#FASuccess Ep 443: Going Deep With Business Owners And Real Estate Investors To Grow $200M Of AUM In 5 Years, With Griffin Kirsch

Resources Featured In This Episode:

• Griffin Kirsch: Website | LinkedIn
• TownSquare Capital
• GW Wealth Management's Real Estate Calculator – Download (Excel)

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Full Transcript:

Michael: Welcome, Griffin Kirsch, to the "Financial Advisor Success" podcast.

Griffin: How we doing, Michael? Thanks for having me.

Michael: I really appreciate you joining us, and I'm excited to chat today about the opportunities of working with different types of clientele. When I look broadly over our financial advisor world the most dominant trends for the past 20 years or so has been such the rise of AUM. So, people going RIA, charging advisory fees instead of commissions, the broker-dealer world shift from commission-based accounts to fee-based accounts. And it's certainly been successful. At the end of the day, we're building bigger and much more scalable businesses with recurring fee revenue than we ever did with one-time commission revenue. So we have bigger service teams, bigger organizations. We can actually hire advisors now whose primary job is not to find clients, instead just to service the clients that the firms has. But to me, there is a fundamental constraint. As I joke sometimes, the AUM model only works if you have A to M and a willingness to delegate it and actually hand it off to someone.

And so the industry, we've really concentrated on people who have assets and, in particular, those who have liquid assets that can invest into what we offer, market-traded securities by and large, rather than other forms of asset wealth like real estate and private businesses where we usually don't work with those folks until they liquidate their real estate or their privately-held business so they can buy publicly-traded REITs or publicly-traded businesses, aka stocks, mutual funds, ETFs. And I know you've had great success building with clients who do in fact have significant wealth in private businesses, in real estate assets, and use your expertise to differentiate from other advisors in that domain, and have actually still managed to accumulate very significant AUM as well. And so I'm excited to talk today about what it takes to serve, I guess I'm going to call them non-traditional assets or clients that have more non-traditional assets and how you've still also managed to turn it into a very sizable successful AUM business as well.

Griffin: Yeah. Absolutely. Well, yeah, thanks for having me, Michael. It's an honor to be here, and I've followed your work for a long time and a lot of respect for the platform you've built and the impact on the profession. So, yeah, I could start by just giving a quick intro to who I am and we can get started.

What GK Wealth Management Looks Like Today [05:19]

Michael: Yeah. Let's start there. Just help us understand the advisory firm itself, the business as it exists today, and then we can dig dig further into what you do, who you serve, how it works, how it's come together.

Griffin: Absolutely. Yeah. So, my name is Griffin Kirsch. I'm the founder of GK Wealth Management here in Reno, Nevada. We're an SEC-registered RIA. I'm the founder and the 100% owner. We launched the firm in 2019, and today we manage just under $200 million in assets. We've grown completely organically. We've not advertised. We have not had any acquisitions. We've just focused on comprehensive planning, for a lot of business owner type clients as well as families. And our approach has just gone well beyond investment management and asset allocation. We've integrated tax strategy, real estate insurance, estate planning, and more. And we've structured the business to be lean, high touch, and just deeply personal in how we serve the clients.

Michael: So help us understand, for $200 million of AUM, how many clients is that or households is that?

Griffin: Yeah. So we have just about 450 households. We have about 1,500 different accounts. And we started in 2019 from zero and so have grown pretty quickly and done so with some crazy markets, especially 2020 that showed up really quickly after we got approved for the RIA to exist. But that was one of the inflection points of my career because there was a lot going on in 2020, but I learned how to get really good at certain areas of planning that I can touch on.

Michael: And so I want to get deeper into planning, but first but I want to make sure I understand all the parts of the firm. So what does team structure look like for supporting 450-odd client households?

Griffin: Yep. So I'm the owner. I've got three employees that are all licensed. One of them is our chief investment officer, and his responsibility primarily is just looking at portfolios all day long and making sure that clients are invested correctly and the portfolio allocation's in line with their risk tolerance and time frame. I've got another advisor that is mostly just an administrator. He's a younger guy that's going into an advisory role over the next couple years. But starting out as an administrator, doing paperwork, kind of just learning the learning the business, and really just wearing all the hats. And then my oldest employee, he's kind of a guy that wears all the hats still, but he's transitioning as we speak from administrator role to advisory role. And he's taking a good chunk of the clients, a lot of them lower-end clients, off my plate so I can focus on the ideal client that we serve. So, yeah, it's myself and three others right now.

Michael: Okay. And do you feel like you're at capacity with that many clients that you're working with and the team structure that you've got?

Griffin: Yeah. I think we probably have a little bit more runway before having to make another hire. But I think what we've identified is that we have probably, of the 450 clients, 200 that really demand our time and attention on a more frequent basis. And then the other clients are just a little bit simpler to manage. They don't have a lot of complexities going on. They might just be earlier in their investing career and don't have a lot of moving parts and oftentimes are not business owners. We service probably 200 business owner clients. And so the clients that are just wage earners that are just a simpler client just have a little bit less required outreach because there's just not a lot of things going on on a regular basis. So instead of four touch points a year, they might only need one or two. So because of that dynamic, we probably have a little bit more runway, but we will be having to make another administrative hire to allow my current administrator to kind of grow into the advisory role over the next, I would say, 6 to 12 months.

Michael: Okay. And so that becomes a path similar to what you did with the oldest employee that you've had. They start out in more client service administrator roles, and then they grow into taking over the smaller portion of the client base within the book and serving them, and then you free up more capacity to take more clients at the higher end of the book.

Griffin: Exactly. Yeah. Our chief investment officer is someone that's been in the industry a long time, and so he's actually not client-facing. He's strictly just at the computer managing portfolios. But the other two guys that I hired were young guys basically fresh out of school, and so they didn't have any industry experience. And so I thought, well, let's start as an administrator role to learn the paperwork process and just learn the systems. Had I hired someone that was previously at like a Fidelity or something that came in with some know-how, I think it would probably be a different dynamic. But the way that I've decided to go about it with the guys that I hired is to kind of start at the bottom administrative role and grow into the advisory role, and then let's just kind of replace that administrator, which is going to be our next hire at some point. And I think after we make another administrator hire, I think we probably have a pretty long runway before we have to make another advisory hire.

Michael: So as you've evolved this system, how long do they typically stay and operate in an administrator role before you want or need or feel the pressure to move them up?

Griffin: Yeah. It's kind of just happened pretty organically. The guys that were starting out as administrator, like my associate Clayton who's kind of advanced to the advisory role, I think it's just been a really simple understanding from their end and mine that I want them to know how to do more than just planning and portfolio management because there's just a lot more that goes on in this business. And I think the main point that I've been looking for, for them to really graduate from administrator role to advisory role, is just to prove their proficiency with what they're capable of doing for clients and knowing how to address more than just the basics like risk management and planning, really kind of diving into a lot of the other comprehensive planning that we provide, which is addressing their real estate and taxes and estate planning and insurance needs. So it's obviously a steep learning curve to be able to be proficient at all those areas.

And so they've kind of just organically started to grow into that role over the course of 12 to 24 months. And I'm very willing and accepting of them accelerating that time frame. And I'm open to accelerating our time frame to hiring a new administrator if they graduate from that role quickly. But it's just been an open dialogue with them as we've been growing the firm and as they've been growing their skill sets to kind of take those next steps and them feeling comfortable with more on their plate. And so, it's been working great. I think it'd be cool to hire someone that came from Fidelity that had some know-how day one, which could be in our future, but I've just been introduced to these guys. I actually was not going out and trying to find someone. They've just been people that have been introduced and we hit off, we liked each other. And I thought, I can definitely train these guys to be successful. But they were just younger guys as they started out. So they're just graduating from their incremental roles as they go, wearing a lot of hats as they go, and kind of taking other hats off as they graduate levels.

Michael: So how do you think about training in this context?

