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Financial Advisor Success
Ep 457: Making Financial Planning Less Scary For New Clients By Focusing First On What Brings Them Joy with Larry Sprung
01:30:00
How leading with values and emotional connection builds trust with prospective clients.
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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 457th episode of the Financial Financial Advisor Success Podcast. My guest on today's podcast is Larry Sprung. Larry is the founder of Mitland Financial, an advisory firm affiliated with Carson Group and based in HAWPAG, New York that oversees approximately $200 million in assets under management for 200 client households. What's unique about Larry though, is how he has grown his business in part by helping prospective clients focus on what brings them joy rather than on financial details that they might be more nervous to discuss. In this episode we talk in depth about how Larry starts his prospect fit meetings with open ended questions, including asking prospects what their ideal life filled with joy would look like to find out what's really important to them how Larry has found that this approach can take the edge off when many clients come into the process worried about whether they'll be judged for their previous financial decisions and how Larry's focus on leading with joy questions shows prospects that his firm cares about their overall well being and not just the dollars and cents of their financial life, increasing trust in the likelihood that they will choose to become a client. We also talk about how sharing more business related and personal content on social media helped Larry drive greater engagement with prospects and clients, convincing many they'd want to become clients even before meeting with him personally how Larry's openness about his values, including prioritizing his family by purposefully keeping his practice small for many years, helped him gain and retain clients who share those values and how Larry decided to transition from a lifestyle practice to a business enterprise after his youngest child left home, giving him the time needed to focus on growing his firm and be certain to listen to the end where Larry shares why he decided to affiliate with Carson Group rather than try to build the business on his own or sell to a larger buyer How Larry smoothed the transition for his clients by being transparent about how their fees would change and the enhanced services he'd be able to offer under Carson Group and how Larry ultimately views professional success as his ability to help as many generations of client families as possible, while also helping his staff reach their personal success, which ultimately leads to better service for his clients as well and so with that introduction, I hope you enjoy this episode of the Financial Advisor Success Podcast with Larry Sprung. Welcome, Larry Sprung, to the Financial Advisor Success Podcast.
- [02:41]
C
Thanks for having me, Michael. Pleasure to be here.
- [02:44]
B
I'm excited to have the conversation today and to get to, I think, delve into what I would at least frame as kind of make financial planning a little bit less scary for clients. And, like, this was something that, I guess, really I just had surprised me earlier in my career, you know, the beginning. Like, I was so excited to get new clients. I'm still excited, but, like, I was. I was so excited to get new clients. Like, I'm like, I'm gonna learn their situation. I'm find out their goals. Like, we're gonna give awesome recommendations. We're gonna do cool financial planning analysis. We'll give them all this. All this helpful stuff so they can move forward to their goals. And I. And I only realized probably a few years later, because I'm a little slow on the uptake on these things. Like, I had just missed how scared and uncomfortable a lot of new clients were in those early meetings. Right? Like, money is so personal for so many of us. And we, as advisors, basically ask clients to get really financially vulnerable with us very quickly, which for a lot of clients, leads to, like, a lot of discomfort, a lot of fear, I think a lot of fear of judgment in particular. Right. You know, from there on, they're like, well, well, how am I doing? Well, like, you know, Larry sees a lot of people. Michael sees a lot of people. Like, what's he going to think of me and how I'm doing? Like, am I going to be above average clients? I want to feel good. Like, I know I've. I know I made some financial mistakes. I hope this is going to be humiliating when, like, when he sees what he. What I did to myself a few years ago with my portfolio. Right. And I. And I think. I mean, truly, I think this is part of why it's so hard to get new clients, that a lot of people, you know, the easiest way to avoid fear of financial judgment is, well, if you just don't hire an advisor, then you have those conversations. That's right. You don't need to deal with that. And so to me, there's this. It raises this question, like, how do you. How do you turn those conversations around? And I know you spent time exploring this not only sort of as I frame it, like, how do you make financial planning less scary, but, like, how do you make the whole conversation more positive? Or as I think you put it, like, how do you make it joyful? Like, how do you bring joy to this conversation instead of fear to these discovery conversations? So just for today's episode, like, I'm excited to talk about how we turn financial planning conversations into more positive experiences when so many seem to be really afraid of being judged for what they've done or how they're financially doing.
- [04:59]
C
That's right. And I think your experience, you know, early on in your career is something that I experienced as well. And that's one of the primary reasons of why we are leaning into this joyful impact conversation with families.
- [05:13]
B
So can you just describe that a little bit more? I mean, what does that mean to be leaning into joyful impact?
- [05:21]
C
So I think what we've done as a firm is we've changed and really taken a 180 in the conversations that we're having with families. Instead of being very number focused and very financially focused, especially early on, we're not focusing in on any of that. We're really focusing in on with the families that are exploring, working with us. First and foremost. Our first meeting is called an is there a fit meeting? And really what we want to determine is, are, is this family a good fit for us? And equally important for them is do they think we're a good fit for them as well? And we ask the family pretty much to show up as they are. No financial documents, no financial information. If there are certain things that they want to discuss, they can bring that with them. But we want to, you know, going back to that, you know, challenge that you had earlier on in your career, in terms of people feeling kind of intimidated and uneasy, we. We want to make it as disarming as possible and as open and honest as possible. And what we found is, at the end of the day, it's not really about the money. Right? Everybody needs to. And advisors, as advisors, we need to be proficient in figuring out how much money somebody needs for retirement or how much money somebody needs to send their kid to college. But when that family's walking through the door, they're pretty much convinced at that point that we have at least that skill set. We're good at that. So instead of focusing on that, we focus on the things that are most important to them. We want to understand, well, what do you want this money to do for you? You know, what is your game plan for the money? Before we even get into how much, how much do you need? What do you want to do? Do you want to send your daughter to medical school debt free? Is that what makes and brings joy to your life? Do you want to walk through the doors of a community center that you and your family had a hand in constructing or building? Or is it just simply, you know, you want to go down to your beach house and sit on that deck and overlook the ocean and drink a cup of coffee, whatever that looks like for you? We spend, you know, probably 80 to 90% of that first meeting talking about what that looks like to them, what that means to them, and what that would feel like if they were able to accomplish or, and, or do those things. And that's really where we spend the lion's share of that initial meeting with that family. So.
- [07:56]
B
So can you walk me through a little bit more? It's just the questions you use, the way you set the, set the meeting with the client to do this. I'm just, I'm envisioning this is not necessarily what they thought they were going to be getting as a conversation in coming in with the, with an advisor. So I'd love to hear more of how you actually get this conversation going with clients and what the, if there are like, go to questions that you typically ask to open this thread.
- [08:31]
C
Sure. So, I mean, we do prepare them for the meeting because ultimately, I think most people who've worked with an advisor before conditioned that if they're looking or searching for a new advisor that they want to bring, they want them to bring these financial documents with them. So we try to prepare them as much as possible in advance and share with them that really this meeting is simply a fit meeting. You know, we've had the luxury of working with second and third and now approaching some fourth generations of families that we've worked with from when I started in the, in the business. And we say, you know, the primary basis for that type of long term relationship really comes in the outset to making sure that there's a fit. So we outline it very, you know, proactively. At the beginning, we tell them that there's no need to bring documents, just bring an idea and be ready to discuss kind of what their goals and objectives are and what brings them joy. And I would also preface this by saying, Michael, that a lot of the inbound traffic that we get are from either referrals, coi, social media, so they already have an idea of what we talk about and this joyful slant or joyful conversation that we bring to the conversation. So I would say for many of the people, it's not too surprising, but with that being said, we tell them up front you know, we're going to spend the majority of the first meeting learning about you, learning about what brings you and your family the most joy and what you're striving to continue that joyful nature in your life. And we're also going to spend some time telling you about us and our practice and how we're compensated, all the important stuff, if you will, that you would need to know to make a decision whether you feel we're a good fit for you. And through the conversation we're going to be looking and evaluating whether or not you're a good fit for us and you have challenges and issues that we've successfully worked families through and help solve. So that's how we get them there. So it's not too surprising when they walk through the door. And then some of those things that we have conversations with once we're in the meeting are really just asking some, you know, general open ended questions and letting them talk. Right. And seeing where the conversation goes. So some of those, we might start out just as simply as saying, so listen, you know, we know you're here, you have some challenges. Before we go into those, you know, if you could create your ideal life filled with joy, what would that look like? You know, and let them talk. And then usually there's something out of that conversation that will drill down a little bit further to uncover, you know, what's really important to them, why they want to have that joy in their life. You know, if they say, as my example earlier, that they want their daughter to go to medical school debt free, you know, typically there's some type of issue or challenge that happened in one either the husband or wife's life, that they were either riddled with debt coming out of school, or their family, their mom and dad couldn't afford to send them to school and they want to have the pride and joy of being able to do that for their kid. So it's asking those open ended questions, not necessarily about the money, but about those things that the money could help that family accomplish. That's just going to allow them to beam with pride and joy. And that's really at the heart of that initial meeting and that conversation to really understand what that family is all about and what really drives that joy factor for them.
