#FASuccess Ep 437: Becoming An IRA Expert To Differentiate By Charging The Highest Fee Instead Of The Lowest, With Ed Slott

Resources Featured In This Episode:

• Ed Slott: Website | Facebook | LinkedIn | YouTube
• Elite IRA Advisor Group
• Two-Day IRA Workshop
• IRA Advisor Newsletter
• Kolbe Index
• The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It by Micheal Gerber
• BenefitsLink

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Full Transcript:

Michael: Welcome, Ed Slott, to the "Financial Advisor Success" podcast.

Ed: Well, it's great to be here with you, Mike. Thanks.

Michael: I'm really excited to have you join us today and to get to, I hope, share a little bit of a story that isn't really out there in the world, which is the actual story of how Ed Slott, the IRA guy, becomes Ed Slott, the IRA guy, and what it's like to build this kind of path to specialization. Because I find, if you look at almost any other recognized profession, law, accounting, medicine, there is a clear reality that the specialists are more financially successful than the generals. The M&A attorney makes more than the generalist lawyer who does your real estate transaction and pleads your speeding tickets. The forensic accountant makes more than the general CPA who prepares returns and does small business accounting. The cardiothoracic surgeon makes a lot more than the general family physician.

As financial advisors, though, I find there's still a lot of fear towards specializing. What if I picked the wrong thing? Do business opportunities really come knocking on your door if you're a recognized expert? And so, as I grew up in the business and started nerding out on taxes and retirement, I quickly got familiar with, as I frame it, just Ed Slott, the IRA guy, in early years of my career. And so, again, I'm just really excited to hear the backstory of how exactly you become the leading expert in IRAs and whether it's played out the way that you expected when you started down this IRA expert path.

Ed’s Start In The Accounting Industry [04:13]

Ed: Well, it was really never planned. I like to say there was a plan. I was an accountant. I came out of college in '76, got my first accounting job, which is now, as I realize, almost 50 years ago, and that's what you did. You went to clients. You did their books. By the way, back then, for the younger advisors, when I say they did their books, they were actual books, ledgers, not QuickBooks. I mean books that you wrote in general ledgers, you would post, write up cash receipts and cash disbursements, and do bank recs. And you got a real feel for the client's business. So that's what we do. But I didn't really know anything. I didn't last in that first job. After tax season, they got rid of me, one of the partners. It was a small accounting firm, but it's all I needed.

It was very hard to get a job then when all the baby boomers were coming out. It was almost impossible. I spent weeks after I graduated in May '76, I didn't get my first job till about November, just going around. I remember a couple of days just going into Manhattan, I'm in Long Island, just knocking on any door with resumes, and it was just impossible. But I got into this one small firm. And at one point, I remember, we were at a meatpacking company who happened to be one of their clients, and the partner...there were only three partners, small firm. He looked at me, saw what I was doing. He looked over at me, he said, "You really don't know anything about accounting, do you?" And I didn't know what to say. I didn't answer him because I didn't even know what to answer. But I realized he's probably right. But I was learning there. So I didn't last long there, but I knew enough to get another job after they let me go. That was after tax season, April '77.

Michael: Why were they letting you go? What were you, I was going to say, doing or apparently not doing?

Ed: Well, I'll tell you, my first job, to show how insignificant I was, because you really don't know, he was right, anything about taxes just from going to college and dealing with clients and writing up their books and all of that stuff. My first job there, I remember, I was so insignificant, they sent me out to get coffee for the secretaries because they were more valuable. So it was just the way they looked at me, a new guy coming out, he's a body, he could do some things. But I was very lucky they had one senior accountant, not the partners, this guy, Dave, who I haven't seen him since then, but he was a great guy, a little older than me, maybe 10 or 15 years older, but he had that experience. He showed me everything, how to go to clients, how to get the work done on time, and how to schedule every... I learned everything from him. He even showed me which colored pencils to use back then. You had to use red for totals, blue for debits, red for credits. He had these colored pencils and stuff.

It was a whole different era. But I knew enough that when an opportunity came after I left that company, I went back to my college. I graduated from Adelphi. I had one of those stickers on the board that some accounting firm needed somebody. So I picked one of them up, and I went to see the guy. And I had a nice interview and everything. And I told him I could do payroll taxes, sales taxes, write up the books, because I learned all that from this guy. So it was very valuable at that first job. The first job is so valuable if you can get it. I don't know if that's still true today. Maybe they don't have the patience today like that guy did. But I had a great interview, a small firm, another small firm with two partners, one younger guy in his late 30s and one older guy maybe in his 50s. And I had a great interview, but never heard from the guy.

So I went back about two weeks later, went in there, and I said, or I called them, I don't remember, and the older partner...I had the interview with the younger partner, and the older partner said... I said, "I had this interview with Bernie," was the guy's name, "I never heard from him." He says, "Oh, well, Bernie had a heart attack right after that at 38 years old, and we need somebody. So come on over." And he put me at Bernie's desk. And back then, the old partnerships, it wasn't really a true partnership. It was two guys with their own separate practices that shared the office space. So he didn't know anything about Bernie's clients. He gave me his diary, his day book, and he said, "Here's the list of his clients and a map. And go see what you can see." I don't even know what he charges them because we used to write out the checks and everything. And people were very good.

Michael: So I want to be clear. So Bernie's had a heart attack, and you get his book of clients because it's literally a book with clients?

Ed: Yeah. It's a calendar of where he goes. And the other partner told me, "Just go there." And I remember I was looking up one stationery store in Sheepshead Bay in Brooklyn, and the map they gave me was so old, those streets weren't on the map. They didn't have GPS then, so I'm riding around Brooklyn trying to find the place. I remember it was called 4B Stationery Store. I finally got there. And in every account, they were all great to be there. I was a young guy. I said, "What does Bernie do when he gets here?" He says, "Well, here's the books. Here's the checkbook. Here's all the tax forms." He had them well-trained. So I dug in and did everything. And this went on for a few months till Bernie got back.

One day, I'm sitting in the office, doing the work, and this guy comes in, and he says, "What? No hello?" I said, "Well, who are you?" He says, "I'm Bernie." I don't remember the guy. I only met him once at the interview.

Michael: Wow.

Ed: Anyway, I eventually became great friends with him, and he was a fantastic accountant, very meticulous, had everything. And he had great relationships. That's what I learned from that guy. And that is the key to everything, I think, in business, nurturing those relationships, just being part of the client's family. And he was great at that. And I learned that from him. And eventually, when I got my CPA later, I wasn't a CPA yet, I got it because you had to have two years working experience then, I got my CPA, and as soon as I did, they made me a partner, because it was perfect for them. I was a young guy. Bernie had health issues. The other guy was older. And I could do all the running around to clients all over. So that worked out great. And I got great experience then.

And then I moved on years later to my own. My father was an accountant, a regular old-time accountant, like that guy said. But I never really hooked up with that because I wanted to do something on my own. I wanted it to be tougher because I didn't want to be coddled, and I was afraid he might make it too easy. I really wanted to learn from the ground up, which I did. And my father had the same kind of practice, him and another guy, that each had their own book of business but shared office space. Anyway, that was in 1984. So he called me up, or not he, my brother called me up, and he said, "Dad's partner, Irving, died," at a tax seminar, of all things. And I could see it. They were so boring then, that could do it to you. It's one of the things that I know...

Michael: Was he delivering or receiving the tax seminar?

Ed: No, he was attending.

Michael: Okay.

Ed: It was one of those old Sid Kess seminars. I don't know if you... You had Sid. You talk about pioneers. Sid started all of that. There was no CE. Well, they didn't even have CE then. But there were no general seminars then. He picked that up and was the master of all seminars for years and years and wrote books, and he was friends with all the CPAs. Everybody knew him. So it's one of those seminars. But other than Sid seminars, most of them were so boring and horrible, and I always remembered that. I remembered, if I ever do programs like this, I'm not doing them like this. I remember sitting there with my father. He took me, and I guess he knew more than me.

So, for me, it was really boring. I don't know what they were talking about. And I looked at my watch the first time. I thought it was lunchtime. It was only a quarter after nine, and they started at nine. And I said, "Holy crap, this is going to go on till 5:00. How do these people…?" Anyway, so my father was a traditional accountant. And my brother called and said, "Irving died, and you know what you have to do." And my brother wasn't in finance. He had another job. So I went over, and my father needed help. And again, same situation. He didn't know...

Michael: You bizarrely are very experienced at taking over for medically evacuated CPA practices.

