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Financial Advisor Success
Ep 429: What It Takes To Really Help (HNW) Business Owners Navigate Their Wealth With Purpose with Ali Nasser
01:30:00
Scaling a thriving advisory firm by addressing entrepreneurs' unique financial mindsets.
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- [00:02]
A
Welcome to the Financial Advisor Success Podcast where you go behind the scenes with financial planner speaker and consultant Michael Kitces to hear stories of how leading financial advisors navigated the inevitable challenges that arise on the path to success and get insight from leading industry consultants about how to break through to the next level in your advisory business. And now, here's your host, Michael Kitces.
- [00:28]
B
Welcome everyone. Welcome to the 429th episode of the Financial Advisor Success Podcast. My guest on today's podcast is Ali Nasser. Ali is the founder of Wealth Integration System for Entrepreneurs or wise, an education and coaching company based in Houston, Texas that works with entrepreneurs facing a liquidity event and trying to figure out what's next and the financial advisors who serve them. What's unique about Ali though is the path of how he built his advisory business by helping these high net worth business owners to achieve their financial goals while being true to their entrepreneurial mindset and drive, which can sometimes conflict with standard financial planning advice, which was so successful that Ali eventually sold his advisory firm so he could focus even more deeply with non advisory coaching and consulting services to entrepreneurs. In this episode we talk in depth about how Ali attracted high net worth business owner clients to his advisory firm by identifying planning gaps created by the client's current investment in tax and estate advisors who might not really have been coordinating their advice on the full breadth of the business owner's tax situation, especially in areas like making charitable donations in the most efficient way possible. How doing so helped Ali convince busy business owner clients to go through a multi meeting pre engagement process to further demonstrate the value he provided and helped both sides understand whether they could be a good fit in the long run and Ali's financial planning process itself, which could include up to eight meetings over the course of six to nine months for mapping a path to what he calls independent wealth for his entrepreneur clients as a way to facilitate them finding a better balance between their work and personal lives. We also talk about how Ali approaches the delicate issue of concentration risk when working with entrepreneurs who often have a deep emotional attachment to their business and might be hesitant to pull money out of it despite it making up a disproportionately large percentage of their net worth. How Ali helps business owner clients overcome the paradigm gap of being so reluctant to invest in the broader stock market, preferring to reinvest in their own businesses instead by framing index investing as a way to tap into the best entrepreneurial minds in the country, but in a diversified and hands off manner. And Howelli finds that despite their sometimes very significant wealth many business owner clients still have to overcome feelings of financial scarcity given how many high net worth entrepreneurs come from very financially difficult backgrounds. And be certain to listen to the end where Ali shares how as an advisory firm owner he sought out feedback not just from squeaky wheel clients, but the ones who best represented the target avatar of client he wanted to serve to better understand how to find and serve those clients that he wanted to replicate. How Ali found that some of the hardest parts of being an entrepreneur himself came to getting other team members on board with delivering the same level of experience that he as the founder wanted to provide to his clients and the subsequent challenge of letting employees go when they weren't a good fit to deliver up to the standards and how Ali's own entrepreneurial journey led him to sell his advisory firm and focus full time on coaching business owners and the advisors working with them. Because as he puts it, the gems are in the details of the process that's really needed to serve entrepreneur clients and their needs effectively. And so with that introduction, I hope you enjoyed this episode of the Financial Advisor Success Podcast with Ali Nasser. Welcome Ali Nasr to the Financial Advisor Success podcast.
- [03:49]
C
Thank you Michael. Pleasure to be here.
- [03:51]
B
I'm really looking forward to today's discussion and getting to dig into, as I think about it, just what what it really means to work with business owners like business owners of sizable businesses. Because I feel like in the, in the advisor world we're often trained to look at this from the lens of investments diversification. CEO business owners can have sizable liquidity events and maybe have a lot of free cash flow to reinvest. But the reality is that when a business gets to a certain size like the, the, the biggest impact we can have on those clients usually is not helping them with their portfolios and their investment assets. It's helping them with the business and the business asset because that's actually the main asset, main cash flow generator on their balance sheet. And frankly I find there's there's a lot more ways you can actually move the needle for a business owner to help them grow 1% more than there is to try to lift up portfolios returns by 1% more and it's often their bigger asset. But we don't necessarily get trained for that as advisors like cfp Curriculum doesn't really have business consulting as a thing. And so I know you've had a career of building in the space of working directly with business owners and so I'm excited to really dig in what you have learned about what it Takes to really work with business owners effectively. And even, like, what the difference is between the work you do with business owners and, like, dare I say, calling it traditional financial planning.
- [05:22]
C
When you think about an owner and their balance sheet, it's so drastically different than call it the traditional client. And the dichotomy that jumped out at me first is, you know, if you meet someone that's got $50 million invested in Apple, what's the first thing you think of as an advisor?
- [05:39]
B
Oh, you have to just. Oh, my Lord. How have you not diversified after that? Are you insane?
- [05:46]
C
What are you doing?
- [05:47]
B
Like, it's just. It flows forth. I'm, like, having a visceral, like, physical response to the mere thought of $50 million of your portfolio solely invested in Apple.
- [05:58]
C
Yeah. And. But what if I introduce you to my friend Justin, who also has a $50 million net worth, but it's entirely invested in the company that he built.
- [06:07]
B
Wow. What an amazing company. Tell me more about what you built. Like, how did you create that? What have you done?
- [06:13]
C
So that dichotomy is extreme. And the reality is, arguably, Apple is the most successful company in human history. And this guy Justin, that built this manufacturing company over the last 20 years, I don't know if that company will be around 20 or 30 or 40 years from now. But when we meet them, you just gave the perfect reaction. That's the spread. And when I saw that, I said, wait a second. Why is that? And then as you lean into it, you realize it's a perception of risk because Justin controls his company. He has a perception that his company has low risk. But the reality is, what really has less risk, Justin's manufacturing company or Apple? And I think it'd be very hard to argue that Justin's company could even remotely compete with Apple when it comes to a function of risk. But control changes that. And entrepreneurs by design. And you're an entrepreneur, I'm an entrepreneur. Control makes a huge difference in the way that we make decisions on our business. And rightfully, control also will impact the decisions we make with our personal wealth, with our personal planning, with the way that we approach so many decisions in life. So the whole paradigm of planning for the entrepreneur is very different than that traditional approach. And this example of Justin versus Apple is just one example of how that manifests. It just happens to be a very big example and a very big financial example.
- [07:44]
B
So maybe not to take your example too on the nose, but as you framed it, planning for the business owner is different than planning for others because Justin treats his $50 million business very different than a client who, who has $50 million in Apple because of the risk perceptions are different because of the control. But I, I guess almost the first question that I have in response, like, is the financial planning actually different? Or do I just have two clients with different mentalities? Because I have a different conversation in how to get my client with 50 million in Apple to diversify versus how I get Justin to diversify out of his business? Like, are these just two clients that have different approaches to risk perception, or should we be thinking about these more differently when we actually start talking about financial planning and tools and techniques and strategies?
- [08:39]
C
Yeah, it's the latter. It's the latter. You've got to think about it differently. And it's not just, this is Apple, this is a company that he runs because the psychology and the perception is so drastically different that that has to be taken into consideration. And also the pathway that you can sell Apple in a few minutes by clicking a few buttons on a screen, you can't go out there and just liquidate, oh, let's just take 20% off the table with this manufacturing company. And then there's people and emotions and a human aspect, and he might have inherited it or bought it from his parents or grandparents. It's just, it's such a different asset. And it's not just money. It's not just a financial tool. It represents life's work. And approaching it with that level of empathy and with that level of consideration, it's required. It's not only something that we should do, it's something that we're required to do. Otherwise, we really won't make the progress helping that client plan. And sometimes, just to pull on the thread you mentioned of diversifying, in many situations, the best decision for that owner is not to diversify and say, hey, you need to take that 50 million and spread it out. It might be, you might need to take a few chips off the table sometimes, no chips off the table, and keep growing it. And it's giving an advisor or giving the client the perspective to where they can get to the decision points with clarity to where they know, okay, I'm moving forward, but I'm not moving forward blindly. I have the appropriate guardrails or perspective or understanding. I have the appropriate path as to when or how this might change. So it's not, hey, stay, stay fully invested because you should just keep doing what you're doing. No, you've got a lot of risk here, and you need to understand what that means and how to protect against it. And even if you decide to continue building the way that you do, or we recommend that you build the way that you do, you'll be doing it with conscious awareness versus just blind growth.