- [12:04]
B
So I'm, it's, there's something striking to me, you know, you, I mean, as you frame that question, like if you could create your life filled with joy, what would that look like? I don't even know what it is or how to articulate it. There's. There's something strange to me that catches when you add that. That part in the middle filled with joy. Because I think. I think a lot of us have some version of, tell me about your goals. Tell me about your ideal life. Tell me about your objectives. But, like, we don't. We don't use the word joy. Like, that's a. That's a unique one. And I don't know, like, even just hearing it, I. I feel some kind of strange, slightly visceral reaction when you say filled with joy that I'm trying to figure out. Like, does that hone the question?
- [13:00]
C
I.
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B
And this may be entirely me projecting. Like, there's almost a small piece that it feels a little bit. I was gonna say over the top. Like, joy's a. Joy's a big word. Joy's a big. A big level. It's not even. Like, if you could create your ideal life that makes you happy, what would it look like? It's like, no, no, no. We're gonna create your ideal life filled with joy. But I'm sure it's very intentional for you and probably something that you've tried or experimented or explored with over time. So I'd love to hear a little bit more, like, why joy? Where did joy come from? Am I the only one who ever voices anything to you back to you wondering about that word?
- [13:44]
C
No. I mean, it's something that has resonated with those that know me, follow me, and have. Have known me for a while. So kind of. Let's take a step back for a second and how this, you know, concept of joy really iterated. And really, it first started when. About five years ago, when I launched my podcast and the Midland Money mindset. And my wife, who's our chief marketing officer, said, you need to have a question like this closing question that ties together each of the episodes. And I was like, great, you're the marketing person. Figure it out. And what ended up happening was she came back two days later or so with the question, what did you do today that brought you joy? And that was going to be the question. And we started using that question, and it resonated with guests. I mean, they lit up. When we started asking them that final question, it was like, wow, what a great question. And then we started putting that question on T shirts. And, you know, I tell a story of being down in Disney World, and we were waiting, my family and I were waiting on Rise of the Resistance, and. And I'm wearing one of those shirts, and the Disney cast Member who's at Rise of the Resistance. They're very character driven, so they normally don't break out of character. But this gal that day broke out of character, looked me in the eye and said, I ate a bag of Hershey Kisses. And I was like, what? I looked at her, like, so, so strangely look back at my family.
- [15:23]
B
Is this like a Star wars themed thing? I'm not realizing, did I miss a Hershey thing in one of the episodes?
- [15:28]
C
Yeah. I'm like, what's going on here? And my older son looks at me and goes, she's answering your question. I was like, wow. So then she started asking my question, and then I started paying attention. And as I went through airports, as I went on my daily, you know, walks, as I went to conferences, people started coming up to me, taking pictures of that question. They started blurting out, I had one woman, I'm sitting in the front row of the plane. She goes, oh, I ran a marathon yesterday. And I was like, what? She goes, oh, that's what brought me joy this weekend. I was like, wow, that's great. You know, and we started a conversation, and I've seen countless people walking past people in airports, their eyes glued to my shirt. So we knew we were on some onto something with that course question. And when we started leaning into it in social media and we started capitalizing the word joy, and then when we wrote to people, you know, happy birthday, hope you have a great day, and even more enjoyable year ahead, and we capitalized the word joy, what ultimately ended up happening is people that I knew, people that were clients, people that I didn't know, started responding back to me with that same verbiage capitalizing joy and, you know, writing enjoy the trip with joy capitalized. And I started realizing, you know, this is something that we are really leaning into. And I think one of the issues that we're experiencing today is we're, you know, the world is somewhat divisive if you haven't seen. Right. You know, there's so much division out there that I think that this concept of joy, you know, kind of brings people together. So we knew we were there. And like I said, when people are coming in to meet with us, a lot of us, a lot of them already see that and that tact, you know, that those words that we're using, and it's something that they feel attracted to. I had a client just a couple weeks ago, he was on a hike. His wife took a picture of him from behind and sent it our joy for today, you know, so it's resonated with the families we serve and those others. So. And just to kind of go back to what you said about happiness and joy, you know, my view, and this is my vision, not everybody may share this. I think happiness is a state that we all strive to attain, but it's unattainable because happiness is a constant state. I think it's almost unattainable for us to be completely happy all the time. Joy is something that gives us joy on a consistent basis, and it's something that we can attain and we do know what gives us joy. I don't think many of us understand what. Because it's unattainable, what we can do to strive for happiness. But joy is something that is so attainable and tangible that we do know. So I have not seen any type of, you know, negative response to that question. I have had some responses in terms of, well, you know, I've never really thought about that. And I'm like, well, let's spend a few minutes and think about it. You know, what. What are you looking to do over the next five, 10, 20 years that would bring joy to your life? And then we start driving down there. The only time we had a negative response, which we ended up cutting bait on the conversation in that moment and tabling it, is we had a new family, a newer family that we were working with, and mom was meeting with us, and she unfortunately had just recently lost her daughter. And our presentation popped up and it said, you know, the first question on our first slide when we're having the this conference, what did you do today that brought you joy? And I looked across the table at her and I could see her eyes starting to well up. And I go, you know, you're not feeling very joyful today, are you? And she looked at me and she goes, no. She goes, you know, it comes and goes, and I don't think I can talk about anything joyful today. And I said, okay. I said, then we're going to table this for today and we're going to talk about other things. We'll talk about more numerical things at that point. And we, we cut bait and we said, you know, when you're in a position that you can feel that you can talk about these joyful things, we'll revisit this conversation because ultimately, you know, we want to help you restore some joy to your life and work with you on that. So that was the only instance that we had that situation. But it really resonates with, with most people.
- [19:45]
B
1 and look, even for the client who has right. Has the kind of challenge that you'd expressed, right? For better or worse, like, okay, why? I know exactly where this client is now. I know what's going on, right? Like, I, I didn't have to ask a question of, tell me what's going on in your life or did anybody die recently? Has there been any significant change in circumstances that we should be planning for? Right? I. You put a question up about what brought you joy today, and they had a unauthentic response. And you could then respond in turn to say, like, okay, well, let's just table that conversation for now, but thank you. I understand now more of what's going on in your life and can respond to that appropriately, right? There is just like in this theme around joy, there is something that really resonated to me in what you said that happiness seems to be this thing that, you know, we try to attain as a state of being, right? Like, ideally, I would just be happy all the time. Like, I could have happiness. I could have work life, balance and be happy. And then that gets very difficult for lots of reasons that philosophers have watched them poetically about, for, For a few millennia. But, but I highlight it because it struck me the way that you framed it. Like, we, Happiness is a state, or at least one that we strive for, but joy is fleeting just by its nature, right? We. We talk about moments of joy is where it naturally occurs, right? Even your question, it's not like, are you joyful today? Right? It's not like, are you in a state of joy? Like, are you happy today? Are you happy with your life? It's like, what brought you joy today? Was there. Did you have a moment? What was the moment? What was the thing? Right? Marathon runners, high bag of Hershey kisses, to each their own. And in that vein, it does feel more attainable. I can have moments of joy even in some challenging times of life. I don't know how I'm getting a full state happiness. But moments of joy, we can work on that.
- [22:07]
C
I can think of gratitude almost, right?
- [22:10]
B
I can think of some of those and how I want more of those moments.
