#FASuccess Ep 439: Scaling Financial Planning With Monday.com As A Project Management Hub In Lieu Of Wealthbox CRM, With Alvin Carlos

Resources Featured In This Episode:

• Alvin Carlos: Website | LinkedIn
• Kitces Report: The Technology That Independent Financial Advisors Actually Use (And Like)
• T3/Inside Information Software Survey
• Kitces Financial Planning Value Summit 2024
• Entrepreneurly
• Boosting Profitability with Labor Efficiency: Mastering the Labor Efficiency Ratio (LER)
• Trellis Solutions
• Monday.com
• RightCapital
• Krisp.ai
• Zapier
• Copyscape
• XY Planning Network
• The Gap and The Gain: The High Achievers' Guide to Happiness, Confidence, and Success by Dan Sullivan
• #FASuccess Ep 024: How Mindset Drives Success And The 7 Freedoms Of Limitless Advisers with Stephanie Bogan

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Full Transcript:

Michael: Welcome, Alvin Carlos, to the "Financial Advisor Success" Podcast.

Alvin: I'm so excited to be here, Michael.

Michael: I'm thrilled to have you on today and a chance to, I think, get to nerd out a little bit on technology and the tools that we use and build our practices around. Because I found most firms that do some version of comprehensive financial planning, wealth management, the different labels we have for it, usually are built around three core components to the tech stack. There's planning software itself, there's something to do performance reporting, and there's a CRM system. And then usually that's layered on top of a broker-dealer or custodian if you're actually managing the portfolio directly.

And in the past, when most firms were more investment-centric, often either the custodian or BD platform or the portfolio management software was basically the hub of the business. It was the first thing you logged into every day, and data flowed in and out from there. So, platforms like TD's VO, or Orion become the integration hubs.

But more recently the hubs started to shift, and so as firms get more planning-centric, they increasingly start building around their planning software, or to the extent that they're doing more multi-team member interaction with clients over time, the CRM system starts to become the hub and kind of moves away from its history as glorified Rolodex of contact information and compliance documentation and into actual workflow engine for upfront ongoing financial planning.

And then recently we've started seeing yet another trend. We're seeing it in our Kitces research data and the recent T3 study highlighted as well, which is industry CRM adoption is now actually starting to decline a little bit as being supplanted by tools that were first and foremost task management workflow systems, like the project management tools like Trello and Asana and Monday.com.

And I know you've been going through a version of this transition for yourself and recently got rid of industry CRM to use one of these. And so I'm excited just to get to talk about this evolution of what really is the technology that we have to build around when we're trying to do deep ongoing financial planning for clients and ensure they actually implement the recommendations we're giving them.

Alvin: That sounds great, Michael.

What District Capital Management Looks Like Today [05:16]

Michael: So, I think to kick off, I know we're going to get to nerd out on technology for a bit, but as a starting point, just tell us a little bit about the advisory firm as it exists today so we have some context for the discussion.

Alvin: Yeah, so our advisory firm, District Capital Management, most of our clients are in the Washington, DC area. Most of them are in the wealth-building phase. Late 30s, early 40s, is going to be the bulk of our clients. And most of it is a monthly retainer model. So, 80% of our revenue comes from clients just paying us a fixed monthly fee. And then 20% is AUM.

Michael: Okay. And then can I ask what is revenue overall for the business now?

Alvin: It's currently around $850,000 revenue.

Michael: Okay. And how many clients is it?

Alvin: So, it's about 155 clients.

Michael: Okay. And then team infrastructure: how many team members are on board to support and make all this happen?

Alvin: So, in addition to myself, I have one full-time advisor, another advisor who's working 75% of the time and will soon be full-time. So, yeah, 1.75 to 2 FTE [Full-Time Equivalent] on that. And then I have an admin assistant who's really like a super assistant because she does a whole bunch of things. She's a third of the time. And then I have a marketing person, also a third part-time.

Michael: Okay. So, it sounds like you plus a little over two full-time equivalent support people, but it's actually for four humans in various full-time or part-time roles, depending on how much you need from that area.

Alvin: That's right, yes.

Michael: Okay. So, that's helpful for context. I'm just thinking about this from kind of overall metrics for the business. So, around three full-time equivalents and $850,000 of revenue. So, your kind of revenue per team member is just under $300,000, which is a really good productivity, staff productivity ratio for the business. Eight hundred and fifty thousand of revenue across 155 clients. So, if I'm mathing this, your typical client is north of $5,000 a year in fees, most of which is retainer. Am I getting that math right?

Alvin: Yeah, that's about right. And it's a little bit skewed because when I started out, I would accept clients that only had $50,000 AUM, and we didn't do full financial planning for them, and it's just like investment management, meet-once-a-year type of thing. So, there's going to be a handful of those clients who are paying at a low price. But yes, the average is going to be around what you said, yeah, around $5,000 per client or so.

Michael: So, then how does the fee structure work, I guess on a forward-looking basis for clients that you take now, which puts aside the legacy that we all have from the early years?

Alvin: Yeah, so most clients, so we actually just introduced complexity-based pricing, and I attended the Kitces Value Summit actually last couple months ago, and I decided to do it. I've been thinking about it for a while. And so we actually have a pricing calculator, which I also stole from Brooklyn Fi. They have a really cool pricing calculator online that you can use. So, this is going to reflect our monthly retainer fee. So, typically, an individual client will probably come in at $5,400 a year. So, around $450 a month, probably, or $500.

Michael: Okay. Four-fifty a month?

Alvin: Yeah. And then a typical couple client will probably come in at $7,000 a year.

Michael: Okay. So, now you're at $500 to $550 a month for couples. So, are those the only components that go into the complexity side, like single versus couple, or are there other things you put into this?

Alvin: So, in our pricing calculator, we have whether you have stock options or not, whether you have RSUs [Restricted Stock Units] or ESPPs [Employee Stock Purchase Plans] or not, if you have self-employment income. So, each of those, if you click on yes on those, that increases the monthly price. Do you have advanced tax planning issues? So, we lumped a whole bunch of things in there, like if you have a beneficiary IRA or income abroad or rental property. And then the one interesting thing that we introduced, and I'm not aware of other advisors who do it, is we give discounts for clients making lower...who have a lower income.

Michael: Okay, how does that work? What are the discounts?

Alvin: So, actually, if I revise what was said earlier. So, if a regular couple that makes more than $400,000 a year household income, they would actually come in at $800 a month or $9,600 total. And so when we give discounts, we would give a discount of $150 a month if that couple makes $200k to $400k. And then we give a total of $300 discount a month if the couple makes less than $200,000 a year. That's the number that I was using earlier when I said $6,000 a year.

Michael: So, that's how you work backwards to get to $6,000 or $7,000 for a couple as a bare minimum.

Alvin: That's right.

Michael: Because it starts higher and discounts backwards if your income is more limited.

Alvin: That's right.