Ed: Yeah, I know. It was the weirdest thing. And so anyway, me and my father, we had a rough start, and it worked out beautifully because I was young. I was not married. I didn't have a lot of expenses. I had a little apartment, paying $242-a-month rent. And it was great. We were both at a point where we didn't need money, not much money. So we really had nothing. We really didn't take any income for about two years because it turned out his partner was so sick, we found out all the work was behind by two years. So it was a real mess. Anyway, we got that done.

And then I think it was around that time...actually, before that, when I was at the other firm, they were also like my father. They wanted straight accounting. You go see the clients, do their taxes, talk about their business, do all their books. But I realized even then in the beginning that this can't be it. You just working, doing tax returns, because I realized, even in my 20s, that all I was doing, and it's still true today, I always say it in every speech, the average CPA is really just a history teacher. They just tell you what already happened when you're doing a tax return. I saw no value in that. There was always...I watched when the partners would increase the fees. It was always, "What's that for?" You're just doing a tax return. I realized I got to get into something else that provides more value. But I didn't have the ability because I was working under a partner.

Raising Fees With Little Pushback By Focusing On Big-Ticket Tax-Saving Opportunities [14:18]

Ed: Once I got in with my father, I had more autonomy because I was working not really with him but doing the other guy's accounts. And the first thing I did was go in and raise all the prices. I was going into some companies who were paying $50 a month. I said, "This is outrageous." And they agreed. They said, "We always thought that, but Irving never charged us more, we were friends." I said, "I could be a friend, too." But I remember one guy I charged with...it was $50, I brought him up to $350 a month, then $400. They were fine with that because they talked to all their business buddies. They were all paying that. So this guy was back in the '60s or something.

Michael: I find there's a version of that that crops up a lot for firms where someone has old legacy pricing either that we set long ago or that we took over for someone else, and we're mortified to raise and fix the prices. And eventually, you do. And the client is like, "Oh, yeah, I've talked to other people. I know you were undercharging me. I was just waiting for you to come to do it."

Ed: Right, exactly what happened.

Michael: No big deal. I knew I was getting a deal.

Ed: And my father thought I was a genius. He said, "Look at all this money coming in." I said, "Yeah, that's because Irving has been charging them the same thing since the 1950s or whenever you guys got together." It's crazy. But I think the moment that hit me, because I was on the lookout, I said...I didn't realize it then, but it's what's happening now for accountants and has always been happening, and financial advisors, marginalization, commoditization. You talked about it before. If you're not doing something special, you're doing the same thing as everybody, and there's just no upside to that. It's a race to the bottom. Then it's all about price, and you'll never get ahead. And you'll just labor yourself to death. So I realized that in my 20s, and I said, "What is a valuable service?"

And then it hit me. I was following the tax law then into all of that. The '81 Tax Act, they called it the Reagan Tax Act, which had monumental changes in the estate planning area, and I got totally enthralled with that. I was totally into that. I said, "You know what, this is an area where you could save people hundreds of thousands." Forget about another $50 charitable deduction or something. If I really knew this stuff, I could save people hundreds of thousands, if not millions, and be able to charge for it. So I started getting into all of that. That's where the marital deduction came out. Believe it or not, there was no marital deduction, the QTIPs [Qualified Terminable Interest Property trusts], all of that, a massive change in the way estate taxes were done.

So that was kind of new. And I started getting into that, and I wanted to do estate planning. There was really no vehicle to do it. So what I started doing years later...actually, it was a combination of that. I was learning it. I joined my... That was another great thing I did. Even though I was in with my father, I was kind of on my own, because he was happy doing what...he would do that the rest of his life, just sit down with clients and schmooze with them. He'd schmooze with them for 3 hours over a $100 tax return, have coffee. And they loved him for that. But that's what he did. I knew I needed a bigger future. So I was trying to do that.

So I joined my state society of CPAs, the New York State Society. I got involved in the estate planning committee. I loved it. I was doing seminars around it. And I saw a real value there. But I still didn't know how to really get clients doing that. And then it hit me. The epiphany was the '86 Tax Reform Act. And that's what gave us all these rules about IRAs, and that was the moment it hit me. Because at that point, I was trying to say, "Well, how do I do estate planning?" I'm in my 20s or early 30s, late 20s, early 30s. Everybody doing it knows more than me. They're older than me. What's a 60-year-old client? They're not going to listen to somebody 28 or 30 years old about doing their estate plan. They want an old guy with gray hair, like I am now. Not even gray hair, no hair. But they want a more experienced guy.

So I realized this is part of the lane, but it's not the lane because I don't have the years of experience that these guys have, and it would be too much of a learning curve, which I was willing to do. But it was the '86 Tax Act, and that's when it hit me, this whole IRA thing. And I made a bold prediction. I never said it out loud. I said it to myself, a bold prediction that I said to myself, "You know what," and I really went out on a limb here, I said, "In 30 years, anybody still alive will be 30 years older." And it came true. And I realized this is just the beginning of this whole area of retirement. And I said, "I don't have to worry about these old guys. They're not going to learn this." I saw the new regulations. It was written. It wasn't even in English. It was like Sanskrit or Russian or some other language. And I said to myself, "I'm going to dig in on this. Nobody's doing this. There wasn't even a genre." There was estate planning, but I saw a subgenre of estate planning and tax planning, income tax planning, for retirement accounts. And nobody wanted to learn any of this.

I remember, part of being with the state society, we do seminars, and when tax laws come out, we do seminars and educational programs for the CPAs. And I was assigned to do one by the committee. And one of the guys on the committee that we were doing it with, he said, "Look at all these rules." He said, "These are going to affect everyone, and no one is ever going to understand them." And that was the moment the light went on in my head. That was the epiphany. I said, "Oh, this is good. It's going to affect everyone, and nobody will ever understand them."

Michael: Sounds like opportunity.

Ed: Yeah. I knew it. I knew it at that moment. And then I went all in, and learning took two years because they were written. Believe it or not, as complex as they are now, they were worse then. You may remember before some of the major changes in 2001, '02, and '03, they had, I don't know, 8. I don't even remember.

Michael: Oh, yeah, the old RMD rules, recalculating, non-recalculating.

Ed: Yeah, MDIB, minimum distribution incidental benefit rules. It was insane, but I learned it all. And then I went out and did something which was not allowed. Well, it was allowed when I did it. I don't know if you know this, but up until then, I'd say mid-'80s or early '80s when I wanted to get out, around '86 when I realized this is where I'm going. I really still couldn't get clients. How do you get clients? But at that time, before that, professionals like accountants and attorneys were not allowed to advertise by law. I don't know if you knew that. They were just not allowed to advertise. And that ban was lifted, I don't remember, the early '80s or mid-'80s, and that gave me the lane to start doing seminars. So I went out and started renting little hotel rooms. I did it with an attorney because he would do the wills and trusts, and I would talk about the IRA and estate and tax planning. So we kind of shared the freight.

Michael: I didn't know there was originally a rule in the books that accountants couldn't advertise.

Ed: Yeah, or attorneys, I don't remember what the rule was called, but it was not allowed. It was considered unprofessional, but illegal, too.

Michael: Interesting.

Leading IRA Seminars To Attract High-Dollar Clients [21:40]

Ed: So then I started doing these little seminars. We got a few people here and there, local hotels. We called them the Protect Your Wealth seminars. But one thing I did, even though it took a while, is consistency over time, I think. If you believe that you have a good idea, obviously, if it's no good, you don't keep doing it, but if you believe you have a good idea and I knew I had that lane, I was creating a genre that did not exist, and I knew the old-timers were not going to sit and learn this stuff. So this was just an unbelievable opportunity to explain this and learn it, and I knew it would affect a lot of people. And people started...remember, they already had 401(k)s at that point. They had just started, but they didn't realize that these things are going to end up in IRAs. So I started doing these little seminars all around the local area, and I was doing it to get higher-end clients to talk about bigger things than just taxes.

Michael: Yeah. I'm fascinated by this sort of, I don't know, evolution, confluence that it feels like you had this overlap of "I want to solve bigger dollar problems" or "I can get paid more solving tax and IRA and estate problems for hundreds of thousands or millions of dollars of savings than record your $50 charitable contribution." I want to do bigger dollar problems. It has complexity because there's all these new rules with crazy regs that have to be interpreted, and there's no one to compete with yet, at least, because the whole thing is new. So all the old-timers with gray hair and experience have no more experience than you do in your 20s because these are brand new rules.

Ed: Exactly.

Michael: So no one has experience with these when you grab on to a new thing as it's coming out.