Griffin: Yeah. Well, when they started with me, I was very transparent. I said, "Hey, I'm a small firm compared to a lot of the big firms out there and especially the broker-dealers like the Morgan Stanleys and Edward Joneses." And I said, "If you're starting out here, what I don't have is a training program that's dialed in, just to be frank. I'm kind of just shooting from the hip trying to train you the way I think I'm capable of training you." But if they were to start out at an Edward Jones like I did, they've got that dialed in. But I told them that if they if they start out at a broker-dealer, they're going to get a better training program, but it's going to be a lot harder to leave if you end up building a practice. It's easy to get stuck at those places. And it's obviously a lot harder to transition as you grow up and you get married and you have kids and you've got responsibilities. Pivoting at an older age is just a lot more difficult.

And so these guys were young, and I was just saying, "Hey, if you start here, this the place you want to end up being at if you're going to find success in this industry. But we're going to have to kind of create this training program as we go." And so the way I've done it is just be open to having all my clients be clients of the firm. We don't we don't have solo practices underneath the firm where my clients are my clients and their clients are their clients. All of the clients are clients of the firm that we're all helping out as a team. And so I've just basically said, "Hey, I'm happy to give you some of these clients, but I want you to show your skill set and earn these clients from me. So if I were to give this client to you today, what would be the planning you talk to them about? What would you look at in their portfolio?" And kind of just showcasing their proficiency at being able to take them off my plate. And so they've just done that. We've done that organically over the last 24 months as they've shown their skill sets. I've said, "Okay, I feel comfortable handing this client off to you." And they're kind of graduating to more and more complex clients as we go.

Michael: Right. And then how do you explain or position it with clients? I'm assuming you're a founder-led firm and founder-grown firm, so any and every client that has ever come to the firm came to Griffin originally. So how are you handling communicating this to clients as you start doing handoffs to Clayton?

Griffin: Yeah. What I've been telling the guys is I just want to make myself replaceable, and I want them to be irreplaceable, and I want the client to inevitably see that. And so, when it comes to just communication with us with regard to the clients needing something done or wanting to schedule a meeting, I'm trying to have those clients reaching out to my guys instead of myself so that they're kind of in front of those touch points more and more frequently. And then I think just over time, it's going to be something that they get used to. And I think once the once their skill sets are dialed in, they're going to realize that the guys that I'm hiring and bringing on is what I'm kind of calling them as service advisors even though, behind the scenes, they're going to be their advisor. We're not telling them that upfront.

But I think just as time goes by, the clients are going to start to realize, okay, this the guy that I've communicated with, and this the guy that's done some administrative stuff for me and has had some meetings with me and has shown that they're capable of handling what we're doing. And I've said to clients that I'm always behind the scenes looking at their portfolio and making the decision-making. But at the face to face with the client, we're kind of operating like a team and then kind of pairing off those clients after some period of time after a number of touch points to where the client's feeling comfortable to talk with them instead of me.

Michael: And do you actually bring them into the client meetings with you? Are you doing a bunch of that sort of joint work, or is the goal the others are really the touch points when clients reach out on admin-related work, but you're still the primary meeting person?

Griffin: Yeah, I've been bringing them into meetings. And when someone's coming to our firm, as a prospect and we're having that first meeting, I'll typically be...even though I might know that this a client that I'm not going to work with because maybe they're not the ideal client that fits my qualifications for, I'm still closing the business for them. And then after we get the paperwork sent out and opening accounts and accounts transferring over, we're kind of slowly just having the ongoing touch points being on their plate instead of mine. And I'll still service the accounts and I'll still have meetings and those clients will still call me here and there. But I want it that way because I want the clients to be clients of the firm and have that team approach because I just think that the team approach is what clients want instead of just a solo advisor that I was for a long time, so that they know there's some layers to who's servicing them.

Michael: And then what does this look like from a revenue perspective overall for the firm?

Griffin: Yep. So, our net fee that we pull after clients are paying for portfolio management costs, we basically charge one flat fee, period. So there's not an advisory fee and then all these manager fees on top of it. When we charge a client a fee, that's what they're paying us. And when we've got clients that have enough money to allocate to third-party institutional managers, we'll actually eat part of that fee and pay these managers out of their advisory fee instead of layering it on top. So the net fee that we're charging after all that is about 1%. And over the last 12 months what's hit our bank account is about $1.7 million. And then after paying for the employee's payroll and software and just normal overhead, we've got about a 70% margin. So what I netted, because I own the firm, was about $1.2 million over the last 12 months.

Michael: So the industry likes to call that the EBOC number, earnings before owner comp, because once you pay the rest of the team, we have all sorts of ways we can say what's our salary versus dividend profits and gains with S corps if you want. So from your perspective, you put all the owner comp into one bucket regardless of how it's structured and it nets about 70% for you.

Griffin: Exactly. Yeah. And that 70% includes my payroll as well. So I pay myself a $100,000 just flat salary for the purpose of just mitigating self employment-taxes. And I have other wages that I pay for my insurance business, which is separate from my advisory business. So I'm making the IRS happy from a FICA tax standpoint. I'm paying my fair share. But, yeah, the majority of my income is owner draws versus salary.

Leveraging Third-Party Investment Managers To Enhance Client Portfolios And Business Efficiency [20:08]

Michael: So if you're layering third-party manager fees in, so I'm presuming then stated fee schedule to the client is actually a little bit more than 1% for you just in order to cover down on the underlying manager cost as well?

Griffin: Exactly. Yeah. Just like all advisors, we charge an advisory fee based on the complexity, based on the assets that they have, and then just some underlying variables that we factor in. But we're typically between 0.8% to 1.5%, that's the advisory fee, that's the all-in fee the clients are paying. And then, again, the clients that have more liquid investable assets that have enough to allow these third parties to come in...because these third-party managers typically have about $75,000, $100,000 minimums for their strategies. So if someone's coming in with only a couple hundred thousand, we might just be forced to buy index funds or advisor-direct their portfolio instead of allocate to third parties. So we end up having a little bit more margin on the smaller accounts, just because we're not giving up part of the fee to managers. But we're happy to give away part of our advisory fee to managers because these managers are incredibly good at what they do. And we're happy to squeeze our margin when they kind of graduate from an advisor-directed model to a third-party model.

Michael: And so what platforms or systems are you using to allocate across third-party managers as well as having advisor structured for managed portfolios?

Griffin: Yep. Yeah. So we use Schwab as a custodian, and then we use Orion's entire tech stack for reporting and billing and trading. We use eMoney for planning. And so when it comes to the advisor-directed models that we build, that's what my chief investment officer is primarily responsible for is managing those accounts. And then the accounts that we allocate to third parties, we're kind of just managers of managers. We're just making sure that allocation's appropriate and the investment risk profile is in line with these clients' risk tolerances and time frame for investing. So a lot more is taken off our plate when we allocate the third-party managers versus own the models ourselves and are responsible for overseeing these portfolios, which is also why we're happy to delegate to these managers because it means that we've got a little bit more time back from having to be a PM [Portfolio Manager] and really focus on the bigger planning components that the clients that we service are really coming to us for.

Because investment management's somewhat of a commodity. There's a lot of different ways to do it. So we want to try to maximize the efficiency of the portfolio and make sure that we're dialed in allocation-wise, etc. But we definitely want more clients graduating from advisor-directed models that we're building to these SMA [Separately Managed Account] managers. And so that's always the goal is to essentially have these third parties come into the accounts and take that off of our plate. But, again, they have to have enough money for them to be able to actually diversify their money with these models having minimums of $75,000, $100,000.

Michael: Are there particular managers or SMAs that are go-tos for you? How do you tend to put these together?

Griffin: Yeah. Good question. So what's been a huge thing for my growth is I've worked with this company called TownSquare, which was basically a TAMP [Turnkey Asset Management Platform]. And this TAMP actually got bought by Orion about two years ago. It's a wholly-owned subsidiary of Orion, but TownSquare is essentially now under the Orion umbrella. And so TownSquare has been this company that has allowed me servicing retail clients to get access to institutional management, managers that are managing endowment funds and pension funds. And so TownSquare has basically looked at the marketplace and found managers that have a track record of ten years or more, top decile performance, high active share, semi-concentrated. And they basically do that vetting for us and kind of give us a library of best options with respect to the different Morningstar-style boxes, like large cap growth and large cap value, etc. So they've taken a lot of that kind of underwriting, due diligence off my plate and put the best options in the library for us to choose from. And so, yes, we do have some go-to models and SMA managers that we allocate to.