Michael: Which I guess, I suppose it's another way of saying if folks have higher dollars and more financial capacity to pay, they pay more. But it sounds a lot better to say we give discounts to folks whose income is a bit lower as opposed to we charge more for people whose income is a bit higher.

Alvin: That's right, because people who make more money are going to complain and say, "Why are you charging more just because I make more money?" So, essentially, if I tell them, "No, this is our price, this is the market price, but we give discounts to make it more affordable to people, which is actually embedded in our mission." Typically, most advisors will try to go upmarket, which is great because they get more profits or revenue that way, but we want to make it more affordable to most people.

Michael: I really like how you framed that, that "Look, this is the market price, where I am for my higher income, full value couples. We're choosing to discount the fees down a bit to make it more affordable for the rest." But I am struck. You're certainly relative to $800 a month, $9,600 a year for a higher-income couple that's at that level. The discounting back to get them down to $500 a month, $6,000 a year, that's not "cheap." You're not discounting them down to $1,000 total to give away your time. I'm struck that the discounted value, you're still at a level that, to me, just you can run a healthy business at. It's really hard to scale financial planning with less than about $3,000 of revenue per client. The math works a lot better when we're at $4,000, $5,000, $6,000 of revenue per client. So, your discounted level isn't below the threshold of what it takes to scale the business.

Alvin: That's right, Michael. And I learned my lesson the hard way because when I started out, I was significantly underpricing. I think my first client was I was charging her $100 a month.

Michael: Yep.

Alvin: So, yeah, makes sense to have a minimum fee to actually be able to grow and have a profitable business.

How Alvin Determined His Firm's (Profitable) Minimum Fee [14:10]

Michael: So, I'm curious, was there a math or an analysis or a business process for you to get to where the minimum fee needs to be after the discounts to make it viable for your firm?

Alvin: Yeah. So, essentially I said, "Okay, what's my goal? I probably started doing this a couple of years ago. Okay, I want to build a $2,000,000 revenue firm. And this is going to be the people. This is going to be the expenses. This is going to be the income if I charge it this much." And so, it's basically just doing a forecast. And with a whole bunch of assumptions, you plug in the price and say, "Okay, it looks like we need to charge at least $5,000 to have a profitable business." Correct me if I'm wrong. Is the profit margins 25% to 35% for RIAs?

Michael: Yeah, that's what you see for most independent advisory firms. Once you get to the point that you have some staff infrastructure. If it's literally just us as a solo, sometimes our take-home looks a little bit different. And once you pay yourself the advisor salary in the business, right? What it would take for you to hire another advisor to serve your clients and then not show up to the business.

Alvin: Yes, that's right.

Michael: At that point, you're actually pricing an independent profit margin for the business.

Alvin: That's right. So, basically, after I pay myself and all the team members, I want to have a 25% profit margin. And so that's how I got to the price.

Michael: Interesting. So, I guess I'm curious to hear a little bit more about just how you built this or visualized it. So, you said, I want to create a $2 million revenue firm. That's the long-term strategic goal we're working towards. And then what was next? It was who the clients are, how many clients?

Alvin: So, we started out with wanting to work intentionally with the younger demographic. So, I come from a social justice background, Michael, so I used to work for a nonprofit for 10 years. So, when I finished college, I said, "Oh, I want to make a difference." And I thought the only way to do that is either work for the government or a nonprofit. And so, that's my whole framing.

And when I discovered this calling of being a financial planner and discovered, "Oh, I can actually be a financial planner and get paid for it." So, I had that in mind in terms of most advisors would target retirees that have $1 million at least in assets under management, then you'd do AUM, which makes a lot of sense. But I look at my friends who are in their 30s and 40s, they're not getting any financial advice, but they're making a lot of financial decisions that you would argue are going to be more impactful in growing their wealth. So, we intentionally created our RIA to serve 30s and 40s. Make it more affordable. And so later on, it was only after being a business owner for several years that I was like, "I need to build a profitable business." And so figuring out how to marry those two was the task at hand.

Michael: Okay. So, thus the, "When we launched originally, we were pricing at..."

Alvin: A hundred dollars a month.

Michael: "...$100 a month." Very affordable, accessible to a good number of people, but that was getting difficult to build and scale. And being a fellow native of the DC Metro Area, this is a very high cost of living area, so that gets a little bit more challenging for us around here in particular.

So, then share with me a little bit more what the numbers or the sequencing was that got you to the target fee that you'd have to have to actually make it work. Was there like a, "I want to serve a certain number of clients" or "I'm going to spend this many hours per client"? How did you get to it?

Alvin: So, I think I was thinking of, if I was just doing financial planning or, let's say, hiring an advisor, which I did, I think back in... Well, the current advisor that I have right now started with me in 2021. And so essentially, I was like, "Okay, assuming that's all you do, you're a financial advisor, what is a reasonable amount of clients that I can expect her to have total?"

And I also looked at, okay, most advisory firms meet with their clients twice a year. Mostly they're retirees. Nothing really major changes that typically happen, but most of our clientele is 30s and 40s. You change jobs, you get married, you buy a bigger house. There's a lot of things going on, and we say, "Okay, we need to meet three times a year."

And eventually I came down to basically doing the math in terms of if my advisor has 80 clients and we do a client surge. And I think it's reasonable for her to meet eight clients a week over ten weeks and then have a break, a couple of weeks break. And so that's eventually I got to 80 clients, and then just, yeah, I just did a math from there on in terms of the expenses and all of that. Yeah, it still came down to, again, $500 a month of target.

Michael: Okay, $5,000. Oh, $500-a-month target.

Alvin: Yes.

Michael: Okay, $6,000 a year, which I get. I get it. If it's 80 clients, then you're going to be at least about $500,000 of revenue per advisor. Realistically, you'll be a bit higher because not every client's going to be at the minimum. Some will be higher than that. So, you may average $600,000 or $700,000 of revenue per advisor in practice, which maths pretty well. If you look at most AUM firms working with retirees, they also have basically the same numbers. They're also right in the neighborhood of $600,000, $700,000 of revenue per advisor.

Alvin: Right. Yes.

Envisioning What He Wants His Business (And Role) To Look Like In The Long Run [21:11]

Michael: It's very interesting. And so then I'm kind of inferring for the numbers that you want to get to overall. So, the end state is three advisors?

Alvin: At this point, I'm going to just try to grow however much we can. And the revised goal that I have in mind, Michael, because so now I am working with a business coach. I am part of this startup. Not start up. An accelerator program by Entrepreneurs' Organization. It's technically a spinoff of that in DC. It's called Entrepreneurly. It's a nonprofit. It's a spinoff of EO. So, I'm part of that accelerator, and I have a business coach. And he asked me what I want to do with my business. And I said, "I want to be able to grow the business so I can offload my clients to another advisor. And if I wanted to, I can step away and just hire a CEO to replace me and have a set of responsibilities that are reasonable." Meaning right now I'm wearing 7 different hats in running the company.

Michael: Joy of entrepreneurship right there.