Ed: We were starting the race at the same point, but they weren't running anymore.

Michael: I like that. I like that. Because they're experienced folks who have the gray hairs and the experienced clients, so they weren't going to be enthusiastic to learn a brand new domain the way that you were.

Ed: Yeah, that's like me learning Bitcoin now or something. It's the same kind of thing. No, let's do it the old way. So there was literally no competition. But the people with the accounts came out to the seminars. So I used to say, "I'm going to charge you a set fee, and it doesn't matter how much you have. I just wanted to..." But it was a high fee for them. And some of them were so into it, they were afraid I was going to charge more, because they saw the value. That's the amazing thing. Some people would come back into the office or they made an appointment with the check made out. They said, "This is the check. You said it wouldn't be more." And I said, "No, that's it."

Michael: So, what were you doing? What were you charging? What were you actually doing for them?

Ed: I started out very small. Well, it was way bigger than a tax return but small if you look back at it now. When I first started, I said, "I'm going to charge $1,000." No matter how much you have, you come out and do your estate plan. The attorney, he would do his own thing with it. I didn't do documents, I’m not an attorney. But I would do the estate planning. I would talk to you about your IRA planning distributions. And nobody was talking about that. So I was getting a lot of appointments, and they were thrilled to pay it. And years later, I still have...obviously, I stopped a lot of that. The retail clients years ago, I sold off my practice to a young guy, a great guy, and he's doing well with it now. But I still have some of the old-time clients. But remember, not many. I was 30, and they were 60 or 70. Now, I'm 70, and they're dead, except for a couple of people.

But I sometimes hear from their kids. And over the years, I heard from those people. They would come back and say, "This is the best investment I ever made." They just loved it. They liked the idea. It was a set fee. I remember one guy in a room said, "What if I have $10 million? Is it the same fee?" I said, "I don't care what you have. Same fee just to get things going." I eventually raised it quite a bit over time. But it got them in, and they eventually became tax clients but at much higher fees because they realized they were dealing with a specialist, like you said. In fact, my favorite line was when people would come to these little seminars I did, and they would say to me, "Ed, I already have an accountant, a CPA, but he's just a regular accountant." I said, "Of course, you need a specialist, and of course, you're going to pay him." "Oh, yeah, yeah." It's just something about it. So I was getting where I wanted to be to make a big difference and get paid for the value I'm putting out there. So we did that for years. Yeah, go ahead.

Michael: So I'm fascinated by this. So help sort of timestamp for us a little at this point that you're doing, is it...?

Ed: Well, that was in the early to mid-'90s. I was doing those seminars, built up a nice, healthy tax practice and estate planning practice. And that was great.

Michael: Okay. And that's not estate documents.

Ed: No, no, no, no, no.

Michal: That's estate planning work that you're charging a $1,000 flat fee.

Ed: Eventually, it was a lot more than that. Now, we don't even do that anymore, sometimes for any price, but sometimes...

Michael: I'm trying to imagine, $1,000 in the early '90s is probably $2,500 to $3,000.

Ed: Yeah. But they love that I gave them a price at the seminar. I said, "Here's what it is, and here's what I'm going to do." And I did everything. I still have the old notes of every client. Like I said, most of them are not around, but sometimes their kids. I got all my original notes handwritten. I used one of those seven-column accounting pads, and I would just do the first thing, like everybody does online or with some computer program now. I would write down a balance sheet approach to do their assets, ownership, husband, wife, joint, and get their net worth, see where their money is, and then talk about everything. Then I would give them a list of what I call recommendations and observations. Blah, blah, blah, blah. And I would always keep a copy of that. And they thought that was so super valuable.

Eventually, there were hundreds of people going to these not-so-little seminars anymore. But here's where it turned. The only way I could get people to the seminars is advertising. And there was no, again, internet then or online or any of that. So I advertised in our local paper here, "Newsday," which is the paper still in Long Island, and it was about a half-page ad, and it costs us $5,000 a month, me and the attorney.

Michael: Well, that's a big number now. That would have been a very big number then.

Ed: Yeah. But we advertised, I think, it was four seminars every month, consistently. We did, I think, a Thursday, Friday, two on Saturday for people who worked or something like that, and at different hotels, two or three different hotels, but every month. So what started happening is financial advisors started showing up. These were more brokers then. They weren't really financial advisors. They were wirehouse guys and brokers. That was mainly who they were. And I knew who they were because they were the only people in the back of the room with a suit and tie on. So they wanted to know what I was up to. They were probably thinking, "This guy is spending $5,000 a month. He must be making a fortune. What is this guy up to? We're going to go find out."

What they didn't know is when I wrote the check for $5,000, I only had $6,000 in the checking account. And I was still with my father then, that would drive him nuts. He says, "You're emptying out." I said, "I know. I'm on to something here, Dad. Go with me." We had some disagreements over that because he was old school. And I said, "Dad."

Michael: That's a lot of money for advertising.

Ed: Oh, yeah, yeah. So they thought I was making a fortune. But what happened is they went there and they thought I was their competitor. Now, I know you know this, but some people listening, I've never done investments. I'm just a tax advisor. I don't sell stocks, bonds, funds, insurance, annuities, none of that. I never had any of those licenses. And I used to say that at the program. And the minute they realize that, these wirehouse guys, these financial advisors, their eyes lit up. "Wait a minute, this guy is not our competition. Look at the people he's bringing in." So they started asking, "Can you do this seminar for our clients and for our prospects? And we'll pay the fee. We'll do this, and we'll set you up. You won't have to pay anything. No advertising."

So I came back to the office, and I spoke to... And this is another angle here. This was another watershed moment. And this you may relate to. Back about 30, around that time, maybe before that time, I needed a secretary, somebody. It was in the middle of tax season, I think '94 or '95, somewhere around there. We were buried. And back then we called it a secretary or whatever, somebody to take the calls, make the appointments, and stuff like that. And I had nobody. And my sister-in-law said, "I know this woman in town," and she came in. And to this day, she said, "You never even looked up. You just saw that I could breathe and hired me," which is true. It's tax season. She says it's true. I don't even remember the day. It was a haze to me. But that woman was somebody you know, Laurin Levine, who is Jeff Levine's mom.

Michael: Right.

Ed: And this changed everything. Now, she was still putting the tax returns together. And I was a micromanager, still probably one of my biggest faults. She reminds me that I used to get annoyed if she didn't put the staple in the right place on the tax return, if the W-2s weren't attached properly. If they didn't, I'd have her add up the withholding on all the W-2s to check all that. This was all done by hand, remember, back then. Well, actually, you had computer returns then, but you used to send them out to a service. Nobody had a tax program in their office. Anyway. But I was still doing the seminars. And what I did, I used to give out...I used to go through articles. Sometimes I was in them and all of that and highlight different lines and go through them at my seminars. And I would make little packets.

So one day, not too long after she started, maybe a few months or so, I was getting ready for my seminars, and all the packets were made. I said, "What is this?" And she said, "Well, I did that." I said, "Well, how would you know how to do it? I have a specific way. I do it like this. I highlight." She says, "It's all highlighted. Check for yourself." I said, "Well, how would you know how to do that?" And she said, "I watched you. And I got this little..." She even got this little contraption organized that looks like an accordion, puts the pages in. And she says, "And if you want, I'll go to the seminars with you, maybe get you some appointments." And I never thought of that.

Michael: Very enterprising of her.

Ed: Yeah. I never saw anybody with so much initiative that she even wanted to work...she even told me she had an argument with her husband because some of the seminars were on Saturday, and he would tell her, "Why would you work Saturday when he's not even paying you for that? You should get overtime." And she said, "No, I see something here." And obviously, you know the rest of the story because of what she brought to the table. And this ties into the other thing where I said the lights in the eyes of the financial advisors went up and said, "Wait a minute, we could do this for you. We could do these seminars." And at that point, I was asking Laurin for advice on everything because she seemed to have a sense of how to bring in clients and make money and leverage everything I was doing. And I never saw anything like it. So I brought the idea back to her. I said, "These financial advisors..." Well, she was at the seminar when it happened. I said, "They want to put... We don't have to advertise anymore. They're going to put me in a room with it." And she says, "Well, they should pay you for that." I never even thought of that.

Michael: Oh, so you were just going to let them put you in the room because then you would get to do $1,000 estate plans and get the tax business.

