Finding Real Uses For AI Tools Not Just To Gain Efficiency But Create More (Customized) Value For Clients: #FASuccess Ep 477 With Christopher Haigh

Podcast Player:

Resources Featured In This Episode:

• Christopher Haigh Website | LinkedIn
• Christopher's Sample Dynamic New Client Proposal
• New Client Proposal, Client Review Document, and Financial Vitality Report – Download (PDF)
• Equity Visualizer – Download (Excel)
• Hazel
• Jump
• Claude
• XYPN VIP Group
• CFP Subreddit
• Holistiplan
• RightCapital
• Income Lab
• YCharts
• YourStake
• Calendly
• RingCentral
• v0 by Vercel
• Loom
• "The Power of Moments: Why Certain Experiences Have Extraordinary Impact" by Chip Heath
• "Unreasonable Hospitality: The Remarkable Power of Giving People More Than They Expect" by Will Guidara
• Altruist
• FP Transitions

Full Transcript:

Michael: Welcome, Christopher Haigh, to the "Financial Advisor Success" podcast.

Christopher: How are we doing, Michael?

Michael: We're doing well. We're doing well. I am excited today because we get to nerd out on all things AI, which...

Christopher: I thought you'd be talking about it.

Michael: I heard it's a thing, apparently. I read something online about it, so I was thinking, "Hey, maybe we should talk about it a little on this podcast." Because I do find, just having watched, I don't know, the hype curves of new technology from robo, smartphone, internet, I started 25 years ago when the internet was supposed to dismantle all brick-and-mortar stores in the next 3 years, there are sort of these phenomena, we over-project the change in the near term, but then sometimes we either under-project or misestimate the change in the long term. The internet was supposed to eliminate all brick-and-mortar stores. It didn't do that. But it turns out I can serve my clients from the beach anywhere around the world with artificial Zoom backgrounds. Who saw that coming?

Christopher: Right?

Michael: So all sorts of fascinating, unexpected ways that technology plays out. And I feel like, now, in the artificial intelligence curve, I feel like we're sort of past the "It's going to replace everyone in two or three years," because we're almost three years out now from the ChatGPT release. We obviously still have jobs. But we're starting to figure out some cool things to do with AI. Some of us are figuring out more than others. What we see internally, even from our research so far on the Kitces platform, is that there are some interesting use cases around efficiency and time savings, particularly in areas like just good old-fashioned meeting notes. That's very time-consuming for some of us. But there's also cool ways to build mini apps for clients, build new deliverables for clients, things that I think of less in the time savings and more in the just add more value, create better value for clients.

I save time in being able to deliver to them, but I'm not doing it to save time what I already do. I'm doing it to offer new value I couldn't before because the AI can do it efficiently and effectively. And then we have to figure out how we actually do it and what are the right use cases, and how do we manage the compliance privacy parts, and how much can we do when we're not coders and software developers. So, as I know you have very much lived this firsthand, being an early adopter, a tech-forward firm, and trying to figure out, really, what can we do and build within our firm using AI? So I'm just excited to hear, what are you actually using that really works in cool ways?

How Christopher Evolved His Use Of Client Meeting Note Taking Software [05:15]

Christopher: Well, yeah, I'm so pumped to talk about it. There are so many ways in which AI…we've integrated into our practice and so many directions you can take it, including the following. Meeting notes is obvious. I think everyone has their favorite meeting note taker. And that's kind of where I found it stops. Everyone is very excited about them and talking like their new tech when it's old tech at this point. That's the rate in which it's moving. We're currently using Hazel. We've tried Fireflies and Jump. They were okay, but Altruist is our primary custodian, and that integrates with Hazel really well, where it's a meeting transcription, it syncs to our case notes really well with Wealthbox, but also it can pull data from Altruist now. When we're doing preparations, we don't have to then go to another platform and gather the details. We can ask our AI note taker for the details around assets under management, rate of returns, and things like that.

Michael: So let me even pause you here. I really want to understand more of where and how exactly you're using, I guess, sort of even the sequence, Fireflies, Jump, Hazel. And what was different for you as you went through the evolution of each of those?

Christopher: Yeah. So Fireflies, because it was a brand new technology and that was very, I think, agnostic to industry, so that was just the V1 [Version One], we'll call it, of, "Oh my gosh, this thing can listen and take notes, and I can be more present." And I think that's the exciting thing about AI for us is that it just gives us more time on the quality time with our clients now that we can do more for them that we don't have to spend on notes.