Michael: It sounds like you tend to do it at the asset class level. So I'll have one manager for my large cap. I'll have another manager for my small cap. I'll have another manager for my international. You're doing it at that level.

Griffin: Exactly. Yep. And these managers charge anywhere between 35 and 45 basis points, which I think in the industry is a pretty reasonable expense. I know there's some SMA managers that are upwards of 1%. And because I'm eating that cost, because I'm charging just one advisory fee, the margin's a lot more impressive because these managers have been actually reasonable. And through TownSquare, they just have a lot of money with these managers, so I think they've just negotiated pretty good pricing. But, yeah, we basically just have different managers that are responsible for different models, and it's not always the same manager. In fact it's most of the time not the same manager. So for example, large-cap growth, Loomis a popular manager out there that runs a growth fund that has just done incredibly well. Columbia is a large-cap value manager that we've used a lot of times. And so, yeah, the lineup is typically one to two managers per Morningstar style box that we're looking at.

Michael: And so the managers themselves, I'm presuming, are largely buying individual securities directly. It's like they're buying individual stocks and bonds. So you don't end up with a list of mutual funds and ETF holdings for clients at the security level. You've got just a list of actual stocks and bonds.

Griffin: Exactly. Yeah. And we have a lot of non-qualified money. And so there's just some good benefit to having individual securities for the sake of just being able to do some tax loss harvesting. Whereas if people are owning...if they're allocated toward mutual funds, they don't have a lot of that same ability from a tax standpoint. And they just don't necessarily know what they own. Whereas when you own individual bonds and stocks, you know the full story. And statements for clients are a little bit longer because they have individual securities. But at the end of the day, they're more concentrated than they were owning mutual fund portfolios or index fund portfolios because we're owning really what I call semi-concentrated allocations to these managers. They typically have anywhere between 25 to 45 different securities and they're looking at their benchmark and kind of have their own algorithm to choose what ends up in their portfolio. But it's high active share, best ideas only, good management teams, companies that have good balance sheets and growth trajectories, etc.

So it's a pretty good story. And it's also a good story when things are not going so well because these managers are owning their best ideas. And so when times aren't so good, these managers are pretty darn good at mitigating downside. And what I remind clients is we're not outperforming the market when the market's growing. We're participating in the market, but a lot of these managers earn their keep by protecting downside because they're just owning strictly high-quality companies.

Michael: And I'm just curious. How do you handle this as, I guess, either tracking their performance or particularly as your reporting out for clients?

Griffin: Yeah. So first thing is when we have these different managers, we don't have to have separate accounts. So a client can have a million dollars in a retirement account or brokerage account, and these managers are all coming into the same account responsible for their different stocks that they oversee. And what I tell clients is they wouldn't even know that there's a lot of managers behind the scenes because when they look at Schwab, when they log in, they just see these individual securities. But the skeleton behind the scenes, we've got different sleeves of different securities managed by these managers, and we use Orion for reporting and performance. And so when we do reporting meetings with clients, performance meetings, we're looking at the household level to start.

But we have to dive into the manager level, especially when client's like, "Well, the S&P did 23% last year. I only did 17%. Well, why was that?" It's like, "Well, okay, let's go break that down. Your large-cap growth did 32%, but your large-cap value did 8%, and your fixed income that you have 30% exposure to did 4%. And so that's why the aggregate stories underperformed the S&P, but the S&P is not our benchmark. So that's when I have to dive into the manager level when they're kind of asking questions about the overall performance relative to some standard index like the S&P. But I do start at the household level just to show them the overall. But it's fun to dive into the manager level just to showcase, these guys are doing what they're very good at doing and compared to their benchmarks, they're doing well and that's why we own them.

Attracting Business-Owner Clients By Leading With Tax Planning Opportunities [29:45]

Michael: Okay. So now help us understand more of the clientele that you serve. These 450 clients are things you've kind of highlighted. I know it's 200 core clients that fit the business owner sweet spot and then a segment of other clients because as we grow, we tend to accumulate a lot of clients from a lot of different places over time. So help us understand more about the clientele. I guess I'm wondering both about there's the two different segments, and then we'll dive more into, I think, the business owner real estate end in particular where you've been building.

Griffin: Yeah. Well, I think we kind of have to start at my inception point in 2019. I'm a business owner. I own the firm. And what I realized is that most advisors out there are not business owners. They're W-2 wage earners at their respective broker-dealers or their advisor at an RIA, but they're not the owner. And so I just realized kind of early on in the career that, wow, I can relate to these business owners because I am one and I'm doing the same planning. I make money a different way. But what I'm implementing for myself is I could just copy-paste for these business owners and just kind of address the fact that I'm optimizing my structure. I'm dialing in any inefficiency. And I've got a good CPA and ultimately have a really buttoned-up planning process for myself. And I was like well, I can essentially showcase this with the business owner clients that can relate. They're making money a different way, but at the end of the day, it's the same thing.

And so in 2019 when I started, I was just growing the business just like anybody else, from zero, by the way. And I was just knocking on doors and making calls. And I started out at Edward Jones, by the way. So I had earned business from the groundwork I laid back in 2014, 2015 when I knocked on 5,000 doors. And then when I transitioned, obviously, I kind of had to start over and repaper everything, which took some time. But then 2020 came along and what I got really good at was understanding some of the programs that had been implemented, such as the PPP [Paycheck Protection Program] loans and the ERTC [Employee Retention Tax Credit] tax credits. And so I literally, in 2020, would just go to restaurants, for example, and/or just any business and just ask for the business owner and say, "Hey, did you get this credit?" And then if they said, "Well, what are you talking about?" I said, "Well, you would definitely know what I'm talking about if you got it because they were pretty sizable tax credits."

Michael: Hundreds of thousands of dollars...

Griffin: Hundreds of thousands, yes.

Michael: ...for a sizable business. Yeah, you'd know. You would definitely know.

Griffin: And so basically I raised probably $50 million in 2020 just from essentially putting business owners in front of my CPA and said, "Hey, if you've not gotten this PPP loan, or maybe you're not qualified, maybe you are, but you should have this discussion." And then also the employee retention tax credit showed up shortly after. And so I just basically used those two tools to essentially put them in front of CPAs, allow the CPA to get those tax credits for them, and then when they got the funds, they needed to manage those funds. And so the CPA would essentially refer them back to me and help them manage those funds. And then after that, then we became the advisor for the client and started addressing all their other areas of planning. And I think that's really how we got to become a business owner expert is because of COVID. We just kind of helped a lot of business owners get those PPP loans and ERTC tax credits. And then beyond that, it kind of just snowballed after we earned the client's business and started to do the planning.

The business owner network is a tight network and Reno's the biggest little city in the world, as they say. And so then it just became this referral machine, from both the CPAs realizing that I was not just someone trying to be transactional. I was trying to be very holistic in helping these business owners get what they were entitled to, and just essentially showcased my proficiency at the tax planning level. And so a lot of these CPAs that referred have been my best referral partners and then these business owner clients that I had essentially done some free work for, if you will...I mean the CPA did most of the work because they were the ones processing these credits. But I kind of just showcased my skill set to these business owner clients and the CPAs that, "Hey, I can do more than just portfolio management, and I'm happy to do more even if I don't get paid for it because at the end of the day, there's going to be some benefit of helping these guys out getting money that they were deserving of. And by the way, I can help you manage that money."

Michael: So I'm fascinated by this. I want to actually take one step back just as this was queuing up in 2020. So how are you getting in front of the business owners to be able to just highlight, have a conversation of, "Are you claiming your PPP loan? Are you claiming your ERTC tax credits? Oh, you don't know what that is. Let me tell you about it for free. I want to help." So how were you getting the at-bats to have those conversations in the first place? How are you getting in front of them?

