you going to make in retirement? So, just right there, the spending part is not let’s help you figure out your budget. I found that basically, 99% of budgets clients either bring you or tell you are completely wrong. But let’s go through from our history of what have you spent over time and our history of working with clients to see this is a likely amount you’ll spend over time, let’s plan that out. And then you’re still making money in retirement. Just because you stopped working doesn’t mean you stop making money in retirement. You have one or two pensions, one or two social security decisions. These are big decisions you make one time, let’s help you plan those out next and make sure that those are going towards the right dollar amounts that you need for your spending.

Michael: So when you’re talking about what will you make, you’re not necessarily talking about post-retirement employment, silver entrepreneurship, and that whole realm necessarily, you’re framing this in terms of pension and social security, like those fixed income sources, that is still money you “make”, and you’ve got to make some decisions about because you’re very focused on retirements decisions in this decision-based financial planning framework.

Jeremy: Yeah, that’s the most of it. But you’re right on that there might be two people in the couple and one person might retire and the other one might not. Or you may have a goal for your retirement income. We have to account for this income that is coming in. And it could be a consulting gig, or it could be your spouse’s income. And almost definitely, it’s going to be social security. And for a lot of people we’re working with, it’s the pensions. And let’s plan that in. It’s almost like a pension company does. It’s asset-liability matching. You need this money at certain times, let’s figure out the consistent incomes that have nothing to do with your portfolio first because those are the ones that you have a lot more control over, and then let’s start dealing with the investments.

We’ll tell people all the time that, in our opinion, investments are important. And yet, they’re like number four on the list. They’re way down on the list. And most advisors think that’s not quite the case. Most clients walk in thinking that’s number one. Let’s worry about the stocks and bonds. You have no control over the stocks and bonds. Let’s worry about the things that you can control first, and let’s protect against the things that you have no control over. And let’s take that down the line when we’re doing it.

Michael: Okay. Okay. So what will you spend? What will you make? And some of the decision points you get around pension and social security and all the choices and trade-offs there. Start early, delay single life, joint life, all of those trade-offs. What comes next?

Jeremy: Then it’s your short-term money of how much of a buffer do you want to create for yourself? And you might be somebody that is more conservative and wants a large buffer. You might be somebody that is delaying social security for four years. Maybe that’s your dollar amount of a buffer that you want to have. Let’s figure out that amount first because honestly, your investments, all your long-term money, that’s just leftover, until you decide how much you’re going to spend, and find out when and how much you’re making from places like social security and pension, and then decide how much of a buffer you want to set aside, we have no idea how much you ought to have in long-term growth money, and then, how much risk do you want to take in the long-term growth money. So that’s step four is actually looking at the investment part of it, as opposed to, let’s start looking at the stock and bond portfolio right away.

Michael: Okay, so I guess step three is short-term money and how much do you want to set aside as a buffer? Step four is basically long-term money. So now we’re into the, how is the portfolio allocated?

Jeremy: Correct? Yeah, that’s exactly it. You’ve got it.

And then step five is what do you leave behind? If you’ve gone through steps one through four, hopefully, you’ll leave some money behind. And let’s talk through some of the estate planning things that are going on. And even what do you leave behind if there are some things that go wrong in the portfolio? What if you die too soon? Let’s find out what that gap is for your surviving spouse. What if you live a long life, let’s see how well protected you are in case you live longer than average with meeting your monthly income means. And if you do live a long life, usually the longer you live, the worse your health gets, and the bigger your health bills become. And so let’s talk through the long-term care decisions and decide along with you, do you want to insure that risk? Do you want to ignore it? Or do you want to maybe set aside some money and plan for it in different ways?

Michael: Interesting. And so, clients that come on board, they get this conversation, they go through the five steps in the discussion. So I’m wondering, how does this get applied in practice with clients? Do you make a financial plan that follows these stages and there’s like five sections to the financial plan? Is this a conversation that you have in the early stages of discovery with the client, where you’re setting them up in this direction? If I stay I want to work with Jeremy Keil as my financial advisor because I’m getting ready to retire and I want to come on board and your process sounds good. What actually happens? How do I as a client go through this?

Jeremy: Yeah, that’s good. Well, it is a conversation. And I’d say it’s a sequential plan where the goal is absolutely not here’s the big stack of paper on the desk type of plan. I’ve gone through with some different clients that are in the tech world, in the IT world, and say, “Oh, you’re doing Agile Planning.” And so they had to explain to me what I was doing, that apparently that’s the way you go about with different software iterations is you let decision one inform decision two, and then you go back to the start again, you keep on doing this. I heard Roger Whitney, I think refer to it as Agile Planning. He might have even trademarked it. If he did, he beat me to the punch.

But it’s not that there is a plan. We tell people, we don’t create a plan, we do the planning. And so if you are a prospective client and you come in and you’re learning more about us, we’ll walk through, these are the five steps that we take, this is how we go about that. That’s actually probably about 40 minutes into the conversation because the whole point of an intro meeting with a prospective client is to learn exactly what it is that they’re looking for. So, 40 minutes roughly, of figuring out what it is that they want. Then we’ll describe the process that we go through. And from our earlier conversation, we would have figured out, what is it or how is it that they want to work with us. We just want to help people make great retirement decisions. If they want to have us manage their investments and do the planning together, gladly do it, like just about every comprehensive financial planner or wealth manager, whatever you want to call yourself, do it, where we pull over the assets, we start doing the planning, and we charge against the assets.

But we’re finding more and more that there’s people, especially at the higher dollar ranges of assets where they don’t want you to do the investments. And so if that’s the case, well, we won’t do the investments, we don’t require that. We’ll charge an hourly rate, or we’ll charge a consulting fee, just depending on whichever they prefer. We don’t want our business model to get in the way of actually helping people.

And so, at the end of that first meeting, they will have described to us what they’re looking for, we will describe their process, and we will have quoted them a fee at the end of that meeting, whether it is, here’s the percentage based on the assets you want to bring on over or here’s that hourly or consulting fee amount. Then they make the decision and we just move the money over if that’s the case, or we sign the forms to sign as a client, and we just get cracking at doing all the planning things that they need.

How Jeremy Structures His Fees [18:18]

Michael: And what does this look like from a business model end? Like, what do you set as your planning fee? What do you set as your AUM fee? How do you actually bring this together in the business model itself?

Jeremy: When it comes to the actual fee itself, we’ve put a decent amount of time and effort into trying to figure out what’s the proper fee. And my hope is that whether you sign up for hourly, or consulting, or wealth management, that it’s going to be an equivalent value across the board. So, talking numbers here. At half a million we charge 1.35%. At $1.1 million, we charge 1.1%. At $2.1 million, we’re charging 0.9%. And what we found is that that’s probably like 10 basis points above average. We’ve just got a belief that we need to do more than what might be happening out there on average. I think I’ve seen studies on your site that the fees are pretty much the same no matter where you go. Like there’s not much correlation between the amount of services you offer and the fees that you charge. And we’re trying to create some that correlation, at least in the way that we go about it. Say, well, we’re doing more than average and what we see out there. And so, 10 basis points isn’t terribly too much different but that’s roughly what it seems like when we’re looking at things out there.

Michael: Interesting. And so it doesn’t bother you to say my fee may be a bit above average, I’m at 1.35% for the first fee tier. From your end it’s just okay, then I’m just going to show up with above-average services.

Jeremy: Yeah, 10 basis points, now 1.25 is within 10 percentage. We’re within that average ballpark. And I believe strongly that the people that want their wealth management, they want all of it that they need for retirement planning, let’s deliver it to them. So you’re right off. We can charge slightly above average and deliver way above average, I think we’re doing all right. That’s our business model.

Michael: One, I find it a striking discussion because there’s so many firms out there that are so focused on fees and exact fee levels and either the proverbial 1%, the literal 1%, the “I’m concerned I can’t even be competitive at 1% because everyone else is charging 1% so I’m going to go to 95 basis points or 90 basis points and start ratcheting down from there.” And on the one hand, I hear you from the client’s end, if your fee is within 10% of what I was going to pay somewhere else anyways, unless I’m a super fee-conscious client, in which case you may not want to work with me anyways, if we’re within 10%, I’m making the decision on value, I’m not making the decision on the fee alone. It’s going to be some connection of the fee and what I think I’m getting for it.