Alvin: Exactly. Nobody in the right mind will accept that kind of job. So, essentially, how big do I need to get to build a firm where I can actually create a company that can stand on its own without me with functions that are well delegated? And I think my coach and I came down to around $3.5 - $4 million in revenue to be able to do that. And so that's my new goal right now.

Michael: Interesting. So, tell me more about what the business looks like at that size and scale that you see it running, being able to run on its own.

Alvin: It looks like when I did the math, I don't think I broke it down into number of advisors. But essentially, I have it in here of $4 million in revenue. And then I use a term called Labor Efficiency Ratio by Greg Crabtree. Do you guys use that term?

Michael: I don't know about that label, but what is it? What is it calculating or measuring?

Alvin: I think you just... XY just uses a different term, but essentially for every dollar that I pay my advisor, they bring in, let's say, two times the revenue. So, let's say I pay them $150,000, and then they bring in $300,000 in revenue. So, your labor efficiency ratio is two because revenue divided by the cost, direct labor cost. So, the healthy labor efficiency ratio is going to be around at least two. So, ideally 2.5.

So, I assume that. So, labor efficiency ratio of 2.5. Then I came down to essentially having advisor/paraplanner salary and benefits of around $1.6 million. So, I don't know, it's going to be around in the neighborhood of maybe nine advisors. I don't know. I'm just estimating here of how many people that will entail.

Michael: Okay. Yeah, makes sense to me. You end up with five or six lead advisors, three or four support advisors built around them for the teams.

Alvin: Yes. Yeah. Something like that.

Michael: And if your labor efficiency ratio is 2.5x, if I'm mathing that right, that essentially means advisors earn 40 cents of every dollar, because 40 cents times 2.5 would be the dollar, which fits. A lot of firms try to benchmark advisor compensation to 40% of revenue.

Alvin: Okay.

Michael: Yeah. And then you've got 35% overhead and 25% profit margin.

Alvin: Yes.

Michael: And so, but it sounds like you had a profitable vision as it was growing to $2 million of revenue. So, what else do you envision hiring or doing in the firm that meant, "No, no, it's got to get to $4 million to fulfill the whole vision in Alvin's head of what he wants it to be"?

Alvin: So, that would just mean we continue to grow at hopefully the pace that we've been growing. And I think our revenue grew around 30% last year. Obviously, as you get bigger, the harder it is to sustain our growth.

Michael: Denominator gets tough after a while. I call it the tyranny of the denominator. At some point, that thing gets really big. It takes a lot of growth to move that needle.

Alvin: Yeah. And I think that's probably going to be the biggest challenge, because assuming we can sustain that, then all I need to do is once my second advisor gets at capacity, I just hire a new advisor. Typically we've been hiring half-time advisor first, 50%, then once they have a certain number of clients, then they go full-time. The bigger we are, the easier it is to hire a full-time advisor.

And so I envision that happening, and then at some point, I would also need to figure out at some point what's going to be the next non-advisor hire. So, right now my non-advisor staff is my admin person doing one-third FTE and my marketing person one-third FTE. So, what's going to be the next hire? Because you would need people to support people. So, that's what I need to figure out is what's going to be the next hire? What do you think is going to be the next hire?

Michael: I mean, what we see for advisory firms, it's typically the first full hire is simply full-time admin. So, the admin ops, client service support, to keep all the advisors really productive, depending on how much administrative task work there is to be done. Sometimes you end up with two client service administrators. Then by the time you got two CSAs and three or four advisors and you're at six plus people total, usually it's some kind of operations manager comes next.

So, now it's just the amount of tech, IT, payroll, and benefits is a little bit more complex. The bookkeeping, finance stuff is a little more complex. There's a bit more to do on billing because we've just got a lot of clients to bill and manage that a more centralized role around operations, tech, HR, benefits, payroll, systems, process, like someone that actually focuses on building process for the business, if that's not our natural gift as founder. That's usually the one that shows up next. That's somewhere in the five to nine team members, as again, a non-revenue-producing role to leverage all the revenue-producing folks more effectively.

Alvin: Yes, that makes sense to me. And the way I've managed to make it work, because we have to be lean, right? Because we're not making as much as an AUM firm. We have to be lean. So, the way I envision that is instead of hiring a full-time client service associate, I actually just hired a paraplanning firm, Trellis, and essentially it's a paraplanning firm, and he supports a couple of advisors either creating a plan or whatever it is that the firm needs. So, it's essentially like an outsourced CSA, is my understanding.

And so my point was I need to be able to use these part-time roles instead of hiring full-time. So, as I continue to grow, I'm going to use Jeff's firm or services to assist us in paraplanning and CSA needs. And then my part-time person will probably need to work more hours, or I have actually been exploring hiring someone abroad, like in India or Sri Lanka. There's a couple of outsource firms out there that you can use these days. I got a couple of ones from my Entrepreneurly group. We actually tried to hire one, but it didn't really...we ended up pivoting to this just US-based early paraplanner.

Michael: Do you worry about overseas? I hear some firms are concerned about client privacy, access to information. Is that a concern for you?

Alvin: It was definitely one of the top concerns, so that's why I'm just not hiring anyone. I won't do it by myself. I would want to do it through an outsourcing firm where they screen these people and they have some safeguards in place. They only work at certain sites, and they have some security things in place.

But other RIAs do it because I asked them if they had clients who are RIAs. And have you spoke with an owner who hires overseas?

Michael: Not a lot. I've talked to some folks that do it for the pure admin work, because there are a couple of virtual ops, virtual assistant-type businesses. But I find most advisory firms seem to prefer just folks with more industry experience. They don't have to explain all the rest of what happens in a regulated advisory business. And then they tend to end out with someone that's US-based because there's a good number of people who were operations folks in an advisory firm who went and launched an outsource business doing operations for advisory firms, and then they know the business, and you don't have to teach them as much.

Alvin: That's right. Yeah, I get that.

Michael: So, there's only if you're not delegating financial planning tasks or industry-specific operation things. Stuff that interacts with a custodian, for example. The amount of pure virtual assistant, completely non-regulated tasks is not a huge amount for most advisors.

Alvin: I understand.

Michael: There's only so much to delegate before you just need someone to actually interface with your custodian or broker-dealer. And at the point you hire a person to do that, you may as well have them do all the other admin support tasks as well, because you got a person now.

Alvin: Makes sense. Yeah.

Michael: So, you've noted this as a contrast AUM firm. So, do you have an AUM fee component at all, or is it solely the flat fee, rotator fee structure?

Alvin: So, we do. Twenty percent of our business is AUM. Some of it is just retirees that got referred to us, or some of it is our clients' parents. And I think it just makes sense to me to do AUM if you're retired. We can make more timely trades, and everything is in there. You don't need to worry about a 401(k). And for that, we charge just your typical 1%. But because of legacy clients, when I initially started, we were only charging 65 basis points. Then I increased that to 85 basis points. And so I'm still in the process of migrating everyone to the new 1% fee. So, right now I think we're just averaging 80 basis points in fees for the $23 million assets that we manage.