Griffin: Yeah. Well, when I was at Edward Jones knocking on doors, literally going to neighborhoods and businesses and knocking on the doors, I kind of just got good at being personable and likable. And it was a lot easier though when there was something I could give them immediately versus selling myself to them back in the day trying to earn their business as an advisor that they needed help with, kind of just addressing them at their front door saying, "Hey, I'd love to be someone that you can think of if you need help with money." It was a lot harder sell, especially when I was a younger guy, going door to door. But going door to door during COVID was a very easy game because, it was just, "Hey, there's free money out there, and you're available to get this. And let me show you. Let me make an introduction to my CPA," who was an expert at these ERTC tax credits and wrote some white papers on it and was really proficient on the PPP side, both PPP 1 and PPP 2.

And it was just an easy sell. And I was just happy to ask whoever I ran into at these businesses, because sometimes these people that I met were HR people or had a relationship with the business owner. And so when I kind of addressed, "Hey, there's some free government money out there. The owner of this business is probably qualified," it was, "Oh, well, let me ask and let me bring them over." And it there was no pushback. I wasn't trying to sell anything.

Michael: Yeah. So you were literally cold knocking. You just walk the street door to door, just go into each business and ask if the business owner is there?

Griffin: Yep. Yep.

Michael: Would you literally ask the business owner? I don't know if you remember.

Griffin: Yeah. And I had a lot of...I have a network. I've been at this for more than a decade in Reno. And so I didn't start in 2019 fresh-fresh. I was transitioning from broker-dealer model to RIA. So I had a pretty good network. And so in addition to going to businesses and restaurants, I was making calls as well and just saying, "Hey, have you got this? If you haven't, and you would know if you did..." And a lot of people, their initial response is, "I'm not sure." And it's like, "Well, you would know if you got this credit. It's sizable."

And so I just did that for a year, and I probably helped 200 business owners get these credits. I don't know if...I doubt all 200 became clients. I don't know if I tracked that perfectly well. But at the end of the day, they sure knew who I was. And even if they didn't become a client, they have probably referred me business because I helped them out at a really uncertain time with something that was very meaningful for them, and it kind of just snowballed. So I think the answer to your question about the business owner client that we serve, I think we kind of just fell into that client that we now call our ideal client.

Michael: So you didn't launch in 2019 saying, "I've got a vision to create GK Wealth to serve the small business owners of Reno," right?

Griffin: Yeah, not at all.

Michael: You just had to get business going, and then a pandemic broke out with a bunch of government programs, and you helped solve the problems. And now it turns out we pretty much have a core in small business owners.

Griffin: Yes. Exactly.

Providing Real Estate Planning Services To Clients [38:25]

Griffin: And then that kind of blossomed into the real estate analysis and planning that we do. Because I just realized everybody has real estate as part of their financial picture, or at least that's the goal. And so and, obviously, when interest rates were nothing back in COVID era, real estate was an asset class that was very popular. And the economics were incredible because you could buy these houses for under 3% interest rates and lock those in for 30 years. And so naturally, real estate was a really desirable asset class for for people that had any money or income during those years. And I just thought, well, I'd love to be a real estate expert on top of business ownership expert.

And my wife's a real estate broker. My sister's a mortgage broker. My brother-in-law builds houses. And so we've kind of got this unique offering with clients that come in the office. It's like, "Hey, what do you want to do with your money? You want to buy a house? My wife can help you. You you need to finance something? My sister can help you. You want to go ground up? My brother-in-law could do that. And then, obviously, I've got CPAs that are experts in their different areas. And then I've got an office that has an estate planning attorney in it." So we're not a family office, but that's kind of what I'm trying to build towards is having an office that can help and address everything. Even though we're only getting paid on AUM, I love being at $200 million because when you're at zero, it's a lot harder to be truly a fiduciary. You always kind of have that that, hey, we should probably do some investing in brokerage account approach because behind the scenes...

Michael: I need to get paid at some point. I got no revenue and I need some because I have bills to pay.

Griffin: But it's cool to be here now because I'm very okay when clients are coming to me in the office and say, "Hey, I want to build a real estate portfolio." And my answer to that is, "Well, let's save some money in a brokerage account. And depending on the time frame, that'll determine how we invest these dollars. But I would be happy to help you buy real estate and take the money out of your brokerage account and inevitably lose the revenue from that to make sure that I can help you out and be in front of these decisions that are financial decisions." And that's, by the way, one of the reasons I left Edward Jones is because I was giving some real estate advice, and they didn't want me giving it. They they said that that's for the real estate professional or the tax professional. And I was just like, "Well, I know real estate. I'm proficient at this." My wife's been doing it for years, and I decided to be an advisor that can discuss this asset class. And I became an expert, not just for primary homeownership, but real estate investing and the tax planning that goes behind that with cost segregation and bonus depreciation and all of those moving parts.

Michael: So is that a domain you can get paid in or that's just part of the holistic advice that you give because clients with enough dollars to invest a lot of real estate at least have some investable assets usually as well even if it's not the concentration?

Griffin: Yeah. So on my ADV, I actually disclose that I'm married to my wife and that my wife is a real estate broker, because I do refer her a lot. And so that's basically one of the reasons that it's really easy for me to say, "Hey, I'm happy to support your real estate investing. And, oh, by the way, my wife is an incredible broker. She's one of the top...she just won the 30 under 30 award in the nation." And so she's an incredibly smart, brilliant, beautiful realtor that people just trust immediately. And this without my help. She was successful before me. So but that's been just kind of a unique way to essentially be very happy about clients taking money out of their account to buy real estate because oftentimes my wife gets to be their broker and make 3% to buy or sell their property.

So in a way, I'm okay to lose my revenue because Laura's going to make probably 3x my revenue in one transaction. So I do disclose that on my ADV because it's obviously a conflict of interest. But beyond that conflict of interest, my wife's just incredibly good at what she does and people that I refer her love her. And so it's just kind of a unique value proposition. And my sister's a mortgage broker and she's really competitive with rates. And so there's oftentimes the ability to refer my sister and my wife. And I know that I'm doing a good service for my clients because I trust my wife and I trust my sister. And inevitably, my clients like and trust them as well. And so we kind of keep it in the family.

Michael: Is there ever a point where you look at more directly bringing this under one roof?

Griffin: I've decided not to introduce a ton of complexity to my business with something like that or a lot of alternatives. I just wanted to keep the compliance story simple because I just have a busy life, and the compliance part of the business is definitely the most unenjoyable. And I just know that if I'm doing other things that bring more complexity, that it's inevitably going to cost more money and time for the compliance side of things.

Michael: So at the end of the day, separate businesses with their own compliance is straightforward enough. We have disclosures to explain what's going on. At the end of the day, I don't need a centralized business entity to consolidate all this because I have the Kirsch family household balance sheets where all of our dollars eventually flow back to whether they're doing brokered real estate transactions to invest or investment advisory and financial planning work with your side of the business.

Griffin: Exactly. Yeah. So bringing my wife under my roof, the economics just wouldn't change, but the complexity would. And, frankly, I don't want clients to have to work with my wife. I give my wife as an option, but I'm happy to support them with their real estate investing regardless of who they use to represent them. But a lot of times, they don't have that representation or they're new to town from California or wherever. And so the relationships they've had in the past are not relationships that are a good fit anymore because they're in different states. So, yeah, I think the model that I've built so far is working just fine. And like you said, it's kind of staying on the family balance sheet. I'm obviously not getting any economic benefit to refer my sister because that's a separate thing, but that's okay.

GK Wealth Management's Client Service Model [45:01]

Michael: So I guess just help me understand overall, I guess, just what you're doing for clients, how deep you get ongoing. I'm just cognizant 450 clients is a lot of clients. And I'm presuming you're still out there marketing and growing to some extent or you have been over the past few years to get to 450 households in six years. So just how does it work supporting clients on an ongoing basis? What are you actually doing?