We fed the transcriptions into, fill in the blank, ChatGPT, Claude, Gemini. I think it was ChatGPT at the time. We had built a custom GPT for meeting notes so that it knew when we're submitting case notes, we wanted them formatted a certain way, the output to have follow-up, all those things that we all look for when we're debriefing from a client meeting. That saves us time. We would put that into Wealthbox and then also assign tasks based on those outputs.

Michael: So I'm struck even at that point. So you weren't even using the Fireflies version of the summary. You wanted your own version of summary, so you used the Fireflies raw transcript, fed that into ChatGPT, Claude, take your choice, made your own custom GPT to say, "Here's how I want my meeting notes formatted. Cover what we talked about last. Cover the new topics. Make sure you capture the action items," etc. So then you drop the transcript in, you run it through your meeting notes summarizer, get the output, and Ctrl+C, Ctrl+V, copy and paste into Wealthbox notes, and make whatever task you're going to make.

Christopher: Yeah. And that was so huge for us because we're mostly remote. I am based in Brooklyn now. Our firm is based in Rochester, New York. That's where our office is. But we definitely have a hybrid approach where everyone is not going to be in the same room. So the consistency around notes was always a problem, where if I've got six meetings in a day, at the end of the night, do I really want to go into Wealthbox and write all these notes? No, I don't. Sometimes I might not do it. The next day, someone might be relying on those notes, and then so it goes. So this was a huge efficiency and consistency improvement for us.

Michael: Okay. So I feel like that's version 1.0 of AI note taker meeting notes for you. So, what led you to Jump?

Christopher: So Jump was...I'm thinking it was in maybe the XY Facebook group, which is a great resource for things like this, of, "Hey, what are you using? What do you like?"

Michael: The XYPN's VIP group, the Facebook group.

Christopher: Yep, the VIP member group, yep. Or the CFP subreddit, to be honest, is another great resource if you're not a part of XYPN. And that was...the V2 was now it's AI note takers for financial planning firms, which meant it synced to Wealthbox. You could customize the meeting type, so the outputs were more dialed in for the type of meeting you're having, whether it was an intro call or a review meeting. And then it also synced to Gmail to then create the follow-up immediately. And then you could feed in from ChatGPT your custom language so it speaks like you. Because we all know when we've received an AI email at this point, or written by one. So that made it so that it then cut down the time on connecting all of those things together. It synced with Wealthbox, pushed the notes, pushed the tasks to Wealthbox, creates a draft in Gmail. And then I would say, really, the shift to Hazel was just really cost savings and because it integrated with Altruist. I think that's great.

Michael: So the appeal at the Jump stage was it took all the in-between connectivity work and solved it. I don't have to copy the transcript into ChatGPT and then copy the ChatGPT into Wealthbox. It just pushes it in Wealthbox, and I don't have to teach it my meeting note style. It understands meeting types, and I can train it.

Christopher: Yep. And then for teams like ours that are teams of five, and sometimes there are three or four of us on a client meeting at the same time, or not, it syncs with everyone's calendars correctly and joins at the right time and syncs to the appropriate people as well, which was a big one. But also in terms of the outputs were just much better, because I just thought...

Michael: Only just the raw output transcription was better?

Christopher: Especially the tasks, yeah. The issue for us is always we talk about so much with our clients, we want to get all these things done, and then, to recap to them what we need to do, what they need to do, it just sometimes gets lost because you've had such a good conversation. But with AI, it doesn't lose those anymore. It pulls out even small tasks that need to get done afterwards.

Michael: Okay. And I'm trying to remember, cost-wise, Jump is more expensive than Fireflies, but to eliminate the "Move the notes here, run it through our GPT there," that was still worth...incremental time savings was worth the cost.

Christopher: Yeah. Our tech bill is pretty high. We are very...I think I did the math. We have about 48 tech subscriptions. It's probably our third biggest line item besides people and walls and roof. But we're very quick to invest in something we think is going to move the needle and very quick to get rid of it if it's not. So that was not that big of an investment. I think it was maybe $800 a user per year. But for people who have multi-member firms, the per-user subscription versus a flat fee is a very...

Michael: It starts to add up.

Christopher: Yeah. We looked to a lot of the ones that just have a blanket flat fee, and everyone gets access. We love those. The per-user ones are tough. But then Hazel came out and reached out to us in beta, "Hey, it's going to be free for a little while." So we jumped to that, obviously. I think we're always looking to make sure that we're being profit-conscious.

Michael: So then talk to us a little bit more about what's different with Hazel versus Jump.

Christopher: Yeah. I would say there's not a ton. I think the feature internally, and I can't speak...all this changes so much, so Jump could have updated.

Michael: Yeah, understood. We recorded this a month or two in advance. The tech may or may not have moved by the time.