Ed: I didn't have to pay any of the advertising costs. I thought I was way ahead. But she was ahead of me. So she said, "You should charge for that." I said, "What on earth would I charge?" She said, "I don't know." She said, "The next person who calls, I'm going to tell them it's $5,000." I said, "Are you insane?" I said, "Go ahead." The next person who called was a company. She said $5,000. They say, "Great. Where do we send the check?" All of a sudden, I was in a new business. This just happened. So this is not something I had planned for.

And then, what happened, I started doing these local seminars, and then they were all part of their national networks, especially with wirehouses all over the country. They said, "Oh, can you do this for a national program?" And that put me out nationally. One company actually put me on tour, and that put me on the map, a giant company. And all of a sudden, I was doing paid events for even a lot more than the $5,000 after that. And then I was in a new business. Then I was out doing programs and seminars. And I'm still doing the client work. So it was a tough time then. So I had to get people in to do the client work. But that's where it shifted, when Laurin said to charge these people, which I never even thought of. I know it sounds ridiculous.

Michael: And all of this is because you're, what now, we're in the mid to late 1990s. So we're 10 years into the sort of modern era of IRAs since Tax Reform Act of '86.

Ed: And the balances were building up until the 2000 crash, of course, the dot-com stuff.

Attracting More Clients By Charging Higher Fees [35:29]

Michael: So again, I'm fascinated by the journey for this. So because you came in through the accounting world, for you, this was originally a path to higher dollar tax planning and accounting business, was the original model. I can get paid for an estate plan $1,000 and then several thousand dollars. Then I get to do their tax business, and I can charge them more because I'm a specialist CPA, not one of those regular guys.

Ed: I remember, the tax returns were recurring income. So that came in every year, and they referred a ton of people at a big tax practice at high fees. In fact, the fees were so high nobody could compete with me because I was the highest. I used to joke about that in seminars. I still do. I have a competitive advantage. I'm the highest price. And I always tell people, "You'll never make money being the lowest price." It's a race to the bottom, like I said before, and I knew that then. And it is an odd thing. The higher I charged, the more clients I got.

Michael: So talk about that further. Just I'm fascinated by the idea, "I have a competitive advantage. I'm the highest price."

Ed: Yeah, it always worked like that. And I attracted higher net worth people, "Oh, I'm with Ed Slott. He charges a lot, but this guy really knows his stuff." And it became a thing locally. It was just crazy. And nobody could compete with me because they said to themselves, I don't know what they said to themselves, but I got the idea they said to themselves, "Do I want my regular accountant who only charges me $300, maybe doesn't know anything, or do I want this guy who's charging me thousands and knows everything?" Even though it could be that their own accountant would do the same thing I did.

Michael: Because at some point, the perception kind of defines the reality. If that's what you charge, then everybody else is paying you. You must really be that good.

Ed: Right. Right.

Michael: And then they would talk to you, and you really did know your stuff, so you could back it up.

Ed: Oh, yeah. And I was doing other things, too. I left out, as I'm talking, a lot of pieces of this. I knew I had to get out there, and I was doing more than just the advertising in "Newsday." I started way before anybody did that. In the early, I think, '92 or something, around the time we started doing the seminars, I started a weekly radio program, an hour, and I would highlight experts on there and kind of what everybody does on a podcast today, but that was kind of new on a major station in Long Island. And that really catapulted me. And then they caught some people that were doing cable, which was also kind of new then. We have something called News 12 here in Long Island, and these are the people, the Dolan family, who I'm sure you heard of, with Optimum, and they own the Rangers and the Knicks and the Garden and Radio City now, the kids anyway. The kids, they're my age now. But it was Chuck Dolan who started this.

Anyway, the son contacted me, and he said, "I like what you're doing on radio. Would you like to do that on air for News 12?" And he gave me my own segment. It was unbelievable. And they let me advertise my estate planning, my Protect Your Wealth seminars right on my segment every Monday morning. And the news anchors were all in on this. They love, "Oh, Ed, tell them about your seminar." And I ended up getting all these news anchors as tax clients, and for the same reason, because I told them, "Oh, you could deduct your hair and makeup," this kind of stuff. And they thought this was brilliant. They told all their friends, and they thought I was an expert in news anchors. So I got all these news anchors.

Michael: Like a side niche. You do so much television. You have a side hustle in tax planning for news anchors.

Ed: Then they would put me on all their shows. I would do people on CNBC and all these big... And then I was also writing in these local throwaway papers, the local journal. I think it was called "The Tribune" or your own little town thing. I did a column every week. That guy contacted me because he heard me on the radio, and he said, "Could you write a column?" So this is what I was doing every week. And this is where...you talk about below the iceberg. Remember we're talking about that? This is the stuff under the iceberg that they don't see on the tip.

So every Monday morning, I would go to News 12 and do my segment, which I produced. So I had total autonomy. I wrote the graphics. I wrote what would go up on the screen. So they loved it. My producers, they loved it. They didn't have to do anything. They just put me on, and I did the screen. I even put on the graphics, the 800 number for my seminars. And they were all into it. So I did that. And then I would meet with clients at the attorney's office who I was doing the seminars with because he had an office right near where the station was, and I was out in that area anyway. And then, at night, at 6:00, well, actually earlier, I would do my radio show. But I would meet the guests earlier, an hour earlier, take them out to the local diner, get to know them, and things like that. And a lot of the guests were people I wanted to meet but could never because I was basically a nobody.

I'll give you one example. I remember, Mary Rowland, I don't know if she's still around anymore, but she had the column in "The New York Times" called "Your Own Account." It was in the Sunday Times business section. If you were in that column, you were a made man. How would she ever know who I was? Well, I saw she wrote a book, and I went through the book, and I invited... I went through a different angle, not to call her up to be in her articles because everybody was doing that. I said, "You know, I saw you have this book, and I want to highlight you and that on my radio show." She said, "That would be great." And I went through it, and I made sure to read to the end of the book and ask her questions about page 345 so she knew I went through the whole book, even though I really didn't. And I said, "You know, on page 345, you said blah, blah, blah." And all of a sudden, I was in her column, what some person called...they called me, it says, "You're in there incessantly in the Times. You're always in the Times."

So that started things for me with the media. I started inviting Newsday reporters on. Matter of fact, my very first show, I invited Lynn Brenner, is her name, who still writes for Newsday. She was my very first guest on my very first show. And I had her back on my 200th show and on my 300th show on that program to celebrate our anniversaries. And we're still great friends today. I still take her questions and calls. So in addition to the seminars, I was doing, I guess, what people do now is called social media or Facebook or everything. But I was doing a lot of that work, writing articles, meeting people I wanted to meet. That's what the radio program did for me. It got me access to people I could never meet otherwise. So being on the radio was big then, not like it is now. It was a big deal to be on the radio and on the TV show on News 12. And what was great about News 12, and they still do it now, it's local news but only a few times a day. They rerun everything ad nauseam. So my segment ran ten times a day every Monday. So it drew people. So it's all these things.

And I remember there was a PR firm that contacted me around that time, and they were the PR firm for a big brokerage firm. And they said, I think it was an email, I don't remember, but they said, "How come you're in 'The New York Times,' you're in 'The Wall Street Journal,' you're at News 8, you're in everything? And I can't get my clients this big firm." I think it was Merrill Lynch at the time. I don't remember. "We can't get our guys in anywhere. How do you do it?" I said, "Oh, it's easy." And I gave them a list of 10 things, or 20 things, I think. "Do these 20 things and do them every day. And after 20 years, it happens overnight." Talk about below the iceberg. This thing, the time people don't want to put in. They only see... You look at The Beatles. They did, what, 10,000 hours of performances. And you see them, and Ed Sullivan said, "Oh, look at that. They just got famous." No, they worked. They worked hard, hard labor.

Building A Team To Support Expanding Business Opportunities [44:05]

Michael: So help us understand how you built a business around yourself for this, because I'm presuming, at some point, you can't do this much media and seminars and speaking and the rest to get tax clients and then actually have time to sign that many tax returns.

Ed: Well, then I hired more tax preparers, obviously, and I still have...one of them has been with me over 30 years now. But I had several over the years, great tax. They would go out and see the clients, and they did all of that. I kind of farmed out my whole tax practice. I only did a few returns during that time.

Michael: So, when did that hiring begin?

Ed: Oh, that started in the late '80s. I got some big tax clients, and I just couldn't handle them. I got a huge real estate outfit in New York connected with the Helmsley Group. It was gigantic. And I had to go out, and I went to one of the big firm, local big firm. And I found a guy who was retired from there, who I knew from my CPA society. I said, "Are you available for per diem work? This is beyond me. I don't even know where to begin." And so he dug in and did a lot and showed me how to do a lot of that. And that's how I was able to do. One of these firms had 30 different entities.