Griffin: We basically identified clients that fit into a gold, silver, bronze, or red kind of service model. And so that's the starting point is figuring out what type of client. And it's not always AUM. It's complexity. So we might have a gold client that doesn't have a lot of AUM with us, but has a lot of moving parts and, therefore, has a required higher frequency for phone calls and meetings. And so we basically layered these clients into these different models, and each model has a different frequency in terms of phone calls and formal sit-down meetings. And we try to stick to that, but the reality is people are busy. And so even though we might make our best effort to have a sit down or a phone call with clients, sometimes there's just not any changes, and so there's not really much to talk about. And I think that's probably why we've been able to service 450 clients without growing more is because not all 450 clients are talking to us all that often, even though we've made an effort to.

Michael: So what's at least the ideal model if they're engaging at desired levels? What is your, I guess, meeting cadence or touchpoint cadence for gold, silver, bronze, red?

Griffin: Yeah. So the gold is four meetings a year, and then just a phone call or two throughout the quarter if there's something to talk about. Not always is there a phone call requirement, but...and a lot of these gold clients that have this service model are not necessarily sticking to it either. I let them know in the meeting when we open accounts, "Hey, this going to kind of be our frequency of touchpoints. Your life's busy, so if things have to change, that's totally okay. But we're going to make sure that we're reaching out on a specific frequency just to make sure that we're having those touchpoints." Silver is three meetings a year and a couple phone calls. Bronze is two meetings a year, and then red is one. But I would say of each of those categories, probably 70%, if not less, actually stick to that frequency, and it's because of them, not us. And so because of that, I think it's just allowed us to have a little bit leaner staff, just because if everybody was sticking to that frequency, we probably would be a little bit overwhelmed with the fact that we just don't have enough time to do all this. But the reality is just a lot of these clients are not demanding as much time as as maybe we're offering.

Michael: So you aim for four, three, two, one, and you get three, two, one, and zero.

Griffin: Yeah. Exactly. Exactly.

Michael: At some point you got to talk to the red clients, but they'll only take the meeting so often because there's not as much going on.

Griffin: Exactly. Yeah. Yep.

Michael: So then, in that vein, do you have a sense as to how many clients you actually have at each of the tiers? I'm just trying to visualize how they're dispersed across this range.

Griffin: So, gold, I think we have about 70 clients. Silver, we've got about 70 as well. Bronze is our biggest category with about 200. And then red is the remainder.

Michael: Okay. Okay. A hundred something left.

Griffin: Yeah. And, again, not AUM-related per se. It's more complexity. Some of my clients that have the most money with me are red clients because they just gave us money to manage and manage it well, but they don't have any ongoing planning needs. For example, I've got a client that makes $400,000 a year of a pension. And it's like, "Hey, I could do all this planning for you..." And we're still doing some estate planning and stuff, but financial planning, it's like, "Hey, as long as you can spend less than 400 grand a year...

Michael: You're probably going to be okay.

Griffin: ...you're going to be okay. I can show you this planning software, but I already know the answer." And so they gave us money to manage for essentially their later-in-life needs for long-term care health concerns or just managing money for their beneficiaries. And so they might have a ton of money with us, but there's just zero complexity. And there's really not a need to talk all that frequently, even though they might qualify for their AUM level to be on a more frequent service level. At the end of the day, they just say, "I trust you," and we don't need to meet that frequent. So once or twice a year just to review the accounts and catch up on life and make sure that we're catching up on any changes, it's pretty simple.

Michael: So do you ever get challenges the other direction, though, which is clients that have gold level complexity but don't necessarily have as sizable assets? Do you get challenges then around, am I really being compensated for the time that I'm spending and the depth of advice I'm doing with clients?

Griffin: Yes.

Michael: So how do you navigate that?

Griffin: Yeah. I'm figuring that as we go. So I know that there's some clients that we're spending a lot of time on that are probably not paying us a reasonable wage. But what I've just come to realize is that focusing at the granular level of am I actually making what I should be making based on what I'm doing for these clients? I think at scale and maybe 3x, 4x, 5x where we're at, that'll probably be a focus point. But I've just realized that some of these clients that are demanding more of our time have been great referral partners. And, even though there might be some clients that we're not getting paid very much from, they've often been clients that have been our greatest referral partners. And there's probably some that are demanding a lot of our time that are not sending us business either. So I think we could probably identify those and figure out some going-forward game plan.

But I don't love the idea of firing clients because I'm firing their network. And Reno's a small town, and I think I've benefited from not saying no to people. And when someone comes in the door that's not a good fit for me, these younger guys that are in my office are happy to service them. And I think that's going to be the game plan going forward is trying to say no as as little as possible so that we're not saying no to the network because we've spent $0 in advertising. We've had no acquisitions. I don't even get out of the office too much anymore to network because I just don't need to. My clients are my greatest referral partners. My clients are my sales staff. So I've just kind of made the concession to say, okay, if I'm not getting paid fairly from a client that's demanding more of our time, I'm okay making that concession at the moment because they've been introducing me to their network and that's better than the income that I could be making from this client paying me the right way.

Michael: Well, and I think it's striking that, yeah, okay, we can do the granular client-level analysis and perhaps find some clients with gold level service who don't quite have the assets or revenue to make the math work and it's a $2 million revenue practice with 70% EBOC. So, something's going right. You can only really be so off here. Clearly on average in the aggregate, it's doing just fine. Or as I think of it from the other end, if you get enough things really right in the business that math okay, it doesn't matter really in the grand scheme if there's a few things that technically could math out slightly better because it still adds up just fine. And maybe there's a point where the growth in economics change, but not where you are.

Griffin: Exactly. Exactly. Yeah. So that's the concession I've made for that example of the more complex client demanding more time without paying us a fair fee because big picture, things are really good. And even at that granular level, I think that those clients are going to be clients that inevitably pay us some way, shape, or form, whether it be a referral or inheritance or whatever it be. And I've just been fair from an advisory fee standpoint. I don't charge many planning fees. I've done maybe three. So I've just...

Michael: So that's really not...Out of 400 clients. So you really don't do that much.

Griffin: It's a rarity. Yeah. So, yeah, that's just the concession I've made, and it's worked. And, again, at scale, I think there's probably going to be a little bit more things that we dial in and maybe some minimums that we pay just because we have to make the economics work and the economics will change as we grow. I know the margin will start to shrink a little bit. Although it hasn't shrank to this point. We've actually increased our margin as we've grown. But I know that that's not necessarily the case as you scale to half a billion and a billion dollars, which is okay. So that's probably when we'll address that more granular minimum fee and service-level component and make sure that that's optimal.

Michael: So I guess it's when more of the clients aren't you anymore and you actually have to have all the fixed staff overhead to service all the clients, and then suddenly you want to make sure it maths a little bit more.

Griffin: Exactly. That's when it's going to probably matter.

Griffin's Approach To Convincing Business-Owner Clients To Invest Outside Of Their Business [55:09]

Michael: Okay. Okay. So can you maybe take us one step further into just what you're doing with these clients...I guess as you're trying to integrate together business planning and real estate planning and investments and the rest, or maybe you're not and you're just focused on the portfolio that you're doing...I'm just trying to understand more of how these heavy business owner and real estate clients do mix together into your core model that's still largely AUM.

Griffin: Yeah. I think I've been a little lucky in terms of business owner client. I would say the average business owner client probably doesn't have a ton of liquidity. And if they do, a lot of them are probably pouring that back into the business. But I've just educated my clients a lot with regard to business ownership. I've seen a lot of business owners that make good money and pour most of that back in their business with this hope to sell this thing for this big number. And I just think the reality is that's not all that common. And just using my business as an example, I could definitely make a good argument for taking a lot of my money and putting it back in the business to grow this thing. But I've just personally decided that as I make money, I want to grow this business, but I like the idea of diversifying outside this business.

And one of the main reasons is because AI [Artificial Intelligence] is a real thing, and I'm not certain that AI is going to take our jobs. I think it's going to more so enhance our offering. But in the back of my mind, I'm a little bit concerned that maybe there's going to be some transition to some more artificial intelligence advisory platforms out there. And so I'm not thinking, hey, I can take every dollar that I make and pour it back in my business and have this big windfall in 10, 20 years, which I still am planning on, of course. But I'm just trying to trying to derisk and take money out and buy real estate and put money to work in my brokerage account. And I just remind my...