- [10:49]
B
So can you take us a little bit further on that conversation? You made the comment like, okay, maybe the best decision for the owner is not diversifying. Maybe it is only air quotes only taking a few chips off the table. Maybe it's even reinvesting into it. I feel like you've almost crossed the line into financial planning heresy. Because I really do feel like there's, there's a mentality of, I think just what we're trained into in financial planning. Like if I meet a business owner who has a $50 million privately held business, literally the only acceptable answer is, thou shalt diversify.
- [11:31]
C
And I would disagree with that. If an advisor meets an owner that has a high concentration in their company, one question is, do you want to have independent wealth separate from this business? If so, what does that look like? And then in other cases, does the business need you to be fully invested all in. Or could you say, hey, you're making 10 million bucks a year in cash flow. Do you need all of that to go be fully reinvested? Or can we start to pull chips off the table through distributions or cash flow from the company and start to build that independent wealth separate from the company? So those are the types of conversations that need to take place with an entrepreneur. Because I can practically guarantee you if you go in there and say you need to diversify, you're going to alienate the client. And if you go in there and give them a path to diversify, but their better path was to stay invested and continue to grow and ride that wave, you're probably down the road going to regret that you made that decision. So it's really a delicate dance between their objectives and where they are in the business and where they are in their life cycle and kind of balancing between those different, different aspects.
- [12:41]
B
I guess there are two things that, that hit me. One, it makes sense. I mean, just there is sort of a time horizon thing here. The 25 year old DECA millionaire, bless their soul. But like the, the 25 year old DECA millionaire may very well say, like, hey, you know, made over $10 million by the time I'm 25. If it all goes away, I'll just do it again by when I'm 30. Um, may or may not be a realistic expectation. But, but there is a, like, look, they're young enough and have a long enough time horizon that if they want to, you know, ride this roller coaster a long time, they can. And that may show up different than the 40 something year old who maybe still has a decent time horizon but might be staring down college or retirement is not as far away and saying like, okay, maybe, maybe I can take my foot off the gas a little bit. I'm not necessarily out yet, but, but maybe I can take my foot off the gas a little bit. So it strikes me there's a, which I get just like there's a age time horizon distinction here. But the, the other thing that jumps out at me, Ali, is as you explained that you look a, most of us as advisors is like by the numbers. The media loves to talk about the firms that work with the very affluent clients, but most of us work primarily with the mass affluent segment. Like a couple hundred thousand dollars up to a million. And, and we, when we get good clients, we get clients that have a few million dollars. That's a great client for virtually every advisory firm. And if we're working with business owners, often it's business owners that you know, run a medical practice, run a law firm, run a local H vac, and like great businesses that could be worth several million dollars. But there's like, there's a, there's still a zero missing. Like it's, it's, it's seven digit wealth, not eight or nine digit wealth. And part of what strikes me about what you said in working with larger business owners is that it feels like the, the numbers and the conversation start to change when you have a zero, when you add a zero or two. Because like, I can't go to my, you know, local services. Business clients say like, hey, maybe you take 10% off the table to kind of COVID your independent wealth for your lifestyle for the rest of your life.
- [15:07]
C
Yes, yes, and that's a, that's a great point. And let's discuss that a little because you're spot on. Adding a zero makes a very different decision model. And I use an extraordinary example with Facebook and you know, Mark Zuckerberg, just because it's so drastic, you can frame conceptually that someone could be the MySpace or someone could be the Facebook. And you have to consider that not everyone's going to blow up. In fact, the vast majority won't blow up. But let's take the zeros off and let's go to the business owner that maybe has a 5 million or 10 million or 20 million net worth. And just for context, the majority of our Clients in my advisory practice fell into two segments. It was 5 to 20 million of net worth and then 20 million to 100 million of net worth. That was kind of call it the 80% of our clients, we had maybe 10 that were larger than that and 10% that were smaller than that. But that was the window. It wasn't billionaires or multi hundred millionaires. There's a few hundred millionaires, but certainly wasn't the majority of the practice. For those business owners having their cash flow, their business isn't necessarily. It's a life decision to sell a business or to take stock off the table. The bigger decision is, hey, your medical practice. Let's just say we're talking about a surgeon here who, who owns a medical practice with a few other surgeons. And let's say he's cash flowing one and a half or $2 million a year from the business. The question with that owner isn't, do you want to sell it? It might be, but I think at this point, if they're growing their practice, it might be, hey, what are some of the ways you can enhance the value of your company? Whether it's hiring more of a team or an operator, or implementing a system to expand the business, or helping them strategically think about how to grow the enterprise value. Like, hey, your practice trades for four times earnings, but if your practice is triple the revenue, it'll trade at 8 times earnings. And if you decide you want to do M and A, you can take advantage of that arbitrage. You know, there's strategic conversations to help the owner grow their business and then, you know, introducing the appropriate experts that can help with that. There's strategic conversations that can help them maximize value if they decide they want to sell one day, that we can certainly help them through and help guide them in those conversations. And then there's financial planning decisions that need to be made each year. What are we doing with the 2 million of free cash flow? How much goes back in the business? How much is going to be distributed for independent wealth or for colleges you mentioned. And for owners like that, the more traditional business owner that we deal with, it's not independent wealth by selling 10% of the company this year. It's independent wealth by saving maybe 20% of your free cash flows for the next 15 years. And we're saying we're taking you're 35 and you're a surgeon and you're doing this thing, and by 55, you're going to have so much wealth separate from the company that your business actual Exit will just be excess wealth that you can do whatever you want to do with. But all your base is covered because you've been saving consistently from the company. And whether it's a guy that has a dry cleaner that makes $500,000 a year, or a surgeon at 2 million a year, or a manufacturing company that does 10 million a year of profit, it's the same decision model and conversation. It's what is your path to independent wealth? Is it through savings? Is it through sale, Is it through a combination? And let's map that path to get there. And while you're on that path to get there, how do we protect against the big risks? What happens if you break your hand? What happens if you aren't around anymore? What happens if X, Y and Z take place? But across the board, it's the same decision model. What is your path to independent wealth?
- [18:47]
B
So now help us understand just like what, what you were doing with this relative to your business, to your advisory business. So you said like you started early 2000s, so were, were you building with clients like this? Like were you going after business owner clients like this from the start or was this something that you, you found and came to over time?