Michael: Okay. So, I guess I'm kind of fascinated by that evolution. So, you started with a more discounted AUM fee, but even as the planning fees have come up, the AUM fees have also come up.

Alvin: Right. And as I was discovering what it takes to run a sustainable business, that's how I decided to do that. And most firms charge about 1%. And actually, some firms even charge higher than that. I've seen RIAs charge 1.75%. So, I thought 1% was a pretty reasonable fee, and that's probably what the average is these days, would you say?

Michael: Yeah. Our data shows that continues to be the median. It has been for basically 20 years, 1% on a million, and it has not moved. Notwithstanding all the discussion about fee compression...

Alvin: That's right, with all the advisors.

Using Monday.com Project Management Software Alongside RightCapital To Efficiently Create Financial Plans [34:37]

Michael: It actually has not moved. Not at all. Okay. Interesting. So, now help us understand what the service model looks like. What do you do for young clients that you're charging at least $6,000 a year for couples? What's the service model?

Alvin: It's a comprehensive financial planning service model where we talk to them and ask them about their goals, their situation, and most of them will say, "I want to maximize my money. I have a 3-year-old child. I want to save for their college education. And at some point, we want to move to a bigger house." That's typically the conversation. And we prepare a comprehensive financial plan. So, we use RightCapital and Monday.com which I know we're going to get into.

And so Monday.com we've built a whole template there, and essentially we create a financial plan for them. It's going to contain 30-plus, 40-plus recommendations in that Monday board. And that's going to contain everything from open a high-yield savings account and keep your 5-month emergency fund there. To switch from pre-tax to a Roth 401(k) because you're at the 24% tax bracket, which we think is going to be lower compared to when you retire. Contribute to a traditional IRA and exercise your option to convert to a Roth.

So, all of those tasks, like prepare a will, all of those are going to be in Monday.com. And we actually go sometimes further in the traditional if we think there's value. So, for example, identity theft is something that I'm very concerned about. So, we have a section in the Monday board on how to prevent identity theft.

And so we create the plan. That's going to be in conjunction with the RightCapital projections. And we present the plan, and essentially we meet with the client over Zoom. It's all remote now, Michael, since COVID. We were 50-50 remote before COVID, and then we just went 100% remote after that. So, we meet three times a year with a client, usually winter, spring, fall, and then they can email me or my two advisors anytime with questions.

Michael: So, help me understand further. You said planning with RightCapital and then these recommendations that are getting built in in Monday.com, which at least traditionally I knew was project management software. So, I guess help us understand further what happens in each? What exactly are you doing in RightCapital versus what's in Monday, and how does this plan come together?

Alvin: So, with RightCapital, you can do projections. The bulk of the work there is retirement projections. What do you do? How much you need to save? Where do you need to save so that you can retire at 55? A lot of our clients in their late 30s, early 40s want to retire by 55. So, RightCapital will help you do those projections. RightCapital will help us do projections on college education. Usually our clients will typically want to fund their kids' college for two years at an in-state university. And so we have those projections.

And then you have enough assets to last you until 90. And then all of the things that are assumed in the RightCapital projections, we make sure are going to be reflected in Monday like, "You need to contribute 10% to your Roth 401(k). We need to do a backdoor Roth, and you need to save $1,000 a month in a brokerage account." So, all of that are going to be tasks that are going to be in Monday.com so we can track have you done it or not. And along with in the client Monday board financial plan is also going to contain tasks that are not going to be in RightCapital, like where you keep your emergency fund or insurance stuff, which you can use RightCapital for tasks, but it's just harder.

Michael: Can you talk about that a little bit more? I guess I'm trying to envision what's the difference between using the task tools in RightCapital versus what you're doing in Monday.

Alvin: So, to start with, when I'm creating a new financial plan for a client, I have to write down all these tasks for a client from scratch. I was actually asking RightCapital...we were early adopters of RightCapital when they came out. That was our first financial planning software. And then at some point I was asking them, "Hey, is it possible for us to create a template of a list of tasks in RightCapital, let's say 50 tasks that I typically recommend to clients, such that I don't have to type in every single task every time I create a financial plan?" I don't know if they have a feature like that right now. I'm not aware of it.

So, that was one thing that frustrated me, is I do...eighty percent of the recommendations that I give to clients, the backbone is going to be there because most of them are wealth building, but I would have to build it from scratch in RightCapital.

With Monday, what we've done is we've created a template, a board, that will contain all sorts of recommendations that we can possibly give to a client. And so when we create a financial plan, typically after you see the client's situation, you can sort of get, "Okay, I don't need this." So, it's just you select a whole bunch of tasks, and you just delete them. "They're not a business owner, so I'm going to delete this section," or "They don't have credit card debt. I'm going to delete that section. They don't have a child. I'm going to delete that section." And then you continue to refine the plan to make sure that it matches with RightCapital.

And the advantage of that is the efficiency, Michael. So, my senior advisor, Kayla, and I can create a financial plan both using Monday and RightCapital in three to four hours, data gathering up to the completion of the plan, which I think is way below the industry average.

Michael: So, I'm just trying to visualize this. So, in Monday, you basically have the master list of all recommendations. All the things that commonly get said to clients. And I'm kind of inferring, it's not even literally just the recommendation: "You should have an emergency fund." It's actually structured as a task or tasks with subtasks. So, "You need emergency funds," sub-task number one. "Open emergency fund account," task number two. "Transfer the appropriate amount of money." Just you actually, you can literally workflow the tasks through.

Alvin: Exactly. Yes, these are actually actionable tasks. And then once they open a high-yield savings account, we can mark it as done. And now they need to transfer that money to that new emergency fund, and they haven't done that, so it's going to be working on it. There's a status column.

And so this is where the project management aspects kick in, right? So, I can assign them as an owner, "Automate $500 a month to your emergency fund from your checking account." So, I can assign the client as an owner. They're going to get an email about that. I can assign a date. So, I can create an automation there that says, "Two weeks before the due date, ping the client. When the due date arrives, ping the client again." So, I don't need to constantly check, "Oh, has the client done this? If not, okay, I'm going to go ahead and email the client." So, it saves me time because after the meeting I've set already these tasks and due dates for the client.

Michael: Okay. So, this is helpful as I'm trying to visualize. So, now you've got a whole... So, there's a board that's got whatever is the 50 things that ever might come up as prospective recommendations for clients that are all task templates with sub-tasks that have been built out, at least in skeleton form. Sure, you occasionally have to edit it to be client-specific: "Open account at your bank, not the bank," kind of thing. But you've got a master list of tasks. And so if I'm following it right, so there's a templated version of the board. So, you copy it over for a new client. That's now their board.

Alvin: That's right.

Michael: And then you don't have to start writing recommendations. You effectively start deleting non-recommendations.

Alvin: That's right.