Michael: At a personal level for you.

Griffin: At a personal level, that's what I'm doing. And I just kind of relay that to my clients to say, "Hey, your business is a great business that's making great money. I want to support you growing your business, but I think it'd be a mistake to take all your liquidity and put it back in the business because I think the majority of the time, you're not going to get that windfall that you think you're going to get at the end. And I think the cash flow is...as Kevin O'Leary says, cash flow is king. And if we can take our cash flow and build wealth with it versus taking the cash flow to build this business up with this hope that there's going to be some buyer at the other end to pay this extreme multiple. Of course those examples exist, but I just don't think that it's the majority of the time. And so I try to help my business owner clients just think about, as they make money, let's try to build wealth outside the business while still focusing on growing your business, of course.

But that's been kind of the angle I've taken and allow these business owners that typically don't have large portfolios to start to lean into building their portfolios. And because I work with most mostly accumulator clients, clients that are in the accumulation phase of life, the markets being as crazy as they've been have been the best thing ever because volatility is really only a concern when it comes to the timing of distributions. But when you're when you're on your accumulation journey, volatility is a like a little blessing in disguise to actually buy great companies on sale. And even this most recent market pullback in April, it was pretty scary, but I just had to remind my clients, "Hey, this not money we're touching. And, frankly, because it's not money we're touching, this is a great time to buy great companies that are on sale. It's not so often that you get 105, 15%, 20% pullbacks in the market. That's once every four or five years. And so those are going to be the times that we need to lean into this.

Michael: So are you now finding you've got a sizable flow of...flows coming from existing clients just because enough of them have built up to bigger levels?

Griffin: Yes. Very much so. Yeah, most of my business owner clients are saving more than what the average person in terms of percents are saving. I would say they're putting away 20% to 30% of their income, just because at some level when you're making enough money, there's a lot more to essentially invest once you've kind of created a standard of living for yourself that you are happy with. And I also remind my clients, whether they're business owner or not, that as their income increases, yeah, sure, you can you can increase lifestyle a little bit, but I think that's a mistake that a lot of Americans make. As they get more money, they don't increase their savings. And so I've just trained my business owner clients to say, "Hey, you want to retire someday, right? So let's try to focus on retiring and still living the life that you want to live."

But the easy solution is just go make more money, and let's take more of that money and invest it. It's obviously a lot harder for the families that have household income of $100,000. There's not a lot of extra savings dollars there. But most of my clients are not making a $100,000 at the household level. They're making $250,000-plus. So as long as I'm training them the right way, there's $50,000 a year that they can put away versus $5,000 a year for the $100,000 client. So I've just kind of found clients that are business owners that are making good money in the business. They just needed to be trained on how to position their cash flow versus just putting it back in the business or increasing lifestyle.

Driving Additional Growth Through Client Referrals And Online Reviews [1:01:02]

Michael: So now talk to us a little bit more about where the growth came from over the past few years.

Griffin: Yeah. I think just kind of at the very simple basic level is we've made our clients very happy, looking at a very comprehensive approach, and kind of being the family fiduciary. And I think it just as time goes by...I've been in this for ten years, and some of my clients I've been with longer than 2019 because they moved accounts over and worked with me with my firm. So some of these clients have had some long duration with me. And as time's gone on, they've just realized that I'm helping them incrementally make all of their financial picture better. I've helped clients that have debt recapitalize and refinance that debt to be better economics and just making 1% improvements across all areas of their life. Looking through a pigeonhole lens, a 1% improvement on something is not that meaningful, but compounded over time, and at many different areas of their financial life, that's very meaningful. And I think clients have just started to see that.

And I work with all my clients' CPAs, not necessarily at a deep level, but I'm with a lot of my clients having conversations with their CPAs because I do a lot of the tax planning. And I obviously kind of walk that compliance line to not give tax advice. And if tax advice comes into play, I'm just looping the CPA into the conversation to kind of have them be the one that's giving the blessing if you will. But I've just kind of put myself into the comprehensive fiduciary role more than just an asset allocator and broker role. I've helped them with their tax planning, their estate planning, their real estate endeavors, and obviously manage their money well and have done good in terms of performance. And so you kind of just add all that up, you've got some happy customers. And those happy customers...just the law of large numbers. If I've got 450 clients, I would say it's not unreasonable to expect each of those clients to refer me once every two or three years. And doing that math, it's okay, we're getting 50 referrals a year at least. And we do, we get at least a referral every week, if not more.

And then these clients have given us reviews on our Google web page. And as of just the last six months, we've probably gotten one or two clients every week from people just finding us online. And I'm always curious because I don't advertise. I don't pay any Google ad spend or anything. But somehow, some way, I'm ranking pretty high on Google when people search "wealth management Reno." I'm coming to the top of the page and they're seeing the five-star reviews. And I'm always just fascinated, like, How'd you find me?" "I found you on the website." "Well, how'd how'd you find me there?" "I just searched in Google and you were at the top of the page." And I was like, "Why'd you go to me? Just to be frank, if I was you, I'd probably look at some of the bigger shops in town that are behemoths that have 30, 40, 50 staff and have a machine dialed in. Why are you taking the bet on me?"

And I think once that once I actually get to shake their hand, meet them, I'm pretty good at people. And I think that's part of the reason there's a lot of attrition in this business is there's a lot of smart people in the business, but if you if you're not good at people, it's hard to grow something from zero. Yeah, you can you can step into an advisory firm and take some clients and manage them, but to grow from zero, you have to be a people person. And I think I've just really done well at being likable and trustworthy. Just like my wife in real estate, people just...she's incredibly good on the phone and people just trust her right away. She's really soft spoken and a really good listener. I listen to her phone calls and I'm fascinated. I take notes from time to time when I'm watching that.

Michael: Yeah. Yeah. Amazing to watch masters at work.

Griffin: Yeah, it really is. So I think that's my response to how we've grown is I've done really a deep dive in as many client plans as as possible and tried to get more in their financial weeds with regard to things like their mortgages and making sure that they've got the best mortgage rates. And it's like, okay, here's an opportunity to refer my sister, who I love and want to support, and here's an opportunity to help my client make a 1% difference in this area. And then let's talk to the CPA and make sure that they're including all the moving parts for their tax side of things. And oftentimes, clients have CPAs that are filing tax returns, but they're not looking forward in providing tax advice. That's the majority of the time, frankly. And it's not anything against CPAs. I think a lot of CPAs are just so busy, they don't have time for it. And I think there was a lot of CPAs that, for whatever reason, during COVID left their job. I think there's a deficit of CPAs out there.

So most of the CPAs just don't have the time, especially for clients that are not big, big clients of their CPA firm. They're just not taking the time to sit down with their clients and look forward. And so I said, okay, I'll do that. I'll sit down with you and look forward, and I'll loop in the CPA to make sure that we're in line with what advice he would give. But I'm kind of taking that role off the CPA's plate, and the CPA ends up loving it because they're essentially doing the planning that they otherwise would have to try to find the time for. And the client's happy. And so, anyways, it's just all those little incremental deep dives into these clients' financial pictures has allowed for clients to be realizing, I need to go to this guy whenever I'm making any financial decision, not just what a good stock to buy is at the moment.

Building Connections With Key Centers Of Influence To Serve Client Needs And Generate Mutual Referrals [1:06:48]

Michael: I'm struck as well in this discussion, the journey that...I feel like there's been a big focus for a lot of advisory firms of we need to do more for clients and be the either proverbial or literal one-stop shop. So the tax work comes in-house. Sometimes the estate planning work comes in-house. And you seem to have positioned very deliberately and very well to not add to the complexity of trying to do lots of different things under under one roof and instead keeping really strong relationships with external providers, granted, some who are family and you know very well, but keeping keeping relationships with the external providers and letting referrals be referrals and just external professionals be external professionals. And you still seem to be getting all the credit from the clients about the holistic nature of what you're doing because you're driving the referrals without needing to add the complexity of literally trying to do it all under your roof.