- [19:11]
C
That found and came to over time. So when I first started, I didn't come from money. I didn't grow up with a book. I didn't have a senior person. I started at 20 years old. My first two clients were my doctor and my mechanic and my dentist. Like I did not know anyone. And I came into the financial services industry and it was like, eat what you kill, you know, just. And I thought when I got recruited in, it was, I was still in school finishing my degree in finance and a recruiter came along and said, you can help people, you can make money, you can get licensed and you can start to build kind of a potential six figure income. And I was like, sign me up. So I got started and had early success. And I thought I'd do this business for a year or two, finish school, and then probably go work in sales and trading in New York or something like that. And I fell in love with helping people. And at the same time, I couldn't stand the conflicts of interest of the financial services industry. I was like, this is so backward. I remember helping a client. I had spent probably five or six hours in meetings with them. Over the course of two or three meetings, I'd helped them through everything. And the best advice for them was to pay down their credit card debt in an accelerated fashion and maximize their company benefits. And I gave them that advice and we got done with the meeting and they said, well, what do we owe you? And I said, well, you don't owe me anything. At some point in the future, if you need financial services or investments or something, I can help you. And they're like, well, that's not right. You've just spent all these hours with us. And of course we start in the business in a similar way. That wasn't the business model to charge fees. So I went back and I understood what they said and I reflected on it and I was probably, you know, a year into my career at this point, still in school. I said, you know what? I really need to be able to provide advice independent of any financial solution. So then I shifted. I kind of said, I want to do fee based planning. And I got a lot of pushback from the firm. And I was like, I'm going to do fee based planning whether it's here or elsewhere, because that's the right way to serve the client. And then I started charging fees. And with the exception of maybe 1% of the situations, like 99% of the clients I've had in my career, start every engagement with a consulting fee to go through a planning process. So that started as the model and then naturally kind of being an entrepreneur. I didn't know it at the time, but being an entrepreneur, I naturally gravitated towards entrepreneurial personalities. We got along. I liked their vision, I liked their ideas, we vibed the same way. So four or five years in, I realized a lot of my clients are entrepreneurs. And then I had a crisis of sorts probably seven years into my career where I was like, I have these three groups of clients, retirees, entrepreneurs, and kind of young professionals. Where do I want to focus in my niche? Because I strongly believe and still believe that the narrower the focus, the greater the opportunity. But I had these three great client segments and I had to pick, like, where are you going to focus your practice? And it's really hard because one group is really profitable and a lot easier. One group's really hard, but there's a lot of passion and one group has a ton of potential. And I made a decision which was which, as you know, I appreciate these follow up questions. Michael. So the retirement group. Thank you. The retirement group was highly profitable. They were easy, they were nice people. Right? And you can help someone build a retirement income plan and Monte Carlo and protect the longevity, risk and all that stuff. And it's highly profitable. But it wasn't a 10 out of 10 passion. For me, the business owners were the most complex. Maybe had the largest amount of profit per client, but the profit profitability was a lot lower because it take a lot more work and time, but there's a much larger, much larger opportunity financially and huge amount of passion for me. Working with the entrepreneurs and then the young professionals, it's like they were, it was easy, it was fun, and there's also a lot of future potential because they were, they were growing. And you know, at that time, it was like the new cool thing, like the Millennial group, you know, is we were the early stage at that point, and I had to make a decision, a very difficult decision as to where do I want to focus? And I picked the client segment that was the hardest, but I had the greatest amount of passion for and that was the entrepreneur. And at that point I said, from this day forth, we're only our marketing, our content, our website, our conversation. Everything is entrepreneur from now on. And we reached a point where we would just not accept any other client. But sometimes we'd have to, you know, make exceptions for client, family member, or you, you know, the, the typical exceptions that will come up. But that was our focus and it was one of the best decisions I've ever made in my career. One of them was to charge fees for financial planning, for our financial planning process. Not even for the plan. We charge a fee for the process every year. That was one of the best decisions I ever made. Then picking to focus on entrepreneurs is one of the best decisions I ever made. And then developing our planning process, which today is called wise, the wealth integration system for entrepreneurs, that was probably the next decision that was a game changer. So it's these moments in your career where and of course the decision to get into the business and just help. Help people the right way. So it went from protect clients from the bad advisors and help them to give them a structured planning process to help them to an entrepreneur structured planning process to a full ecosystem and thinking system for entrepreneurs, which is where things are today and now helping kind of advisors expand that as well. So that was the evolution.
- [24:53]
B
So I'm fascinated by this, I guess like crossroads moment for you seven years in to decide to do the narrowing. So I guess lots of questions here. So first it's. You said the narrower the focus, the greater the opportunities. So where, where did that. I guess so we're learning. Where did that come from for you? And if that was a thing, why did that hit in year seven and not year one? If like that's Your philosophy in the first place?
- [25:24]
C
Well, the short answer to why it didn't hit in year one, I think there's, there's a certain amount of wisdom and learning that came to get there. I don't know that I had that necessarily Year one, also year one, you've got to feed yourself. And if you develop a hyper niche market day one, you may not survive. You've got to sink or swim already in the industry. And then if you go into a hyper niche, it may be even harder. I think initially sometimes you've got to get your feet wet. You've got to learn what you like. I didn't even know at the time what the niche was. So initially it was help people and take care of them. And I saw a lot of bad advice out there, so I wanted to protect them, call it from the bad advisors or some guy out there just trying to sell a product with no real planning. And then as you start to work with different clients, I can imagine a listener that maybe is five years in or 10 years in. And I've worked with 20 different types of clients. You'll know by trying different ones which ones you really have passion for. And I highly encourage individuals. Don't make a decision based on the financials being first. Don't look at profitability first. Look at passion first. Because with passion comes unlimited energy. If you're passionate about something, you'll continue to build and grow because you've got all of that energy. And business is hard, and building an advisory business is hard. So you better have 10 out of 10 passion for whatever you're building toward. And once you figure out who you want to be, you know who you want to take care of, the client you want to be passionate about. And once that's figured out, then simplify and narrow that focus. So kind of take the time to measure twice, if you will, and then cut once. I think is a strong approach, especially for an advisory business, because you don't really know what you're getting into until you've done it.
- [27:18]
B
So was there something going on that just made that the point that you said, I'm ready to pull the, the trigger and start narrowing in. Like, I certainly get the. You've got to feed yourself and find the segments that you, that you enjoy working with, that you have passion for working with. But was there. Was there some moment going on that like year seven was the year that you said, okay, now I'm going to pick one and it wasn't year five and you didn't wait until year 10.
- [27:48]
C
So I formed my own RIA. I started in kind of an eat what you kill model within a larger firm. But like we had our own, we had to source our own clients and run kind of our own practice, or I shouldn't say run, hire own employees, pay our own office space. But we had freedom within the system, but we were still in a structure. And I started my independent firm in 09, which was six years in to my career. Yeah, six years into my career. Then at that point I'm saying we want to scale this business. And I think to answer your question, it was the growth strategy or the scale strategy. We want to grow and scale this business in order to effectively grow and scale. What is the client that we really want to make the biggest impact? In which client's life, which client do we want to take on? Where do we have the greatest skills, capabilities, passion, gifts to really impact? And it was a decision to say we want to grow better and smarter and who do we want to grow with. And that was the business owner market. And they were a joy and a pleasure to work with as well. So from an energy standpoint, even though they were the most work and the most complex, they gave me the most energy and I gave them the most energy.
- [29:02]
B
Interesting. So it was the transition to independence and I guess sort of the fresh start. Okay, I'm building my firm now and I guess age wise, like your late 20s, early 30s, like I'm building my own firm, I've got a long time horizon. I'm ready to actually make this thing scale. So who am I going to focus on and scale it up with? Okay. And you said then as you got deeper in with business owner clients, you ended up building your own planning process. I think you said you called it wise. So can you talk to us more about like what this, what this planning process was or turned into that you were doing with your business owner clients?
- [29:50]
C
Yeah, so I noticed with business owners that when I would meet them, they would give me a very similar response. I'd talk to them, I'd have a meeting set up. Someone made an introduction and we were a referral only business for years. Someone make an introduction and I'd meet with, you know, call it Mr. $30,000,000 business owner. And he'd be like, ali, I'm all set. Look, I've got two financial advisors, I've got an investment, I've got insurance advisor, I've got, you know, tax legal, I've got trusts, I've got captives, I've got all sorts I don't know what it is that you're going to do for me, but such and such made an introduction and I'm happy to have a conversation. That was kind of the pattern that I would notice. I'm all set, in short. And what I noticed is when I heard all their planning, I was like, okay, yeah, there's a plan in multiple different areas. But when I'd pull all those plans together, I noticed that there were major planning gaps. And those planning gaps were largely unknown to the owner. They didn't realize that those gaps existed because they think they have five advisors with five different plans. They must be all set. But in reality, they had these huge planning gaps. And the reason that exists is because each one of these professionals was providing their work in silo and there was nobody pulling all the pieces together. So it was like they had five different advisors with five different plans. A lot of times had conflict with one another, and there was gaping holes that they didn't realize exist. So I started to show an owner that, let's take a look at all the different pieces that's pulled together, and let me show you where your planning gaps are. Let me show you where there could be a huge opportunity for change. And the larger the client, the larger the gap. And I essentially helped them understand why integration was so important. And the way we get to integration is through this unique planning process that we had built. And at the time, it was called wealth with purpose, and it still is called wealth with purpose within wise, which is a larger system of entrepreneurial planning. But what the wealth with purpose process was, essentially, let's create the purpose behind all of your wealth and the intentionality, if you will, and then let's integrate your spouse, your tax and legal advisors into that planning process. So we don't only go through a process that crystallizes your goals and maps out an appropriate strategy and helps coach you through your options and considerations. We're actually going to integrate your tax and legal and advisors into that planning process. So when we're done with this, we not only have intentionality behind your goals, we now have integration where we're actually bringing the different parties into one process, and we have repeatability each year where we can re bring in your advisors as needed so that this not only builds out a great plan year one, but we can sustain this through year 10, year 20, year 30. And that level of integration, especially at the time, it's Rare today, but 15 years ago was extremely rare. And that planning process was what brought all those pieces together. For the owner, and then the value for that was far beyond what your rate of return. Sometimes it would be through this planning process, we just saved you $4 million, and on a projected basis, we saved you $30 million. That was the kind of ROI that was exponential, and that process was the pathway to giving the client that type of clarity and that type of return on investment.