Christopher: Yeah, Jump is going to be out of business, in a new name, or something, right? Just kidding. But, yeah. So the big thing was the case prep is really good in Hazel, where if you have an upcoming meeting, the prompt that you run to prepare, it pulls in all the meeting transcripts you've had, emails that are synced to Wealthbox, internal notes. And it'll summarize really nicely what you have to think about in this upcoming meeting, but then you can also, like I said, bring in Altruist data as well, what are their account balances, rates of return, allocations, so you just don't have to...it's not perfect. We still double-check and go in there, but that's a really nice thing to save a little bit of time there.

Michael: Oh, interesting. So it cuts down the step of look through the client's CRM notes to figure out what we're talking about and then pull up the investment platform to see what's going on with their accounts, because Hazel becomes a central prep dashboard that pulls in those things from multiple sources. And since it's built by Altruist and you're in the custody of Altruist, lo and behold, it's got a really good pipeline of the Altruist data because it's all native to them.

Christopher: Yeah. And frankly, I think we do invest in tech-forward thinking of, "Okay, because it syncs with Altruist, I'm assuming it's going to get even better for Altruist users a year from now." So that's definitely a winning factor.

Michael: And I think you said there's a cost difference as well that was appealing for you.

Christopher: Yeah. I think it was maybe 40% cheaper in total for...because a nice thing about Hazel is they do a paraplanner assistant lite version where it won't join their meetings, but they'll still have access to the platform to grab the notes and build that, which we have one or two people that is more suitable for them versus the flat...

Michael: And because it's more limited, it's a lower price point, so you made the full rate.

Christopher: I think it's $250 or $300 a year for the admin seat, and then it's $600 a year for the advisor seat.

Michael: Okay, okay. Which, across five team members, and if you don't need it, that's $500, $1,000 bucks a year just on pricing strategy, I'll take it.

Christopher: Yeah. And I'm sure we'll talk about it, but I was coming from Northwestern, coming from a low-middle-class family that's always kind of, I think, a habit of mine is to you got a little bit of profit here and there, cost savings, because it just can be repurposed elsewhere.

Using AI Tools Within Existing Advisor Software For Data Extraction [14:53]

Michael: Okay. So now, coming all the way back to the beginning of the conversations, you framed it like AI note takers are the old tech of this. So, what else has come in? What else has layered in for you since then?

Christopher: Yeah. I think, like I said, there's many ways it can go that we found improvements. So, on the planning side of things, we actually don't lean on it a lot because I'm worried that some assumption is incorrect, and I'm overlooking it. But we do it for a lot of math-based, whether it's an RMD calculation, Roth conversions. But the way that, I think, platforms are integrating it as well, Holistiplan, RightCapital, Income Lab has a really cool plan builder with AI, where I just dump in RightCapital's report from a client, and then it builds an Income Lab household with totally accurate data for me without having to do anything. So that data scraping and OCR [Optical Character Recognition] scanning, I think, is the next wave of where people are going to find it really impressive.

I think YCharts has a good one as well, where we've all been there where we've got a PDF from a competing firm that we're trying to get a new client relationship. There's 200 holdings, and I got to type them in just to have accurate data. It removes a lot of that now where you can just put a scan in, it does it for you. We use YourStake. They have a really good data confidence in their scanning tool for allocations. So that is one of the big ones, I think, low-hanging fruit.

Michael: So now I want to understand even these scenarios a little bit more of what you're doing and how you're doing it. So YCharts, this is, "I want to analyze a client's current portfolio to build a proposal. Here's what you've gotten, why it's got problems here, how we allocate, and why it's better." So you just get statements from clients, like the good old PDFs. You can put it into YCharts. It's got a statement extractor tool, and it will pull the client positions and dollars or shares, or whatever it is, details, to build a model of the client's portfolio so that you can then do your proposal analysis.

Christopher: Yeah. And that's a traumatic example because we don't get a lot of statements anymore. It's mostly linking to RightCapital. But even that version of downloading the holdings to a CSV file from RightCapital, very easy upload into YourStake or whoever, YCharts and the other tools, for just easy continuity. If you want more deep dive into analytics and fees and things of that nature, that's where we use those for.

Michael: So now, for folks who aren't familiar, what does YourStake do, and how is it different from YCharts?

Christopher: Yeah. YourStake is an interesting one, where I believe it holds itself out as an ESG scanner, right? I don't know if you're familiar.

Michael: I think that's where their roots were before the AI era. They were doing values-based ESG portfolio side.