But just from the pure business ends, if your fees were 10% higher than they are today, across the board, for all the work and things that you’re currently doing, that drops straight to the bottom line. Either as profits from the business or dollars you can reinvest in the growth of the business. We tend not to talk about the business reinvestment opportunities that come from not being the rock-bottom fee, or just not even being the average fee being, say, a slightly above average fee for, as you put it, away above-average service offering you’re trying to deliver for that fee. But that really does actually give you a lot of breathing room in the business when you haven’t ground your fees and your revenue all the way down as far as they can go.

Jeremy: Yeah. And in a way, we’re talking right now about why should the fees be a little bit higher. And I think at the same time, the marginal fee should be a little bit lower. I’ve read probably more ADVs than I should have, but I have. I see all these ADVs and pricing schedules that say 1%, from 0 to 2 million. And I’m thinking, so if I have $500,000 as a client, and I give you another $500,000, you’re going to charge me the same 1%? That just doesn’t seem to make any sense to me. Or then on the other end of it, we’re just thinking through where you hear that RIAs may have a million-dollar minimum, or whatever the minimum is because they just can’t service the people under that profitably. And I’m thinking, Okay, so a 500,000 client walks in the door, my charge would be just shy of 7,000, you’re telling me you can’t make that profitable at 7,000? And it’s just because you have in your head that 1% is the only thing you can ever charge. And 1% is the average fee at a million dollars. If you are somebody that wants to work with somebody that has less than a million dollars, it just stands to reason that perhaps the correct fee ought to be above 1%.

So we take a look and say if you are somebody that wants to invest $250,000 with us, you want the comprehensive retirement planning, our fee is 1.5%. And we want to bring that down as quickly as possible, because you going from 250 to 500 doesn’t double our work. And so at 250, it’s 1.5, 500 it’s at 1.35, 1.1 million we’re at 1.1%. We’re trying to drive this down. Our breakpoints are every like 75,000 or 100,000. I’m just trying to find, when can I drop 5 basis points out of here because when you go from 500 to a million, it didn’t change my work that much. So I’ll charge less than the last 500 that I would on the first 500 or in the last million than the first million. And that’s just how we approach it.

Michael: Well, I’m struck just when you talk about even this midpoint that you were at 1.35%, they get half a million, but you were down to 0.9% by the time the clients are $1.5 million. That means your fee on the lower end is 50% higher than it is on the higher end. That is a really material drop-off in the fee as it moves down the line. Just reinforcing your point that it’s not that you’re necessarily starting at 1.5% or 1.3% and running that out for millions of dollars. But you’re starting higher at the low-end and just break-pointing more aggressively, having that fee slope down more rapidly as it picks up in recognition of that, yes, there’s a little bit more work and liability and exposure and all the other stuff for a bigger client or of a smaller client, but it’s not that dramatic of a difference. So at the margin, the fee falls off more quickly. But at the bottom-end, you got to make sure you get to a certain number to make the client work for you.

Jeremy: Right. And so where do you get your value from? The people that we’re working with, they value the planning, and we’re delivering the planning. And if that’s the case, well, the planning didn’t double when your investments doubled with us. If your big pitch is that I will manage your investments and make you more than the next guy. Well, yeah, go ahead for 1% for millions of dollars, have a breakpoint however you want to go because every dollar extra is the directly extra work there. But the biggest value is the planning. And so let’s make sure once the planning fees have been covered, well, whether you want to move $100 grand to us or a million on top of that or not, you’re doing all right, we’re doing all right. And almost take the fees out of the equation if people are thinking of do I add more money to it?

Michael: So then, what does it look like when you are operating on a flat-fee basis, if you’re doing project fees or hourly fees? Are you still trying to get to similar numbers? Like if they want planning only, is this a multi-thousand-dollar engagement or a $300 to $500 an hour 10-hour minimum kind of thing? How does it work when you get the clients that say, I just want the plan. I like your five-step process thing, but I don’t need your investment help, I don’t want to hire you for that part?

Jeremy: Yeah, so we charge my time at $285 an hour, my other associate, John at $180 an hour. And so we will either work hourly at that rate. Or we’ll learn from them, here’s what they need. And we’ve got the experience to understand, here’s probably the timeframe that we’re going to need to take it, multiply it out, and quote them a fee, which typically comes to around $4,200 when we charge a one-time planning fee for my services and $3,000 for John’s. And of course, it goes up or down based on what they say they need and what it turns out that they do need. But that’s a pretty typical fee is at $3,000 for John who’s got a CFP and six years of experience, and myself at $4,200. That’s a pretty difficult fee.

Michael: Which I’m doing the math is around 15 hours for the planning process, give or take a little.

Jeremy: Yeah, you probably do the math more than I do. And I took a lot of math to figure that one out.

How Jeremy’s Financial Planning Process Works [26:49]

Michael: So for clients that want to come on board and go through this, how does the process actually work? Like I call and say I’m ready to come on board. What’s the first meeting? What do you actually do in this process?

Jeremy: Yeah, so after we’ve had the conversation and learn what they want, and we’re taking all the notes, and we give them a summary, so they know exactly what is that we had heard from them. And also, here’s the things that we had talked about. And here’s the exact fee. We want them to know that right up front, and whether it’s percentage, or hourly, or consulting, whatever it is from there.

Oddly enough, the pandemic helped that gather data meeting immensely, because that’s usually the next meeting. Somebody brings in all their stuff. And we tell people, for 18 years, you print this off, you bring this in, and they never bring in any of it correctly in the way that we want to. And so the last year has been amazing for that data gather type meeting where they just share their screen, and we go directly into their 401(k) and hit print on their statement, and then save it to their desktop so they can email it to us. Compared to before we’d say, print off the statement, don’t hit the print screen. And then they bring us the print screen, which happens all the time. Please bring us the entire tax returns. And then they went through and they brought like half of it. Like it’s all right there, thankfully, on the computer. And so that’s the next step. And when we come out of the pandemic, we might just be out of it soon enough. But when we come out of it, we want to keep that. We’re keeping the virtual data gathering because it is way more efficient on their end, way more efficient on our end, everyone’s less frustrated. Because they’re not driving to our office with half the stuff that they needed. We’re actually getting it from them directly on the computer as they’re guiding us through and we’re saving it to their desktop so that they can send it out over to us.

Michael: And so the idea is just like let’s, literally, turn on the screen share, log into the websites, grab the documents we need. Like “No, no, no, click on the statement button. No, no, don’t do that. No, click on the statement button over there on the upper-right. Okay, go there. Yes. Okay, download that one, right there, that one, and save it to your desktop, and send it to us.”

Jeremy: Exactly. And some of them are apprehensive about the idea of us taking over the control for about a minute. And then they realize, why don’t you just take over instead of telling me what to do. That’s perfect. You can see it, you can shut me down at any time if you think I’m doing anything wrong, which you won’t. But it’s just far more efficient.

Michael: Interesting. So it’s not even just a screen-sharing thing for you. You are literally taking control of their desktop. Just a click to the things that they need to click to.

Jeremy: Well, it’s planning? And that’s what we do. We do the planning, and unless you get the information, what are you making the decisions on? A lot of people you got the one print screen on your pension, the one print screen on your 401(k), let’s look in your 401(k) to see not what you have but what’s available. You might have a stable value plan that pays out 2.5%. That could be gold right now. You might have stock inside of there with net unrealized appreciation. Let’s find the cost basis. Let’s find out some after-tax stuff. Let’s go and download the summary plan descriptions for your 401(k) and your pension. Let’s get the info so you can make a reasonable decision.

Michael: So, I’m just curious, do you not get clients who get a little nervous or wigged out by, I would even think just for some clients just turning on the screen share of them showing themselves logging into their accounts while you’re watching might feel privacy anxiety invoking for some, never mind like oh, and I’m going to take control of your screen while you’re logged into your financial accounts? Just walk me through, do you really not get clients nervous and upset about this? Am I just imagining it in my head? Or have you found a way to work them through it so they’re still comfortable with it?