- [22:13]
C
Right? Right. And I think joyful is the same way there are moments. And I think as we go through our lives, you know, we use that word, you know, that gauge happiness, if you will, right? And we're like, oh, well, I'm not really happy all the time, so how am I in the state of happiness? But as you mentioned, I can pinpoint a couple of things that I did each day that brought me joy. And, you know, rather than focusing on this constant state of happiness, I'm going to concentrate on these two or three moments of joy that I've, you know, experienced. And that's where my focus is going to be.
- [22:45]
B
And so now I can have some, some, some moments of gratitude for my moments of joy, which, you know, just. There is a lot of interesting research out there about how taking, taking pause to reflect on moments of gratitude can materially impact our mood and our mental state in very positive ways. So now take me back to this meeting because I'm still just trying to visualize further the questions or the series of questions that you ask. You just mentioned, I think a presentation as well. I'm not sure if that's a presentation, slides you have in your fit meeting or if that's like a separate presentation thing that you do. Like, walk me through a little bit more. I mean, like, how literally are you doing this? Are you staging this? Are you executing this?
- [23:37]
C
Yeah, so in the meeting, we do, we, we use a PowerPoint just to keep the flow of the, of the meeting. Okay. And to make sure that we're hitting, we call it our value proposition kind of, you know, the, the probably the beginning, 60 to 70% of it is focused on the family and what brings them joy. And it's, there's not a lot of slides. There's really like one or two where we talk about what brings them joy. You know, in terms of specific questions during that 60 to 70%, we don't have necessarily these are the questions that we're going to go through. Because, you know, as you've mentioned, I think planning and thinking about life in this way is, is very personal. Right. Financial planning is personal. Joy is very personal. So we start out with that. You know, what did you do today that brought you joy as a, as a framework? And then what they're looking to accomplish that brings joy to their lives. And depending upon what they say and what is important to them, that will drive the conversation. And we'll drill down to find out a little bit more in terms of why are they going to derive joy? Why is that important to them? What makes that so joyful to them and their family? And I think the important thing to remember here for the other advisors listening is, you know, you have to be very mindful, especially when you're sitting with a couple that, you know, if one is answering the questions, you know, if the husband's answering or the wife, whoever's answering it, you want to make sure. That you're addressing the other person in the room because they may have different viewpoints on what brings them joy. Right. You know, one person may say right off the rip, hey, you know what's going to bring me joy? 65, I'm retiring, I'm done. 60, I'm retiring, I'm done. Right. And they may say that will bring me a lot of joy. And then it's a matter of, you know, why is that important to you? What do you expect to do that will bring you joy following winding down work and the other spouse may be sitting there and maybe, you know, I'm not interested in necessarily going a conventional retirement route. So, you know, so have a set group of questions for us is not something that we typically do. We start out with that opener and then we really want to drive those open ended questions to learn more. And we're very intentional about making sure that everybody who's in that room that's coming to that meeting that they're being heard. And we have an idea if some of these things that bring them joy individually, we know what those are. And maybe there are some of those things that bring them joy together and they are on the same page. But we want to make sure that everybody's in the conversation. And then the remaining 30% of the meeting is really about us, how we work with families, how we organize their financial life. Probably the one visualization that we use that resonates so well with families is we show them this slide where, you know, they're at the center and they have all these financial planning, business, personal things that they have to address to, and they're all disconnected and kind of all over the place. And then we show them the next kind of picture where we're at the center, they're at the top, and all these things are organized around us. And we say that we work to make sure that these things are addressed, attended to and reviewed on a regular basis, organizing that chaos of their life. And that right there kind of, you know, resonates super well with them because most of them are in some kind of state of, of chaos at that point. And that's something that really, you know, can, can resonate with them and they, they attend to. So. And then the rest is really about how we work with families, you know, how we're compensated, et cetera. And you know, then we close out that first meeting typically.
- [27:26]
B
So. All right, so two questions. One, just, just wondering, is this something you'd be willing to share with folks who are listening? I know it's very specific to your process, but just where I'm hearing all these, like, visualizations of the slides, I'm like, I'm curious just to, like, see what it. What it looks like. Is that something you're comfortable to share?
- [27:47]
C
Yeah. So one of the things that we are doing is we are going to be sharing how we've basically created this joyful impact within our practice. And we are planning on sharing this with other advisors through a webinar. If we have a web URL, joyful advisor.com where people are signing up now to get on the waiting list. And once we have the webinar ready to go, we will be sharing all of the secrets and behind the scenes of how we've integrated joyfulness to our practice and how it's led to record growth as a result.
- [28:26]
B
So I guess in that vein. So for folks who are listening, this is episode 457. So if you go to kitsas.com 457, we'll have links out in the show, notes for, I guess, like, the FIT meeting presentation deck that Larry uses and then the Joyful Advisor website, if you want to actually go and sign up for the waiting list and get to participate in the webinar when it's available.
- [28:50]
C
Yeah. Thank you.
- [28:52]
B
Thank you. So then my second question now, I guess I'm dialing slightly back into the. The FIT meeting and the flow. So I guess what. What question or which questions are. Is. Are the ones you actually use when you kick off the meeting? Because you'd mentioned earlier, like, if you could create your ideal life filled with joy, what would that look like? But I know you also have your, like, what did you do today that brought you joy? Questions. So, like, which. Which questions actually appear in this meeting as you're trying to get clients into this? Let's. Let's talk a little more about joy mindset.
- [29:29]
C
Yeah. So we kick it off the first slide showing, what did you do today that brought you joy? And most people who come in understand that we already talk about joy quite a bit. And then we lead into what brings them the most joy. We'll show them the agenda, kind of our goals for the meeting in terms of talking about their joy, going over how we work with families and how we serve them, and then what the next steps would be. And then we dive into what, what, you know, what their joyful life looks like and what brings them joy in their own personal situation. And then depending on how their answers there go, you know, we may have to delve a little bit deeper because maybe they're not in a position that they've ever thought about that. And we try to spur some. Some conversation around that and say, you know, what. What is most important to you? What do you value the most? What, you know, what do you do on a. On a weekend that brings you a lot of joy? What do you do on. During the week? But we really want to dive into and hopefully get them talking right. Right off the bat about their joyful life and what that looks like. And then, you know, be very. Be very mindful about the questions that we go through from there to make sure we're drilling down and we have an understanding of what that means to them. So we understand what that means to them, and we're on the same page as what that means to them, and it means to us the same thing.
- [30:46]
B
And so how does this meeting wrap up?
- [30:53]
C
So typically, we'll wrap up as to. We will ask them, we will tell them as far as next steps, as far as we're concerned. We will reach out to them, or they can reach out to us with any questions, and we'll circle back to see if it's a good fit, if they believe it's a good fit for them, and we'll let them know if it's a good fit for us based on the conversations. If it is a good fit, then the next step would be to get some of their financial information because ultimately they want to have an idea from a financial aspect how we may be able to help them. We don't want to do that in the first meeting, as we've discussed kind of what our process is. But in that second meeting, we would have a little bit more of a deep dive, taking a look at, you know, how their assets are positioned and then having them come in for a second meeting with, where we would talk about a little bit more in depth how their assets today work towards their joy and how we may see things differently, the same as they're currently doing, and what their financial situation would or could look like if they were to move their assets over to our firm and what their cost of investing with us would be. So we outline all of that in the second meeting and then really at the end of that meeting, meeting two, which is more of the nuts and bolts, the financial stuff at that point, we're either we're looking for a commitment to either move forward or they feel it's not a good fit. At that point, for some reason, we want to have a conversation.
- [32:29]
B
Okay. And so, so nominally, it's it's kind of a two meeting sales process, a fit meeting, an initial fit meeting, and then a deeper dive into their finances and numbers. And then we decide if we're going to work together.
- [32:44]
C
Correct.
- [32:45]
B
So do you, do you per, like creator build any kind of deliverable. Is there an initial plan or a preliminary recommendations or anything along those lines, or are you still mostly in data gathering phase and just verbalizing some directions of things that you might do and inviting them to work together if they're interested?