Michael: And then suddenly you're down to a board that's specific for the client with all the tasks fully configured, with all the things that they need to be doing, assigned to them specifically, and now you just set out, "Okay, which tasks are we working on first? Those are the ones I assign to them first." And I guess mechanically, you have to invite them to the board.

Alvin: That's right. And we can invite an unlimited number of guests.

Michael: And so in Monday, then if you have 100-plus clients, you essentially end up with 100-plus different boards, like each client has their own board, and you invite them to that board, and each one's just shared with their own individual?

Alvin: That's right. Yes.

Presenting Financial Plans To And Communicating With Clients Using Monday.com Boards [45:40]

Michael: Okay. So, I get it from the management end. I guess I'm taking one step back to the planning, I guess the planning process and delivery. So, you gather data, you come back, and present a plan of recommendations to clients. So, what actually gets delivered or presented in the meeting itself?

Alvin: So, we share our screen. We show them all the recommendations in Monday and what we think they should prioritize. We show them the projections in RightCapital because they would want to know, "Okay, I can fund my kid's college by 2 years if I contribute X amount to their 529, and retirement projections."

And then typically if there's time, we just dive in and do a working meeting. And that happens a lot during the three-times-a-year meetings where, "Okay, in the plan, we recommend you increase your 401(k) from 5% to 10%. Let's do it now." So, they log in, and they share their screen. And so yeah, it's basically a presentation of the highlights of their financial plan as seen in Monday.com and a little bit of RightCapital during the plan presentation.

Michael: So, you don't print…or PDF in today's world. You don't create a financial planning software output. If we need to look at projections, we literally open them on RightCapital. Otherwise, we're solely looking at the Monday board.

Alvin: So, we actually also just PDF the RightCapital report and we send it to them. So, some people like having that fancy stuff with all the graphs and tables and charts.

Michael: I was wondering, do you get clients that still want to see that stuff? So, you do.

Alvin: Yeah. So, we still deliver that right before the meeting or after. We can export the Monday board, but it's not going to be pretty because it's just going to be in an Excel file. But they can do an export on that. We do export it and save it in our drive just in case Monday's system collapses, at least we have some sort of data on that.

Michael: And so then I'm presuming the Monday board effectively becomes the center of the planning relationship now because it's just literally where all the recommendations and tasks are that you're working on?

Alvin: That's correct. That's going to be their place, go-to place to log in. The tech-savvy ones are going to be there actually logging in and marking things as done. That's going to be a smaller percentage of our clients. But they can actually send us a question as well. We can communicate through Monday. So, let's say we wanted them to reallocate their 401(k), and we pinged them to do it, and then they do it and then they come in and log in through Monday and said, "Hey, I'm in my 401(k), and I don't see the fund that you were saying, but I see this. Is this good?" So, we get a notification in on a Monday board. We respond to the clients in their Monday board. Then at some point we hit Done.

So, the advantage of that is in the email, when you're searching for it, you don't know. It's kind of hard to search. But here you have a whole list of conversations on that specific task, like emergency fund or a 529 on that specific task. You can just trace the conversation there.

Michael: Oh, because it's just a threaded task conversation at that point.

Alvin: Yes. On that specific task, you can converse with each other there.

Michael: So, that brings so many questions to me. So, do clients get thrown or confused? Am I supposed to email you, or am I supposed to log in to Monday? Am I allowed to email you? Do I have to log in to Monday to do it? How do you manage the "Where am I supposed to communicate yet another portal thing?"

Alvin: Yeah. In the ideal world, Michael, they would just ping us through Monday. So, we've actually, my team and I talked about that, and I think we think it's too much to require. So, we just tell them, "You can email me or you can ping me in Monday," and clients will do either or both.

Michael: Okay.

Alvin: Depends on their preference.

Michael: So, you give them the choice. It's not a requirement. I guess if they don't, then you have to go into Monday and mark the tasks...

Alvin: Exactly.

Michael: ...on how they're doing so that they're accurate when you have your next meeting.

Alvin: That's right. Because some clients don't want another login to deal with. So, for a handful of clients, it's really just for us. The Monday board is going to be for us as a task management tool. And for some, it's going to be both, where the clients can also see their progress and communicate with us.

Michael: And so I guess I'm just still trying to envision. You're framing this around the efficiency that you get from it. I think a lot of us have so much fatigue around how many different tech systems we have that we have to use and log into and integrate together that I just feel a collective ugh at the thought of another thing to log into. So, I don't know how…help me reconcile. I'm feeling resistance to have yet another thing to have to log into and manage, but you're saying it's more efficient. What's happening that makes this easier and more efficient to have this on top of my CRM, on top of RightCapital, like yet another system where I'm tracking tasks and activity and managing client information?

Alvin: Well, let me ask you. So, the typical advisor, how are they tracking client tasks, and how are they making sure whether or not it's done or not? Do they use...yeah, what are they using? Are you using CRM, RightCapital, or Monday, or, sorry, Word or Excel?

Michael: I think it's all over. I don't know that we've directly tracked this in our research. What I see is a lot of firms cover this in some combination of their financial plan or basically meeting agendas. We recommended this, and then when we have our meetings 1 or 2 or 3 times a year, we pull out what we were working on and say, "How are you doing? Have you completed it?" I think strictly speaking, tracking-wise, that might live in a Word doc, that might live in something like eMoney, RightCapital tasks to the extent that you're using some of those modules, and some probably capture it in a CRM.

If we're going to remember what we recommended and actually track progress on it, it's got to get lived and recorded somewhere. But I think, to your point or highlight here, I don't think it's tracked terribly well. Because if we use a task system, historically we do that in CRM, but that's usually not something where clients would have a login to share. And the planning tools have built some of these, I think, because advisors have been using third-party tools, so they want to capture the business.

But I get it, just the... I think the truth is the depth of how much you're tracking and managing each client's tasks at the task level probably is just deeper than where most firms go today. I think we still have a tendency of "I recommended that you do the things. Did you do the things?"

Alvin: That's right. Yeah, and simple things like freeze your credit with the three bureaus to protect yourself from identity theft. Probably most advisors will not care to track that, but we want to track that. And we've found that this is really the best way to track everything. "Have you done your 2024 traditional IRA contributions?" It's so easy to track that. If a CPA asks, "Hey, how much did that client contribute again?" It's at our fingertips. And I realize it's a separate login.

Switching From Wealthbox To Monday.com As The Firm's CRM [54:53]

Alvin: And we had that issue when we were using Wealthbox, but now we don't have that issue anymore because we're using Monday as a CRM as well.

Michael: So, you actually dropped Wealthbox CRM for this?

Alvin: We literally just ended our subscription March 31st, more than a week ago, to Wealthbox.

Michael: Interesting. And so to use Monday as your project, to use this system for all your clients or... Because I think Monday actually has a project management system and a CRM system. Are you expanding this project system, or are you actually using their CRM standalone as well and integrating together because it's from one provider?