- [33:24]
B
So what kinds of gaps were you finding in practice? Like, where do those holes tend to show up?
- [33:34]
C
So an easy gap we might spot is, hey, I notice you donated $40,000 last year to charity. And I also noticed you have $200,000 of capital gain. And are you aware that you could be donating appreciating securities and avoiding capital gain deduction and getting an ordinary income tax deduction. Sorry, avoiding capital gains tax and getting an ordinary income tax deduction. And they're going, are you kidding me? Like, why didn't my financial advisor tell me that? Why didn't my CPA tell me that? And I said, I don't know why someone should be looking at the whole picture. And if I were to guess, you're meeting with your CPA at tax time in a very reactive fashion, where they're literally just trying to prepare the return, and then your financial advisor you're meeting with to discuss investments, and it's not a collaborative conversation, or neither of those two advisors is saying, hey, wait a second, let me take that extra step forward and say, how do I create more value for this client? You don't need to pay that tax. So that's one example of a gap. Sometimes it would be we'd look at their will, and the will would say, everything goes to the credit shelter trust if someone passes away. And then all their assets are titled joint with rights of survivorship. I'm like, well, guess what happens? That doesn't work. So it's great you paid five grand for a will, and it's great that you have an investment advisor, but guess what? Your plan's broken. It doesn't accomplish what you wanted to do. All these types of lever or gaps we'd pull, and sometimes it was. I remember the largest one I met, he had made a 10 million. This was an extreme example with an extra zero. But he had made a $10 million donation a year prior to a medical facility, and he had his name on the wall, if you will. And he wrote a check, and he had tons of appreciated assets and real estate. And I was like that. Literally, your advisor team costs you a couple million bucks with not catching that. So it might be a $20,000 or $50,000 mistake for call it a more modest client, it might be a million dollar mistake for a super client, or it might be someone that. Do you realize your entire illiquid estate, you're worth $50 million today and it's all in real estate. And your wife passed away 15 years ago and your three children are going to inherit 50 million of illiquid assets inside of all of these entities and one of them is involved in the real estate business, two aren't. Let me tell you what's going to happen and how many things are going to blow up here and let me make it very real for you so you understand this is an issue. Those are four examples of gaps that we would identify. And then our goal at that point was to really educate the owner on here's why this is a big deal and here's why now is a more important time to solve this in one day.
- [36:25]
B
So are these gaps you're trying to find and explore literally in an introduction sort of conversation to engage a business owner in the first place, or are these things you find because they've engaged you for a planning process and they provided you all the documents and your just going through everything and trying to find gaps?
- [36:49]
C
So it's a combination of both. Okay, so we typically. My model has been, and I encourage advisors to do this as well, don't have just one introductory meeting with a client and try to prepare an engagement especially for a larger client. And again, I gave you the size of our client base. When we would engage clients, we typically have a couple of meetings, usually two, sometimes three pre engagement. Our engagements were larger. We typically would charge our fees were call it 10k to 100k in consulting fee. And the vast majority is probably 20 to 50,000 of consulting fee for our planning process on the front end. Spending two or three meetings, making sure it's the right fit was really important. And it also gave us an opportunity to uncover greater gaps and get under the hood a bit. So, and sometimes we may discover a few things on the front end and we need to discover enough to say, hey, we want to warrant this engagement. We're not just going to come in here and charge you fees with no value. We want to come and take you through a process and deliver a lot of value. So some of that we'd identify in the first or second meeting. And then some of those things it was really when we got under the hood and inside the documents, you know, during the data process, which might be, you know, four or five meetings in.
- [38:07]
B
So, so I get it that, you know, you get two or three meetings in, you start finding a couple things like, you know, you, you made a $10 million donation last year in a medical facility. You didn't produce any of your appreciated investments, you know, that may have cost you $1 million in capital gains that you could have avoided. Like if we lunch, believe it or not, you know, if we can help you find more opportunities like that, do you think it would be worthwhile to engage us in our planning process? Like I, I get it. You find, you find something that big and it's like, well, yeah, if you're going to find more things like that, that 25 to $50,000 fee doesn't seem such a big deal anymore. I guess I'm still trying to envision though, like how do you get prospects to engage in what might be two or three pre engagement meetings when all this so often starts from some premise to the extent of, you know, Ali, I'm really all set. I've already got like two advisors and my insurance agent and my CPA and my attorney.
- [39:12]
C
Yeah. So it's a great question. And there's an art and a science to engaging with high net worth business owners. And I could probably tell you, as you say this, I realize I'm having a realization of that might be rare. The vast majority, I mean, I'm going to probably call it 90% of the introductory meetings that I've had with clients or prospects over the years. We've had no problem getting a follow up meeting to present our preliminary findings. And it's actually very easy to get those. Very rarely do we not. And as I'm thinking through this, you ask great questions. There's an art and science to educating them as to where the problem is. So when I give that description and there's other language and descriptions that I use, and there's a whole framework and language that is part of this planning process that really helps the owner understand this. We start with education. Here's why the problem exists. And the industry is not built for high performers. The industry is built for the mass market. And the mass market doesn't serve high performers. So if you think about a financial services company, 80% of the financial services landscape is probably doing business with Morgan Stanley, Merrill Lynch, Fidelity, schwab, Raymond James, LPL. That's probably 80% of the financial services industry. Those firms are not hyper focused on working with a high net worth entrepreneur. And therefore the solutions and the services that you're getting are Built for the masses and they're probably under serving you. 80% of businesses go under in 10 years. Very few, less than 1% of the United States population is going to have a net worth over $10 million. And you're in that group. So there's a 99% chance you're not getting served appropriately with your current solution. That's the kind of language, this is one example of many things that can be done, but that's the kind of conversation that will get an owner to go, wait a second, he's got a point. That makes sense. And then you're talking about these planning gaps, Ali that I have. I want to know what the gaps are. So in an initial discussion, I'm data gathering, trying to figure out, what are you doing, how are you doing it, how is it positioned? And then being able to think through that and usually circling with my team, soundboarding around, you know, some considerations or opportunities. I refer to them as issues and opportunities. Where are the issues that this client has, you know, challenges, and where are the opportunities that this client could really or prospect could really take advantage of? And then coming back to them with a meaningful discussion around, here's what I heard, here's where I think there may be issues, and then here's where, you know, you've got opportunities. That type of conversation isn't being delivered to owners. What they're usually hearing is, hey, how much money do you have in investable assets? Oh, cool. Well, let me get a statement from you. I'll come back with a proposal for why my investable assets is better than their investable assets, which is complete garbage. It's a terrible process and it's not really solving their bigger issues. So when we engage or talk with the owner, it's really about empowering and educating. If you empower and educate, even with what I've said in the past few minutes on an introductory meeting, there's a 90 plus percent chance that owner's going to go, I'll give this person a second meeting to present their findings. Plus I want to know what they think my planning gaps are. So it makes it a lot easier to pivot to that next step. Does that make sense?
- [42:51]
B
And then the goal is to find enough planning gaps that it makes sense to have an engagement to say, we can help you with these and we're going to put you through a full planning process and we may even find more opportunities to create value for you.
- [43:06]
C
Yes, that's a fair statement, with the exception of we want to make sure it's the right fit. So in many cases, right. It's one of the criteria is they have enough planning gaps that warrants our process. But then also do they have the right mindset to be a client for us? Do they have the appropriate resources for this to make sense for them? Are they going to be committed to this process? Are they enjoyable to work with? So we always, and I would always lead with that and talk to owners like, look, not every client's a fit. We want to make sure it's a good fit for you and it's a good fit for us. It's got to be good for the both of us, us. And that helped kind of level the playing field. We're not here trying to sell to you or find a reason why you should do business with us. We really just want to make sure it's the right fit and that we can deliver value to you and that you can, you can appreciate the value that we deliver.
- [43:55]
B
And so if they decide to do this, help us understand further what the planning like what the actual planning process was. I think you said you framed it as wealth with purpose. Process, like what? What's the process? I'd say Ali, sounds great. I've got $30 million business and you already found a few gaps. Sign me up, I'm ready to go. What actually happens next? What was the process?