Jeremy: Yeah, I thought that would be the case. And we were thinking back to March and April of 2020. We were setting up Zoom meetings. And we were sending out emailed instructions. And here’s how you connect to Zoom. We’ll call you, walk you through it. And after a week, we just stopped because we realized all these people that are 50 to 65, here they’re 50 and you’re doing virtual happy hours, and you know exactly how to set up a Zoom. Or you’re 65 and you will take however long it takes to figure out how to FaceTime or Zoom with your grandkids. And so, all of them just do this way quicker than I thought they would. And it’s just…

Michael: So, just the pandemic actually made everybody get over using Zoom more than we perhaps gave it credit for?

Jeremy: Yeah, I think so. And every so often you might get someone saying, I’m concerned about the screen sharing, the internet. Well, come on into our office and we’ll do it there. And so they just bring their own laptop, they log in, get connected to our TV screen, and then they hand over the laptop. And so, in a way, I’ve got more control right there live than just doing the screen share because it’s real quick to shut you down on a screen share. But it’s probably more in our head, I think that’s maybe an advisor thing that the clients are more comfortable with a lot of things than we give them credit for.

Michael: On the one hand, it’s obviously easy to imagine the client that gets really nervous about having you have that access and log in. And then the other part of me is like, you realize like one or two meetings further down the road from here, you’re going to ask them to sign a document that gives you unlimited discretionary control over their life savings. Like, if they’re going to get hung up on this part, you’re probably going to have other problems in the relationship, and if they’re okay delegating control of their entire life savings to you, they’re probably going to be okay with the screen share.

Jeremy: Yeah. Oh, wait, well, we tell them how we do it ahead of time, letting people know that’s part of the process because people will ask, “Well, what’s next? And we’ll describe Well, this is what’s next. Or they are referred to us by somebody? Well, if John trusts them and if Mary trusts them, well, they must be good. And this is exactly what they did with John and Mary. Or a lot of our new clients are coming in from some of the leads we’re purchasing online. Well, they went online to find us. They interviewed us and two others. They’re already used to the internet. They’ve already decided we’re the most trustworthy and for them out of the three advisors that they chose from, and we’ve built up a lot of trust from that. And if we need the information, it’s like you’re going to the doctor. You need the information to make the diagnosis.

Michael: So, just out of curiosity, what platform do you use to just actually do this? You had mentioned Zoom, but is that actually the platform of choice for the screen share and the take control on the rest?

Jeremy: Yeah, we use Zoom. It just seems to be the easiest one that I’ve been connected to. And we paid for the webinar one because we do a decent number of webinars, so that was just easy to do the corporate licensing with them to get that.

Michael: And for clients that come in, you had said, you’ll just pull out a USB cable or something, connect it to their laptop, and projected their screen onto your big screen.

Jeremy: Yeah, you can do wireless now, but yeah, exactly. Yeah.

Michael: Okay. Very cool. Very cool. So that’s data gathering for you is going through this virtual or screen-shared or live document experience. So what comes next in the process for you?

Jeremy: Yes. And now we have our diagnosing or planning to do, which, again, it’s planning with them. And so really, on our back end of it, if we’re behind the screens and doing our financial wizardry, it’s not they need to do this or do that, it’s let’s figure out what decisions they need to make. Let’s make sure they have the information to make that decision. And let’s go through the line. So we will plug in to see the amount of money that they need, will it last through their retirement? And if the answer is reasonably “Yes”, well, let’s let them know. If it’s reasonably “No”, it’s not going to work out, let’s let them know that too. So we can have a conversation. If you go through with somebody and realize you’re not going to make it the way that you want, you don’t just tell them, you’re out of luck, your Monte Carlo is at zero, you help them walk through, what would you like to do? Basically, it’s spend less or retire later. Let’s walk through those different options for them. And we need to have or make those decisions before we can even make investment choices for them.

So that the next meeting is talking through, here’s what your spending might look like, should we make adjustments based on what your feelings are, what we’ve seen? So we have that goal set up. Here’s the spending by year. And then at the same meeting, we’re going through those social security and pension decisions.

That way, once they’ve set a commitment, not like they sign a contract with their pension or social security saying, “Eight years from now, I will do this.” But we have a commitment from them saying, “Here’s what my income needs are, here is where a large part of its going to be coming in.” Now we can figure out well, here’s how the mix ought to be between the short-term and the long-term areas.

So that’s second planning meeting. You do the data gathering first, virtually, hopefully, it’s way easier that way. The next meeting, whether it’s virtual or in-person, that’s fine, but that’s on where are you going to spend retirement? What will you be making in retirement? Let’s make some decisions so that the next meeting we can decide along with you, “Well, here’s the dollar amount you want to set aside towards short-term types of investments. So you got that buffer there. And here’s the amount you want to put towards the long term. And here’s the investments that we’re going to do with that.” So that would be the second planning meeting.

And then the third planning meeting is saying, “Great, that all works out well. Let’s blow it up. Let’s say you die too soon, you live too long. Your health costs are way worse. Let’s figure out how you want to protect for those situations. And how do you want to set up your estate if none of those bad problems happen at all?” And that’s the third planning meeting. And I would say that at the end of that, not that the financial plan is done because it’s never done. And they signed us up for planning, not a plan. But at that point, the plan is kind of set. At least you’re in the right direction, you’re investing money, you’re guiding them towards what insurances they may or may not need, things like that.

And then you’re just reiterating over time, where we want to make sure that we are reviewing each and every step throughout the year. And we do it in the whole time blocking, let’s do meeting surges type of situation, where we look at the first quarter and the third quarter is reviewing their investments. And that we try to do by phone because they have their statements, we got their statements. Do you need to sit across from each other to talk about what the mid-cap fund did in May? Not really. But then the spring and the wintertime, the second quarter and the fourth quarter, let’s talk through specifically how your income is being set up for the following year, how did it come out the last year, what was last year’s taxes like, what will we probably do for tax planning this year? Okay, let’s execute the tax planning for this year. That’s how we break it up.

Michael: All right, so a couple of follow-up questions on this because you got a lot of interesting pieces there. So on the planning side, it sounds like once you get through data gathering, you’ve essentially got a three-meeting process of presenting out and going through the plan. Number one is, following your framework, like what will you spend, what will you make discussion? So just let’s look at the resources you’ve got and see what kind of income sources you’re going to have coming in, what spending goals you’re going to have going out, and make some decisions. They are about timing and pensions, social securities, and such.

The second planning meeting is for the assets and the net worth, the short-term money, and the long-term money meeting. So are we putting dollars aside as a buffer? How are we going to invest the retirement dollars themselves for the long term? And then the third planning meeting is, I think about the insurance and the estate meeting. Like, what if you die young? What if you live a long time? What if you’ve got health issues? All those things that crop up in the context of retirees in particular? So, Medicare, long-term care insurance, estate planning documents, and so forth?

Jeremy: Yeah, that’s exactly it?

Jeremy’s Clients Deliverables And Planning Software Stack [38:27]

Michael: And what gets produced and prepared for these meetings? Are you still living in a traditional financial planning software to do these kinds of analyses? Have you actually created your own stuff to follow your own five-step process? What do you actually produce as deliverables for these meetings? And where is that coming from?

Jeremy: Yeah. The biggest deliverable, if you want to call it that, is an email summary to them after each meeting of here’s what we discussed, here’s what we did, here’s what you’ve committed to doing, and here’s what we’ve committed to doing. Because a lot of times during a planning meeting, there might be things that they need to do, make changes to your 401(k), or review your beneficiaries over there. And there might be things that we need to do. Like, “We will send you this paperwork, we will invest your dollars this certain way.” So I’d say if there is one thing we can call a deliverable, it’s that.

I think you’re also asking though, What software do I use, right?

Michael: Yeah.

Jeremy: We use Income Solver. We are retirement-focused. We’re tax planning-focused. We love how Income Solver does both of those together. It’s such a great thing. That helps us set the strategy of, “Well, it looks like throughout your lifetime, we ought to be doing Roth conversions up until the 22% bracket or up until the first level of the Medicare premium hitting over and hitting another cost point.” Okay, now we know this strategy, let’s talk through with the client so they understand what the strategy is. Let’s go out and use Holistiplan each year so that we grab last year’s tax returns, project out what this year’s tax returns may look like, based on what they’re taking out and different things on there. So then we can go tactically, saying, “Well, if the strategy is let’s hit the top of the 22% income bracket, here’s how much money is in this 22% income bracket. And let’s figure out how we’re going to pay the taxes on that. And let’s figure out the timing on it. The market is at a high point, right now in the spring of 2021, do you want to do it right now? Or should we wait throughout the year? And now we’ve got this thought of, according to the strategy or the planning, we might convert over $50 grand, and we’re waiting for a time to do that throughout the year. Or if it hits to be November, we haven’t done it yet. Let’s just confirm everything we’ve ever looked at for the year and do the Roth conversion at that point in time.”