- [33:07]
C
Yeah, so we do not do any sort of financial plan or, you know, direct deliverable, recommendation wise. Okay. Because again, I think as we move forward through the process, we're just talking in generalities, we'll want to learn more in terms of when we actually execute because things can sometimes change along that route and we feel that again, every advisor does things differently. As you know, I feel like giving a financial plan right off the bat sometimes is. Well, it is a lot of work and I don't feel like we are in a position that we want to give that away. We want to make sure that we have a commitment from the family that we're going to move forward and work together. And then simultaneously, if we gain that commitment, we're working simultaneously on constructing that financial plan, which obviously at this point we have a lot of information for, and also start working with them to consolidate their assets and, you know, start working towards a game plan on how to best direct those investments going forward, whether it's making changes, keeping things the same, whatever that means for them.
- [34:18]
B
So I guess I'm just curious when, when, when the initial process is so focused around this joy conversation, like what, what did you do today that brought you to joy? What are you looking to accomplish that brings, brings joy in your life? Because I know you've, you've done this for a long time, Larry. So I'm just wondering, like, what. How did the, how do the client responses change when you started having joy questions instead of, I don't know, the traditional tell me about your financial planning goals. Like, I mean, do you, do ultimately you still get to the same place or is there actually something different in how it shows up for you ultimately?
- [35:08]
C
Michael? Yeah, Michael, I think at the, at the end of the day we end up in the same place. I think it's just a little bit later down the road. But I think what happens is up front they understand and they're like, you know, I understand a little bit better about what your goals are and how you're going to help Me, because you're not necessarily concentrating on the assets, you're not concentrating on the money, you know, and the response we're getting is, you know, I feel like you have a real good sense of who I am, where I want to go and what I want to do. And I already know, and that's why I'm here. You know, that you have the capabilities and the ability to do the number stuff and the, and the financial stuff. But I feel like nobody's really asked me these questions before. You know, in many cases we're just adding money to various accounts so we can say we're saving towards, you know, 529 plan for college or we're saving to a retirement account. I don't really ever know that. My advisor really hasn't talked to me about what brings me joy or what this money is really going to invoke in me. So the response has been a lot better. It's been eye opening. I think we've gotten people to talk a lot more and open up a lot more since we've made this transition from, as you mentioned, like the traditional type questions to more of this joy focus in those initial meetings.
- [36:38]
B
Yeah. Strikes me as, as well, just you, you've, you've mentioned it twice now that by the time prospects show up with you in your office or they've gone through whatever process they are to decide that you're the one that they want to talk to and spend some time with, they have likely already decided that you're good enough at the financial and number stuff or they probably wouldn't have come in and therefore you're not spending much of any time on the financial and number side of things or I guess like proving your competency and capability to do technical financial planning analysis and recommendations. Like, not that it's not there and doesn't come later, but just I'm it. It resonates to me how you framed it. Like, I just don't need to do that stuff in the first meeting or two because I don't. They've already decided I'm good at that or they probably wouldn't have taken this meeting with me. That, that's not the thing I, I need to prove here. I'm going for connection and understanding them and just making sure they understand our, you know, our pricing and our scope of services and how we work with people. But not are we good enough to do a financial planning analysis.
- [37:54]
C
That's right, Mike. I mean, people do business with people they know like and trust. Right. As we've spoken. You've spoken about many. On many occasions. Just to. Just to kind of give you. I'll give you, you know, a quote from an existing family that we work with. She said this out in the open during an advisory council meeting that we had back in May. And she said, you know, I was following Larry and his family for seven years. She wasn't a client. We didn't work with her and her family. Seven years. I followed him, and I decided to finally, you know, I had an event in my life that I had to make a decision about using an advisor. And she's like, I've watched him. I watched his family. I watched his boys grow up. And she said, if he can be a father and raise the boys that he's raised the way he raised them, then he's got to be good enough to manage my money and help me through my financial life. And that. That, to me, tells it all right. I think that's the important thing. People want to know that they can trust you. They can like you. You're somebody that's out for their best interests. And I think by leading with that Joy Peace and not focusing on the money, because many of the folks already, as you mentioned, feel comfortable that we're able to do that. We really want to dive deep and learn about them and understand them. I think the world has changed quite a bit. I know the world has changed quite a bit. So since when I started in this profession, you know, I talk about a lot all the time. You know, when I started in this profession, it would take 4, 5, 6 meetings to even get a commitment from a family, because you needed that six hours for them to get to know like, and trust you. Whereas now, through social media platforms like this, podcasting, YouTube, et cetera, we've shrunk that down. That. That's not even necessary. I mean, we have people that come in for, is there a fit meeting? And before we even get started, they're like, you know, you know, we want to work with you. And I'm like, okay, but we're going to go through this process anyway because we want to make sure that it's a good fit for us and for you. And we want to make sure that you are armed with all the information, and we're armed with all the information we need. So I think the world. I know the world has changed quite a bit. So.
- [40:11]
B
So now tell us about your advisory firm. Help us understand the. The broader context of the business that you have built around these conversations of leading with Joy and just more broadly, the firm that you built, you've been doing this for many years now.
- [40:26]
C
Yeah, so we've had a couple of, you know, just to kind of bring you back to the beginning and bring you forward. You know, we've had explosive growth in roughly the last four and a half and you know, four and a half to five years. So I started in the business back in 1997. If you saw Wolf of Wall Street, I was at a firm just like that. And if you think the movie was over the top, I will tell you in real life it was worse. You know, that's the way it was. But I started my independent practice in 2004, was affiliated with securities America for about seven years through 2011, then shifted to my own RIA. We were SEC registered from 11 to 20. And really during that time, from 2004 to 2020, my practice was a very good lifestyle practice. We had a very small team, me and one other person, and that was really by design. I am a family guy through and through. I lost my mom, she was at the age of 47. It was the day after my 23rd birthday. So because of that. And she battled cancer for many years while I was young as well. Family's always been important to me. And then a month before I launched my firm in 2004, unfortunately, I lost my brother in law to suicide. And many people know that I'm very active in the mental health community and with mental health charities, et cetera. So that reinforced that family importance for me. So as my youngest, my oldest was born in 2003, my youngest in 2006, so I wanted to be there for all their hockey games, all their life events, etc. So we had a lifestyle practice for that reason. And then in 2020, my older son started college. My younger son, at the age of 15, decided that he wanted to continue to pursue his dream of playing hockey at a very high level and moved away from home and, and went to Minnesota and moved out there to boarding school. And my wife and I were looking at each other and basically I had all this newfound time and I was like, yeah. And I was like, you know, empty nesters earlier than we expected. And I said, you know, now's the time for us to really grow this from a lifestyle practice to more of an enterprise practice. And at that time it was an SEC registered investment advisory firm and RIA and I was doing a lot of things that were bogging down my time. So I had to make a decision. And that was an inflection point in my career and we could talk about like the options that I looked at. But ultimately I decided to at that time to affiliate with Carson Group, which we're still affiliated with. When we did that, we were at about, we had about $54 million under management at that time. And over the last four and a half, five years we're now, you know, at about 200 million in assets. So we've grown significantly in that time frame that we started focusing in on, you know, moving from a lifestyle practice to an enterprise. It also coincides with the launch of the podcast that question and this shift, you know, to joyfulness and talking about the Joyful Advisor as well as becoming very active on social media. So we've grown the practice significantly as a result of, you know, having the support of Carson Group. That's been tremendously helpful coinciding with the fact that, you know, we made this, you know, shift in mindset from wanting to be a lifestyle and moving more towards an enterprise practice.
- [44:08]
B
So kind of a feels to me like a very seasons of life kind of transition. You know, I wanted to be, I wanted to run the firm one way when the kids were, were home and I wanted to be present while they were growing up. And then we got past that stage of life and now I've got more time and other ways to focus and so we, we go a different direction in the practice.