Alvin: We weren't familiar that they had a CRM, but when somehow my assistant discovered that they had one... I don't know how true that is, but essentially when we discovered that they had a CRM, we just switched because it was no additional cost to us. It was just a different interface with new features. We had to transfer all of our Monday boards to the new CRM, which takes a little bit of work, but it was fine. But now we use their CRM, and so all of our client data is in there. Their background info, email. And Monday CRM tracks the email conversations back and forth. You can write notes in there. So, anything really that Wealthbox can do, Monday CRM can do. It's just going to look different.

Michael: Interesting. And I guess the upside of that as well, to the comment you just made, if I've got email correspondence with my client and I've got direct email and I've got task-related correspondence, right? They're checking off tasks, or they write a comment in the thing: "I don't know what I'm supposed to do next, advisor. Please help me." All of that communication now gets consolidated to a single record when you're running Monday for CRM and project management and financial planning boards because it's one system.

Alvin: That's right.

Michael: It's one.

Alvin: Yeah, we don't need to log into either and say, "I'm pretty sure I wrote down a task for myself about reminding the client of task A," but now it's all going to be in Monday.

Michael: So, are there capabilities that Wealthbox had for the industry that you don't have in Monday? Was it a trade-off: "We gave up some things to get this integration with the financial planning boards"? Or were you able to substantively replicate the rest of the CRM functions as well?

Alvin: We looked at the main features and compared, and Monday actually had slightly better features. So, for example, Wealthbox had a mass email option where I can email all my clients, but I can only do it 100 at a time. So, before, I had to do it multiple times. With Monday, they actually have a nice button that says, "Mass Email," and I can send 500 at a time. It's all going to be tracked. So, for that one, Monday wins.

Wealthbox had a report on...we had some reports, report templates there where I wanted to understand where did my 2024 clients come from, from different sources. So, Monday can do all of that, and actually, it's much easier to change the timeline in terms of, "Okay, I want to know where I got my past clients for the past 2 years. I can do filters on that."

So, I don't think Wealthbox had a feature that Monday doesn't have. I think the only "complaint" that my team and I have with Monday is when you scroll down on the history of the notes, in Wealthbox you can see more of the notes as you scroll down, but here Monday hides it more. So, that's really minor, so I can just click on the thing in Monday, and I can expand it. But, yeah, it's a fully functioning CRM system.

Michael: And are there integrations to other tools that Wealthbox would have as an industry player that Monday might not have? Or do you not really leverage in the way of integrations?

Alvin: There's a lot of integration that we have actually even yet to explore in Monday. So, we used to have Zapier integrate with Wealthbox on automations like when a prospect schedules, a client contact is created with Wealthbox. So, we could also use Zapier, but they have their own version of the Zapier called Make in Monday, which integrates well. So, we have that. I believe we can actually, this is one of our to-do lists is to export integrations. I think we can integrate Zoom. We use AI notetakers these days. I know it's a thing.

Michael: What's your AI notetaker of choice?

Alvin: So, we researched a whole bunch of notetakers. I know in the financial planning industry, there's Jump. And what were the other two, Michael?

Michael: Oh, Jump, Zocks, Zeplyn, FinMate are probably the three or four that we see often that are industry-specific.

Alvin: So, we looked at a couple of those, and I think they charge like 100 bucks a month. And we looked at just the regular note taker apps out there that other companies might use, like obviously there's Zoom AI Companion, which is really easy. We use Zoom as a backup. We tried Grain. And I think I just did online research in terms of what's the best in terms of accuracy, because that's what we want, right? An accurate transcript and summary. And we settled on what we decided that Krisp fit our needs, K-R-I-S-P. We pay Krisp, I think, $8 a month, like a tenth cheaper than Jump.

Michael: Oh, wow. That's a lot cheaper.

Alvin: Yeah, and it summarizes really well, and it produces action items. You can get a general summary, or you can do a detailed summary per topic. Like, "Okay, you talked about buying a vacation home." So, there's a summary in there. "You talked about retirement." There's a summary section there.

Michael: Very cool. Very cool. So, I guess on the integrations, and sort of my key takeaway is a lot of what we do with our systems at the end of the day, we can patch them together with Zapier in the first place. And so if we can zap it into Wealthbox, we can zap it into Monday CRM or anything else.

Alvin: That's correct. Yes. And they have a whole bunch of, when I go to their integrated section, there's a whole bunch of vendors there that we haven't even explored. So, there's a lot of capabilities that Monday...

Michael: Interesting.

Alvin: ...can do in automations that we have yet to scratch the surface.

Michael: Okay. That's interesting. And just the industry-specific, just a lot of advisors look to integrate planning software, portfolio management software, custodial integrations to varying levels. Does that come up for you? Is that not even really a concern? How do you think about the industry-specific integrations?

Alvin: How do they typically integrate, use those integrations, like custodian to Wealthbox, for example?

Michael: Making sure that contact information is consistent across systems is usually the biggest.

Alvin: Oh. We haven't explored that. I'm going to write that down. So, we use Goldman Sachs as our custodian. So, I'm going to see if...

Michael: Oh, interesting. So, what...

Alvin: Again, we haven't looked into that, Michael.

Michael: What led you to Goldman and not Schwab, Fidelity, Altruist, a lot of the others that are out there?

Alvin: So, when we were starting out, we created our RIA back in 2013, and then I quit my nonprofit job back in 2015. So, when we created the RIA, we obviously had zero assets. And I think back then most of the custodians had a $10 million minimum. And then when was XY created?

Michael: Launched in 2014, but didn't start a custodial relationship until I think 2017 to get advisors into TD with no minimums was the deal at the time.

Alvin: Okay. So, yeah, there was no XY, or actually I didn't really know about XY until several years ago. But so there was really no way for us to custody with Fidelity or Schwab. But Folio Institutional was the firm back then. Goldman Sachs bought it a couple of years ago. And so they were doing no minimums, and they had some nice features where you can create model folios and subscribe clients to those, and then it's easier to rebalance. I'm sure other custodians can do that. And yeah, that's how we ended up with Goldman Sachs.

Michael: So, you were with them in the Folio days as the no-minimum custodian. And then when Goldman bought them, you went along and have continued.

Alvin: Right. And essentially nothing really changed in their platform. It's just now branded as Goldman Sachs.

Michael: I was going to ask, did anything change for you as a user, or has it effectively just continued the same way throughout?

Alvin: Yeah, same way. We had to fill up a new form, but after that, everything else is the same. And they bought Folio for a reason. They wanted to get into that space, and Folio was doing some pretty cool things in it.

Michael: Okay. Very cool. Very cool.

The Marketing Tactics District Capital Management Uses To Attract New Clients [1:06:07]

Michael: So, now, as you look forward from here, what comes next for the business as you continue to build and iterate?

Alvin: So, my business coach tells me I need to spend more time on sales and marketing. So, I believe that. So, now I want to just spend more time on that and work with my marketing person, Jess, just to continue to generate qualified leads for the firm. We're hoping to get 30 new clients this year. I think last year we got 36. No, last year we got 30 new clients. So, yeah, we want to get 30 new clients this year. And basically just once my second advisor hits close to capacity, hire a new advisor and just repeat the process. And at some point I'll need more time for my paraplanner and my assistant and hopefully hit $4 million in revenue in 10 or 15 years. I'm sure it's not going to be as smooth as that, as we all know.