- [44:21]
C
Sure. And I'll give you the short answer. This is all written out in my book and explains it in depth because it literally takes a book to express the process. It's very in depth. But the faster answer for call it this conversation. We'd start with, you know, what are your goals, your initial goals? Then identify kind of a high level map of their financial position. Call it the 10,000 foot view. Identify the initial issues and opportunities within their planning. Then we would engage. Once we engage with a client, we get a comprehensive view of their financial position. I call this kind of total balance sheet. Everything you own from a planning software system. You know, we've used E Money for. I think I've been an E money user for 17 years now. The early birth of their company. We started using them. We put everything there. So here's everything you own. And let's look at this today and let's look at this in the future and let's have some perspective over where you're going. Not just your investments. Put your business on there as well. Put a fair market value for what your business is worth. And let's see what this looks like. So you and most owners, they've never seen a total balance sheet. They've never looked at their balance sheet with their company value on there. So they're going, oh, yeah, yeah, I'm worth three or four million. And you put it down, you're like, no, you're worth 24 million. Why am I worth 24 million? Well, because your business makes $4 million a year. Sorry, 4 million of earnings and 5 times multiple, you're at $20 million and you've got no debt. So here's where your balance sheet is. So we start with that. Then we would integrate and educate with their spouse. Sometimes the husband was the business owner, sometimes the wife. Sometimes they're both working in the business. So we'd bring them into the picture to say, here's where you are. Here are the major points you need some education on. And then we would coach them through their paradigm gaps. Some owners didn't understand things the right way, and they needed wealth coaching. And the difference between coaching and advice is advice is telling them what to do. Coaching has helped them, helping them find the solution on their own through guided questions and really educating and empowering them to find their own solution. So we do wealth coaching through that process. Then once we had the owners or the client in a place where we had clear goals, we had good coaching, clear perspective, then we would integrate or bring in their tax and legal advisors and say, hey, John and Jane have these goals and objectives. Here's what we've identified as issues and opportunities. This is what the balance sheet looks like in totality. And we'd like to have meaningful conversation with you, the attorney, and the CPA on ways we can solve these challenges and ways we can capture these opportunities. And we would kind of tee up and frame the conversation and then say, hey, we've laid out kind of the architecture here. We're serving in a. Call it a GC capacity. We need the contractors here to pour the concrete and do the electrical. And what's your perspective? Should we use a grat here? Should we use an intentionally defective trust? Should we sell? Should we gift? Should we change from a C corp to an S corp? Here are all the different levers and empower the tax and legal team to really come in and give that advice. So we're playing not just financial advisor, investment advisor. We're playing quarterback to the planning. And once we have the integration with the tax and legal team, then we would come up with a comprehensive blueprint that represented all of the client's goals and objectives and had a clear path forward and only at that point would we then say, now we're going to execute this and actually move investments, set up trusts, change entity structure, fund the college funds, whatever actions may be. But before we get to all that implementation, we got to plan this right, and we got to integrate this right. And we got to get the buy in of not just you, but your spouse and your tax and legal advisors. So that was our planning process, kind of in a nutshell, if you will.
- [48:10]
B
So how many meetings is this to walk through? What's the. I'm just trying to envision literally like what the meeting sequence is and how many there are. Because that sounds like a lot of stuff to get through.
- [48:24]
C
It is. It's a lot of stuff to get through. And you've got to keep energy and momentum. And it's more of a workshop style meeting than it is a sit and get meeting. But basically, if I summarize, I'm going to call it a middle of the fairway client, which for us would be maybe a business owner with $20 million of net worth and maybe they had 2 million investable. We would have. I'm just going to count these meetings here because I don't know the exact number off the top of my head. We'd have a introductory meeting, a preliminary assessment meeting, a data meeting, probably one to two education and strategy meetings. So we're talking five, integration with the tax and legal team, six, recommendation seven, and then kind of implementation path forward, eight. So over the course of. Call it six months, six to nine months, we'd probably have eight meetings. And some of those would be an hour long, some of those would be two hours long. Maybe one is a 45 minute call. Okay, so I'd call it. I'm gonna. Yeah, eight meetings over. Eight meetings over eight months. That sounds nice.
- [49:25]
B
Okay, so. So this draws out a lot, which I guess helps me understand why you had a substantial separate planning fee. Because there's just a lot of work and stuff that's going on in this stage.
- [49:36]
C
A lot of work, lot of value. And if it was a smaller client, Michael, we might have been able to do that same process without skipping any steps. But we might combine them in meetings with a smaller client that didn't have as much complexity. We might have been doing all of those things in three, three meetings or four meetings. So the family office, it might have been 12 over the course of 18 months. You know, it just. But the process is the same. It's, it's. Yeah. Just depends on that complexity.
- [50:06]
B
So help us understand further. You talked about There's a education coaching layer, I think you said, like finding their paradigm gaps that they need wealth coaching through. So what are paradigm gaps in this context?
- [50:23]
C
So I'll start at the. At a very basic level. Let's say it's an entrepreneur that says and many entrepreneurs say this, I've lost a ton of money in the stock market. I don't believe in the market and I'm going to invest in my own business. If an entrepreneur says that to me, I completely 100% can empathize. And I know how many entrepreneurs that were in the call it investing in the late 90s, early 2000s. They had a bunch of random tech stocks and JDSU and whatever else. And you've heard this story many times, man, I lost all my money in the market or 90% of my money. The market was going up, up, up, and I invested, I lost money. I'm never doing that again. Then the next leg is that the individuals that had invested in pre 08 and call it a little younger investor, maybe their Gen X or maybe their gen well, I guess now they call it Millennial that lost a lot of money in 08 or 09 and really took a beating and they don't want to invest. So they've deferred back to I'm just going to invest in my business or I'm going to invest in real estate because I don't believe in the market. It. Well, I'm not here to tell them in a advice way you're wrong. The s and P500 was at 1500 dollars back then and now it's at 6000. And I don't know how you lost money if you just bought the that's not the place or the time to be telling somebody what they should believe. You got to be empathetic towards their position and understand that was their experience. And I'm just going to make a little note on the side of my, on the side of my paddle. At some point at the right time, we've got to give this client comprehensive education on how markets work, maybe where they were misinformed by buying one stock. And let's teach them about how diversification works or how indexes work. So what I do is identify any gaps in their paradigms in the initial meetings. And this is part of the art and science to our planning process and why it is so robust and why it takes a book to express this. And it's not just a one pager that planning process identifies. Okay, where are the different gaps that could exist in their paradigm, and this one market gap is a small example. They think markets are gambling. They think that they're going to lose their money and they don't understand. And they love entrepreneurship. This is a huge opportunity because if you think about the s and P500, it's diversified entrepreneurship. So if I tell a YPO, let's say I meet a YPO CEO and he's like, I don't believe in the market. I don't trust it. It's gambling. And I said, what if I said there was an investment out there that the top 100 YPO CEOs, highest revenue growth rate, margins, all those metrics combined. We had the healthiest 100 companies in YPO, which is young Presidents Organization. Organization. And you could invest in that fund. And they all say the same thing. Heck yeah, I'd invest in that. I'd be all over that. I'd love to put my money there. Okay, let me express to you that the s and P500, if we can take away the noise of MSNBC and everything you hear on the news and Jim Cramer, it's the 500, not just YPO companies, the 500 best companies in the United States. And what if I told you if it didn't trade on a screen and it was more fundamentally based, it would look totally different? And you start to give them that education and then you express. And one of my favorite stories that I tell avidly is the story of Enron. And this may be new to you, Michael, but do you know what company replaced Enron and the s and P500?
- [53:59]
B
No. I remember Enron blowing up, but I don't know what replaced them.
- [54:02]
C
So I live in Houston where everybody not only knew about Enron, but they felt Enron's collapse. Because we still know. We still see the Enron buildings in downtown, right? This was the home court. And everybody knew Enron went bankrupt. And a lot of the people in oil and gas remember that. And I said, let me tell you why. Enron going bankrupt was actually good for the s and P500. And they gave me this crazy stare like, what are you talking about? How could it be good? The small $5 billion company that replaced Enron as the number 501, if you will, in the S&P 500 was Nvidia. And Nvidia was worth 5 billion at the time. And they went from 5 billion over the next 20 years or 25 years to $3 trillion of market cap. Even if Enron had compound returned at 10%, it wouldn't have beat having Nvidia in there, obviously compounding at a much higher rate. So what it is, it's diversified entrepreneurship. One company goes bankrupt, a new one gets added in. So you're constantly owning the 500 best companies. It's basically entrepreneurship and innovation at its finest. Right, I'll have this conversation with an entrepreneur. There's a multitude of things I explained to them in this meeting. I'll chart this out or draw them or show certain concepts that address this and I'll say what you're buying is you're buying diversified entrepreneurship in a passive capacity that takes zero time from you that historically has generated about a 10% compound rate of return. You just have to not watch the news when this happens, not sell when it's low, not get emotional and if you can train and educate them in the right frame of mind, not when the market's falling and not when they're getting defensive about investing in their business. Half of the entrepreneurs I talk to will convert, half of them still need more time or they won't convert their mentality of thinking. But it's these kind of stories and examples in education that shifts their paradigm from going the market's dangerous. I don't believe in it, it's gambling to ah, I understand if I follow this set of rules and look at it very differently than I do my own company that I control, I can have something in the background working for me at 10%.