- [44:32]
C
I think that's one of the greatest things about this business and this profession is that, you know, just that you can have the ability to go as hard and fast as you want or slow. And you know, I still today, you know, spend a lot of time with my family. Yesterday I took the day and my wife and my two boys, we went down to the New York Stock Exchange, had lunch at the 1792 restaurant there, did a tour of the exchange and then was there for the closing bell. So. So I think, you know, I'm still take that time off. But yeah, I think, you know, that's one of the great things about this profession. It allows us to do that. And I would also say I took a lot of flack in those early years because I didn't go to many conferences. There are people that are like, you know, in the last four years, five years are like, Larry, where how you been in the business? 20 plus. I've only seen you the last four years or five years. And I was like, yeah, because I was at my kids hockey games, I couldn't bolt out to go to a conference. I, I was spending that family time and people are like, oh, well, why didn't you just grow this thing, you know, pedal to the metal from the start? And I said, well, you know, those 18 years, or my younger son's case, 15 years that I had to be with him, I don't get those back. And I wanted to be very intentional about making sure that I was there and, and you know, involved in all those aspects of their lives.
- [45:53]
B
So I'm, I'm trying to figure out how to frame this question in a not negative way that it's going to sound, but like, do you just take it? You, you don't have concerns of, you know, I did I miss out on something because I hadn't been growing and compounding this business since 20 years ago. I only, only quote, like put the pedal to the metal over the past five years.
- [46:14]
C
No regret whatsoever, you know, because I guess from my perspective, which may be different for others, right. I have the persp of seeing my mom, you know, pass away at 47, not making it to retirement, saw my brother in law pass away at 27, and you know, there was no, there was no contract, no guarantee to say that I was going to be there throughout my boy's life. So the fact that I've been there all along the way, I have no regrets whatsoever. And you know, we've created a culture at the firm, you know, with our stakeholders as well as the families we serve. When my kids were young, I take off, you know, June, July and August, every Friday. And there are clients still today that think I'm not in the office on Friday during the summer because they, they got used to that. And I would say that actually has been a great magnet for families that we're serving because they see, just like that family, that woman I mentioned earlier who said, I saw how you've raised these boys, I find that a lot of the families we serve are also very family oriented. Right? They, they feel very aligned with, you know, kind of our goals and our values. So I have no regrets whatsoever about that, you know, at all, at all. I, I cherish every one of those moments that I got to spend with them and my wife over those years.
- [47:38]
B
When I think there's something powerful to, to reflect there. Even from the client perspective, you spent time taking Fridays off in the summer to have flexibility with the family. And I think for a lot of us there would be this fear of, well, our client's going to be upset that you're not available on Fridays, like, why are you taking off and I'm paying you all this money and you don't work on Fridays. What's going on? And yet for your clients that are our family aligned as well and find resonance to that, like, it's. It's literally the opposite. It's. Larry seems to have good priorities about family. Those align to my priorities about Larry. They're about family. Therefore, I like and trust Larry. So I actually want to work with Larry more because he's willing to say, I'm not coming in on Fridays during the summer to be with my kids.
- [48:34]
C
And I would.
- [48:35]
B
And that's a plus.
- [48:36]
C
Yeah. And I would say this. Keep in mind, at that point, it was me and one other person right. At our firm. I had myself and one other support person. That was it. And to your point, I can't say that I wasn't concerned about it back then, and I just did it. I was concerned. So year one, I only did Fridays during the month of June. And then the next year, I did June and July. And what I started seeing from a business standpoint was my business was actually increasing during the summer, when a lot of advisors say that their businesses aren't mine, was increasing. And I think to some degree, it was because I was taking that time off. I don't know if it was just because I was a little more refreshed. I don't know if it was because I now had to cram basically five days of work into four. But, you know, it's like that vacation mentality. You get more work done before and right after the vacation. Right. Because, you know that's coming. So I created that for myself. And I can't say that I wasn't concerned about it from the start. I was, and it turned out to be the complete opposite. For those reasons and the reasons you spoke about earlier, which is people started really feeling aligned to, you know, me doing that. And, you know, I think the important thing there was that I wasn't just taking Fridays off for the heck of taking Fridays off and not communicating that to the families we served. I was taking Fridays off to spend that time with my family, and I was communicating that to the families we serve. So they knew exactly why I wasn't in. It wasn't, oh, Larry must be out playing golf, or Larry must be on his boat. No, Larry was out with his boys doing something fun that day or going to a hockey game or something along those lines. And they were aware of it, which I think is a very important piece to that part for other advisors out there. I think a lot of times we don't want to share that because we don't want them knowing. But, you know, as long as it's things that you're comfortable with, I think it's worth sharing because if they know, then they're less likely to have an issue, challenge, or concern.
- [50:35]
B
Yeah.
- [50:36]
C
Why?
- [50:37]
B
I mean, I'm glad you said that, because to me, then the, the next thing that's even more awkward, I think, for most advisors than, you know, telling clients you're not working Fridays in the summer is telling them why you're not working Friday Fridays in the summer. So I'm. I'm struck by your point of. No, no, no. I told them exactly why. It's not even just like, be with my family, but like, I'm doing this thing with my boys. And that just makes it even more resonant because we mostly end up attracting clients who have values similar to ours, because that's who we end up creating residents with, with clients. So if that's what you're leaning into, you're much less likely to get clients say, what the heck are you doing taking Friday off with your boys? You're going to have clients saying, that's awesome. I have to figure out how to adjust my work because I want to do that on Fridays with my boys the way that you do, help me with my financial plan. So we can do that too, right?
- [51:31]
C
Yeah. We have a family who, that we work with for the last several years. He came up to me at an event that we had for the families we work with, and he said to me point blank, he's like, you know, I don't go on Facebook really at all. But he goes, I log in once a week just to see what's going on with you and your family and the firm. And I'm like, you know, that's, that's powerful. So I think that's the, you know, the important stuff. So I think, and, you know, we could talk about it if you want. You know, 2019, there was a big shift for me right before we made this, this big move. You know, I was not sharing a lot on social media. I was not sharing a lot of personal stuff. And there were a couple of things that really significantly changed. And we ended up taking a 180. And that's been hugely beneficial to the growth of our practice as well.
- [52:20]
B
So I think I'd love to hear more about what changed for you in 2019, especially reflecting, as you said earlier, like, you're 20 plus years in the business. At that point, you're 15 years with your own firms. I mean, you've been doing this a long time at that point with some very establish patterns of what you do that we all get into in our behaviors after some. Some period of time. So what. What changed? That shook all this up and. And created a transition.
- [52:52]
C
Yeah. So for me, I was not very open to sharing. And, you know, as I mentioned, my wife's in the practice on the marketing side, and she was like, you know, you got to share this stuff. People want to know where you're going, what you're doing. And I'm like, I don't think so. So my. My youngest son was bar mitzvahed in 2019. Instead of taking a bit or instead of throwing a big party, we ended up taking a family trip to South Africa going on safari. So my wife said, listen, let's use this as a test case. We're going to share this trip with your social connections and let's see what happens.
- [53:29]
B
Okay?
- [53:30]
C
I said, okay, let's do it. So what we did was basically, you know, put out a video or, you know, some kind of commentary once a day of our trip and our adventure throughout South Africa. And what I came back to was an email from one of the families we serve, and she unfortunately had copd, so she couldn't leave the house because she had an oxygen tank, you know, couldn't leave the house very much. Definitely couldn't go to South Africa. And she sent me an email and said, you know, I really appreciate you sharing your journey on social media. I logged in every day to see what was going on, because South Africa was a bucket list trip for me. And it's a place I know that I'm never going to get to, but I felt like I went on safari with you and your family for sharing every day. And it was in that moment that I was, like, awestruck, Michael. I was like, oh, wow. I was like, that's powerful. And I'm like, I get it. And it was from that point on that we got very active in or on social media. And it was really from there that we've created this following and really has created a lot of opportunities for new families that we're working with who are following us through those channels. And it was a big inflection point. You know, it was in that moment that, you know, like you said, once you're doing this for a long time, sometimes you get into those, you know, those routines that you feel comfortable with. You kind of may be skeptical about changing. But I think from time to Time you have to really listen to those around you. And in this case, it happened to be my wife who, you know, really had a sense of what was going on. And it's really been a game changer ever since that date and, you know, making that mindset shift that I made back in, you know, early 2019.