Christopher: Yeah, exactly. So it's a little...the category it's under, we found, this was an area that we still are scratching our head a little bit around. Because we have Jack, my co-founder. He's our portfolio manager, our CIO. He uses YCharts exclusively. But that's another one of those where we pay for one subscription. It's his access. We don't really have access to it. I think we would use it more if we did. But we needed a tool where I could go in and look at somebody's allocation if I needed to or help him put data in that didn't cost a lot. We used Nitrogen for a little while. It just ended up being too costly. It was more of a risk tool that we didn't need.

So YourStake presented as this...I think they're actually leading in a lot of areas on the AI adoption side, that we maybe have found kind of a hidden gem there. Their data entry and their analytics are amazing for client portfolios that we don't manage. So it could be a 401(k), could be a competing new prospect. But that fills that gap really well at a very good cost.

Michael: Interesting. So that's your quick slice on, "How's their 401(k) allocation doing? Does it seem reasonable? Shall we make some adjustments? We're not hands-on managing this as a discretionary account, but I need to advise on it and do so efficiently."

Christopher: Yeah. And I think a lot of people listening can accomplish that in RightCapital, and it does that pretty well. But I think what you'll find through the way that we do things is that we may go just over the top too often. So we just do too much work for no reason. But we do really, I think, emphasize digging as deep as we can, and every chance that we get to make a good impression, to show high quality, that's what we're trying to do. And that's where I think AI really comes into play for us, is on the presentation side of things, of creating amazing-looking documents or proposals that I have always wanted to, but I just didn't have the savvy to. My brother is a graphic designer. He's incredible at these things, but I don't have his brain. I don't have his abilities to make things look nice, but I know when they do. He's helped me understand that.

Now, with AI, it understands our brand, our brand kit, our brand strategy. So when I'm looking to create a new client proposal or even just a small calculator, I can bring in our branding and our quality so that if someone looks in that... To me, that's really important. If someone looks at something and says, "Wow, that's one of the nicest things I've ever seen," or, "That's such high-quality, they must really care," because that's really at the crux, that we care deeply about our clients in the work that we're doing, so we want them to know that.

Michael: So then you mentioned Income Lab as a way that it can extract data out of a RightCapital plan to build in Income Lab.

Christopher: Where the data lives, where we're keeping up with outside accounts, running plans, tasks, files, is all through RightCapital. And then Income Lab is just more of a specialty. If we have somebody who's really considering retirement on the next few years, we're bringing it into Income Lab because I think their philosophy, their approach is really cool for that purpose.

Michael: And so the appeal from then the AI, just simply, in the past, it's very painful to use more than one platform because we all hate to do double data entry. And now, because Income Lab built their own version of a financial plan extractor, you can literally just generate a RightCapital plan, send it over to Income Lab, Income Lab could ingest that data, and then you can do your retirement analysis on the spot, and you don't have to spend all the time doing the double data entry.

Christopher: Yeah, it's so easy, and it works really well, because you can put in... I'll usually put the RightCapital report, and then you can put multiple files, so I'll put pretty much whatever files I have. And then it knows when you're kind of double-counting, so it doesn't count something twice. And then there's a context window, a textbox that you can also put in. I usually just in the Hazel summary of the client of who they are, when they're born. And then my checks and balances are... I did one earlier. I think it took me three minutes after it was processing, and that would normally... I would just spend three minutes on putting the client's info in to get it started, before even going into the actual financial data.

Michael: And I was going to ask, so what about ongoing updates? But I guess that's not really the thing. Your ongoing planning software with all the live data feeds is RightCapital. Income Lab is more of a point-in-time analysis for you.

Christopher: Yep, yeah, for that big decision, especially for project-based clients, but even ongoing clients who are going through that retirement decision. It's really just another, like you said, point of confidence that we can look to and say, "Yeah, Monte Carlo says you're going to have $100 million leftover." That's not very helpful. The success rate is fine, but you're still worried. It kind of just, I think, removes them from that so abstract conversation into one that they can understand better.

Michael: And, okay. And so continuous data connection doesn't matter in this context. AI importer just solves basically all the redundant data entry in three minutes.

Christopher: Yeah. And we normally will give people a view-only access to that platform at first. But then, once we...we'll ask them, "Are you all set? Have you gotten what you needed?" We'll usually take them out of there if it's not necessary so that we're just not clogging up too much internal confusion. But, yeah, it's very much, I think, an amazing retirement planning tool. I'm sure a lot of people use it for the main portal because I think it's more robust than we use it for. But that's just how it integrates in our practice really well.

Michael: And so it sounds like, overall, you feel good about the accuracy of these tools. Just as you give them plans, as you give them statements, they're doing a pretty good job of ingesting the right information.