So Income Solver helps us with the retirement income projections, the tax planning strategy, the social security analyzer is part of that, that helps us with some of the social security decisions. A big part of it is the pension valuations. A lot of the people we work with are publicly traded companies, Harley-Davidson, We Energies, AT&T. And they’ve got pensions. And they also have lump sum pension offers. And so we will calculate the value of their pension options and put it together in Excel. Because what other system is better than Excel? Right?

Michael: Good old Excel.

Jeremy: Yeah, I love it. So we’ll have the listing of numbers, we’ll have some math done. And the lump sum grows by this percentage amount, the annuity grows by this amount, here’s the return, in a manner of speaking. So we’ll be using Excel for a lot of the pension calculations.

But really, if you had to say what’s a deliverable? It’s the summary. It’s the ongoing planning. It’s not a piece of paper, not even the one-page financial plan that people have heard of. It’s the planning as their planner is the deliverable.

Michael: And so, does that mean you don’t use what’s called traditional financial planning software? MoneyGuidePro, eMoney, RightCapital, etc. You’re not using those at all? Like, Income Solver is your entire full package for doing the planning work that you do?

Jeremy: That’s it. I looked at all of them. I looked at so many different ones. And the way that we go about our retirement planning… Actually, here’s what happened. I looked through a lot of them. I was not quite satisfied with the way that we go about planning. And then I pull out an article because I like to read a lot. And I’m reading this article by two guys named Bill. And I’m thinking whoever these people are, they’re talking my language. They’re saying everything that I believe about tax planning and retirement income and social security and pension valuations. And then I get to the end, and it says, Bill and Bill are professors, and they created a software program called Income Solver. I thought, “I just spent two months looking for and evaluating 15 different software packages. And there it is.” So I sign up for it within 24 hours, and that’s what we’ve been using ever since.

Michael: And so, just help us understand because most advisors, I think are familiar with planning software, may not be familiar with Income Solver, do their retirement planning in planning software, and not necessarily Income Solver. What is Income Solver and what does it do that’s different than other planning tools?

Jeremy: Yeah. I’d say the number one value is the tax planning strategy. The number two part of it is how your social security decisions can go into your retirement income decisions. There’s a lot of social security decision software out there. And I think they started with Social Security Analyzer themselves. I know that, that’s one of the bigger ones that are out there. But that’s just so focused on one decision. It’s important, but how does your decision to delay by four years or eight years, social security, how does that draw down your investments? And it will show you how that affects it? If you delay your social security, your drawing down your investments? And what’s the trade-offs on there, it’ll help you with that. But they’ll go through year by year, what do your cash flows look like? What are your taxes?

You almost have a pro forma and tax return from here until the end of your retirement. And that helps give you the strategy. Because if you project out for 40 years, here’s what your taxes are going to look like, you can also project out what’s your marginal tax rate. And if you see that certain times your marginal tax rate is higher than average, you don’t want to stop paying taxes in if you can. And if you find times that are below average, marginal tax rates, you’d want to pay taxes on purpose, most likely through Roth conversions. So they’ll be able to show after-tax, “If I do this strategy, how does it work out with delaying social security, but you draw down your investments. If I do this strategy, I’d pay the taxes upfront, but at the same time, hopefully, it’s a lower tax rate than later on.” And you just get that big strategy.

We were doing that already. But we were doing that in Excel. We would do a pro forma tax return of before retirement, after retirement, before social security, after social security, before required minimums and after requirement minimums. And the one most people forget is if there’s two of you right now and somebody dies, it now becomes a single individual. So we would do like eight different tax returns, plug it in to see what the different marginal rates were. And then we’d see right there, “Well, based on this, we should be targeting these specific tax brackets when we’re doing the tax planning.” And they just do that automatically, for every year, not just the Delta years. They do it for every year. And that helps you with the real strategy. And that’s where Holistiplan comes in to say, we know the strategy, let’s upload the tax return so that we can get down to the dollar amount of here’s the right amount to be converting over.

Michael: And so it sounds like overall, the tax planning overlay is a very significant part of the overall value proposition for you guys and what you’re doing for clients.

Jeremy: Yeah, definitely. We talk a lot about the tax planning. We found doing that a lot of people say, Oh, so you do tax preparation. We don’t do tax preparation, we do tax planning. I think I saw Ed Slott say one time that tax preparers are basically historians, they tell you what already happened. And the biggest value is projecting and planning for what is likely to come up in the future. Well, that’s what we think is a huge value that advisors can add. And thankfully, there’s a software program there that helps us make it even easier.

Michael: And that’s the Holistiplan for you of being able to pull in the software to do the analysis.

Jeremy: Yeah, that’s the Income Solver on the strategy, but Holistiplan on the tactic of each year. Here’s what we should be doing based on the overall strategy. And your question earlier, of you’re not quite using all the normal software, the standard software, everything flows out of who is it we’re trying to serve and how we’re trying to do that. And I think that’s something that if you’re setting up a business, or the marketing that I know you want to talk a bit about later on, is who is it you’re trying to serve? Let’s set up that system to make it happen. And in our case, we’re not trying to serve everybody. We’re trying to serve specific people with specific issues. So we make sure that we’ve got that ability to do it.

Jeremy’s Marketing Budget And Why Branding Is So Important [46:49]

Michael: So, let’s talk a little bit about where these clients are coming from. We’d kicked off the discussion around marketing and spending dollars on marketing. You said you had gone through a process internally with your firm of looking at who you already had to figure out who your ideal clients were, and your 54-year-old empty-nesters in the final sprint, and your 62-year-old imminent retirees.

So, talk to us about marketing. How are you growing the business and getting your prospective retiree clients in a world that I think there’s a few other people probably listening who also do some stuff with retirees. So it’s out there as a thing already, a little bit competitive. So, how are you going out there and getting your 54-year-old and 62-year-old prospective clients?

Jeremy: Yeah. And I suppose a little bit of it has to do with our business philosophy. And you’ve mentioned it before, plenty of podcasts that most firms are spending 2% on their marketing. And in my mind, if you’re only spending 2% on your marketing, you’re not even trying to go out and get new clients, really. We’ve just got a belief that we are adding value to people that are in the retirement planning space that need this value. And it’s not our goal to sit on that and just make life easier for ourselves and work with our 100 clients and be done. Let’s go out and help some people and find some people to go out with that.

Another thing I saw is something like the average profit margin for firms, like 33%, something like that. So I figure, “Great, I’ve got profit and marketing that adds up to 35%. Now I just get to choose how much of that I want to put towards marketing and how much of it is leftover towards profit.” And starting out, you’ve caught me in a little bit of an inflection point. I’ve been basically a solo advisor the last few years. And because of this desire to grow, we’ve inflected over to where we’ve got the other advisor that’s taken out a lot of clients, and we’re almost to the point where we need another advisor to take on the clients. And it’s just because we’ve decided, I don’t want 35% profit margins, I want to take at least 15% of that, and put that towards the marketing.

And one way that I look at it is, if you want to grow by 15%, probably the best way to do that is actually spend 15% of your money on the marketing. And so that’s how we’re going about that just making that decision that we want to go and find people that need our help. And we think it’s our responsibility, really, to go out and help people through that way.

Michael: And that you’re not afraid to spend some money and put some dollars to it.

Jeremy: Right. Yeah, and that’s 15% of gross. So that’s saying, if your gross revenue was around $600,000, which mine was, at the time, we basically started looking at this, 15% of that is $90 grand. And a lot of solo advisors starting out as a solo to just walk in and say, “Hey, go out and spend $90 grand on your marketing or as you grow to a million in total revenue, how about next year you do $150,000 in marketing?” Just like I described, it’s coming straight out of your profit. Profit and marketing adds up to 35% in advisor world. And so you’ve got to either make the conscious decision to turn your profits into marketing dollars on there and just go for it. And that’s what I’ve chosen to do. But at the same time, that’s a big commitment.