- [56:13]
B
So are there other common paradigm gaps like this that come up? I mean I totally get the right. I don't believe in markets. I'm going to invest in my business. What else crops up?
- [56:25]
C
Well, I'll go, I started with call it the most basic one for financial advisors obviously understanding the market. I'm going to go to the flip side of the most extreme challenge on the opposite end and this is deep and I'll try to explain it in a simple way. Most entrepreneurs have a paradigm that either their money experience was either traumatic or they had a high amount of adversity towards it at some point in their life. So essentially many entrepreneurs grew up. Most entrepreneurs grew up poor or lower middle class. So early on in their life they didn't have a lot of if you look at the top, and this goes for mid sized businesses all the way up to billionaires. If you look at the billionaires list, it's either family money or a guy that grew up poor or lower middle class or guy or gal I should say that situation usually started with an early in life they had maybe what they needed, but not what they wanted, or they didn't have anything at all. And they had to go build, build, build, build, build, build. Because that was how they put food on the table. And that's how they got out of the tough situation they were in. And they had these memories and these experiences with money that formed their, their paradigm. And if they had a traumatic experience with money when they were, you know, single digits or a teenager, they've been running toward building wealth to protect themselves against that fear of scarcity or inadequacy that they had once upon a time. And most of them don't realize what they're running from. And you'll see somebody who's worth $50 million and they still feel like they're poor. They still talk about how they couldn't afford dinner. They are still worried about that subconsciously, they're still concerned that they won't have enough. When monetarily, an advisor that maybe doesn't have the empathy is going, you're worth $50 million. What are you worried about? But the reality is, and I'm going pretty deep here, but the wounded child in them that has been hurt by the money and doesn't necessarily ever feel like they have enough is looking at the situation going, I need to keep building. I can't slow down. I can't diversify. I got to do what I did to get out, to get what I did to get where I am is what I'm going to keep doing, because that protected me against being poor. So they need coaching and education and sometimes therapy to really reset their psychology or their paradigm of money. So that's a huge, huge part of the entrepreneurial experience and journey. And the vast majority of entrepreneurs have a major paradigm of money they either haven't dealt with or don't know exists, but it's there.
- [59:08]
B
So I know you said you get into this deeper on the book end as well. So just like for folks who are curious to get, get deeper on this, just if they want to go look up what is the name of the book? How do folks find the book?
- [59:22]
C
Sure. The Business Owner's Dilemma is the name of the book and it's on Amazon, so they can find it there. And essentially in the book I give the entire journey, I've wrote this book for the entrepreneur. It's certainly been extremely effective for the advisors that have read it as well. But it's written to the entrepreneur and walks them through their journey as an entrepreneur and how to think about and how to frame their biggest decisions. At the intersection of business ownership, wealth and life. So essentially, you want the life plan, the wealth plan and the business plan to come together to give you not just a great return on investment, but to give you a great role, which I refer to as return on life experience. Not just getting great growth in money, but also getting the life experience you truly desire from your wealth. Because wealth, it's a means to an end. And ideally the wealth is a source of well being. I think the source word for wealth is a Middle English term that means well being. Many people with a lot of money don't have well being. So what I teach entrepreneurs in this book is here's how to build wealth, have money, but also get the well being and the return on life experience that you desire. And here's how it's all framed. Here are your three dilemmas you're facing and here's the system that brings it all together. So it's all out there. And the business owners don't want my book.
- [60:45]
B
So I guess for folks who are listening as well, if you otherwise want to get access to the book or just find the book, this is episode 429. So if you go to kitsas.com 429, we'll put a link right out to Ali's book in the show notes as well so you can get it there. If you can't scribble this down while you're driving or exercising. The things that many folks do as they listen to this podcast. So, Alino, taking us back to the advisory business for a moment. Is this help me understand your actual business model?
- [61:21]
C
Sure, yeah, I'm happy to share that. I will preface this with saying that I no longer own my practice. I went through a transaction last year and have since made a major change in my focus and shift towards entrepreneurs and advisors. But I'll speak to the practice before, before we had our sale slash merger and kind of discuss what that, what that model looked like. So I mentioned our client. We had two kind of major client groups, the five to $20 million business owner and then 20 million to 100. That was kind of the 80% of our client base. So every client went through the same process. We would charge a consulting fee to go through that wealth with purpose process that I described to you earlier and kind of take them through that journey of really understanding their wealth, having clarity and empowerment toward their wealth. And we charge not for a document or a plan, we charged for a process. It was very distinct. And we would show owners, here's the process you're going through. And this is why this is so valuable for you, because this is going to create clarity and peace of mind, and that's what you want. In fact, our mission statement for the company was to create clarity, alignment, and peace of mind for your life's work. So that's what the process did, then subsequent to the process, and that's what.
- [62:42]
B
You charged 25 to $50,000 for this, like, eight, eight meeting process they're going through?
- [62:50]
C
Yes. And then on a subsequent basis each year, we would continue to charge a consulting fee. It would be. It wouldn't be the same fee as the first year. Usually it would go down, but we continually would charge that fee to then manage an ongoing. That ongoing strategy and essentially keep the engine running as it should.
- [63:09]
B
And what kind of fees are we talking about? I mean, just neighborhood.
- [63:13]
C
Yeah, it depends. Again, depending on scope, I'd say most clients for 5 to 15,000 per year.
- [63:20]
B
Okay.
- [63:21]
C
You know, and then some, you know, like clients that didn't need that process would, wouldn't have a consulting fee, but that was very rare. That might have been a client that's a retiree that's on autopilot, you know, where they're, they're, they're not really having the business.
- [63:34]
B
It's like once they've sold the business, life kind of gets simpler.
- [63:38]
C
Yeah, sometimes. A lot of times it gets more complicated if they're an entrepreneur, but I won't go down that road.
- [63:44]
B
The only, the only thing worse than an entrepreneur with. With tens of millions of dollars in their business is an entrepreneur with tens of millions of dollars of cash and all their time available.
- [63:53]
C
You. You nailed it. That's literally. You just quoted one of the lines from the book. There's nothing more dangerous than a bored entrepreneur, except a bored entrepreneur with a lot of cash. It's very dangerous. So, so we, we take them through that planning process. We charged a consulting fee. And then of course, as we all know, just because they've gotten the right guidance and input and strategy, they still need the financial services because those commodities like investments or insurance or trusts, they're there to fulfill a goal. Now that we've gone through the process to know why and what, let's get into the how and let's execute these planning recommendations. So once we went through the planning process, then we would provide the actual end services, which for our firm was heavily asset management driven. We didn't do. We weren't a business that did a lot of insurance or annuities or anything like that. It was heavily planning guidance and then call it fee only assets under management services.
- [65:00]
B
So then fast forward us to today. So what is the, what is the business now? Or I guess what is your business now? If the business the advisory firm transacted last year.