Christopher: Yeah, because they give you a really good net worth summary at the very outset that you can then just look right to RightCapital and say, "Yeah, those align." Or if they don't, where don't they align? So, yeah, it's pretty easy to do a double check.

Michael: So, okay. I don't know if stage is the right word. Stage one AI is note-taking and the evolution of note-taking. Stage two is data extraction, extract data from PDFs, extract data from plans, extract data from statements. So, what comes next in the progression then?

Christopher: Your guess is as good as mine, but the way I see it, I kind of see this window as a very important one for us, where if we invest in the right technologies, amount of time, we can move ahead of...not saying that we're always thinking about moving ahead of other firms, but how can we compete better and differentiate ourselves? I think this window is a short one, maybe a year or two, where once you start using different tools and learn them faster, you're going to be 2x, 3x, 4x ahead in certain areas. We're thinking through, right now, AI agents as kind of...that's a little old, but kind of, how can we add...? Oh, man, what's the name of it? It'll come to me. But there's a version where you can use your voice, you can give it your voice from meeting transcripts, and then you can train an agent to talk back to clients in literally my voice. And we're kind of thinking through, how do we get that on our website, where maybe a client goes and asks a very basic question? And then it's just me sitting at a desk, speaking to them. Or if they need help scheduling, I think scheduling and correspondence is going to be a big one where, if we could take out that middle crappiness of, "Okay, when are you free? Here's our schedule," having kind of an agent in between coordinating these things.

Michael: Does Calendly and the like not do that for you, or what's different?

Christopher: Yeah. So we use Calendly, but it's still in the process of, "Hey, here's my Calendly for this time." And it's more of this intermediary that can step in and do it for us. That's where I think we're thinking through. And it's always with the end user in mind, the client. Not so much efficiency for efficiency's sake, but how can I make my clients' lives better? How can they get a hold of us easier? How can they schedule things with us more quickly and let us know if they need us and less about, "Oh, this looks really cool," or, "This is tech-forward?" Even things like we use RingCentral for our phone system and adding in an AI receptionist has been really cool, where we prompted it, you can give it prompts for what they asked and who they're trying to call, and it routes the calls better. Often, we're just getting a lot of missed calls and voicemails. And now, this one routes it to the right people a lot more effectively.

Generating Better Presentations, Documents, And Proposals With AI Tools [26:49]

Michael: So then, in that vein, you said earlier, part of your view about where AI goes is it just lets us make better presentations, better-looking documents and proposals, especially for those of us who are not so graphically visually inclined in the first place. So, is that a vein you're actively experimenting with, or is that your expectation of where it goes next?

Christopher: Yeah, no, we've implemented it already. So we use...the one that I like a lot is v0 by Vercel and Cursor, but mostly, I think people will be familiar with v0. And even Claude does a really great job of producing HTML sites that kind of look like a presentation. But I loathe the PDF, the static PDF. It's the bane of my existence. They look like crap. You can't edit them very well. And this is coming from someone who, at Northwestern Mutual, we printed it into very fancy binders, our financial plans, and gave it to people, right? So switching to an interactive planning system was already a huge leap. But I think it's going to keep getting faster and faster, where I can build a...all of our new client proposals go to a custom domain, usually with their first name, icono.url, that they access instead of me sending them a PDF of a proposal that's templated. But this one, it's more customized to them. It's more interactive. I built in quizzes that come up while they're going through it, so it's more fun. And it's just a more unique way to present, "Hey, if you want to work with us, here's the experience. And it's going to be a good one."

Michael: Wait, so I got to take a small step back.

Christopher: Yes, sir.

Michael: For folks who aren't even familiar with v0 by Vercel, so what is v0?

Christopher: It's a way to create more interactive visuals. We use it for presentations, but people do it for a million things. But really, when you're going into an LLM, a large language model, like a Claude or a ChatGPT or a Gemini, they used to really only output text-based results. Now they've gotten better at coding visuals, but it used to only ever be a text response. But sometimes we just want it to help us create a nice-looking summary or a one-page plan. Rest in peace, Elements. Having that ability to quickly say, "Here's what I'm looking for, here's the information I wanted to show. Now, go to work and put together a clean-looking financial planner, a clean-looking checklist, or a proposal," instead of me having to go into Adobe and manually struggle through it.

Michael: So I guess this falls into the vein, as people call it, of vibecoding.

Christopher: Yep. Yeah, there you go.

Michael: You described the little app or capability you want or the proposal presentation, and it makes them do so.

Christopher: Yep. Yeah, you can create so many... I've tried creating a basic video game in there. I've got some things I'm trying to create, like client archetypes of the typical client, there are certain types of clients that you can kind of narrow down, but then creating their avatar in a video game format, like an old N64-based visual. I think my favorite one was a social security seer, and it made them look like a wizard who is gaming out social security scenarios, all in the fun of creating that avatar to post to their client portal. I haven't figured it out quite yet, but you can create anything in these platforms. The only limitation is your imagination.