Michael: So, where does all the growth come from then? It's a very healthy client flow if you're picking up two or three clients a month ongoing. So, where does new business come from for you?

Alvin: So, we also track that. So, 40% of our business comes from referrals. And then 30% comes from Google Search. And then the rest comes from miscellaneous things of personal contacts, NAPFA, XY [Planning Network], CFP website, Washingtonian. So, the Google search is the one that we've built. This is our SEO thing that we built for, I think, four years now, where essentially if you Google, Michael, if you Google "financial advisor DC"... So, what are we here? Washingtonian comes up first, then I think we usually are the third or the fourth.

Michael: Wow.

Alvin: If you Google "financial advisor Maryland," we are... SmartAsset is first. And then yeah, we're number four or five. So, we're going to be in the top, usually top five if you Google.

Michael: Okay. When things like SmartAsset come up first... I get it. If you want to search for multiple advisors, you can do that. But if you're looking for an actual individual advisory firm, then it sounds like you're even higher on that list.

Alvin: Yes. Yeah. So, we've worked hard to do our SEO. Yeah, for "Financial planner... Financial advisor, Virginia," we're number three here.

Michael: So, being DC Metro Area, for those who aren't local, we often call it the DMV area because it's DC, Maryland, Virginia, overlapping some rivers. So, Alvin, it sounds like you've optimized around all three?

Alvin: All three. And then we also have certain keywords that we've been targeting over the past three years in terms of what our clients who are prospective clients in their 30s and 40s, what are they googling? Are they googling backdoor Roths? So, we try to rank for that, or Amazon is here. So, maybe they might be Googling Amazon RSUs. That's actually one of my to-do list items is do a blog and a YouTube video around that.

And so we've tried to think about what are our prospective clients? What are the keywords they are googling? And then we write a blog around that and try to rank page one. Some of our keywords rank page one. Many don't. And so we just try to constantly find ways on how we can rank better. A lot of factors go into the ranking. So, it's the number of keywords. There's a thing called domain authority, which is how authoritative your website is. You need to have a lot of backlinks from reputable sources that go to your website. So, I'm going to confess with you, Michael. So, my main motivation for being a guest here is for the backlink.

Michael: Yes, sounds great. We are a pretty high authority site.

Alvin: That's right.

Michael: You will get a backlink from our podcast page back to District Capital Management.

Alvin: That's right.

Michael: Yep. So, very legit. When we were building in the early years of our Kitces.com platform, we did a number of guest content, shared content, syndicated content arrangements specifically to help build our SEO domain authority in the early years. Just trying to get linkbacks so Google knows we exist and thinks of us as legitimate.

Alvin: That's right. So, it's been really fascinating learning all about SEO and just trying to evolve on that. Some people are now asking ChatGPT or Gemini on where to find financial advisors. How do we rank for that? I have no idea. Right now, I think ChatGPT ranks us as number two. I have no idea where it got that. So, we need to decipher how to rank in these AI platforms.

How District Capital Management Uses ChatGPT To Support Its Blog Content [1:12:08]

Michael: So, are there other ways that you're using AI in the business at this point beyond trying to figure out how to search optimize for it and AI note-taking tools? Well, and having it analyze your sales transcripts to find the optimal strategy.

Alvin: We write a blog every two weeks in terms of the keywords that we want to target, and we used to write it from scratch. And we've learned this from one of my contacts in my business coaching group. His business is SEO. So, he said they use ChatGPT to create a blog. Just tell it what to write. And then if you publish that just right off ChatGPT, it's not going to do very well because Google will...the interesting thing there is Google is actually more concerned about plagiarism. So, what you do is, what we've done is we use a vendor called Copyscape. So, we put the blog that ChatGPT drafted, put it in Copyscape, and Copyscape will tell us, "Okay, these sections look plagiarized." And so we go in there and use our own words to change those until it's 0% plagiarized. And then we have...

Michael: Because you run the risk that ChatGPT's generative isn't just generating text, it's literally reproducing something that it read...

Alvin: Exactly.

Michael: ...somewhere else that you wouldn't know, but you are responsible for if you hit the Publish button.

Alvin: Exactly. Yes. And then it's also not going to do well in terms of search-wise if it was just copied from somewhere. And then after we use Copyscape and then we have a human read it, an advisor. So, it's going to be me, Kayla, or Amy who reads it and say, "Okay, this makes sense." Usually we want to triple-check the numbers because ChatGPT's not very good with numbers. And then, yeah, that's another way that we use AI.

Michael: Okay. And as you write these posts. I guess I'm just trying to envision how much do you prompt the engine around what it creates. Are you trying to tell it what to write about and what the answer should be? Like, "We want to talk about Roth IRAs, and we want to highlight backdoor Roths specifically," and you queue it up that way. Or do you give it just more generalize like, "Hey, we have a lot of Amazon employees in the area of RSUs. Please write an article that would be relevant for people with RSUs"?

Alvin: Sometimes we have something like a strategy we want to communicate. Let's say I'm going to write a blog on Amazon RSUs. Instead of just asking it, "Write a blog on how to maximize your Amazon RSUs," we have three things that we want to make sure we convey in that blog, like "Three ways you can deal with RSUs, like sell, keep, or sell and reinvest." So, we usually have some type of outline that we want to communicate. And so we're not just telling it to write it from scratch.

Also, when you google a keyword, Google will have people also ask questions. Like, for example, I google "financial advisor DC. What is a normal fee for a financial advisor?" That's a commonly asked question. "Is it worth paying for a financial advisor?" So, those questions, we also have a Q&A at the end of the blog, answering those questions, because we know that that's a popular question that people ask.

Michael: Oh, that's really cool. So, you'll literally just google the thing you're going to write about before you write about it to see what people also ask.

Alvin: Exactly.

Michael: And then make sure the article covers those questions in the article.

Alvin: Exactly. Yes, we've learned all of these tips and tricks over time. Yeah.

Michael: I like that one. That's a cool trick.

What Surprised Alvin The Most Building His Business [1:16:39]

Michael: So, as you reflect on this growth journey so far, what surprised you the most about building the advisory business?

Alvin: So, I came into this business really hungry to deliver sound and solid advice to clients, and I still like that. What surprised me is how I've come to really like marketing, sales and marketing, which coming into the business, I thought marketing was just BS and it's just a way to spin things, and it's a waste of time and all of that. But I've come to value and appreciate how marketing can be both an art and a science. Every advisor will have their own marketing, right? And a lot of things can work depending on who you are and what's your style. So, I've come to really love that part, which I wasn't expecting.