- [65:16]
C
Yeah. So after I launched my book and saw, I really wanted to take everything we've talked about today, the framework, the knowledge, the impact to entrepreneurs, and just kind of package it all in a way that could really help the entrepreneur make better decisions, decisions. And that was why I put the book out there, the Business Owner's Dilemma. When I launched that book, there was such a huge amount of demand from owners and entrepreneurs that wanted kind of the education and coaching and workshops behind it and then also a lot of demand from advisors that wanted to learn the system and kind of utilize the methods and the coaching and that framework that I'd spent 15 years learning and can you train me and license me on this approach? So I had a long look in the mirror, if you will, and said, do I want to be the CEO of a wealth management firm while also being the CEO of an education and coaching company while also giving keynote speeches to entrepreneurs and advisors and while also having a personal life and building a family, can I really do all of that? And the answer was yeah, you could do all of that, but do you really want to do all of that? And, and I essentially made the decision to say I, if I could find a best in class firm that works with entrepreneurs, that could be the home for my clients and my team and I could continue to work with them in a strategic collaborative capacity, would I take that and then fully focus my attention towards the expansion of this entrepreneur and advisor impact? And after I thought about that and deliberated over a while, it was very, very difficult decision. One of the hardest decisions of my life, probably my hardest business decision. I said I'm picking the path, I'll take the fork in the road and I'm going to pick the path to build this education and coaching company, essentially not be the advisory firm owner anymore and not be the CEO of a wealth management firm. So went through an M and A process, found the right partner, and I'm making a long process, very short with this description, found the right partner and essentially stepped away from being the advisory firm owner and stepped fully into and I'm in the process right now further expanding that, saying how can I take the pain that I know so well? The 15, 20 years of advisory work, the 15 years with entrepreneurs, the 20 years with all sorts of clients and help create a bypass for all of the advisors out there that truly, truly care, you know, fiduciary advisors that want to lead with planning, that care about the entrepreneurial journey. How can I make a massive impact in their lives and in their ability to grow those entrepreneur clients? And that's essentially what we focus on at Wise Global and the training and work we do for advisors to give them the boot camp, the resources, the tools, essentially all the how behind the work that's in my book. Expand that and then simultaneous to that, also speak to owners and create, if you will, awareness and also demand in the business owner space through keynotes and workshops and different mediums to really educate the owner that you've got a bigger issue than you realize exists and there's a better way to realize your life's work. You got to get off the. We got to help you realize your life's work in the right way. So that's kind of where things have shifted to today.
- [68:34]
B
And, and so I guess just help us understand a little bit further what's the actual business of Wise at this point? I mean, you do workshops, you do consulting, you do coaching. It's mostly advisors, it's mostly entrepreneurs. What's the offering or offerings at this point?
- [68:55]
C
Yeah, so there's two sides to the business. One is the advisor side and one is the business owner side. I'll speak to both. So for business owners, we take them through workshops and I deliver, you know, speeches, kind of pay fee for fee for consulting, fee for workshop, fee for, for keynote, you know, whatever it might be. I get hired by business owners and coach business owners on planning their life's work independent of and separate from any financial planning, financial advisory work. So I've retired. I'm no longer doing anything under 1940 act anymore. So I don't deliver financial plans and I don't manage a dollar of money. So I'm doing no advisory services. This is all coaching and education for the entrepreneur. Then part two to WISE is advisor licensing and education. So specifically, we have a boot camp literally coming up here next month where we're training and teaching advisors how to work with entrepreneurs. We charge a fee for that training program. And essentially those advisors get to learn all of the how behind our planning process. They get to utilize the intellectual property, the content, and essentially take what took 20 years to build and say, I can now use this and learn this for the entrepreneur client that I want to work with, which in design will create better engagements, better quality solutions, larger engagements, larger clients, and a better Overall experience for the advisor working with the entrepreneur. So those are the two distinct sides to our business. And then there is an intersection that happens is every once in a while. I shouldn't say once in a while. Quite often that's a poor description. Quite often, Michael, I'm speaking to a business owner group and they're saying, hey Ali, how do I get this implemented? And we might have had a hundred owners last year that reached out to maybe more than that. Probably was a couple hundred that said, I want to get an advisor to help implement this. I've read your book or I've listened to your workshop. Who can you who can get this going? So I tell them candidly, I don't do the advisory work anymore, but I can connect you with and help you find the right team or the right advisor that can help you through this. So there's a third channel, if you will, that would be helping advisors, good advisors that do the right work, get connected with the right clients and advice.
- [71:16]
B
And so as you train advisors through the bootcamp end, you end up building a base of advisors over time who can do this work, trained in the process that you're teaching the entrepreneurs. So it all comes together.
- [71:28]
C
You got it. You got it.
- [71:31]
B
And for the advisor end, I know people are going to be curious when you get into these boot camp style programs. How long is the program? What does it cost? How does that come together?
- [71:44]
C
Yeah, so the program, and I'll say this, so far, the success we've had the past year as we've worked with other advisors and teams on the program has been, you know, quite remarkable that, you know, it's been expansive for those advisors that have been using it. So we're now formalizing a training and boot camp program. To be candid, literally last fall we built out about 100 training videos. We, you know, created a learning management system. I took years and years of IP and started kind of housing all of this in a training and a training model and approach. And this boot camp program, essentially it's a two and a half day intensive. So coached directly by me, two and a half days of core training to basically walk through A, B, C, D. How do you deliver this process? Because the gems are in the details and we want to walk through that entire process and explain exactly how everything's done. You asked a great question earlier. How do you get a business owner worth 30 million to book a second or third meeting? I'll show you how that two and a half day intensive starts them in the program and then we have a series of follow ups that will be virtual coaching, live sessions where we discuss what's working, what's not. How do we expand this to business development? How do you handle these objections? How do you run a great collaboration meeting with the tax and legal advisors? Where are you winning? Where are you not winning? Essentially continually making sure the group gets the appropriate guidance and education and then they have access to, call it 100ish videos on a learning management system where at any point in time, if they're going into a strategy meeting with an owner and that owner is struggling with their paradigm of money, click a button, watch Ali's description on how to have that conversation and go into the meeting being prepared and having a framework to think about that discussion. So and then in addition to that, all the tools and concepts and concepts, excuse me, tools, concepts and content that supports that planning process. So that's essentially what the program is. I'm going to say it's probably going to take an advisor about three years, one year to get good and then maybe three to five years to really be exceptional in this space, assuming they're putting the right work in. And these are advisors that already have. This isn't an educational program like a cfp, like I'm expecting someone to come in. You probably already have your cfp, you might already have your sepa. And I think some of the best advisors we've worked with thus far, they're both a CFP and a SEPA already, they've done that work in advance because they're in it. So our goal here is to make good advisors exceptional and to create an ROI that's substantially more than the program cost itself.
- [74:23]
B
And where do you price the program at this point?
- [74:26]
C
So I reserve the right to change fees in the future.
- [74:30]
B
Absolutely. Understood. Podcast has a date of early 2025, so it may vary depending on when you listen to this.
- [74:36]
C
Yeah, so we did our initial year program for the, call it the Founders Group. We provided a discount and we did it at $15,000 for the first year training program. I expect the street price, call it next year to probably be 25k for that program. And the way I look at that is it's about the cost or the investment. I should say it's about the investment of what one client engagement would be. So if you can go through this program, you can nail one new opportunity, obtain one new client at 25k or 15k or 50k, whatever it is, you've paid for it. But really, I think it's exponential. I Think someone that's already doing, let's just say they're doing 5 engagements a year at 5k or 10k, I wouldn't be surprised if they walk out of here doing 8 engagements a year at 25k and delivering a greater experience to the client. So that's our current pricing. And then year two and three, we'll figure out exactly what that's going to look like ongoing. But at this point in time, everyone I've talked to has been, hey, if I can get all of that value for that, I'm in. We haven't really had any challenges with pricing. I think it's going to be really, I want to pour my heart and soul into this group. So it's going to adjust and morph, I think, over time.
- [75:49]
B
So as you reflect back, what surprised you the most about building your own advisory business, your own entrepreneurial journey?
- [75:57]
C
How hard it would be. It was hard. I was overwhelmed at times with how difficult it is to deliver a great client experience while also building an effective team that can help build that client experience with you. It sounds so easy in theory and it's just so challenging in application.
- [76:20]
B
Where was the blocking point in practice? I mean, is it systematizing? Is it literally team hiring and management and all that? Like, what was the, what was the blocking point?
- [76:32]
C
I think the hardest blocking point, if you will, was having other individuals deliver a client experience in a way that could create the same outcome as what you delivered as the founder, if you will, or as the first advisor. And people care. And I've had a wonderful team over the years and I'm sorry, super proud of my team. But it is hard to find individuals that will deliver a client experience with the same amount of care and love and passion as maybe you did for your clients. Being the first advisor or the owner of the firm, that's really challenging. And then as you scale that business, being able to preserve the client experience while at the same time accomplishing all the other outcomes you want in a business, that was tremendously challenging. And the human emotion part of it, especially within building the teams and hearing people upset and dealing with the emotion, people are emotional. It's always going to be that way. But that was a very difficult journey to go through. Nonetheless, I'm glad I did it, I'm grateful for it. But it was certainly hard. If anyone says, oh yeah, built this business to a billion dollars of assets and it was easy. And I've. I think they're just humble or they're just not being honest.