Michael: So, what have you built that you've actually deployed and are using in practice with clients?

Christopher: Yeah. The biggest one now is those presentations that I was mentioning. Once we were working through a new prospect. Our new prospect process is pretty intense. We get about 150 a year of new prospects that book on our calendar, qualifies, quantifies.

Michael: That's a lot of prospects.

Christopher: Yeah, for a firm our size, it's amazing. And then we take them through a pretty consistent process where we have a fit or an intro meeting, and then we have an analysis call after they onboard into RightCapital. Then, after that call, we send them a proposal and the scope of work, essentially, for working with us. And I think maybe just I'm a perfectionist with some of these things, but those proposals, and then I would create a Loom video walking through it, explaining some of the context. Our conversion ratio was really high, but also my burnout ratio was as well, because I was spending three, four hours on these proposals despite them being templated, because I was always trying to make improvements.

So once we shifted to v0 for these, I have a template built, and then it knows. I'm feeding it meeting transcripts and data from whether it's RightCapital or whatever, and then it creates those priorities for me so that I don't have to sit there and deliberate over them for hours and hours. And then I can go on and tweak things as I want.

Michael: And so I guess a couple of questions here. Is there a sample version of this that we can show people that we can share with listeners?

Christopher: Yeah. I think the beautiful thing about this stuff too is that it's all hyperlinked and live, so I can share a link that, as I make tweaks, it then is evergreen, and the tweaks are then displayed. And the same thing with these client proposals. If I push the client proposal out and then someone points out a mistake, I can go in and correct it, and I don't have to email it to them again. It's just refreshed into the new version.

Michael: Right, because it's a live digital document.

Christopher: Yeah. And the simpler version of this, though, would even just be in Claude, and it would just produce an HTML output, which you can either save as a PDF or you can even host it as a live site. It has a more static look to it, but it's so much better looking than what most of us are able to create in things like Adobe or Google Docs, just because we can't have both sides of the brain, I don't think, when it comes to the analytical and the creative side.

Michael: So this is episode 477. So, folks, go to kitces.com/477. We'll put a link in the meeting notes to Chris' sample version of a client proposal built in v0.

So, as we share out this proposal for folks to check out maybe while they're listening, so now connect the dots for me. What was the prompt you wrote? How did you create this thing? How does it work? What did you actually do, the next thing that we're going to see?

Christopher: It's many, many prompts and many versions. So I think the original was I fed it our PDF proposal that we had sent clients and asked it to recreate it in a much more interactive, visually appealing way. And the funny thing about AI is that, usually, prompting the prompts makes them way better. What that means is I would first put the PDF into Claude, let's say, and tell it, "I want to feed this into v0 and have it produce a visually appealing interactive proposal. Give me the prompt that's going to do that best." So then Claude outputs the giant prompt that has all the specifics for color and scale and padding and pixels, and then I feed that into v0, along with the document. And then it reads that a lot better. And the results are way better.

Michael: Oh, interesting. So you tell Claude to give you the design specs for the prompt to give v0.

Christopher: Pretty much for every query for any sort of whether ChatGPT, I'm always getting a prompt from a different one describing the objective and the output and the system I'm using so that I can ask it better, and the results are better. Otherwise, I think you waste a lot of time sometimes correcting it and saying, "No, that's not what I want," when you take a little extra time on the front end.

Michael: And so the goal at the end of the day, as we'll see from the version that's shared out, is now I'm able to...the client gets this more interactive proposal. It's designed to your style of firm, and it just happens now. Because once there's a v0 digital template equivalent, you just give it the new client data, and it generates the proposal.

Christopher: Correct. And the scope of the pricing is what we have to add. I think what we gleaned was that most clients have a really good inkling if they want to work with us or not, and it really just comes down to semantics. So making that experience more enjoyable, but it just lays it out in a better way because I think part of the prompt was explain our scope better, explain our relationship model better, explain our onboarding process in a visual way that they can understand instead of a wall of text is the best thing. But even the integration of it has a button that says, "Here's your onboarding fee, and then here's the link to Stripe to pay that onboarding fee," they click it, it goes to their custom invoice that's been created, and it's just that seamless experience instead of me having to email an invoice from AdvicePay, "Here's your link. If you have questions, here's a hyperlink to my email," and it opens an email in Gmail to me with a pre-prepared question or something. So it's all these little moments that I kind of excruciatingly think through of, "What are the small moments that we're not thinking of that we can make this easier and make their experience better?"