So I had these people helping. And I was out on the road, and then I was out nationally everywhere, like you are now, the same kind of thing. But what started happening, so many advisors...I had my two-day program I was doing by myself. I didn't even have the experts that I eventually curated over time. I was doing it myself. And matter of fact, I was writing up pieces. I used to go just me and Laurin. We used to go and do a two-day program, and I would write some of my material down on a pad. And I remember one time I wrote down, I had an idea, 25 IRA rules you must know, which is, still to this day, the core of our 2-day program. And I wrote it down on a pad, and I said, "Laurin, go make copies of this." And she had to run out and find some copier place. And we gave it out to all the people. And that was the beginning of it.

But as I started doing that, advisors started realizing there's a lot to know here, and they started thinking like me. They said, "Wait a minute, I can expand my practice. What am I doing? I'm just investing money. It's like him doing taxes. It's all commoditized, marginalized work. I don't want to be like fungible goods." That's what I used to call it, fungible goods. You always learn that in the first year in economics. I remember the teacher saying, "Fungible goods is a box of nails." You don't want to be that because those commodities only sell solely on price. So that always stuck in my head.

So they said, "There's more here. We'd like to have you do a special study group." So I said, "Yeah, that's an interesting thing." I discussed it with Laurin, and she started taking cards. I say, "All right, we'll think about it." About a year or two later, maybe three years, Laurin said, "We've got about 70 or 80 cards. Maybe it's time you set up this study group." So I called each of these people personally, spent probably a half hour on the phone with each of them, "You asked, at the time, I've got an idea for a study group." "Ed, if you're doing it, we're interested." And every one of them opted in. I said, "I don't know what we're going to charge, but we're going to charge a big fee," because that was my mindset in everything. And they said, "Whatever it is, we see a big future here for us."

And that began our group called Ed Slott's Elite IRA Advisor Group. And we had our first meeting, believe it or not, 20 years ago in Atlanta in 2005. And our May meeting this year, it's going to be in Atlanta, our 20th anniversary of the group. And there are many members that are still in the group. So, what does it say about the group if they're willing to pay these large fees to us for annual membership? Most of these advisors have probably beyond 10X their practice, and that's what they admit to me, because they saw opportunities. They were talking even after the first two-day program. They would come in, and it still happens today. Usually, by the end of the first or second segment, the most common comment we get for our two-day program...

We still do our two-day, and that's a leader into the elite group. You have to go through the two-day program. That's a foundational program to be in the elite group, the advanced training. But in the two-day program, the most common comment is, "I can't believe how much I didn't know," or, "I didn't know how much I didn't know." And I would tell them, "That's your competitive advantage over the average advisor who doesn't know that he doesn't know, and he's dangerous, and he shouldn't even have clients. And you're going to get his clients." And that's exactly what happened because they build their confidence. Well, it starts with competence.

So, again, under the iceberg, you still got to put in the work and do the learning. Competence builds into confidence. And people smell that on you, the way you talk to people, the demeanor, the way you hold yourself. And people with large IRAs, our average advisor in our elite group, even in our two-day, but mostly the elite group, the average new account they pick up is $1 million more of IRAs because we've reached what I call a crossover point. I said we reached that 15 years ago where the consumers who have large IRAs realized they know more than their current advisor. Their current advisor is telling them what to invest in. They said, "What about the tax claim? I'm not going to keep any of this. Don't you know that?" And they would move to look for advisors that had this training.

And still today, there's no other that I know of training program as expensive as ours, has the expertise that we have. Well, now, we have several experts, as you know, that present with me. Jeff was one of them. Jeff Levine was one of them. He came right through us through Laurin. And look at him.

Ed’s Training Programs For Advisors [49:56]

Michael: Yeah. So help us understand, I guess, just in the context of today because I'm sure there are some folks listening who may be genuinely interested in the fit. So, just how do, I guess, the Ed Slott programs for advisors work at this point? I'm hearing that there was a two-day, there's the Elite Advisor Group. Are those still the things? And can you just talk through what the programs are, what they cost, what they cover, just for folks who want to get oriented on the program?

Ed: And in the middle of everything else, I told you about...just think of these things all through because I never really did an interview like this, but in the middle of all the...remember, I was doing the TV, the radio, the weekly articles. And then, in around 2007, I started with PBS, and I did shows on there for 15 years. And that put the name out there. So it's all these other things that, again, you're only seeing the tip of the iceberg when you come to our programs, and it's getting other experts and training those people, which we have a great team now. So we started with the two-day program, but then, when these advisors wanted to dig deeper and do deep dives and get into case studies and really find planning opportunities for high-end clients with large IRAs and bring in that business, they wanted a study group, which turned into our Elite IRA Advisor Group. But we still have the same structure now.

We do a two-day program, which you can always find on irahelp.com. I created that 30 years ago. Oh, by the way, there's another story on that. That's when websites were just starting. So I had irahelp.com. I don't know how I came up with the name. It's just something I did. The first weekend that went up, I think this was the early '90s or something, there weren't that many websites. It's a new thing happening. I started getting death threats because the Irish Republican Army thought I was doing something about IRA help or something or whoever. And once they realized, "Oh, this guy is just an accountant. Who cares about him?" that stopped quickly when they realized it was about taxes. Anyway, so it's just a funny story with the website, irahelp.com. I didn't know what was happening. I remember sitting here one Sunday morning, "Oh, you're going to..." these horrible death threats. It was actually hilarious at the time because...

Michael: I feel like that's hilarious in retrospect.

Ed: In retrospect, that's what I meant. Yeah.

Michael: Okay.

Ed: Yeah. Yeah, yeah, that's what I meant. So, anyway, now, we have the two-day program, which is our premier program. It's 2 solid days at 9:00 in the morning till 5:00, and there's all killer, no filler. We go through a 400-page manual on every aspect of planning. There's something in it for every client you have, and I give them a system, which I always use myself, on how to take notes and how to put these ideas into action, which is the key to the whole program. One of the things I say at the beginning of every program, knowing is not anything. Taking action is everything. I always say life rewards action. Just learning. I say at the beginning of every program, a lot of you know a lot of smart people. What do you know about them? They're mostly broke, and they borrow money for you because they talk a lot, they know everything, but they don't put their ideas into action. This is an action-oriented program.

And when you leave in the two days, you're going to have a customized marketing action plan because we're going to show you each step of the way. When you learn something, we tell you which relationship you should be contacting right after this program. So we go through this 400-page manual. Now, it's me and my team of IRA experts. You may know some of them now because you've probably seen them around, Sarah Brenner, Andy Ives, and Ian Berger. They are, to me, the tops in the country. I never saw anybody who knows... They're unbelievable. They do a lot of the writing now. So all the things I used to do myself, it's unbelievable to watch this just bloom. So that's the two-day program. And that could be enough for anybody.

But if you want to go further, once you go through the two-day program, which you get the CE credits and all that, once you get that and your mind hasn't exploded, I always tell people, by the end of the second day, you're going to want to hang yourself, and it's just overload because we cover everything. And we're always updating for the tax law changes. But if you want to go further and you now qualify to join our Elite Advisor Group, which is, like I said, celebrating our 20th year this year, so it's a testament to say, advisors have been with us...the average advisor in the group has probably been there over ten years because they're constantly getting ideas. But it's the camaraderie and the elite group, because they see the same people several times a year, and some of them have even developed very big partnerships with each other.

My favorite part of that program is seeing them in groups in the lobby at 8:00 at night, still going at it after the workshop has ended. They're the right kind of people, driven people that want to be successful, and they've seen their practice grow. Matter of fact, I just saw something online before I went on this program today, one of their companies from our original group was just acquired for millions of dollars. So I love to see their success stories because I know they're doing the right things for clients. That doesn't mean they know everything, but they know the people who do. So that's one of the biggest benefits of that elite group.

You have direct access. They have a client issue, they don't have to wait to go to their broker-dealer or their experts who, three weeks later, give them the wrong answer. They go right to us. They get their answer usually the same minute or the same day, and they get an answer on everything. And the confidence they can build, it's so impressive to clients. Some of them will call when the client is in the room, "Wait a minute, I'm going to call the Slott people. They will know the answer to that." And it makes them look like a million bucks, all of this adding value. So that's one of the biggest benefits of the elite group, is having access to me and my team of experts. And that's where we are today.

Michael: And then it sounds like there's education programs for Elite Advisor Group as well.

Ed: Oh, yeah, yeah.