Michael: So, is 15% of revenue on marketing, literally, a concrete and specific target for you at this point, like you literally will do your business projection for the year, say we’re trying to do this much revenue, 15% of that is blank. And that’s our marketing budget from day one. Now, we just have to figure out how we’re going to spend it.

Jeremy: That’s about right. And I’ve heard this before, too, that you basically need about 15% growth to make sure that there’s enough revenue growth to make the new advisors stick around. If you are somebody that has 0% growth in your business and you hire an advisor and say, “Hey, come on board and be a part of this.” What’s there to be a part of? You are already claiming all the 100% of the revenue. You need to have a decent amount of revenue growth. And I figure if you want 15% revenue growth, 15% is a good number towards your marketing. And in fact, that just means you’re spending next year’s growth on this year’s marketing. If you had a million dollars revenue, just because that’s an easy number, and you’re trying to get to $1,150,000, go out and spend $150,000 on marketing. And a year later, you still have the million-dollar revenue. You’re still going to be fine when you bring home whatever it is you bring home to your family. Let’s take a look at the growth you want to do and let’s just use next year’s growth towards this year’s marketing budget. So that’s how I started out with it.

Michael: Interesting. I like that framing. And it does give a certain simplicity that just, if the vision at the end of the day is I want 15% growth by spending 15% on marketing, you’re basically just talking about dollar-for-dollar returns. Like if I spend X, I expect to get X back in new revenue for next year.

Jeremy: Yeah, if you want to grow, and you’re not spending it on the marketing, how are you going to get that growth? Or the opposite? Somebody that spends money on marketing, I probably should make sure that money is spent in a worthwhile manner. If I’m not getting the growth based on the amount of dollars I’m putting into it, I’ve got to reassess some things on there.

Michael: And I’m presuming, when you talk about growth numbers in this context, we are essentially talking about new client organic growth at this point. Like we’re not necessarily talking about growth from clients adding assets or market growth. You’re essentially looking for new revenue dollars in the door for your marketing spend.

Jeremy: Right. That’s exactly it. Exactly it.

Michael: Okay. Okay, so all that being said, like taking 15% of revenue and putting it towards marketing to say I want to get this much money back in new revenue and new growth. So what are you doing to spend 15% of your revenue to drive 15% growth? What have you tried? What do you find that it’s working? How do you actually deploy these dollars to make growth happen?

Jeremy: Yeah, well, one part of is, going back to what I said earlier when it comes to the planning is you got to take care of the most important things first. And my belief when it comes to marketing is that you should deal with your brand, before you deal with your messaging, before you deal with your marketing. And I think a lot of advisors have that exactly reversed, where they’re just looking for the next marketing tactic. And from my definition of that, a brand is who you serve, and who you are. So we’re serving these specific retirement folks. My brand is not quite as nerdy as your brand, but I think in the local area it might be in the ballpark. So that’s who we serve and who we are.

And then the messaging is well, knowing who you serve, how do you talk to who you serve? We’ve been working with some clients from specific companies like Harley-Davidson and We Energies. We Energies doesn’t call the stable value plan, the stable value fund, they call it the BRIF, B-R-I-F. I’m not going to talk about stable value plans in front of a We Energies employee. For some reason, the words around Harley-Davidson are around monthly annuity, not pension. What’s your pension amount? I can get a lump sum of this. No, what’s your pension amount? What’s your monthly amount? Oh, my monthly annuity? I’m going to use the right messaging in front of the right people. And once you have your brand of who you serve, and who you are now, once you know the messaging, and how you talk to the people that you serve, that’s when you go out and do the marketing, which is how do you find who you serve? And that’s how I approach it and everything just through that lens.

Michael: I like that framing. So just starting with your branding of who do you serve first. Who are you and what are you doing for them? And then when you’ve got that clarity, the question of how are you going to go find them gets a little easier.

Jeremy: Exactly. That’s exactly, yeah.

Where Jeremy’s Prospective Clients Come From [59:02]

And so, tactically-wise, right now, a lot of our clients are coming through the SmartAsset and the WiserAdvisor, the leads that we’re buying online. At the same time too, we’re doing branding because we want people to be educated through our content about retirement planning. And we do a podcast, we have guidebooks that we’ve written, we do a blog. So there’s either a podcast or blog that’s released every week. We do the podcasting through Proud Mouth. It used to be known as Top Advisor Marketing. And my book, and I’ve listened to a lot of different marketing podcasts, and here’s how you do this and that, I just want to do the retirement planning.

And so, if I can have somebody else do the podcasting, and the blogging, and the social media, for me, that just gives me an ability to go out and do more retirement planning for my clients. The same thing on the SmartAsset. Instead of trying to become a Google and Facebook AdWords master. Well, there’s a couple companies that have already done that. And all it takes is to write a check or swipe your credit card to have them do it and then you get the leads to where you can start meeting with people to try to see if they fit your niche, if they’re someone that’s looking for what it is that you offer.

Michael: So talk to us more about just what this cost and what you get. Particularly the world of buying leads, the WiserAdvisor and SmartAsset and such. I feel like I hear very mixed reviews from advisors about whether they’re getting results or not getting results or it’s too competitive or people don’t reply. So obviously, you’re doing it and spending dollars on it. So you’re feeling like you’re getting good results. But for those who aren’t familiar, what does it cost you? And what are you getting? Like, what are realistic expectations for results?

Jeremy: Yeah, so I’ve been a part of it for five years, whether it’s WiserAdvisor, SmartAdvisor, keep track of a lot of things that are on there. What I like about it is that you can dial up or dial down your marketing dollars easily. If things are working, you can just put money towards it. if things aren’t working, you take money away from it. And so interesting enough, for the whole pandemic, we were on a budget $2,000 a month with SmartAsset. We get to March 15th of 2020, they call us up and said, you hit your monthly budget. This has never even happened before. Well, we were coming close, but we weren’t hitting our monthly budget. So many people were showing up with the pandemic, looking for information online.

We maxed out our budget halfway through. And they said, “Do you want to increase your budget or just be done for the month?” I said, “Well, people want us, let’s increase the budget.” We doubled it to $4,000. Oddly enough, the last lead we got on March 31 is the only lead that we closed for that entire month. And it’s one of our better clients right now. So if we hadn’t taken that extra $2,000, if we weren’t willing to spend $2 grand to let this keep on rolling, that game of numbers would have been zero. And we would have said, “No, it didn’t work.” Thankfully, we did that. And it’s worked out well, overall.

But that’s part of it, it is a game of numbers. And it’s a game of time too. We hired somebody to help us take over the calling, reaching out to the clients because it takes a lot of reaching out. I was doing it on my own, and then being an advisor as well. And we were having enough success that I wanted to keep on doing the marketing, I just needed somebody else to do the time of reach out to the leads that we get in.

And so we did that. And we didn’t get a closed lead for four months. And I thought, “What is going on here?” Well, then I did some more research. And it turns out that my average was you get the lead today, and then close four months later. And so, of course, yes, nobody that close for four months. So if you’re going to be looking at the lead purchases, be willing to put money into it, be willing to wait four months before you even get one person to close. But once you do that, now you’re in month five, you’re closing the people that you met in month one. Now you’re into the cycle where it works out. And it’s a grind in a way. But thankfully, hiring this person has helped out, he takes care of our million-dollar-plus leads.

Another group that I found out from your website, Michael, was Indyfin. So they do that on behalf of registered investment advisors, where they will do the calling on your behalf. And what was even better for that is they had some extra automated emails that were set up. And now, things are happening without anyone touching it, right, it’s just happening automatically. So we’re becoming more and more efficient through using their services.

But to give you the numbers, if you bought 100 leads, it’d be like $15 grand, that it would cost you. That’s just a good amount. You will not get a hold of 35 of them. You can call until you’re blue in the face, text, email, you will not get a hold of 35 of them. We’ve averaged about 20 of those people. So, 100 leads, 65, you get a hold of about 20 of them actually book, you close 6 of those 20. And our numbers are running about $15,000 to $30,000 a year of recurring revenue based on that 100 leads. So that’s another metric we look at is I figure if you can make your investment back within a year, you’re doing all right, and certainly we want to do better than that, we’re trending more towards the two times revenue. So maybe it’s a six-month payback. Although at the same time, you buy the lead today, it takes you four months to close them. And then six months after that is when you’ve recorded your revenue back to where you’re breaking even. So I suppose it’s maybe closer to a one-year payback that way.