Michael: So, have there been multiple versions of this then? I'm going to presume it's more than this.

Christopher: Probably 40 or 50.

Michael: So I guess if you're willing, can you share two or three versions with us? Again, we'll put in the show notes, kitces.com/477, for episode 477. I think the range of iterations on this may be helpful inspiration for folks who are listening to understand what the tools could do.

Christopher: Yeah. The versions started as a Google Doc, PDF, and I can upload that. And then that progressed to the Claude, v0 model, where it's still kind of a long scroll, one page, we just presented the information better. And then I think, in my mind, I just wanted it, "What if it got really weird and fun? What would that look like?" Then it became kind of I'm tabbing with an arrow through a slideshow. And can I create pop-ups that bring their attention back? In the beginning, they have to say if they're ready or not. If they click Yes, there's a little Hulk Hogan cartoon that pops up that says, "Hell yeah, brother." And then it just gets them going into it. And then halfway through, there's a pop quiz about, I think, their family or something like that. And I'm sure we'll make it weirder, and I'd like to add music or something at some point. But it's these little moments that I pull from...I think about our brand a lot. So "Thinking in Moments" [Note: the book title is "The Power of Moments"]is a great book that spoke to me a lot, where it's like, how can we elevate in unexpected times?

Christopher: Similar to...my favorite book ever on this topic is "Unreasonable Hospitality" by Will Guidara.

Michael: Yes.

Christopher: It's similar to that. How can you elevate boring experiences or unexpected moments, how can you raise the stakes and show quality where no one's expecting it?

Michael: I guess I'm just trying to visualize. It still takes time to build and iterate on all these proposal prompts. So I guess, as I'm inferring it, this isn't necessarily saving you time, per se, because you're spending a lot of time making this. But you can make it custom exactly the way that you want, and you don't have to be a software developer or go find a company that will make custom software for you because you can just make it the way you want it to be. That's the appeal of a context like this.

Christopher: Yeah. And I think speaking to maybe the frustrating side of it can be...you have me and my director of financial planning, Gene, we love this kind of stuff. We're always messing with it. And when you have a team of five people that you have to kind of bring along with you, when you're constantly changing and messing with it, when they may or may not enjoy it, it can lead to a frustrating experience. So we've had to curb it a little bit, where we put some guardrails on and say, "Okay, we're not going to make any changes for the next quarter. We're going to go with this," because, yeah, it can kind of get out of hand. And then, yes, you spend a ton of time on the prompts, and then, all of a sudden, this proposal that was supposed to take five minutes has taken four hours because you had a new idea and something is improved.

Michael: But now, if you like your new version, it takes three minutes to make all of them in the new fancy format.

Christopher: Correct. But one is good enough, right? It was already good enough, and I should be, yeah, mindful of everybody else. But, yeah, everything AI-related really speaks to...the real value that our firm brings to our clients is that approach of the end user in mind, how can we improve the experience, reduce the fee? And also, on the team side of things, how can we make our lives better? How can I make their experience working with our firm better and grow it into an enterprise where people want to work at because of these things?

Michael: The thing that strikes me about all of this as well is that we started with things like note takers. Okay, this just literally saved me time if I was taking my notes out in the past. Statement extractors, okay, this does save me time over keying in data manually. But now you're into a realm where I'm really not saving time. I might actually be spending more time, but I'm spending more time on something that hopefully is creating real, new, unique, differentiated value for clients. So it lets me win business. It lets me raise my fees or better earn my fees. To me, it's interesting, as it takes you down this whole road of, "No, no, no, now the AI isn't making you faster and more efficient. It's a tool that I'm taking more time with, but I'm lifting my value prop."

Christopher: Yeah. And I think you can take it in one of those two directions. For me, you could take it the efficiency route and just kind of stop there, and it's still an amazing add-on. But that's where I feel you're going to just be more of the same. And I don't really buy into that we're going to be replaced by our clients. If anything, our valuing human interaction more than ever because they're rejecting all of these things that make them feel poorly and their brains are fried, they want our time, and they want access to us. So it improves that across the board, and I think we'll be in demand more than ever. But then, for me, I looked at it as a CEO responsible for growing our firm, making it the most profitable for the other equity partners in our firm if we all cash out one day. How can I raise our value so high that I'm iterating in ways that we're going to be different and looked at? And the reason we're talking today is probably because of one of these things that I made and put out there. So I think that speaks to a little bit of my approach to it, is looking long-term.