Michael: So I guess, for each of these, the two-day and then the Elite Advisor Group...

Ed: What's the difference?

Michael: No. When do the programs happen? Where do the programs happen? Is this online, or do I get on a plane?

Ed: Yeah. Well, both, online and a plane. Well, I say both, but that only happened after COVID. We did everything live. When COVID happened, there was no option. And I think, in a way, COVID allowed us to do these programs virtually. All it did is, I think, accelerated where we probably would have been in ten years anyway, made it acceptable to do paid programs online. So we still do a little of that because some people like that. So on the two-day program, we do that three times a year, two on-site, usually one around February and one in July. In February, we did one in Orlando. Our July program is going to be in Chicago. And those programs, almost every one of them, sell out. Because it has a reputation. We've been doing that for longer than the elite group, remember, for over 20 years.

Michael: And what's the cost for a two-day program?

Ed: I believe, and I don't want to say for sure. I think it's $2,500 or $2,495, but there's certain kinds of discounts they get for groups. We even have some people in our elite group that their companies, they will not let financial advisors work with clients until they've gone through our training or let them even advance within the ranks unless they've gone through a training because they advertise and they use it as a marketing advantage, a competitive advantage, "We trained with the Slott team. If you have a large IRA, this is the place for you." And that's why they bring in a lot of business. So that's a two-day program. So we do one on-site in February and one in July. And then, in September, we do a virtual one. And the other two that are on-site, we move them all around the country, East Coast, West Coast, North, South. So we'll hit your area at some point.

But sometimes advisors say, "Well, tell me when you're going to be in Chicago." I say, "Why would you wait? Why would you wait to increase your business?" And they say, "All right, you're right. When's the next one?" Again, not thinking bigger picture. And then the elite group, we have two major workshops a year, and we do have some online things. If there are tax law breaks, we send out alerts. They usually know it before the media knows it. We're right on top of all of that stuff, the SECURE Act, anything, anything that breaks. Mainly things that are under the radar, we always want to give our guys an advantage to know things before other people do.

So, yeah, when you have a major tax law, obviously, everybody sees that. It's in the paper. But when regs are issued or notices or announcements or private letter rulings or revenue rulings, that stuff is under the radar. But if it's big, we let them know about it, and that could give them a great advantage. And we always say, "This could be for these clients that are X, Y, and Z that can do these things." So they're right in the loop, and they love that stuff. They're nerds, like you. They love eating this stuff up. And it's funny, they get in the program for the elite group, and I can tell you where everyone sits. They get there. It's like a race to get there. As soon as the door is open, we don't start till, most times, 8:30 or 9:00, but they're there. They even make up their own signs, "Reserved," at the front row. I could tell you who's going to sit there.

Michael: And then, what's the cost for Elite Advisor Group?

Ed: I believe that we have sliding scale. We have discounts. And again, luckily, I've delegated so much because I used to do it myself. And I think Laurin would know all that, but she has a staff of her own now. And that's the key to it. We do what we do best. But it's generally $10,000 a year, and that's a…you can pay it monthly, and there's some discounts. I know one thing we do which helps a lot of people is when they go to the two-day, say they pay the $2,500, that's credited against their first year's membership in the elite. And they like that. And there's discounts if you're younger advisors because we know it's tough for them to get into the business. But this is great for younger advisors looking, again, to build the same niche I'm in because it's still a niche. I'm amazed that most people, like the third rail, won't touch it, most firms. Look how many financial advisor firms, they put disclaimers, "We don't do tax planning. It's like kryptonite. Oh, no, we won't touch that." And they're missing out on an unbelievable market share. There's 40 trillion in these accounts. Wouldn't you like a piece of that?

Balancing His Tax Practice With His Educational Offerings [1:00:46]

Michael: So I'm curious how this has evolved for you, I guess, I'm thinking mostly in terms of the tax practice, but now, as the educational offerings are built as well, you framed earlier, part of the whole angle and approach at the beginning was "I'm the specialized expert," or, "You don't want your regular CPA. I can do these additional...I've got this additional knowledge and specialization." So, how does that change when suddenly you don't have the capacity to do the returns anymore, and you're the guy, but you're not the guy?

Ed: No, we refer out to our elite advisors. They're listed on our website, another big benefit of being in the group. As a matter of fact, somebody just yesterday said they're looking for an accountant in the New York area because they have a client who is an influencer, and she's making millions of dollars. And so we never really bring it to one of our members. We have them go or we'll refer a group of members. We try and stay away from that, picking favorites, so to speak.

Michael: But how did it work when you were still primarily a tax practice?

Ed: That was a tough time. But what I did is I hired other accountants. I was out of time. I was building this, what became an educational company, which is what essentially we are now, so morphing from a CPA practice but doing both at the same time and the estate planning. Because the deal I made back with these old-time estate planning clients, the ones who originally paid me $1,000, I told them, again, I was young, I was 28, I was looking to build business, I said, "It's $1,000," at 30 years old, whatever. And that's a lifetime fee. You'll never pay me another dime. And they used to come back. Most people didn't come back, but they love the idea of coming back. And that's where I really built the value. Yes, I didn't get the recurring fees, but I did in other ways. They would do their tax returns. That was separate. They'd refer their friends.

But every time they came back, they still didn't believe it. When they came back for an update on their estate plan, say, three years later, they would stop at the desk out there and say, "All right, what's the fee?" And I say, "There's no fee. I told you that's a lifetime." And they would say, "This is amazing." They thought they were getting everything for free. They forgot they already paid. So the value we were building through that was just incredible. Maybe it was different times then. But they couldn't stop talking about it, and that's how we built.

But your question was, how did I...? There was a time in the late '90s where I was full-on tax practice, full-on estate planning, doing our programs outside, speaking all over the country, and it was just too much. So I did hire several tax preparers, and they were great. And they built their own relationships with the clients. And that's how I did it. Because if you're only one person, everything...

Michael: Did you get tension where people say, "I want you. I'm paying the big fees for you, not the other person in your firm?"

Ed: But not much. They liked being here in the office. They were comfortable in the office. I used to have a test. These are stupid little things I noticed. When they would come back for a meeting, and somebody had to go to the bathroom, they say, "Oh, I have to go to the bathroom," and they would say, "Oh, I know where the key is." To me, I knew they felt like they were at home. It's just one of those things. They just felt so comfortable. They just liked being here.

Laurin was great with them. Again, she sat right in the front. She was everything I wasn't on the relationship. They would sit there and talk to her for hours. She was just a people person. I don't know if you've really ever spent time with her. But she is a total relationship person. That was the other part of the business I was missing, and that's why I made her a partner back, I think, in 2007 or something like that. And that has worked beautifully with the elite group, with all of our programs. She knows how to talk to people, and she knows how to bring in business, speaking engagements, advisors. You get on the phone with her, you'll sell your house to go to one of the groups or one of our programs.

Michael: Interesting. So she was helping to drive revenue and scale the business but wasn't in the speaking expertise decision.

Ed: No. But eventually, here, we're going to do one today right after we're recording this. We're doing a virtual client and prospect program for one of our elite advisors who's been with us 20 years in the Seattle area. We're here in New York. She's going to open the program and talk about what a great guy he is and how she knows him for 20 years and how he's learned. I don't even have to say anything. Yeah, I'll do my seminar, but the prospects are sold after they listen to her for five minutes. We did that out in San Diego. We had another one of our advisors, another what we call charter members, 20-year guys that's helped us start the group, the original members. And she got up and talked, again, opened eyes, "I've been with this guy. I know him, and blah, blah, blah," for five minutes.

The advisor said, after she spoke, one of the clients, they were already clients, but she turned over another 4 million to him right there before I even started speaking. So it's unbelievable. So you need that. Not everybody is good at everything. We took these tests. I forget what they're called. Oh, Kolbe tests. You know about those?

Michael: Yes. Yeah.

Ed: And it turned out we were exact opposite. She was a detailed person. I was a quick start. Did you ever take those?

Michael: Yes, yes, very familiar.

Ed: Yeah. So we were perfect partners. We kind of knew it anyway, but when we took it, we realized why we work together so well, and that's true today. So, yeah, we had this, I guess, bubble, you might call it, where we're trying to manage too many businesses at once, with the accounting and estate planning practice, doing the seminars, doing the two-day programs, beginning the elite group. It was a lot. But now, we've got it. We've had it all worked out for almost 20 years already.

Michael: So, how did it work out? What's the composition or balance at this point?