Michael: So I just want to make sure I understand these numbers. This is fascinating to me. So 100 leads, roughly a third of them you’ll never reach. You’re only going to even talk to the other two-thirds. Of those, that’s just initial outreach it sounds like 20 of the 65, or maybe a third of those will actually book some approach talk meeting with you. Is that right? So like the 65, you make some contact, but from the 65 to 20 is from, I made contact with a human being to, they’re actually taking a formal meeting with me where I can talk about my services and what I offer. And then of those, about a third of those end out closing. And the six that close are generating, essentially, about $5,000 of revenue per client on average, so you end out at $30,000 of recurring revenue. And that’s a $30,000 annual recurring revenue for $15,000, one-time spend.

Jeremy: So it’s worthwhile. And when some people say, well, it’s not worth it. In my experience, there’s people like Fisher and Edelman, and Wealth Enhancement Group, they’re doing it. Like, they’re not spending any dollars unless it’s been metricised and tracked, and they figured out the ROI. They’re doing it. So clearly, it’s a way to make things happen. But at the same time, if you are a local independent advisor, you’re going up against Fisher, and Edelman, and all the other nationwide players that probably have 20 callers in their office ready to go, they get the lead instantly, they’re getting a phone call from their caller. If you’re an advisor, and you’re in a meeting, and the lead comes through, you’re behind because you haven’t called them within an instant, you didn’t have the automated email going out.

And so that’s what’s been great about hiring Brad is that he’s able to do that, although he may not be around forever. He’s one of our retired clients. And so when I saw that there’s a company that does it with Indyfin, I just jumped on that to say, let’s get them part of the mix too. So right now Brad takes care of the million-dollar-plus leads that come in, Indyfin takes care of those people that are below a million dollars. And the numbers are definitely there. But a lot of people that sign up, they miss out on two things. It’s that you sign up, let’s give it a month or two, you spend three or four grand. Well, you’re not going to even get one person to close, probably, out of that, or they’re going up against Fisher, and they’re just going to outmarket you like crazy. You’re not in the right ballpark with the marketing competition. And so if you’re going to do it, understand it’s a numbers game, it takes time, the numbers work out. And it very much helps it if you’re not the one that’s actually making the calls.

With 100 leads, each individual to make sure you get a hold of them. There’s something like 12 contacts between email, text, and phone that you need to make before you actually get them onto your calendar. And that’s like the average on there. And 35 of those leads out of 100, you’ll never even get a hold of. That’s over 400 contacts you as an advisor don’t have to do if you have some partner that’s doing it on your behalf. So, for me, we buy 100 leads, the only 20 names that I see are the 20 that show up on my appointment calendar.

Michael: Well, I’m struck by this as well, because, by far, the number one complaint that I hear from advisors that do go through some of these lead generation services really does come down to the just, there are so many people that don’t talk to you, that never call you back that you can’t reach. And that you spend a lot of time trying to get a hold of them. And then it never works out, but like rarely works out. And there’s a lot of frustration from that, as you said like that could be 420 points of contact worth of efforts that just literally never even gets to a human being, which can be frustrating. And just, literally, like time expensive for the firm because you could have spent that time meeting with clients or other marketing strategies, etc.

And so I love that your solution was like, “Well, I’m just not going to do that. It doesn’t mean I don’t have to not do the strategy, it just means I got to hire someone else who does that. And it’s their problem.”

Jeremy: Yeah, it’s a strategy that’s working. And you get a little bit of the ego of, well, if somebody else calls, they’re not as good as I am. Well, yes, they are. And in fact, they’re better because they’ve got the ability to do it technology-wise, or they’re focused on that, while you can focus on other things. And our closing rate, that 6 out of 100. It’s been consistent throughout, whether it was WiserAdvisor or SmartAdvisor, whether I was calling or Indyfin or Brad was calling. Those just seem to be the numbers and anything we can do to continue on with the lead purchases and yet make sure that me and my other advisor, John are actually meeting with clients that want to meet with us, that’s just all better for everybody all around.

Michael: Well, you just threw it out there. But making the point that a lot of advisors say, well, this just isn’t worthwhile, no one can sell it and close it as well as I can sell and close it myself, and that your response at the end of the day is just that’s BS, we need to get over our ourselves, other people can do this just fine.

Jeremy: Other people can do it just fine. And let’s just say you are the pro at closing? Do you want to work on closing the 20 out of 100 that show up in your office? Or do you want to work at closing the 35 out 100 that will never respond to you ever? It’s just where do you want to put that closing skills. It’s a time thing. And it’s a value thing. I add the value from the retirement planning to the clients. And when I look back at my call sheets of, “Okay, I get a lead, I print it out, I called and texted.” I was sending like three or four contacts over maybe a week period, just because the amount of time it takes to do it. And the way that Indyfin does it, they have 7 contacts to the client within 24 hours. They’re double my efficiency in one-seventh of time. They’re doing a much better job of what they do, which is getting the clients onto the calendar. So then once you have them on the calendar, go out and do the things that you’re better at. The closing or the explaining or the advising, whatever it is.

Michael: So strictly speaking, like, “Okay, maybe they don’t quite get as many conversations to convert as you would have if you were talking to these people directly as your own prospects,” the difference is you’re calling them in your spare time between client meetings and life and all the rest. And you may or may not even respond to the clients or the prospects in a timely manner. And Indyfin, this is literally their only job and all they do and they’re very interested in doing it well and diligently because it’s the only way they’re going to keep their business with you. So, whatever they might lose in close rate, they more than make up for in just the sheer timeliness, persistence, and diligence of having the conversation and getting in front of the prospect in the first place.

Well, I guess another important distinction here, at least if I’m following this right, Indyfin, they’re taking the calls with the 65 to get it down to the 20 to get you the in-person, or I guess virtual now, but to get you the live prospect meeting. This person is interested in doing business with us and wants to learn more about our services. You’re still meeting with the 20 “prospects,” like actually qualified prospects interested in meeting to do business with the firm. You’re still keeping that part. It’s not that you’re outsourcing the entire sales and closing process. You’re outsourcing from random internet inquiry down to person we’ve actually communicated with who’s expressing real interest in the firm, and then you’re back in there.

Jeremy: Right. That’s exactly it. And that’s where they come in and they ask questions. They tell you what it is that they are looking for and you start that conversation. Oh, here’s what we offer. And here’s how we can go about it.

Michael: And so, how does the cost of a service like Indyfin fit into this? What do you end up needing to pay them? And how does that change the economics of the deal? Because it’s now basically part of the cost of this channel for you to do the business development.

Jeremy: Yeah, so they charge me 25% of the revenue for the first 3 years. And I think somewhat their pitch is that, “Go to Schwab or Fidelity and they’re going to charge you 20% for life as part of their referral service. Just pay us 25% for 3 years.” And so, yep, it’s off the top. At the same time, you’re not having to pay an employee, like here’s your hourly rate. And let’s see how you’re doing. It’s performance-based. They only get their revenue when you get your revenue. And that helps the metrics too, even though you’re giving up some revenue for three years, I think that helps out just from a cost standpoint, or cash flow standpoint really.

Michael: It smooths it out paying 75% of the first year’s revenue in the first year is a bit pricey, you’re paying 75%, cumulatively, but over 3 years incrementally just is not nearly as hard on the finances of the business in the first place. If you’re getting long-term clients to stick around, this still turns into an even more profitable relationship in the long run. And I guess the good news is just if you’re skeptical about whether it’s going to work, and you’re not convinced that it’s going to close like, well, if it doesn’t, it’s not going to cost you anything. Obviously, they’re hoping it’s going to close and turn into business, but you’re hoping it’s going to close and turn to business as well. I think you make a good point that at the end of the day, like, a lot of advisors I know pay 15% to 25%, rev shares to solicitors who give them introductions, and the solicitors may get the payments forever. And all they do is the initial introduction, you still got to actually follow up on. Indyfin is actually taking them at least one step further down the road before you get there. So relative to what we pay for a lot of solicitor relationships already, that’s arguably a pretty economical deal.