Griffin: Totally. Exactly. Yeah. I've made happy customers. I've been a great...I'm really good at referring other professionals. And I try to find opportunities as often as possible to make sure that my clients are working with the best CPAs, the best mortgage brokers, the best realtors, the best estate planning attorneys. And so I've made all these other professionals happy from building up their business as well.

Michael: How do you find and figure out who those good people are, aside from the ones you happen to marry into, by family? How do you find or figure out who makes your list?

Griffin: Yeah. It's been pretty organic. The CPA that I work with is someone that I met in 2020 who was an ERTC and PPP expert. That that was what he was an expert at the time. And he was a younger CPA as well. I think he's 29 years old today, but he passed the CPA exams in three weeks. He's a borderline genius. And he just was a really proficient advisor, and also likable. He was a type-A CPA that's very, very good at people and not one of those normal CPAs that has a hard time talking to humans. And so he has been my best referral partner, and I've been his best referral partner. What he actually told me was in 2021, I referred him a million dollars of business to their CPA firm from the clients that I sent, and they made a million dollars on the clients that I sent over. So they've been very happy, and my clients are also very happy that they've got a CPA that is not just filing their tax returns, but actually giving tax advice going forward.

So, yeah, it's been really cool. I've been kind of lucky just meeting some really cool professionals. And, obviously, my sister and my wife, those are kind of easier examples because I married my wife, Laura, and sister I grew up with. But the attorneys and CPAs that I work with, that I refer, have just been organic relationships that I've shaken hands with in the past or got introduced from in the past. And you kind of know how proficient someone is once you know their area enough to be able to make a judgment call of, yeah, the CPA knows what they're doing. And I typically have a screening process with my clients that are new that come in. I say, "Hey, make an introduction to your CPA. I want to feel them out, make sure that they're capable of actually tackling some of the complexities that you have." And I can, in just one or two emails back and forth, make a decision. Yeah, the CPA knows what they're doing. The way that they put words together and kind of spoke to some of the moving parts. It's like, yeah, these these guys know what they're doing.

And then in other cases, yeah, the CPA, great guy, great gal, but they don't seem like there's a good fit. And I think we should do an audit on the past tax returns. And so I'll get their tax returns. I'll send it to my CPA, upon their permission, and they'll do an audit of their last tax returns. And if they find some missing pieces of the puzzle, that's their in to basically saying, "Hey, there's some opportunity here to make this tax planning side of your financial picture more efficient and address some of the moving parts that were missed."

What Surprised Griffin The Most On His Advisor Journey [1:11:11]

Michael: So as you reflect on this journey, what surprised you the most about building your own advisory business?

Griffin: Yeah. That's a good question. Well, I think the first thing that I would say to that is when I was at Edward Jones, literally knocking on doors in neighborhoods to drum up new business, the surprising part is that it actually worked. It wasn't fast and it definitely was not easy. And I definitely don't miss knocking on doors in 95 degree heat in Reno in a suit, by the way. I don't wear suits anymore, but I did. But it worked. And it was just a clear numbers game. Have enough conversations, build trust over time, and eventually clients come on board. And so kind of the experience taught me that persistence and consistency are more powerful than people might realize. And then what also kind of surprised me, maybe even more, is just how much faster I've grown than expected. I had set a long-term goal to manage $100 million at some point in my career, and I assumed that was a ten, 15, 20-year journey, but I hit that market under four years. And so it kind of forced me to rethink what was actually possible with the right structure and the right team and the right vision.

And I think that the most surprising thing has been how critical it's been to go beyond just investment management. Even though I'm not getting paid on anything else other than managing people's money, I've just intentionally built deep knowledge around real estate, around mortgages, around taxes, around estate planning. And, frankly, I just love learning, and I love to know more. I think knowledge is power. And I think those are topics that most advisors probably avoid or might avoid just maybe because they can't talk about it if they're at the broker-dealer side.

And I know that I'm acting in a fiduciary role, making sure that we're addressing these investments that they're making outside their brokerage account. And I want to be the person that can speak to the economics and speak to how that may or may not be a good fit for their financial picture. So, yeah, just bringing comprehensive insight across all areas of the client financial life just created deep relationships and, frankly, it created really sticky clients. And it's just led to more referrals than I could have imagined because clients just realized they're getting more than a typical portfolio manager. They're getting a true partner in a family fiduciary.

The Low Point On Griffin's Journey [1:13:25]

Michael: Right. So what was the low point on this journey for you?

Griffin: Yeah. This is the fun part of my story. So low point of my career. I had just moved from Edward Jones in 2017. And what I hadn't shared yet is I joined a firm that was out of Denver called Triumph Capital Management, which was an RIA. And then they were affiliated with a broker-dealer. And so when I met the owner, Derek, at Triumph Capital, he said, "Hey, do you want to you want to have some affiliation with our broker-dealer too?" And I at the time, I was like, "Yeah, sure. More is better." Well, I didn't really know what that meant at the time to be a hybrid advisor. But, basically, even though I was doing only RIA business, I was doing zero brokerage business, zero commissions. I was still under their compliance oversight. And so I basically posted a short video on LinkedIn when I was opening up a new office. It was kind of like a Facebook live where I said, "Hey, here's my office and excited to share it with you guys. And let me know if you guys want to come by and check out the new digs." Just like a normal office presentation. Had nothing to do with...

Michael: I'm excited. My new space. Check out my new office space. Right? Yeah.

Griffin: Didn't have any conversation about investments or...nothing. Zero. But because I did not get that script approved by the broker-dealer, they chose to discharge me. And so that was in 2017. I had moved from Edward Jones in January. I had become affiliated with Triumph Capital and this broker-dealer called Summit Brokerage in March. And then in November, I got discharged, or September. So literally eight months into repapering everything and moving everything over, I got discharged. And it was really frustrating at the time because they terminated me. I now have a disclosure that's on my U4, U5, whatever it is. And when I was going out and interviewing with the Morgan Stanleys and the Fisher Investments, etc. of the world, they all wanted me because I had been growing pretty quickly. But once they looked underneath the hood, they said, "Oh, well, you're a young guy and you have a disclosure. That's a risk that I don't want to take," which I don't blame them. I probably would say the same thing.

So literally from 2017 to 2019, I was in this limbo period of time where I did not have my license hanging somewhere. I had built a $15 million AUM business that I had to basically leave for a period of time. And what was interesting about that is it was very demoralizing. Looking back, I basically was getting punished for trying to grow my business in a compliant and professional way, but I got discharged because I didn't play the broker-dealer rules with compliance, which I just frankly didn't even think about. But during that late 2017 to April of 2019 when my firm got approved, which is 18, 20 months, I was in limbo. And interviewing at firms, they were all interested until they saw the disclosure, and they all said no. It was probably five or six firms. And I was expecting a new baby pretty soon as well.

And so what I did during that period of time was I was like, okay, well, I have relationships with people that I've done business with. I can't do AUM business right now, clearly, because my license is kind of in limbo phase. So I ended up doing a lot of fixed business during that time because I still had my insurance license. And interestingly, in that first 12 months of doing insurance, I made $180,000 helping clients with planning that I had not really addressed yet with life insurance and disability insurance and long-term care insurance. And so that was interesting because, number one, I made some money, and I still make pretty pretty darn good money in the insurance base, which I did not include in the AUM advisory economics that I shared.

And I realized, wow, there's another layer of planning that I'd been kind of forfeiting. And as I got really good at that planning, that's kind of what made me go deeper with clients with all the other areas of their life because I was I want to be the guy that knows this financial picture. And instead of a New York Life or Northwestern selling a policy in a transactional setting, I want to do that for them and make sure that what they're buying here is a good fit. The products are great. There's some great insurance products out there, but it doesn't always mean that it's a good fit for the client. But a lot of these insurance salesman will say that this the best product. And no matter where you're at in your journey, this a good fit for you, and it's just not the case.