Ed: It's delegating. Again, we started doing it ourselves, the two-day, and we realized we're not in that business. And people always ask us if the myth is greater than the reality. They think where this giant business because they see the rooms are filled with advisors who pay a lot of money, like we just talked about, "They must be a giant business. How many employees do you have, 50?" No, we're a small company. One thing I learned from that time is anything you're not good at, delegate out to somebody who's good at it. It's like the old saying, Frank Sinatra doesn't move pianos. So we've hired outside AV guys. So we have, I think, nine employees basically are technical experts, our office staff and some of the key people, administration people, but that's it. Everything else might be 30 or 40 other people. I don't really even know who all of them are. Sometimes I meet them, and they say, "Oh, yeah, I'm behind the curtain. I do all your AV and all the setup, and I built the stage." So we outsource all of that, the AV, the marketing, everything, everything that's not in my lane.

How Ed Got Comfortable Charging “Big Fees” [1:07:55]

Michael: So I'm curious as well just how you got comfortable charging, I guess, as you put it, big fees.

Ed: Oh, I realized, again, that there's no long-term growth in competing on price, and that's still true today. I totally believe that you compete on price. I said it, I think, twice on this program. It's a race to the bottom. Because you can't compete on...in my view, maybe some people can do it, you can't compete on price or performance because it's not adding any value. I just don't get it. If you're doing commoditized services but you can compete on price if you have a high price because you have specialized knowledge, and I was always comfortable with that from the time I started when I thought $1,000 was a lot. Eventually, we went to much more, $10,000, I think we were up to at some point. And they were willing to pay it. They would come with their checks because they weren't getting this elsewhere.

I realized this during PBS years. We got known by millions of people around the country as experts in this area, and a lot of people who would be donating or watching PBS, a lot of them had large IRAs. And the fact that the shows were so successful, they tell me that my PBS shows are in the top five pledge hits of all time. Now, it's not because it's such a great show. They base it on donations, money coming in. If I was there juggling and it brought in a lot of money, they would say, "That's a great show." But it was resonating with people, and what they started doing, it got so successful. Right after my first show, actually, they said, "Would you mind going out and doing programs around the country for private donors and things like that?" And they would advertise them for a donation of $500. And so I said, "Sure, I'll do that."

And I went around the country, did these things. And they said it was a private thing, but there was 500,000 people in every city. And I'm looking around, and I said, I said to myself, I didn't say it to them, I said, "These people paid or donated, I'm supposed to say, $500 to be here." So I would ask the group, I said, "How many of you already have financial advisors?" And every hand went up. And then, privately, once I got to know them after the program, I would ask them, "Why are you here? Everybody here has a financial advisor." And I got the same exact answer in every city, "The stuff you were talking about, the tax planning for IRAs, I wasn't getting this kind of information from my current financial advisor, from my current advisor." So I would always say to advisors, I would tell that story in our programs, I say, "What does it mean when they use the word current? It means they're looking for somebody who has more expertise, and they're willing to pay for it."

So I never had a problem with that. I think that's something advisors have to get over, but they have to prove they're worth it because they have valuable education, like in this IRA area, that they could save people lots of money. Stock market up and down is one thing. You could make people money, but it's not really under your control. With taxes, I like it because it's tangible. The savings, it's quantitative. You could show people the amount of value in dollars how much this family will save, hundreds of thousands, if not millions, in current or future taxes by the planning you're doing just around the IRA alone.

Michael: So then I've got to ask sort of the other end. Does it ever get boring being in the same IRA lane for coming up 40 years here?

Ed: Absolutely not. And the answer to why is one word, Congress.

Michael: Because they keep changing the rules.

Ed: Oh, yeah. Congress, IRS. I learned this years ago. I didn't realize it till I was living it. In Accounting 101, my first tax professor, and this was back in the early '70s so you might not get the impact it had on me, he talked about tax law changes being the biggest thing that will happen to you. He said, "Whenever they change the tax laws, I go out and buy a new car." And back then, nobody bought a new car. People kept their cars on the block till they literally fell apart. In fact, if somebody bought a new car on the block, everybody came out to look at the new car. So it was in an era where people just didn't do that like they do today. So that had an impact on me, and he explained, whenever they changed the laws, you're going to make money, because people need it explained.

And that's one thing our company does well, because, going back to the other part I told you, remember when I talked about going to these old boring seminars with my dad, I realized you've got to make this stuff. Nobody understands what these people are talking about. And I noticed it, you probably do even in some seminars today, speakers speak above the group. A lot of them are there more to show the audience how smart they are but not help the audience. They don't even speak in English. One of the things that hit me is if I could really explain this with examples and an understanding. And I got all that training because I was speaking to consumers. So I had to dial it down, and that helped. And that's how I've trained all the people that work or write for us or consult. I said, "Anything complicated, you got to get it simple." And examples, examples on everything.

If you look at our monthly newsletter, that's another thing. In '98, we started our IRA newsletter when the Roths came out. We're on our 27th year of that. If you've ever seen that, it's loaded with examples, like Mr. and Mrs. Smith do this. That's how I always learned. And as you write, and I always taught the people because that's how I learned, you've got to write. I remember, I had this with Jeff early on. He says, "I just want to do that." No, you got to write. You won't understand it until... You won't really get it until you write up in-depth, which you know he does really well now. Probably too well. Until you write it up in-depth, you can’t explain it. I always go back to that quote by Albert Einstein. If you can't explain it so that a six-year-old understands it, you don't understand it yourself. So writing about it, examples

So we started this newsletter in '98, Ed Slott's IRA Advisor, still going strong 27 years later, but people told me back then, my own colleagues said, "Ed, how are you going to write eight pages a month just on how to take money out of an IRA?" Here we are 27 years later, and more ends up on the cutting room floor than we can fit in the newsletter. And we have our team. Most of that's delegated out. I write some of it, but most of it is Sarah, Andy, and Ian write it. They're loaded with examples. Our training manuals are loaded with examples. Advisors really understand. Totally the opposite of the first seminars I ever attended. They're engaging. They're fun. They're entertaining. They're educational, not boring. People at the end, they say, "It's 5:00 already? We want more."

So I learned from those early seminars, I don't want to do that. I don't want to put people through that. That's torture. And anyway, so you say, "Is it boring?" No, because they keep changing the tax laws, and people want to know about that. We get the biggest bump in our programs when there is a tax law change. You probably see the same thing. That's when the biggest consumers have questions, and they're going to hit their advisors with it. The advisors want to know what to say.

What Surprised Ed The Most Building His Business [1:15:38]

Michael: So, as you reflect on this journey, what surprised you the most about building a business around your IRA expertise?

Ed: Well, two things that there's total value in getting educated, and it's for the benefit of your clients. And most clients want an educated advisor. They don't want somebody who's just going to do their taxes or do their investments. They feel that's, again, commoditized, and they can get that anywhere. And the amazing thing is that, like you asked me about, they're willing to pay for it. People want to pay for confidence and expertise and competence. Remember, people are worried about who can they trust. They're turning over their life savings to an advisor. They make one rollover mistake, it's gone. And we've seen it happen at most advisors.

I'm shocked that more advisors are not part of our training group because I wonder, how do they operate? How do they talk to clients when they don't have the foggiest idea on how to do the tax planning for what may be their largest single asset and the biggest one they're going to turn over to beneficiaries who have their own rules? So I'm shocked that more advisors are not getting it, but the ones who do are grabbing all the business.

Michael: So, what surprised you the most about building your own business?

Ed: Oh, about the scale, the scaling of it.

Michael: Yeah, scaling it to a nine-person team.

Ed: I'm actually disappointed in the scaling of it because if I had to do it over, I would have done it. Remember, I morphed into this. I didn't have the idea. Now, when somebody starts a dot-com or a Silicon Valley thing, app startup, they start it with the idea of, "Who am I going to sell it to?" I never thought like that. I was just building my own name and business, and it was totally centered around me. Maybe that was good. It gave me great reputation and all of that. But the scaling of it got tougher because even the advisors in our group say, "Well, Ed, what happens when something happens to you?" We fixed that problem. We have a good succession plan now. We have experts. But I didn't think like that earlier on. It's like that old...I think it was the Gerber book. I did a seminar with him to work...the E-Myth. And his thing was you should work on your business, not in your business.

So one of the things I'm still guilty of, and everybody tells me, is the micromanaging, but most of that is gone by the wayside. I don't look. I try not to look at things. I didn't look at the design on the name badges for our 20th-anniversary meeting. Actually, I did. I really liked them. But what's surprising me is the reach we have from what we're doing. It's not only...for me, it started out one-on-one with a client. We were able to help that client and their family save hundreds of thousands or millions in taxes and great wealth and great tax planning. But it was only one family. Now, we may have reached millions of families through PBS, through the advisors we train, and each of those advisors probably has a few hundred or thousand clients. So it's infinite, the reach in the market. I don't even know what it is. But the message is reaching probably millions of people now.