Jeremy: Yeah, it’s great. Just the combinations working out well. We had a few years back 19 new clients, just in general. And last year, we went to 31. And we were trying to figure out “Why the increase?” Well, one part of it is I doubled my marketing budget to SmartAsset. We just doubled the amount of leads. If it’s working, it’s really easy to call them up and say, I’d like to pay you some more money on there. And the other reason, which is interesting, I think you might find this interesting is our referrals throughout time have been like one or two a year. And last year, we got 10. And the huge difference, I think has to do with the branding that we did, and the podcasts that we did, and the blogs that we did where somebody was referred to us last year. And when I talked to them, they didn’t say “I was referred to you.” They said, “Somebody sent me your podcast.”

And then, a few other things that are on the website where we have these guidebooks where you give me your first name and your email, I’ll give you a guidebook.

That’s a common thing you do on the internet. That’s how you capture people’s information to send them a nurture sequence through email. And we had two people in the last year that were referred to us. They never called us. They never emailed us. They didn’t send us a contact form. They went to the website, they checked us out, they downloaded a guidebook from us, and I get an email saying, john@gmail.com, download your thing. I email him and say, “Hey, thanks for checking us out. What questions do you have?” And the response back was, “I was referred to you and I thought I’d check you out.” And so I’m thinking through, why did it triple? Why did it quadruple really, our number of referrals, I was probably getting 10 people a year beforehand, saying “Oh, you should go talk to Jeremy.” Well, last year, when I had the marketing going, I was actually able to capture the 10 people a year because they had the guidebooks they could look at, they had the podcasts and blogs that they could check out and get a feel for here’s what it would look like when you’re working with them. And then they send you your email and your name. So even then, just that capturing of their information is what allowed us to even get in contact with them.

Michael: You make a powerful point with this that I think the traditional view, particularly amongst advisors that grow primarily with referrals is, “We get all our growth from the referrals. Like, I don’t need to do this other marketing stuff people refer me, and that’s how I get clients.” And to me, what your story illustrates is, “Yeah, that may be true, but still, in practice, even if someone refers you, you often get scoped out online.” It’s the modern era, people cyberstalk you a little bit before they decide if they want to work with you. And if you don’t show up digitally and online, if you don’t have a solid website and some ability to do lead, capture, and engage people online, then even if they show up, they don’t necessarily engage, and you get the so-called referral gap, which is if you ask clients often they refer they say a lot, and then you ask most firms how much they’re getting a referral flow, and they only say a little. And it’s like, “Why do my clients say they’re referring me a lot but I’m not seeing a lot of actual referral flow?” To me, this is the illustration of why. When your website marketing got better, you started closing that referral gap.

Jeremy: Right. I gave value. We had somebody that was referred to us. And he told us that he’d met with a few other advisors. And he asked them, How do you go about doing this? What’s your philosophy? How you do these different things? He said it’s like he’s pulling teeth that he couldn’t get information out of them. He went to our website. And his remark to me was that “You had more information on your website about retirement for free than anyone ever gave me in an hour of meeting and asking them questions.” And even him, he didn’t call me, I found him because he downloaded something. And I emailed him and said, “Eric, what brings you to our site?” And he wrote back, “I always refer to your site.” And then we started talking.

What Most Advisors Don’t Get About Marketing [01:13:43]

Michael: So, as you look at this journey that you’ve been through, what do most advisors not understand about the marketing world? Just what are we all doing wrong that seems to be working a lot better for you?

Jeremy: I don’t know that people are necessarily doing it wrong. They’re just not necessarily doing it. And so, it’s just a matter of what is it you want out of your business. And for us, it wasn’t that I wanted a cushy value stack that kicks out a big dividend, I want to help people with their retirement. And the more people I reach, the more people I can help with their retirement. And so I made the conscious decision, let’s take money out of our profits for this year so that we can go out and meet more people and do that. So that’s actually doing the marketing and committing the dollars, and basically, taking money out of your left pocket to put it into the marketing, so that you can hopefully take the revenues and do more marketing, but end up with the same dollar amount later on, anyways. That’s the number one thing people should be doing. But the other part is what I said earlier of everyone wants the marketing tactic. But you got to start with the brand, and then the messaging, and then the marketing.

And it’s our branding through the podcast, and through the blogs, and the guidebooks that’s making our referrals work better, and it’s making our SmartAsset and our WiserAdvisor, our lead purchases work better. Having that is making things work a lot better. And it’s making it to the point where we can replicate ourselves. We hire a new advisor or a new staff person, I don’t necessarily have to spend a lot of time saying, here’s how we do our business. I say, Here’s 35 podcasts, listen to how we do our business. And next thing one or two or three more advisors are speaking the same language to the people you’re trying to reach the same way that you’re going about it.

Michael: So, it, again, strikes me as well that there is just an incredible simplicity to the math of like, if you can invest 15% in your marketing and get 15% growth. It’s a one time spend in marketing for a lifetime of additional revenue. Maybe not perfect lifetime, but most of us have clients who stick around for a decade or few. So 1 year of marketing for 10 to 30 years of that revenue annually recurring over and over and over again, why would you not do that, especially when you get the compounding? Next year, when you spend 15% of your revenue, it’s 15% higher than this year, you got 15% more to reinvest, which means you can add even more compounding. And just that’s how you can actually drive compounding growth.

For the average advisor, if I said, can you grow another 15% more next year than you did this year? At some point that breaks. It’s like, I can only go to so many networking meetings. I can only meet so many CIOs. I’ve only got so much time. My time is fixed. My available time to invest in marketing does not increase as the business grows. My available dollars to invest in marketing absolutely increases as business grows. But that means you have to create marketing strategies that can absorb more dollars, which I think is striking. Like what you’re doing can what a lot of us traditionally do can’t.

Jeremy: You buy an ad in your local newspaper. There’s only so many local newspapers. You put something into purchasing leads online, unless you’re already doing the max, you can always add more into it. And like I said, some of the big players that have people that are paid lots of money to figure out the metrics, they figured out that this works. And so, let’s get into that same game as a local independent type advisor. And at the same time, let’s maybe have some of that technology through offloading some of the tasks to other people so that you can compete with the people that have decided this is worthwhile from a marketing standpoint.

The Low Point For Jeremy And The Advice He’d Give Newer Advisors [01:17:31]

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

Jeremy: Yeah, I suppose a couple of them. One of them is that I started out as a 22-year-old in an insurance-type company. Insurance and investments and all that. But is more of you get paid to go out and close business. And to help you out they gave you a business loan. It’s like a draw commission-type situation. Well, two years in, if you quit, you didn’t have to pay back the loan. If you stayed, you did have to pay back the loan. And so, we weren’t quite doing as well 2 years in than you do 20 years in. And so I’d have a colleague every day say, “Hey, how are you still here?”

And what was interesting about that is, thankfully, I grinded it out. Thankfully, I was doing the things that were getting more and more clients. An interesting part of that is I went out and got my ChFC, CLU, brand new to the area, did not know a lot of people. And so I would just try to talk to other advisors, like, “What can I do for you, to make your life easier?” We had one person who was my mentor. He runs into my office one day and says, “You got to come on this meeting, I need somebody to speak spreadsheet to this guy.” And so I came in and spoke spreadsheet to this guy. He was the classic engineer that advisors don’t necessarily care for as much. So he and I talk spreadsheets. He closed the business with the veteran advisor. Later on that advisor left the company. He said, “Hey, can you take care of this client?” He didn’t say, “Buy the client off me.” He’s like, “Hey, you just go and take care of this client.” And so, just trying to add value to wherever I was, in that situation, which happened to be doing the things that maybe a veteran advisor didn’t need to do with speaking spreadsheet for that guy. That’s what got us through.

Michael: So, anything that you do wish you’d done differently? Or what do you know now that you wish you could go back and tell you from 10, 15 years ago when you were first getting started?

Jeremy: Not much that I’d say I would want to do anything differently other than finding a niche sooner. Being in the retirement planning niche just energizes me every day. And I did the typical thing that most advisors might do, where you just do everything for anybody. So having the niche sooner, what a helpful thing? Hiring professional staff sooner, or in my world now, just outsource. A big thing is I can’t hire a staff person because it costs $60 grand to go find somebody full time. And then, are they any good? And I got to hire them and train them. There’s a lot of places you can go out and hire a 10-hour a week virtual administrative assistant. You can hire virtual planners. You can hire somebody virtually to do your marketing and to do your paperwork. And there’s a lot of things you can do out there that don’t involve getting a full-time person. So I suppose if I could have done that sooner, that would have been a helpful thing. But generally, it’s worked out all right.