So, anyways, that was a interesting discovery during my really low point of trying to get hired. And I'm a believer, and I just think that God closed that door to open up another one. And the door that opened up was being able to do some more comprehensive planning, such as on the life insurance and fixed business side. And then, frankly, the only door that was available to me on the AUM side was to start my own firm. And so I submitted paperwork with the securities division in Nevada because I was under $100 million, so I wasn't SEC registered. And so the State of Nevada basically, for 12 months, was going back and forth with me kind of figuring out if they should approve my application because they looked at me as a 25-year-old, 26-year-old advisor that had a disclosure and weren't too sure what to make of it.

And so I just kind of pled my case. I went to the securities division government building and had to kind of plead my case, like, "Hey. I'm a good guy. I recognize I broke a compliance rule at the broker-dealer level, but I've never done anything unethical. I've been trying to grow my business in a very compliant and professional way. I made a mistake sharing a video that I didn't know I needed to get approved, even though everything I said was just perfectly fine." And so, eventually, the State of Nevada Securities Division approved me with a condition, which was a consent order for 24 months. So I literally had to go through an audit every single month for 24 months with the State of Nevada. So I got really good at compliance. And obviously, that...

Michael: So they came in every month for 24 months to audit your compliance of policies and procedures, just make sure you're really doing it by the book?

Griffin: Yes. Correct. Yep. They didn't come in, but we had phone calls and Zoom meetings. So virtually, but yes. And I had to hire a third-party law firm that was dealing with the securities industry to help me. And so I had to pay them for 24 months to essentially kind of be the compliance officer, if you will. And so we basically had to share every account that we opened, all the trades that we made, and all the other things that come with compliance. And so it was literally an audit every month for 24 months. And then after that 24 months, I basically pled my case to say, "Hey, I've pleased you guys. I've done everything by the book. I've gotten really good at compliance, and you've overseen everything for the last two years. Can we lift this consent order?" And they did. And obviously compliance is one of the worst parts about owning a firm, but I've gotten really good at it. And I just finished another SEC audit, and I've gone through three audits since that 24-month period and passed them with flying colors. But anytime I get a call from the SEC, it's like, shit, what's going on now? It's just always...your heart sinks.

But it was another example of low point turning into high point because I got good at fixed business. I started my firm when I was probably not going to start a firm. I was probably going to join someone else's firm. And I got really good at compliance, which you have to be good at. It's compliance first, then clients. It's clients first, but you can't service clients if you're not compliant. You you can't service clients if you're not in business. So getting really dialed in on the compliance front was a huge blessing in disguise as I was going through that process as well. And, yeah, again, one door closed and a better door opened. And in hindsight, looking back, I would I would not trade that for anything, but it sucked going through that. It was totally uncertain. And yeah, it was not fun. But I would, in hindsight, not trade that for anything.

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

Michael: So are there other things that looking back you know...what else do you know now that you wish you knew then?

Griffin: One thing that I wish I did earlier on was to really dial in the systems and processes and tech stack. Early on when you're small, you can get away with loose ends, manual follow-ups, informal workflows, disconnected software. But as you grow, the lack of structure catches up fast. And I heard a interesting stat that most businesses fail in their growth period. And I thought that was interesting. I don't know if that's necessarily applicable to the advisory space, but I think the reality is most most companies grow quickly and in some cases so quickly that they can't tackle it all. And whether it's reputation damage or cash flow mismanagement or whatever, I realized that there was going to be some growth pains if I didn't address them quickly. And so that lack of structure caught up. And so we basically took up literally a full year to clean up the CRM, implement the right tools, build out workflows, streamline operations, because without foundation, growth would have just created chaos.

And then another thing just to address what I wish I knew at the beginning was just trusting the process, which sounds cliche, but just consistently doing good work, holistic work for clients and letting that compound, just making that 1% additional change in someone's financial life, whether they're saving 1% a year because we're helping them address other areas of spending that they can tamper down, or making sure that they've got the most economic leverage if they own any debt. Just making 1% improvements, through a thin lens, it's not really meaningful. But over time and addressing all the areas, not just their portfolio, those 1% changes are massive. And I and, again, I think that's the main reason people refer us is because we're optimizing every part of their financial picture, not just their portfolio.

Michael: So any other advice you would give younger and newer advisors coming into the profession?

Griffin: If you're coming into the profession starting out from zero like I did, I think it's a different answer for someone starting out and going to a big firm that's got dialed-in systems and processes and has a book of business for them to service. I think that's just a little different answer. But for advisors that are coming in from zero and trying to grow a business, whether it be at a broker-dealer or an RIA, you're not going to fail because you're not smart enough. You're typically going to fail because you're just not good with people. If advisors that can scale can communicate and connect and earn trust...and I remember some guys that were in my Edward Jones training program that we went through for six months that were way smarter than me. And today, they're not in the business because they just couldn't connect with humans very well. And so I think that having a good skill set to actually be likable and have the ability to earn clients' trust.

And at the end at the end of the day, when you're when you're starting out, you're selling yourself. No one really cares about your proficiency and skill set with portfolio management and financial plans and stuff. They care about you and whether they can trust you or not. And then if they do, then they'll sit down and listen about how you can help them out.

What Success Means To Griffin [1:25:07]

Michael: So as we wrap up, this a podcast about success. And just one of the themes that always comes up is literally that word success means very different things to different people. And so you've had this wonderful growth trajectory of success with the business and now at $200 million after after six years and continuing to grow. So the business is in a wonderfully successful place. How do you define success for yourself?

Griffin: Yeah, that's a great question. Well, in some respects, I've found it. But I think the question is probably related, how will you know when you've made it? Is that kind of the same question?

Michael: Or what are you trying to make it to? What is that endpoint or goal look like?

Griffin: Yeah. So that's the one area that I think is worth addressing is I haven't made it because I'm not replaceable yet. I think, at the end of the day, even though we've done a good job of kind of pairing off clients for my younger advisors in the office, I recognize the fact that if I died today, my business, there's going to be a ton of attrition. And I wouldn't blame them because I am the business. But I've been trying slowly but surely to just make myself more replaceable and make my employees irreplaceable, which they've done an incredible, incredible job of. And so I think I'll know when I found success when I can truly get out of the office for three weeks and not have to check my phone and be at my computer. I can definitely say that I can get out of the office for a week and my staff can handle the business.

But the business is not necessarily moving forward when I'm gone. The business is kind of stagnant in addressing just the incoming needs clients have, etc. But the business isn't growing per se. So I think that I'll know when I found success when I've truly become replaceable. And I think that's also the point when the business value goes from a 3x revenue to a 6x, 7x, 8x revenue. And that's what I'm trying to go for. And that's, by the way, why I decided to go from solo practitioner to building a firm because I realized that if there's a premature death on my side...I'm a type 1 diabetic. So just to give you a little bit more insight to me, I'm a type 1. And so why that really matters is because buying insurance on me is really hard. I take really good care of my diabetes, but the insurance carriers don't really care. They just look at the statistics and the underwriting that goes with that type of disease. And so I'm under-insured.

If I were to die today. I have insurance, but nowhere near enough to replace my income and nowhere close to the value of my business today. And so I just decided, okay, I need to graduate from solo practitioner to building a business so that if I am blessed to have another five-plus years of this life, I'll know that in five years or less, that's my goal that I'll be replaceable. That if I were to pass away or if I were to be out of the office that clients can look to my staff in the office as as their go-to. And so that's when I think I'll know I've made it is to truly be able to get out of the office and not have to worry about putting out any fires and, even better, have the business actually move move forward, from a being able to sit down with complex client standpoint and actually give them planning advice like I do. So that's what I'm shooting for is essentially making myself replaceable, making my employees that are learning the skill sets they need to learn to be so irreplaceable that...and they are. If any of my guys left, I would be lost. And so they've done their job. I'm now just trying to do my job of making sure that my clients know that this a firm, not just a person. And so that's what I'm going for.

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

Griffin: Thank you very much for having me, Michael. It's been a pleasure.