Michael: So, can you share a little bit more how succession kind of works or built out for you? I'm just cognizant. It's hard to spend 40-plus years crafting an expertise and then hand that off in a succession.

Ed: Well, I have great people. I have the people who are experts. And even those people, I found a way to find the people that...there are people that know this stuff, but they're not out there. They're like these nerds in back of legal offices that are ERISA experts. They never let them out. They throw meat in there for lunch or something and close the door. They never talk to anybody, but they know everything. So I found how to get those people. And there was actually a site that I went to, and I found these brilliant people, and we brought them along and taught them our way of explaining these things.

Michael: What was the site? Where did you find them?

Ed: Benefitslink.com. It's a nerdy thing that I get, actually, because there was a lot of people on there that knew all these rules, and most of them come from ERISA, the big tax law from '74, '75, or something around then. And you go to benefitslink.com, and they have it. And it's free. Matter of fact, I go every day. I still look at it, and they have the big law firms on there, a lot of nerdy stuff, but they have a job hotline on there. And I got one of my top people from there, Ian Berger. He's a tax attorney, a brilliant guy. He was the former general counsel for the city of Baltimore.

And they love doing what we're doing. They all work at home. They love that, even before COVID, by the way. They basically answer questions for our advisors, type up responses, write our manuals, write the newsletter, do seminars, present. And they all do it in the way we've designed it where it's easily digested, everybody understands it, lots of great examples. And so that's one site. But you've got to look where...those people are out there, but they're not going to do what I did. I'm unusual. I wanted the intricate knowledge and learned it. But I also wanted to be out there. Those people don't generally want to be out there. And they were looking for a home for a back office kind of thing. But even them, I put out on stage, and they love them. You should see, they get standing ovations at every meeting because people can't believe the depth of knowledge these people have.

And immediately, a ruling comes out, a tax law, we're all over it. And they're great writers, too. So that's a great part of the plan because we know we can always have those people. And we have a great group. Right now, our elite group is about 500 advisors. But I'm still amazed that, I don't know, maybe you know. How many people that call themselves financial advisors are there, a half a million, a million? What would be the number?

Michael: I think the Cerulli pegs the number at about 300,000s that fall under that general category.

Ed: So maybe just over 1% have the knowledge or exposed to the knowledge that we present. I think that's tremendous opportunity for those other 98.5% or something. What are they doing?

The Low Point On Ed’s Journey [1:22:05]

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

Ed: I was talking to Laurin about it yesterday. I said, "Did we ever have a low point?" And she says, "Well, we had a trajectory of building. We had a lot of watershed events like I went through." And bringing her in here was a big one. But the trajectory was always building. I don't know if there was... I try to think about that. I remember once when I stopped certain things, I wouldn't call it a low point. It was just moving to a new venture. Remember, I told you, I did that radio show, and I did that, I think, for about seven years. And what made me stop it? I saw an article in Newsday, and I didn't even know this was coming out. It was around the time... Who was the guy that broke Lou Gehrig's record? You know him, the baseball player.

Michael: Cal Ripken?

Ed: Oh, yeah. All right. Cal Ripken. So there was an article. I think the station manager put it in Newsday, and I saw it, and it was called "The Cal Ripken of Radio," because, apparently, I had done 350 consecutive shows without missing a show. When I saw that article, I said, "All right, that's enough. On to the next." So I wouldn't call that a low point. It's just a transition event that said, "I did that already. Let's move to something else." And we eventually went to bigger platforms like PBS. And now, we're doing other things, getting word out on more social media. That's another thing I did, hiring a lot of young people that are better at social media.

That part where you talked about where I had too much going on, it was too hard to handle, the tax and estate planning practice, building the two-day, building the elite group, having everything, and doing it all, basically, a one-person shop, or two, with Laurin. But I don't think... That just said, "No, we've got to start delegating, move to different things." And it exploded from there.

Ed’s Advice For His Younger Self And Newer Advisors [1:24:00]

Michael: So, what else do you know now you wish you could go back and tell you 30, 40 years ago when you were starting this journey?

Ed: See, I didn't know where it was going to end up. Remember, even when people ask me, you go to a doctor or somebody that you just meet, "Oh, what do you do for a living?" I still say, "I'm an accountant." I don't know what else to say. I never thought that much more of it. So I never really planned anything. Maybe I would have... I always saw a bigger future in higher fees and more of it, but not higher fees for the sake of fees. That's not what I'm saying at all on this interview. You've got to earn that. You've got to be worth that.

And that's that thing that you talked about earlier on. All the stuff you do under the iceberg that people don't see, putting in the time to learn virtually Russian, to learn a new language of tax planning, to put it, but knowing that this is going to pay dividends, this is going to be high-value stuff, so I always realized that. So I don't know if there was something. The only thing I might have done different when it exploded, like I told you, with the elite group and all of that, is look more towards a succession earlier. But we've corrected that. But I never had that outlook. I was just building what we already had.

Michael: So, what advice would you give younger or newer advisors then coming into the industry today?

Ed: Well, you got to provide value in some lane. It could be IRAs. Why did I do IRAs? Because everybody's got them. There's a guy named, I don't know if you know him, Joe Hurley. Do you know him?

Michael: Yeah, yeah.

Ed: Savingforcollege.com.

Michael: Saving for College, yeah.

Ed: So I was doing a seminar with him, and he already had savingforcollege.com. Not with him. We were on a program, like with you. And I said, "Joe, how did you come up with this niche?" He said, "I saw what you were doing with IRAs." And I said, "Oh, that guy got a good one, that the IRAs are taken." So I looked around on the tax return, and I said, "Oh, 529s. Maybe I'll be the 529 guy, like I did with IRAs." And I said, "Well, you far surpassed me. It already sold for millions." So find a niche that has value, and you have to work at it. There's no free lunch. When we talk about fees, people are not going to pay fees for a hollow vessel, just for another advisor who tells them the same thing. And I still think this IRA is the lane because there's not a lot of people. I know, it's ridiculous.

There were companies that started it years ago. One of the big publishers, I think it might have been CCH, one of the big tax publishers saw what I was doing, and they started a competing publication. Our newsletter is called Ed Slott's IRA Advisor. They called it the Distribution Advisor. It lasted six months. Why? In all of their tax staff, and they have a lot more than me, they couldn't find the expertise to write it. So they canned it. So there's an emptiness. There's still a void where all the people have all their money. I think maybe you go to our two-day program and get a taste of it. And there's opportunities everywhere because everybody's got these accounts.

What Success Means To Ed [1:27:06]

Michael: So, as we wrap up, this is a podcast about success, and just one of the themes that comes up is literally the word success means very different things to different people. And so you built this incredibly successful business around IRAs and your expertise. How do you define success for yourself at this point?

Ed: Well, it's enjoying what you're doing. I wouldn't have had the motivation to learn all this stuff and do all this hard work if I wasn't totally into it. I was so into it because I saw a bigger future. I knew, like I said early on, I knew this was the lane to go on, and there was nobody in the lane. So I loved actually doing the work. I loved learning things that other people didn't know. And I love getting up there. Did you know this and that? So to me... And sharing it. And now, what I think of success is the people I don't know who are benefiting from all of this through the advisor that may be trained with us, who made their lives better. And that could be, like I say, millions of people out there. And I run into them sometimes.

I ran into a guy on a train once, the conductor. He says, "Oh, my advisor showed me," and I saw the stuff. It changed everything. I ran into a pilot on a plane, and he recognized me from thesis. Regular people that... You don't know how many people you can reach by getting your expertise out there. So to me, that's success, liking what you're doing. Because if you didn't like it, you too, you wouldn't be doing this, if it was a job, if you were digging ditches or something. You got to believe in it and love it. And you could tell the passion even doing this interview, which is very unique for me. Like I said, I never did one like this, the Ed story. And that comes through in our programs, all of that passion and success. It's contagious when you're around people like that.

Michael: It really is. It really is. Well, thank you so much, Ed, for joining us on the "Financial Advisor Success" podcast.

Ed: Well, you got the first edition of the Ed story.

Michael: Awesome.

Ed: That's for sure.

Michael: I love it. I love it. Thank you so much.

Ed: All right. Thanks, Mike, for having me.

Michael: Thank you.