- [55:21]
B
So, so now I'd love to come to the, the, I guess the, the subsequent year transition, the 2020 transition, as your oldest goes to college, your younger goes to Minnesota, you decide you want to grow more. And there's a lot of stuff you're doing in the town of the firm that you don't want to do. So you started, started looking for partners. So I guess just before we literally get to that process of like going out there and figuring out what you wanted and how to make the transition, just can you paint the picture of what the firm looked like at that point of, I don't know, like assets or revenue or client count? Like, just give us some context for where you were.
- [56:06]
C
Yeah. So, I mean, at that point when I started looking at this process, we were probably in the mid to upper $40 million range. Had myself and one support person at that time as, as we entered the beginning, because I started exploring this a little bit towards the end of 2019 because we had an idea that my son was going to go away. So, so we, we started kind of exploring this then. So we were probably in the, you know, upper 40 million dollar range.
- [56:40]
B
And did you say earlier though, that you were SEC registered?
- [56:43]
C
We were, because we were in this unique place where New York was 25 million and under, you know, but so we're in that donut hole. And our compliance attorney at the time said, because I had known other advisors in New York who were getting letters from New York saying, hey, you're over 25 million. We're not going to supervise you, you have to go sec. So in, in anticipation of that possibly happening, my attorney just suggested that we go sec. So that's what we did.
- [57:14]
B
Okay.
- [57:15]
C
And that was an easy enough transition.
- [57:18]
B
So state specific. The joy of New York not playing the same 100 million threshold game as every other state.
- [57:25]
C
Correct. And I was getting calls from other advisors that I knew who were in similar state to me, who were getting proactive letters from New York saying, hey, you were kicking you out, you got to go to the, the sec. So we didn't want to get that letter. So we were a little proactive on that. So we were quite small. And then I started looking at things and looking at what I was doing on a day to day basis. And there was a lot of stuff, compliance, tech stack review. I was in the process of reviewing our CRM and our website and I'm like, this is all stuff that's keeping me back from growing the practice. As I started thinking about, you know, my boys leaving and having this newfound time. So, you know, I started thinking about what are my options. My options were to really remain independent and lifestyle practice. I could also go to potentially one of these larger firms, potentially sell my practice, what I built up until this point into it, and possibly be an employee or I can team up and maybe shoulder to shoulder with somebody else like a corporate ria, like a Carson Group. And really what ended up happening is I looked at all those options. You know, I didn't want to stay small in a lifestyle practice. I didn't want to necessarily sell at that point and be an employee. I to some degree say I'm unemployable, but that's a whole different story.
- [58:49]
B
I'm very unemployable. I understand that dynamic.
- [58:52]
C
I didn't want to build it myself because number one, it was going to cost a lot of money to build, build it initially and then, you know, technology as you know, is changing so quickly. It was going to cost a lot of money to continue and, and maintain. And you know, going back, I don't know if you remember the last TD link conference that they had.
- [59:11]
B
Yes, absolutely.
- [59:12]
C
Yeah. So I was there and at that time Terry Shepard was on stage and she was talking about Carson Group because she was leading them at that point and she was talking about how, you know, data was so important and vital to our profession and that the way Carson Group was building, they were owning all their data so they didn't have to worry if they changed from one provider to another, they could plug and play. And I was like, that is really interesting. So my wife came back to me and she's like, you know, you surely book a meeting because they had been talking to me or reaching out to me. So I booked a meeting with somebody from Carson Group who had to be on like a 7am flight out the next morning. And we, we met at 5am for coffee, had a, had a quick conversation and then, you know, that's kind of when I went, ended up going down the path with Carson Group because I felt like they were going to be a good partner. I talked to others at that time and I felt like they were going to be the best fit for what we were looking for. And how we were looking to grow at that time, and it's been a great partnership ever since.
- [60:18]
B
So who. I guess I'm just curious to hear more. Like, what made Carson in particular feel like the best fit or what. What else were what or who else were you looking at that didn't feel like a good fit? Like, I'm just fascinated to hear what. Which things resonated with you or not that shaped the decision about who you chose.
- [60:41]
C
Yeah, there were a couple others that I had talked to. I'm not sure why. I can't recall at this very moment who those other two were, but they were. They were rather short lived conversations. The thing that I really felt compelled with, with Carson Group was, was really the people. Everybody that I encountered there, everybody I talked to, felt very much in alignment with what I was looking to accomplish and what we were looking to do. I also felt like they had one of the best tech stacks that was out there, which was extremely important to me at that time and continues to be. But really it was the people and what they had in their process and their offering. And I just felt super compelled about it. And even to this day, I feel like the people there are really what. And the culture really makes it an excellent place. And we felt very comfortable. We felt like it was a home for us from the very beginning. And keep in mind, you know, I made this decision in the midst of COVID I didn't have the opportunity to go out to Omaha and meet with people face to face. I did everything via Zoom. And you know, the big concern for me was, as I mentioned, you know, I started this real, you know, push in terms of social media engagement and putting a lot of content out there. At that point, you know, the biggest thing for me, you know, and. And I guess the last hurdle was, you know, as an independent SEC registered ria, I was the compliance person. I had a compliance attorney. I kind of knew what I could say, what I couldn't say. That process, and, you know, we've all heard that terminology, the business prevention department when it comes to compliance. I will. I do not feel that way. At Carson Group. Obviously, I took a little bit of a leap of faith initially because I told them that this was a major concern for me and a challenge for me. And I remember one of the last conversations I had before I ended up signing the agreement was I got on a Zoom with Omani, you know, at that time, and I said, listen, my one concern is this compliance aspect. I want to make sure that I'm not going to be stifled, that if I want to put out content, it's not going to be, I create it today and it's going to be out three months from now. I know the horror stories. I don't want to be that. And he looked at, you know, over zoom, looked at me in the eye and said, listen, he goes, I have to get what I put out compliance approved. And he goes, I don't have any issues. He goes, I also have been following you for quite some time as well. And he goes, I don't see any issue with what you're putting out. I think you're going to be more than following fine here. And I said, all right. I said, I'm going to take your word for it. And then basically that was the last hurdle. Sign. And I will tell you, we've built, our office, has built a partnership with compliance. You know, just to give you an example, because I know you've probably heard horror stories. You know, in 2023, I put out a book, Financial Planning Made Personal, submitted to compliance and I got the book back in four days, approved with probably three or four what I would consider minor edits. And what I say, even those minor edits that they asked for were things that improved the book, didn't detract from it. It wasn't stuff that I had to X out because it was like, oh, this is no good. You know, it was stuff that really improved, I think made the book a little bit better. And that's been the, that's really like an encapsulation of the relationship that we have with, with them and we've had with them from the start and we still have today.
- [64:18]
B
So how many clients was it that you had to transition as you, as you went into this change?
- [64:25]
C
That's a good question. I would say we were probably less than half of where we are now. I would say we were probably about 80 families or so at that point. And it was an. You want to talk about easy transition? It was easy. Easy. Michael. I know a lot of people have a lot of problems. We, because we were, we predominantly had our families at TD at that time. Carson. TD was a custodian of theirs because we didn't have any privacy issues or non competes in the, in our agreement. We just did a negative consent to move the families over from TD under Mitland to TD under Carson. And we had to have the family sign a new, you know, investment advisory agreement. So we had everybody over. I think it was in like five or six days. We had the whole practice transitioned in.
- [65:21]
B
That period of time and every, everybody came. No one objected or had issues.
- [65:26]
C
We did part ways with two folks. One felt that, that our newfound partnership with Carson, that we were too big for their purposes and they felt like, I don't understand, you know, I guess they felt we were, it wasn't.
- [65:45]
B
I liked, I liked being a big fish in your small pond.
- [65:47]
C
I'm not as good.
- [65:48]
B
If you want to grow, Larry, that's not, that doesn't do it for me, I guess.
- [65:53]
C
I mean I didn't see it that way and I didn't feel like that was going to change in the least and I don't think it did for anybody. But they, they, we did part ways with them and then we had one other family from a, from a pricing standpoint because we did have to, you know, increase fees a bit when we made the, the shift. And you know, one of the reasons why was we really, we did do, we had used, used a lot, quite a bit of mutual funds on the other side. And under Carson we weren't going to do that anymore. We were going to use ETFs and individual, individual stocks and bonds. And there was a challenge with seeing our fee versus what their actual all in fee was, which it was going to be maybe 5 or 10 basis points different when you compared fee to fee. But they had a challenge with that so they decided to, to move on. And you know, the way I look at it, you know, we all look at things differently. I try to look at things with a, the, the glass half full approach always. And I always find if families feel like it's not a good fit, what we found in our practice is when we separate from them, usually it just makes room for a number of different families to come in and we usually fulfill those needs very, very quickly.
