Loading summary
Transcript1 lines
- [00:01]
A
This episode is sponsored by Calibrate iq. First, a disclaimer. In the interest of being transparent, I created Calibrate iq. It's my app and I built it because I wasn't satisfied with any of the other risk tolerance tools on the market. I found that other tools didn't work the way I wanted them to. They focus too much on risk preference rather than time horizon. They're clunky and overcomplicated and they're too expensive for what they do. And they aren't user friendly for clients. I designed Calibrate IQ to be simple, easy to use and low cost. It lets you send a single magic link to any client you want to survey. Clients fill out a simple survey that takes less than two minutes. Once that's done, you can automatically generate an investment policy statement instantly and deliver a beautiful branded report to the client. It lets you customize reports with your logo and brand colors and you can even add your own custom investment preferences to the questionnaire. If you're tired of expensive risk tolerance tools that overthink the process, try CalibrateIQ. It's $9 a month with a seven day free trial. Give it a try at CalibrateIQ app again. That's CalibrateIQ app. Hey everyone, welcome to Ops and Impact where we discuss operations and marketing for independent financial advisors building a lifestyle practice. I'm your host Michael Reynolds and today we're going to talk about how to serve clients who don't have a lot of money. So this has been on my mind for a bit and it recently popped up in one of the groups I'm in for financial advisors online and it gets talked about sometimes. And the post, the original poster, who person who made the post in the group actually said the opposite of what I'm going to talk about today. He said, hey, don't try to serve clients who don't have a lot of money. Try to move up market and make sure you only work with clients who have enough money to pay you appropriately for what you do. And I put a comment in saying, hey, nothing wrong with that perspective at all. And here's how I see it. And that's what I'm going to talk about today. There is a general, I think, consensus among financial advisors that it's best to work with clients who have a lot of money because they can pay you appropriately and you get to do all the work you want to do. So that's pretty straightforward. I think it's a fairly reasonable perspective a lot of advisors have. But I want to offer an alternative perspective today, and that is how would you serve clients who don't have a lot of money? So let's first talk about why you might want to as just a precursor to this. So there could be a number of reasons. I've gone through this journey myself and one of my reasons for wanting to serve clients maybe earlier in their financial journey is I just have a heart to help people. I just want to make sure that I'm available to help anyone who needs and wants that help. Often the, the individuals and the families that we work with that don't have a lot of money, maybe they don't have a lot of assets built up yet, don't have a very high income yet, they are often the ones that need the most help. They're in need of guidance. And so I just find it very fulfilling to provide that kind of help to those who might need it. Others might have a different reason. Maybe it's because you're just starting your firm and you know it's going to take time to build up to working with larger clients with a lot of assets or a lot of income and you want to just get some income in the door as quickly as possible and you want to build a large client base as quickly as possible to jumpstart your revenue. I think that's a perfectly fine reason as well. As long as you don't just abandon those clients. At some point you might change your business model, but as long as you find some way to take care of those clients, whether it's with you or someone else, I think that's a perfectly fine route to take. Maybe you just, you just want to work with middle class families who need budgeting help and basic stuff and that's perfectly fine too. So whatever the reason, there are plenty of reasons to want to work with clients who don't have a lot of money yet. Let's talk about how you might serve those clients. I'll tell you how I did it and I'll just give you some feedback on what I think would be a good way to approach it. So first of all, let me tell you that I made the mistake early on, like many advisors do, I think in that I basically rolled out my entire comprehensive financial planning service for anybody charging 1% AUM. And I didn't have a minimum. And so I ended up with a lot of clients who I was doing quarterly meetings and full fledged comprehensive planning and tax planning and estate planning, the whole nine yards. When they had $50,000 in investments and I was Getting paid almost nothing to do this work. And I did make that mistake early on because I was building my firm, I wanted to get clients quickly. And it's fine, it worked out well. Cause I then transitioned into some other models. But that's a why behind why I did it. I just wanted to get the ball rolling quickly. And I would advise you not to make the mistake that I did because it quickly leads to you getting overwhelmed. Because you're trying to over service a lot of clients who aren't paying you accordingly. And it's just a mismatch. And it's fine to admit that. I had to admit that I made that mistake. I, I fixed it. So I did resolve that. So don't learn from my mistakes and don't do that. But let's say you do want to serve clients that are earlier in their financial journey. They're not millionaires yet, but they need help. So I think as advisors we often feel a lot of pressure to hit our clients over the head with the sledgehammer of value that I attribute to Michael Kitces. Michael Kitces, I think used that phrase on a Kitis and Carl episode at some point. And they talked about the sledgehammer of value where you're just trying to just overwhelm your clients with how much value you can provide. You're doing all this stuff, you're doing tax planning, you're doing investment management, you're doing retirement planning, you're doing estate planning, you're doing full fledged insurance reviews, you're doing cash flow planning, you're doing budgeting, you're doing everything, you're doing all this stuff and you're meeting every quarter and you've got this whole agenda and you keep track of everything for them. And it's just this whole thing that's great if they're a comprehensive financial planning client who is paying you accordingly. But it doesn't mean we have to do that for everybody. It doesn't mean we should do that for everybody. Yeah, some clients have more complex lives. They can really benefit from all that work. But I've found that it's perfectly acceptable to tailor your service to the price point and the phase in life that your clients are in. Does that mean that we don't provide great service? Absolutely not. We do provide great service. I think I provide great service to clients that kind of fit that category. I've developed a whole engagement. I call it essentials. Financial planning. The word essentials signifies that it's