Michael: So, what advice would you give younger or newer advisors coming in the business today and trying to make sure they get off on the right foot?

Jeremy: Yeah, two of them. And I know one of them you’ve mentioned yourself before. It’s just minimize how much you spend on yourself. And a lot of people, especially if you start out maybe in a sales-type role, it’s a little bit of feast or famine at the beginning point. Which means when you’re feasting, you go out and buy a nice new car or something like that. If you’re somebody that just keeps your personal expenses low, then you can afford to invest into the business. And part of that advice is if you want to grow, you need to spend 15% or more on marketing.

I was a physics major. And you hear a lot in this industry about momentum. Well, momentum is mass times velocity. When you’re small, you have no mass. You just started you have nothing. All you have is velocity. The only thing you can do is go out and spend money on marketing, spend money on prospecting. If you want to make it out that’s the way to do it.

Michael: I really like the physics analogy. Momentum comes from mass times velocity. When you get started, you have no mass. So you better be spending some money to create some velocity.

Jeremy: That’s about it.

Michael: Does that mean you anticipate at some point maybe your marketing spend and dynamic becomes different as you grow and add more mass?

Jeremy: I’d say, it’s always going to be different because we’re always trying new things and trying to make the things work better. I was part of a meeting one time where an advisor said, “Well, let’s keep on growing to the point to where we don’t have to grow anymore.” I’m thinking, “What? Like, what do you mean, you don’t have to grow anymore? You don’t have to go get new clients anymore.” And it’s just a matter of what are you trying to do? We’re trying to help people retire and make great decisions on retirement. And so I just can’t imagine that we actually saturate the market. That’d be a pretty big business to actually saturate the market where we say, we’re good, we got them all. So I just imagine we’ll just keep on finding new people to work with. And the marketing is the way to get in front of them.

Michael: And so where is your focus these days? What are you focusing on right now? What’s next on the horizon for you?

Jeremy: Yeah, I think I might have mentioned it. I feel like you caught us on a little bit of an inflection point where we were growing, but it was linear type growth. It was 15%. And then 20%. And then in the last six months or so, it seems like the efforts that you put into it, the dollars that you spent, and the time on the website, and on the guidebooks and everything on there, it seems like it’s been going from linear into exponential-type growth. And so I’ve got to shift my mindset to say, “Well, I can’t be the one that does even all the intro meetings to begin with. I can’t be the one that is a solo advisor and has every single client meeting with me on every single topic. So we’re in a bit of a shift. And I realized that in early January.

And with that, we needed to change around how we did our client service. And I moved our halftime client service person, John to, “Now you’re full time in the advisory role. And with that, here are the clients that you’re responsible for day-to-day.” And as someone that started out and was somewhat of a solo advisor, to have another advisor have more than half of the clients in your business is an interesting mind shift right there. Just imagine how many advisors out there say, “Hey, what if two-thirds of your clients are not yours, but somebody else’s.” So that was a bit of a mind shift right there.

I think we’re at the point where I have to make a little bit of the decision. But so far, my decision has been, I want to stay on with the clients. I think when we get to there, I’d rather hire a manager for the business than actually become the manager for the business. That’s where I’m at right now. At least with my thinking.

Michael: What is it that you attribute to having the growth turn from linear to exponential? Is this just a function of spending money on marketing and it works? Is there something else about what you’re doing or how you’re spending it? Like, why are the results suddenly showing up differently?

Jeremy: It’s a little bit of the fixed and variable type of cost thing. It’s a little bit of time where you put a website out 18 months ago, not too many people have seen it. You do your first podcast, it’s not nearly as good as your 40th podcast. You put out one blog, and there’s not too much search engine optimization going on with one blog. But there’s a lot when you put out a blog every week. So it’s just each additional bit of marketing that’s out there right now is building on what’s been done before. Or let me say it a different way. Each additional bit of branding, because the podcasting, the website, the guidebooks, that’s all branding, that’s all getting people your information out there. And here’s who you serve and how you do it. And so that just builds. Then with the lead purchases, I can turn that up or turn that down anytime I want. And it was working well enough. We went from $2,000 a month of purchases to $4,000 a month to $6,000 a month. And we can keep on doing that if we need to.

And then another piece of it is just diving deep into specific companies. There’s some publicly traded companies that are in the area that have unrealized appreciation opportunities. They have pension calculations that are out there. And one of them in particular, Harley-Davidson, they had some turmoil about 18 months ago. And so through SmartAsset, we got one lead that came to us from there. We got another lead that came to us from there. We had another lead that came to us from there. The next thing we know, we went from one client there to four clients there. And now you know a decent amount about it.

So we thought, “There’s people here that need some help.” We created a webinar. We created a checklist. We created a guidebook. We did a podcast. And with that, now people that work at Harley-Davidson and are retiring from Harley-Davidson, they know that they can come to us as a resource, because we turned those three clients that we got from SmartAsset into an expertise in one particular a company. And so now our growth is going up by quite a bit on just people that are in the Harley-Davidson space.

Michael: Interesting. But it sounds like you’re not necessarily thinking of, “Okay, so we’re going all-in on the niche with Harley-Davidson, and we’re taking the whole firm there.” It sounds like you’re sort of a midpoint. Like, “Hey, we’re getting some. So we’re going to put out a little bit more focus specialized marketing here to try to capitalize on it a little bit more, but we’re not changing the whole firm, this is going to be like a particular clientele we do a little bit more with to try to attract.”

Jeremy: Well, it’s not as if we have to change our name or anything. And it’s similar planning. We Energies was our number one company we were getting clients from before. They have a pension, you do valuations on it. Harley-Davidson has a pension, you do valuations on it. There’s a stack inside the 401(k). The tactics are exactly the same. The marketing may be slightly different. And the ways that you reach people might be just slightly different. But if we have an expertise in helping people retire from publicly traded companies with stock and pensions, we can apply that expertise into different areas. And so if the market opens up a little bit, by happenstance, a little bit by the market change for them so now more people are hitting retirement, and then you go share your expertise. It’s free to be part of my webinar. It’s free to have my guidebook, my downloads my podcast, and you get the information out there. People realize what a value that is.

And it was interesting. I was trying to figure out does anyone else focus on Harley-Davidson? I googled it. Found somebody that did. I download his info. And he just had like a motorcycle cover on a completely generic guidebook. And I thought, “Okay, well, that’s not working.” That’s not what we’re doing. We had a very specific call to these people, “Do these things. Here’s the webinar.” You have to put some effort into it. And we can do that for several different companies.

We had another individual that came to us through SmartAsset. He works at AT&T. And his comment to me was, “I was thinking about you, I was thinking about doing it on my own. There’s this other group that specializes on AT&T employees.” I asked the name, I looked them up, I found their ADV. They have 400 clients. And on their website, it says we specialize in these, and they list 80 different companies. So all they’re doing is trying to hit the SEO-type of situation. Good for them on the marketing, I suppose. But where’s the depth? And I think that’s where some of the exponentialism is coming is that we’ve got depth with We Energies, we have depth with Harley-Davidson. And so we’re trying to create more depth there. And we’re ready to take that same process and apply it to whichever other company that might be needed out there.

What Success Means To Jeremy [01:29:04]

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 trajectory of growth and success in the business itself. But I’m wondering, how do you define success for yourself at this point?

Jeremy: It’s just adding value to any interaction you have every day. If I meet you as a client, I want to add value. If I meet you as a prospective client, I want to add value. I want to go home and add value to however I’m interacting with my wife and my kids. And I’ll tell you, I’ve received a lot of value out of your podcast and your blogs. And I’m just hoping that maybe there’s a little bit of value I got to add as part of this conversation. So I wanted to thank you for that.

Michael: Oh, absolutely. I think you will. I appreciate it, Jeremy joining us on the “Financial Advisors Success” podcast.

Jeremy: Thank you, Michael. It’s been a lot of fun.

Michael: Likewise.