- [67:10]
B
So, so if you can, I'd love to hear more about just I guess like what the cost of Carson was and how you were handling it in terms of what's your fee? What's Carson's fee? What, what, what fees do you change for clients? Because you have to make the math work as a business. Can, can you give us more, more detail and just like how that broke down, how that math worked for you.
- [67:32]
C
Yeah. So just at a high level again, because this is almost five years ago, we had a, we had a tiered fee structure. So initially, you know, under Mitlin Ria, if you will, so we had a tiered fee structure. So as families had more assets with us that fee know went down. So essentially what we did was we looked at each family and calculated what their blended rate was. And then on Carson's side, we went more to a flat fee structure because we wanted to make things more simple. I think that, you know, what we ended up doing with the tiered fee structure for all those years is we made things probably far more complicated than we had to. So we wanted to make things easier. So we went more to a flat fee structure we incorporated. Obviously we knew what revenue was being driven by the firm under the tiered fee structure. We wanted to have that more or less aligned on the Carson side as well. We didn't want our fee necessarily to go down because we were essentially going to be creating and providing more services as a result of this partnership. So we then calculated that in. And we also, on the Midland side, as I said, we had the, you know, mutual fund expenses in a lot of cases. So we took what our fee was, the mutual fund expense. And typically that was in within 5, 10, maybe on the high side, 15 basis points of what the new fee was going to be under the Carson side. And we just explained that to the families. We're like, you know, your fee blended is X, it's now going to be Y. You know, just understand that even though your fee to us was X, you were also paying these, this expense ratio, which is now going to go away. So we compared and contrasted those and when all was said and done, we had one family that was a little bit unsure about how this was going to work. And I said to her, and I said, you know, listen, you're going to be and we're going to be in a position to provide you a lot more services and deliverables. And we talked about what those were under this new partnership. I said, give it 12 months and if you don't feel like we're delivering enough value for the fee, then you call me up, you let me know before or at the 12 month mark and I'd be happy to talk to you about where a good place for your assets would be if you don't feel so. And about six months in, she called me, we were on a call and she was like, you know, she's like, I remember our conversation before you made this move. And she said, thank you. She goes, you were absolutely right. She goes, you're delivering exactly what you said and you know, the 5, 10 basis points, it's a non event, but thank you for giving me that out if I needed it. And she really appreciated it.
- [70:18]
B
So when you talk about shifting to flat fee Structures. I'm presuming you don't mean like flat dollar amount. Clients pay X dollars a year. You just mean like the tiers are flatter. So we're not going to have, you know, 1.3 and then 1.1 and then 0.9 and 0.7, 0.5, which is like we, we charge 1%. It goes up to several million. Peace be with you. Correct.
- [70:40]
C
Yeah. So our average fee is about 1.55, but. And that's all in.
- [70:48]
B
So that's all in meaning, like your fees, Carson fees, underlying etf, correct ratio, like all. All in.
- [70:54]
C
Correct. Yeah. We're averaging about that 1.55 mark up to about 3 million. And then there's a break in pricing from 3 to 10 million because we get some relief also from Carson at that point in terms of them being participatory in, in that fee arrangement with us. So it goes down from a flat to a share and then $10 million and up. We also have a separate, you know, pricing structure, another private client tier at that level.
- [71:26]
B
Okay. And so was the idea of all of these adjustments at the end of the day that you were trying to keep your net largely similar? And so the pricing changes to clients are essentially. How do we embed the cost of the Carson layer in addition to yours into one total fee without making your revenue go backwards?
- [71:53]
C
That's right, yeah. I mean, we wanted to, we wanted to make sure that the revenue of the firm in this, in this transition did not, you know, retreat. We wanted to make sure that it was at the same level, if not higher, because we were pretty, we were confident. Obviously, you know, at that time it was new. Right. So you go into it with eyes wide open, but you also, I think a healthy dose of skepticism is also okay to have. We want, we were fairly confident that in this transition we were going to be adding a lot more value because of the resources and support we would be receiving to the families that we serve. And we were confident that we were going to deliver on that. So we didn't want to see our fees, you know, retrace as a result of that.
- [72:37]
B
And so then you get, you know, 5 to 15 basis point increase for the client, some portion of cost savings of lower cost ETFs and direct stocks that displace the mutual funds. And so that's. Those buckets together let you cover the Carson fee. So while you tried to hold yours relatively even.
- [73:00]
C
Correct. And then I would just add from a business standpoint, overall business standpoint, you know, we were we were able to release some of our costs at the time from a, from an overhead standpoint because we were on Orion at that point point we were, you know, a direct relationship with Orion. And I think, you know, my, my annual cost for Orion was somewhere in the 20 to 30 thousand dollars a year range. That went away because now that was picked up under the Carson tech stack and there were other technologies that we were using and paying for that. That, that was revenue that dropped to the bottom line. Now instead of going out the door in an expense either.
- [73:39]
B
So is the idea that your, did you try to hold your revenue even and you actually got a little bit more net profitable when the costs went to consolidated to Carson or were you trying to also work that into the fee adjustment?
- [73:51]
C
No, I was, I think you, the former. We were looking to keep the revenue the same and you know, have the profitability increase at the same time.
- [74:01]
B
So benefit of working with a partner that supports you. Well, correct. And, and then how did you. I just love to hear a little bit more of how you communicated the change to clients. At the end of the day, I mean, you've got a, a platform change, you've got a pricing change. Basically everyone stayed. How did you communicate?
- [74:22]
C
Yeah, I mean it was, you know, over a, you know, a three, four month period, reaching out in, you know, if we had a meeting with them already scheduled, we would incorporate, incorporate that into that meeting. And if we needed to schedule something, you know, off cycle, we, we did that as well. And it was a matter of telling the story behind, you know, the why. You know, it's going back to, I guess that conversation we had earlier about, you know, sharing the why with the families. Why was I taking Fridays off? I think arming people with all the information, especially in a situation like this, is helpful, not hurtful. So we shared the why behind, you know, why we were doing it because we wanted to add more value. We wanted to be able to spend more time with them and working with them and their family. We also shared the why around having now a portfolio strategy team, which we did not have. Right. We were managing the assets ourselves, having, you know, having the advanced solutions team and having accountants, attorneys and trust professionals to help us navigate those areas. So we, we went through all those areas that are, are super helpful that we were going to add value in ROI from a tech standpoint, how their experience was going to increase also from a technology standpoint and basically then communicated that, you know, these added services are potentially going to have added costs associated with it. We or added time that we're going to be spending with them. And that's, you know, we're going to be making the adjustment. And we made it very clear we tried as best we can in most cases to keep it relatively flat, meaning their cost in terms of what they were paying us versus and adding in those internal expenses versus what they were going to be paying us now. And with those internal expenses, trying to keep that on par as much as possible. And we felt like they were going to be delivering that we'd be delivering a lot more value as a result.
- [76:20]
B
Thus being, say, like, we're giving you all these additional things and your total net fee may go up like five basis points.
- [76:27]
C
Right, right. There you go.
- [76:30]
B
So, so now where is the business today? Like, just help, help us understand where the business stands now in terms of assets, revenue, clients, team.
- [76:43]
C
Yeah, so right now we're at about, we're about 200 million in assets.
- [76:48]
B
Okay.
- [76:49]
C
We'll do anywhere between, somewhere between probably 1.7 and 1.8 million in revenue for this, for this year. And we're at about 200 households currently. Our team, we have a team of six. So I'm the founder and lead advisor. We then have Jerrel Bland, who's our associate wealth advisor, who I know, you know Michael, and he credits his shift from, you know, insurance broker dealer world to RIA model because of you and this podcast. So it works. It works. And he's been a valuable member of my team for five years. Plus he joined us the year that we made this transition, probably about 10 months before. And then we have Carmen Abustin, who's our relationship manager. We have Josh Ruble, who is our director of first impressions. He basically handles our operations. My wife Denise is our chief marketing officer. We're all that group is located here on Long Island. And then we have one stakeholder that works remotely from Texas and she acts as an. In an administrative capacity. She does a lot of the stuff that you wouldn't need to be in our office to do, like scheduling annual reviews, confirming performing annual reviews, doing onboardings to get information, and, you know, working on our podcast and some other social media things for us as well.