just the basics. It's the stuff you need it's the essential stuff and we keep it pretty limited. And I charge 1% AUM for those clients. There's no minimum, so it's accessible to anybody as long as they open an investment account and start putting money in or transfer something in. Now, I am flat fee for the bulk of my other clients who are comprehensive. So I do charge flat fee. So if these essentials clients ever graduate into my comprehensive model, we'll convert to flat fee and kind of cap it there. I do consider myself flat fee for that reason, but again, I have this essentials financial planning engagement for clients who don't have a ton of money yet. They're earlier in their journey, income is not through the roof yet, they're middle class and they need help. So what do we do? We focus on the basics. I do investment management for them. I give them retirement projections to hey, you're on track or you're not on track. To be on track, you should be saving this much every month. Great. Let's adjust that. Boom. Fairly simple. We do a very basic review of things like, hey, do you have enough cash in your emergency fund? Yes or no? Do you have too much debt? Yes or no? Do you? If so, let's resolve those numbers, let's move them in the right direction. A few basic checklist things. Do you have estate documents in place? If not, hey, here's a service you can use to get it done. Pretty simple. Do you have life insurance in place? No. Let's get that done. No tax planning? No. In depth project. Managed estate planning. It's fairly basic and we meet once a year to review the plan to make adjustments and, and that I make myself available to them anytime they want to meet. In between, they just reach out to me. So I use a software for this called saveology. I am a partner, I am an affiliate, so full disclosure. There's a conflict of interest there. But I do recommend it because I like it and I use it. If you want to get a discount on it, you can go to michaelreynolds.com saveology but I use Saveology because it makes it really simple to just build a very basic financial plan for clients. There's other tools out there that can do it. You can use right capital and limit it down or E money and turn off modules if you want to. You could probably start using Hazel pretty soon if they're planning modules coming out soon. You could probably use a number of tools to build this. Probably a spreadsheet even. That's fine. Just keep it simple. Use Something that is really simple and doesn't encourage you to dig into every nook and cranny of your client's financial life. They don't necessarily need that at that point and they're not paying for it at that point. So I feel very comfortable and very happy that I'm able to provide this type of service to clients that need help. And here's the thing I'm still doing. I'm giving a lot of good advice, I'm giving a lot of good guidance. But the mental load is what really matters here. It's not the time spent necessarily, because technically I could have a client that's on the essentials engagement and I could meet with them once a year, but they could reach out to me every month and book a meeting if they want to. I'm fine with that because to me, it's not about the time I spend with the client, it's the mental load. My comprehensive clients. I am planning a quarterly agenda. I'm keeping track of a lot more. I'm doing a tax letter for them, I'm doing tax planning, I'm doing all this stuff for them in advance. We meet, we have agendas. I'm much more actively managing their financial life. And so the mental load for that is higher. But the mental load for an essentials client is fairly low. Because my job is to reach out once a year, schedule a meeting with them, review the plan with them, give them guidance and pointers, give them some action items and help them with those things and then reach out again in a year. If they reach out to me every month, they're driving the agenda. They have something to talk about, they have stuff on their mind. I'm going to help them with that stuff on their mind. But they're driving the outreach and that basically eliminates the mental load for me because they're in charge of deciding when they need some help. So it's a vast difference in time spent versus mental load. And I want to make sure advisors understand that because so much of the time we get hung up on how much time am I spending per client. I don't think that's always the best metric because mental load is what really contributes to stress level and anxiety and overwhelm. It's not time spent necessarily. So that's why I really put a lot more premium on addressing the mental load versus the time spent. So again, I don't think that as advisors we have to pressure ourselves to provide a 73 point financial plan for every single client we work with. I Think we can very easily provide service to clients in a very basic way, give them what they need at a mental load that is appropriate for us and a fee that is appropriate for everybody. That's how I serve clients who don't have a lot of money yet. And I think you can probably do the same thing if you want to. So maybe you're an advisor who's earlier in your journey or just launching your firm and you want to just kickstart things and get clients, clients faster than maybe you would if they were higher priced. This might be a reason for it. Or maybe you just, like me, have a heart to serve clients who don't fit the mold of a traditional financial advisory client. And you want to find a way to help them and you find it fulfilling like I do. Because at some point we were all there, we all had no money at some point. And we evolved, we progressed, we made progress in our financial life and we got to the point where we were better off. And these clients that we're working with, they're on that journey too. And we want to help them get to the point where they've gotten rid of debt, they've built up assets, they've got retirement in place, they are lower stress because their money is being handled, moving in the right direction. This is what we want to help them with. So I like doing that. So anyway, that's my soapbox and my spiel about serving clients who maybe don't fit the mold of a traditional client for a financial advisor. So hope that helps. As always, I welcome feedback. You can reach out to me on my advisor consulting site, which is michaelreynolds.com ton of free stuff there. You can also send me voice memos for support asynchronously or just reach out and ask anything you want. Happy to help in any way. Also, I always like to mention this, join my community if you feel like it's called ops and impact and you can get a lot more hands on help in that community. Also, side note, every month there's new resources released. There's a social pack of social media posts and a white label blog post you can use on your own website. And that's designed to give you at least some content you can use for your blog and your social media. And it's all done for you. It's all white labeled and you can treat as your own. It's all completely done for you. So that's part of the community as well. All right, thanks for joining me today. Have a great day. See you next time it.