- [77:55]
B
So what Were there particular things that you found to help get to that point of how do I get my team to deliver at the level that I want them to deliver? That I expect that is in alignment with how I believe clients should be served.
- [78:13]
C
I think first you need to be the example so, you know, you delivering that experience to clients and then making sure that the rest of the team understands exactly what that outcome looks like. And you need to be crystal clear with your vision that this is what the client experience needs to be, and we're not compromising from this client experience. So first you've got to be crystal clear with painting that picture for the team, and then you've got to dedicate the appropriate time and resources to allow the team to get there. And then the hardest part, it's definitely the hardest part for me is when there's someone on the team that isn't meeting that standard, getting rid of them. And that's the hardest part for me. Everyone has a different challenge. I have no problem painting a clear picture. I have no problem developing the standard and being articulate about what needs to get accomplished. But I tend to have a lot of empathy and believe in people like, oh, you know, I can adjust this or we can change that. And I think if there's anything that's really difficult in that equation is if someone's not delivering to that standard or you've got a team member that's okay and good enough, but they're not great. You know, it holds the whole team back, and it's better to set them free and let them go and have them find something where they're a perfect fit for, versus maybe if they're a 7 out of 10 fit for. For your firm.
- [79:38]
B
So what was the low point for you on this journey?
- [79:41]
C
I feel like I can remember it like it was yesterday. We had a. The low point was where I had scaled up the team, and we had probably 12 people at the time. 10 or 12 people, I forget the exact number. And I had moved fast with growing the business, and. And we then tried to implement a lot of process and procedure. And we were a few years into implementing eos, and we had a couple of wrong people on the bus, if you will. And I remember it was probably one of the most emotional days of my life at a leadership team meeting. Four leadership team members. At the time, we had an EOS implementer, and it was just so abundantly clear that two of our leadership team members were not the right fit for the organization and for the vision. And unfortunately, it Was they were in executive leadership roles. They were kind of the ones that were the internal captains of the business. And it was clear that there was a misalignment in both their understanding of what needed to be implemented to preserve the client experience and then also what needed to be delivered to create that client experience. And at the time, we had lost some substantial clients because of this. It was too much unempathetic process that was being implemented that was damaging the client experience. And then it was a lack of care from one particular individual that just, I think, just didn't get. It didn't get what was really needed to create that entrepreneur client experience. And the results were showing. We were having some loss of clients at the time. And. And I knew what the extremely hard decision to do was, which would. And hey, you need to let these two people go because there's so many unintended consequences in there. And I shouldn't say I knew, I felt. But we were in such a fight or flight mode. I was in such a fight or flight mode at the time where we just had to figure it out. And the way harder decision was to say, hey, let's let go of these two people. And the easier decision would be, let's keep trying to figure it out. Let's keep working through this. Let's keep. Let's keep problem solving. This is probably an issue every business goes through. And then you start to rationalize your position. And when the shoe fits, it fits. And when it doesn't, it doesn't. And at that point, I kept wearing a shoe that didn't fit. And then that led me to have to make even more challenging decisions further.
- [82:12]
B
On down the road to eventually let people go and force these changes.
- [82:18]
C
Yeah. And it may have been let it go, or it may have been what I ended up doing. I think, to answer your indirect question, there was. I had to then find, like, we had to go correct the problem. And if you can't deliver at the standard we need to, then let me show you how to deliver at the standard that we need to. And if you don't like that, then this isn't the place for you because we need to get these results and we're not here to waste time on. I'm happy to invest time in meaningful change. And we did that for years. But then when changes aren't working, adjustments need to be made. So eventually just getting back in there and saying, here are the changes that are needed. And I think in some cases that ends up just showing someone the door.
- [83:00]
B
So what Else do you know now you wish you could, like, go back and tell you from 10 years ago.
- [83:06]
C
Trust yourself, I think, is a huge one. If the shoe doesn't fit, take it off. If you want true feedback about your organization, go to your best customers and clients. They'll tell you what's going on. My best clients have always been the source of the best feedback. Internally you can get feedback, it's valuable, but only so valuable externally. The client that's actually experiencing the end result is your best source of feedback. And not listen to any of the noise. And go back to your best clients for your guidance and input as to how you should grow your business. They're your number one source of innovation and growth is keep taking care of your best client and keep them happy and keep growing the next one. You'll build a great business. And if you listen to all the noise around you or all the complaints or the criticisms from this or that, you're probably getting distracted.
- [84:00]
B
And did you have a particular way of doing that? I meet with my top clients once a year and just ask them for feedback. Did you run an advisory board? Was this simply more informal extension of meetings you were already having? How did you cultivate this top client feedback?
- [84:18]
C
Great question, Michael. All of the above. Everything you just mentioned, I've done at some point in my career. We've had an advisory council. We source client feedback. I have lunches and dinners. I have it in groups, individual, all of the above. What I have found the best way to do this is to be very open and honest with your client. Pick your best clients, and you always want to pick the clients you want to replicate. They're the clients that represent your avatar, if you will. Who would we replicate over and over again? And that's the type of client you want to get the feedback from. Because if you, if you pick the client, that's always the squeaky wheel. They may give you some good insights. And I think that is important to get, but they're also not the middle of your. They're not your avatar. So pick your avatars and, you know, go take them to lunch, go take them to dinner and say, hey, you know, why did you pick us? What do you value most about our organization? If there's anything you could change, what would you change? And here's the direction we're growing the organization. Here's the business that we. Here's the business we are. Here's the business we're growing into and we're building. What are your thoughts on that? You know, how do you feel about that? Is there something we're missing? And then another question I like to do is, if you didn't do business with us, who would you do business with and why? And kind of find out from your client, where is it? If they were looking around the corner at something else, what would that be and why would they consider going there? And I think that gives you an incredible view as to what you need to build or what you might be missing. And then be very vulnerable and open to your blind spots. Don't think that you know it all. Go into a conversation curious about learning and about being better, and just put your ego aside.
- [86:00]
B
So what advice would you give younger, newer advisors getting started today?
- [86:07]
C
Don't learn it the hard way. There are many people like me and like Michael, that have made our mistakes over the years and that love helping and teaching and showing others their journey, their wins and their losses and their mistakes. So get a good mentor, read, listen, learn from other people's mistakes. Sign up for programs. I've invested hundreds of thousands of dollars in professional training programs over the years, and it's paid back exponentially. And I think that a lot of times people look at investments in education or training or collaboration groups as a cost, and it really isn't. It's an investment. And I think the more young advisors can get involved and learn from these programs and those that have been there, done that, the faster they get over the learning curve and the better they can build their business.
- [87:08]
B
So as we wrap up, this is a podcast about success. And just one of the themes that comes up is literally that word success means very different things to different people. So you've had this wonderful path of building the advisory firm, selling the advisory firm. Now let's think of it like stage 2.0 and building wise global network. So the business is in a wonderful place. How do you define success for yourself at this point?
- [87:38]
C
Big picture, to me, success is about going out there and accomplishing what you set to accomplish, setting a goal and accomplishing that goal and. Or not accomplishing the goal, but learning and growing to where you can then revise, repeat, and get out there and use what you've learned to then accomplish the goal. So I think at its simplest form, it's attaining that goal. And whether you get there directly or you have to fail a few times to get there, it doesn't matter. The point is you're working toward that goal. And the second part of success to me is enjoying the journey. So often we're so consumed with getting to the outcome by any means necessary that we don't actually enjoy the journey and we're missing out on life. So I think so much of life people live in regret of the past or an anxiety of the future and they don't live in the present moment. And I think achievers, goal oriented people are so concerned with the outcome that they forget to really breathe and enjoy the journey. So for me, success is getting to that outcome, but also enjoying the journey and the steps that take you there and making the choice to have a great life experience while also building. As I mentioned earlier, you want to get a great return on life experience while also getting a great return on investment. So I think the combination of those two in pursuit is how I would look at success.
- [89:05]
B
I love it. I love it. Well, thank you Alif so much for joining us on the Financial Advisor Success podcast.
- [89:12]
C
It's been my sincere pleasure. I've loved the conversation and I appreciate all your intentionality towards it.
- [89:18]
A
Want even more ideas, tools and resources on how to break through to the next level of success as a financial advisor? Check out the leading financial plan industry blog Nerd's Eye View at www.kitsis.com where Michael covers the latest practice management trends and financial planning strategies. And by joining the Members section, you can earn IMCA and CFP continuing education credits along with exclusive member content. Get it all now at www.kitsis. do.