- [78:18]
B
So as you reflect on this journey now, what surprised you the most about the path of building your advisory business?
- [78:28]
C
You know, I think it's. There's things along the way that we have to pay attention to. And I think, you know, a couple of, couple of those inflection moments for me were, you know, starting out in the, the brokerage side of the business and then, you know, taking five, six, seven years to understanding what the RAA world was. I will say there, you know, you talked about regrets about building the business faster. I don't have any regrets there, but I do to some degree have a little bit of regret. Regret not learning about the RIA model sooner because I feel like I would have made that transition a little bit earlier. Whether I could have afforded to do that earlier, I don't know. But hindsight's 20 20, I, I think that was an inflection point for me is, you know, dropping that Series 7 and dropping the FINRA affiliations, that was, you know, hugely beneficial to, to the growth. What was.
- [79:24]
B
What was so significant about it for you?
- [79:27]
C
I just felt, I always felt, I always felt weird about the broker dealer side. I always felt weird about being compensated in a commission fashion. And, you know, the thing that really sealed the deal for me was having a talk with a manager before I launched my firm. And I was with bank of America, which was just merging into Merrill lynch at the time. And the manager was like, hey, you know, what could we do to make the team more successful? And I was like, well, my compensation's not really derived by the team. This is where I become unemployable. Michael, like we talked earlier, right? And she's like, well, okay, what would make you be more successful and drive more revenue? And I said, well, last month we had 40 hours of meetings. I guarantee if you cut those out, I'll be more successful. And, you know, that it was that mentality and the mentality that they would talk about doing the right things for people. But when all said and done, I found a lot of the actions didn't really support that because it was very revenue driven. So I didn't know about the RA model back then until I, you know, started getting into late, you know, 2005, 2006, and then figuring that out. So that was an inflection point. I felt lot more comfortable, I think, in my own skin, doing business that way with families, because I, I think had I found that earlier, it probably would have been an easier transition for me. And then, you know, again, you know, moving and finding that right partnership has been hugely helpful to me. And I guess one step before that would have been, you know, in leaning into social media has been hugely beneficial and then finding that partnership. So I highlight those three, three events and then most recently is really leaning into this. Joy is really now accelerating and having the team that I have in place to help support that, you know, it's really set us up for a lot of success, which I'm pretty excited for.
- [81:25]
B
So what was the low point on this journey for you?
- [81:30]
C
Yeah, that's a good question. And, you know, I know you asked people that, so I was kind of thinking about that. And to be completely transparent, I don't feel like there was any real low point in the business per se. I will say from a, you know, a mental standpoint and really caring about families that we work with. Probably one of the most challenging times was, you know, that 070809 period of time. And it was a struggle. It wasn't a struggle from a standpoint. Point of being concerned about the business per se. It was more of a struggle of, you know, you, you work with these families shoulder to shoulder, you care about them, you want to help them work towards whatever their goals and dreams are. And just seeing a market kind of implode at that point in time where you could not really do much about it, it's that, that was a tough period of time to, to be in this profession. It was also a good, you know, depending on how you look at it, good period, because there was a lot of opportunity in terms of families who were experiencing what your families were feeling, but they weren't hearing from their advisor at that point. But I would say if I had to pick out a point in time, that was probably it. It was a challenging time during that period.
- [82:51]
B
So what else do you know? Now you wish you could go back and tell you from 15, 20 years ago about building the business, building your practice.
- [83:02]
C
I think two things. I think one is I probably wouldn't ever have gotten my seven and gone down that route. I would have gone down the RIA route. I think that's definitely something I would have changed. And then I probably would have given my wife credit a lot earlier and leaned into social media a lot earlier because it's, it's been hugely beneficial and led to a lot of growth. So. And, you know, I, you might want to say, hey, you know, you might have wanted to lean into this joyful, you know, concept a little bit earlier, but I don't know that we would have gotten there without having the podcast and moving down that direction. I mean, maybe we would have, because I think behavioral finance and that kind of conceptual idea is really the, the way the business is going today. But that wasn't available, you know, and when I started in the business, social media wasn't available the way it is today. So, you know, just being maybe a little bit more progressive in those areas and, and being a little bit more comfortable to be uncomfortable because that's what stopped me from like the social media piece. I think as business owners we get into that routine and I think, you know, we don't have to try everything, but if somebody's making a good case for something, I think we have to be more open to, to trying it and seeing what happens and actually putting in a decent enough effort to realize if it worked or it didn't work. Not just trying it for a month and saying, oh, I didn't hear from anybody. I think, you know, this has been really a three, four, five year iteration. That's just, it's, it's like an investment. It's compounding each and every year and becoming bigger and more important.
- [84:42]
B
So what advice would you give younger, newer advisors like an getting started today and looking to their career over the next 20 plus years?
- [84:53]
C
So I talk with newer advisors all the time because I'm part of the Finser foundation. So I typically mentee or mentor a fincer fellow every three to six months. And you know, that's a question we talk about very often. And I try to save some of these folks from, you know, what's going on in the world out there and going down the wrong path. And what I mean by that is I don't see, I don't think any new advisor can or should or would benefit from the brokerage model. I think that, you know, there's a clear wave moving into the RA side. I think it's going to continue, you know, growing in that direction. So I try to encourage them as much as possible to investigate RIAs and try to go down that route in terms of finding internships and an opportunities there. And I think that that's, you know, somewhere an avenue that I try to encourage all young people to go down because I think the, the organizations that are more on the brokerage side and you know, on the selling side, they have, have deep pockets and they have a loud voice and they capture a lot of these young people and they're, they're enamored by it. And I think we as a community of RIAs, we have to do even louder job of getting out there and drowning that out a little bit to show them a different path. Now I'm not saying one's right or wrong, I think one is better than the other. But at the same time, and they're not all created equal, I think young people will and could have a better experience, have more longevity and get More experience that's going to be helpful to the people that need the help through that RA channel. So I try to have a lot of conversations around that with, with young folks.
- [86:46]
B
So as we wrap up, this is a, a podcast about success. And just one of the themes that often comes up, right, that word success means different things, different people, sometimes changes for us as we go through different stages, different seasons of life. And so you have this wonderfully successful advisory firm now, as you're not just crossing 200 million, but basically 4xing in 5 years. So the business is on a wonderful path right now. How do you define success for yourself at this point?
- [87:19]
C
Yeah, that's a great question. So I look at success from two standpoints. I look at it from a standpoint point of personal success, and then I also look at it from business success. So for me, personal success is being the best dad and the best husband I can be and being there for my family whenever they need me and be there for all the important milestones or events in their lives and being there for and with them. So from a personal standpoint, that's very important to me. From a business standpoint, I know a lot of people talk about, you know, a revenue goal or an asset under management goal. For me, you know, from a business standpoint, I'm looking to grow this business and grow it in a way where the business success is going to be determined by how many families can we impact in a positive way. Right. How many generations of those families can we impact and kind of try to measure that, I guess, as best we can. And then I think as important is those stakeholders that are dedicating, you know, their 40 plus hours a week here that are really enveloped and into the mission and the core values of Midland Financial is helping them reach their personal success. And I think if we do that, if we help the families we serve reach their success, and I think just as importantly, we help our stakeholders reach their ideal personal success. Because if they're doing that, they're going to be better serving those families and helping them. To me, that is creating a successful business and a successful life for a lot of people that we're surrounding ourselves with.
- [89:04]
B
I love it. I love it. Well, thank you so much, Larry, for joining us on the Financial Advisor Success podcast.
- [89:11]
C
Thank you, Michael. It's been a pleasure and always enjoy your show.
- [89:15]
B
Thank you.
- [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 planning 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 any IMCA and CFP continuing education credits along with exclusive member content. Get it all now at www.kitsis.com.