Again, I mentioned earlier, I had no desire to ever be a small business owner when I was growing up. And now I love being a small business owner because I basically can build and shape it the way I think it should, and I'm having fun. And I really appreciate it, and I was also surprised that I really, I think it's pretty cool when I've created a new job. There was no job before, and now there's a job for a financial advisor. And so that was pretty cool.

And also to be honest, how far I've come. I know I'm still pretty small, but I think when I was starting out, I was like, "Oh, I think I would be happy with $150,000 in revenue" because that was twice my salary back in my nonprofit days. So, it's just pretty nice how you just improve things step by step, and it's almost like when you're hiking, right? You look at a mountain and there's like, "There's no way I can climb that," but if you just take one step at a time and you're at the top after four hours.

The Low Point On Alvin's Journey [1:18:58]

Michael: So, what was the low point in this journey for you?

Alvin: It was kind of lonely in the beginning, as other solo advisors can probably relate. There was no XY when I started, and I didn't really hear about XY. I didn't have any team members. So, that was tough. And also, I made a lot of mistakes. Like I mentioned to you, I was significantly underpricing before. And something that I still struggle still now is comparison. So, whenever I go to a conference, I'm like, "Okay. I'm going to meet all these advisors that have much bigger businesses than I do. How do I guard myself against comparing myself with others?" Because I mean, it's true what they say, comparison is the thief of joy. And it's like your favorite book, "The Gap And The Gain," Michael, right? So, it was really interesting how even successful business owners running $10 million businesses, they're comparing themselves with $40 million businesses, and they think they haven't gotten that far.

Michael: There's always a bigger fish. It doesn't matter where you are in the spectrum. There's always a bigger fish.

Alvin: Yeah. So, trying to deal with that and say it's not about me, it's how I can use my talents to help other people, and people will do it in different ways.

Michael: So, what did you do to manage the loneliness early on?

Alvin: I did a co-working space. It's like a WeWork. It wasn't WeWork, but there was a lot of WeWork-like places here in DC.

Michael: Yeah, there were a lot of clones of WeWork in the 2010s.

Alvin: At some point when I was doing some research, there was 12 of them just in the Metro DC area. So, that was nice. I can come in two or three times a week and be around people. So, that was helpful.

Alvin's Advice For His Younger Self And For Newer Advisors [1:21:28]

Michael: Interesting. Okay. So, what else do you know now you wish you could go back and tell you a decade ago as you were getting started?

Alvin: I would join a mastermind group. And my business coach told me...he also has a business coach, and his business coach said that "What is the top three criteria of a successful business owner?" And I wasn't actually expecting the answer, but he said, "You have an accountability group. You have a business coach. And you're focused on sales and marketing." So, those three.

Michael: Interesting. Say those again. Focused on sales and marketing, have a business coach. Good recommendation for the business coach.

Alvin: And be part of an accountability group. Join an accountability group.

Michael: Okay.

Alvin: So, accountability group, that's going to be your mastermind group in XY. So, that's a really cool feature. I'm already part of a group through Entrepreneurly. So, if I wasn't part of that, I would definitely join the mastermind group because you just learn a lot of things, and you get camaraderie from there, and it helps to keep you accountable, right?

And so I would definitely encourage new advisors to look into that. Coaching, which is one of the three.

Michael: I was going to say, you hired a full-time... Well, not full-time, but you hired a coach directly?

Alvin: It's part of the... It's one of the perks of joining this business coaching group, Entrepreneurially. So, we're assigned... It's a group coaching format. There's four of us plus a business coach. We meet once a month. So, basically I'm getting both the accountability group and the coach.

Michael: Any other advice you would give younger, newer advisors who are still getting started?

Alvin: My wife and I talk a lot about having a growth mindset. So, sort of like either you win or you learn. So, essentially the idea of that is, "Okay, sometimes you do great on certain things, but sometimes you don't do great, or it flops, or you make a mistake. How can I turn that into an opportunity?" I seem to remember, actually, I don't know if it was you talking to Stephanie Bogan about turning a setback into a huge opportunity.

Michael: Yep.

Alvin: That stuck with me. And so if I ever stumble across a huge setback, I try to ask myself... It's not often easy, but I try to ask myself, "Okay, how can I turn this into an opportunity?" So, for example, my first advisor that I hired, I really loved her, and then worked for me a couple of years. And then at some point she decided she wanted to leave for personal reasons. That happens.

Michael: Most terrifying moment for anyone that finally hires an associate advisor and then finds out they're leaving.

Alvin: Yeah. And I thought, "Oh." I thought, "I had big plans for you." And so I was brokenhearted. But I asked myself, "Okay, how can I turn this into an opportunity?" So, okay, she was part-time. I just hired a new part-time advisor. Maybe I can promote her to a full-time advisor now because I'm going to have the cash flow to do that now. And that turned out to be Kayla, who is one of my rock star senior advisors. So, yeah, how to turn setbacks into an opportunity and having a growth mindset.

Michael: Yeah, the way I had heard it framed to me was, what would have to happen that when you look back years from now, it turned out this was the turning point for the next stage?

Alvin: That's right. Yes.

Michael: Right. And just how do one of those challenging moments turn into, "Oh yeah, it was all different after that." Because a lot of us have those moments. You can only see them in retrospect now. So, the interesting thought experiment is, "Okay, when it's several years from now, and you're looking back at the thing that just happens that we're freaking out about. What would have to happen that when you look back on this years from now, you'll realize that this was the turning point?"

Alvin: That's right. Yeah.

What Success Means To Alvin [1:26:36]

Michael: So, as we wrap up this podcast, this is a show around success, and one of the themes that always comes up is literally that word success means very different things to different people. And so you're on this wonderful success path with the business. I think you said $850,000 of revenue, staring down a million on a path to four. The business seems to be in a wonderful place right now. How do you define success for yourself at this point?

Alvin: The simplest answer, which is actually not my answer, would be to say if I hit $4 million in revenue, then I would consider it a success. But actually, I wouldn't say that is my answer. I would probably just say, at my deathbed, "Was I able to use my talents to serve other people? Was I able to just constantly learn and improve every day, every week, and use setbacks as an opportunity?" I would consider that as access. "Was I able to build great relationships along the way?" I think it would be kind of empty if I built a $4 million revenue and just treated people as transactionally. That would not be success. Building great relationships along the way.

I used to love gardening, Michael. And so with gardening, I'm planting things. I'm trimming the shrubs. And sometimes it grows. Sometimes the plant dies or some animal ate the plant, but I'm not stressed. You're not stressed when you're gardening. You're just giving it your all and you're having fun, and I'm not linking my identity to the firm, which I think is a big deal, right? So, a lot of our heart and soul is poured into the advisory business. And when it comes [time] for us to step out, who am I without my firm if I'm not a financial planner? And so just being able to think about who I am. I'm giving this my all, but not really linking my full identity with the firm.

Michael: Very cool. Very cool. Well, thank you so much, Alvin, for joining us on the "Financial Advisor Success" Podcast.

Alvin: Thank you so much, Michael. It was really fun.

Michael: Thank you.