Handling Compliance Requirements When Working With AI Tools [42:47]

Michael: So now I've got to ask about the proverbial boogeyman in the room, which is compliance, client data privacy, because I find this fascinating. On the one end, we all seem to have gotten comfortable that AI note takers can capture this information and do it in ways that's secure, or I guess even before that. We can put all these data into our CRM. That's okay. We can put it into note takers. That seems to be okay because they're taking steps to sequester the data. We're not training on the data. Then you get into some of the other tools that now you're experimenting and building with here. So I guess just help us on the compliance and client data privacy end.

Christopher: Yeah. I will say I've always a little bit been more on the bleeding edge of the gray lines of compliance, like I said, coming from a place where compliance was the boogeyman and then realizing, "Oh, it's actually not that difficult at all." Through XYPN, I have some memberships for free almost that help me take care of it. And as long as we're not doing anything intentionally malicious, I think we're going to be okay. But when it comes to the AI, I do contend with it a lot. On the data security side of things, that's my biggest fear, is it would make me sick if a client came to me saying, "My information is compromised because of something that you did that you didn't need to." So we're constantly...everything I feed into these presentations, I'm usually scanning for...if it's a statement, I'm removing the name. I'm trying to keep names out of it. And I think just that, data points, net worth, things like that, I don't think that's an issue in terms of what the client would be upset with, but we tell them ahead of time as well, "Hey, we're recording this meeting. We use it for note-taking. This presentation, it has a live link, but once you are done with it, we're deleting that live link. And we'll archive the information we sent, either in a PDF or something else." But we're not letting it all hang out there in perpetuity for people to access.

Michael: Okay.

Christopher: Yeah, it's a growing problem and I think something that we're mindful of. But, yeah, I do think, when you're trying to grow in this area, you have to be a little bit okay with that risk.

Michael: And I guess, at least to the extent you trust the companies, and granted some of us are in different places on that scale, but to the extent you trust the companies, it sounds like all of these, you're in the various versions of paid tiers where there's a box you can check that says, "Please don't train on my private data." ChatGPT has that. Claude has that.

Christopher: Yeah, and that was my comfort level with the aggregator like a Jump or Hazel, too, is knowing that the onus is a little bit more on them now to protect it, and I'm not constantly feeding client info into ChatGPT anymore. So that helped us feel a lot better. But, yeah, I think navigating that, whenever our upcoming SEC audit is, should be interesting. So I'll let you know.

What Iconoclastic Capital Looks Like Today [45:55]

Michael: So now let's kind of come full circle. Just help us understand the advisory firm itself as it exists today. Who are you all? What do you do? Who do you serve? Tell us about the firm.

Christopher: Yeah. I can give you a summary of where we are right now. I think I'd like to talk about where we came from, too. But, yeah.

Michael: Okay.

Christopher: So currently, Iconoclastic Capital or Icono Capital, we are...I don't like the word boutique, but we're a fee-only RIA that has, as we discussed, high-growth enterprise in mind. And we currently have about 120 active households, and I say active because there might be some friends and family in there. And we manage a little north of $60 million, and we should do about $800k in revenue this year, and tracking for over a million next year. We do a lot of planning fee engagements. And it's a team of five, four based in Rochester, New York, and I'm based in Brooklyn, New York, and I work remotely.

Michael: Okay. So you mentioned a little bit earlier, there's a standalone planning fee model. Are you AUM-based at all, or is it all standalone planning fees, and investment management is simply part of the services?

Christopher: Yeah, speaking of iterations and 40 versions of something, I think the most surprising thing to me after leaving Northwestern Mutual was, once the floodgates opened, how difficult it was to really nail down what we wanted to and what the best thing was. So I would say, for anyone who's thinking about this, when you set your fees at the outset, you're going to change them a million times because you're just going to learn from your clients what they're receptive to, what works best, even from as nitty-gritty as monthly versus quarterly versus annual fees. What do people like? But for us, going from eight years of, "We're probably going to have to sell you some insurance, and we're managing your assets for a fee," to now, "Hey, you got to pay for it, but also it's better, and we'll charge you less on the assets," that was a tough transition, for sure, but we got to a point now where we have standalone projects, like I mentioned.

So people come to us who want to just pay us for a specific reason. So it's usually a catalyst of a loss of a family member inheritance, a new job, retirement. I would say over 80% of our new clients are DIY, have never worked with an advisor before, first conversation with one, but they've gotten to a point where they're like, "I feel confident, but I really want an expert to step in, but I really don't feel the need to have them manage our assets," and we're banging our heads against the wall trying to convince them to move their assets, or they would kind of agree to, and then we charge them a discounted fee, and then they wouldn't move it. And then we're going to be stuck in this awkward, "Well, that's kind of crappy, but it's really our fault."

So that's where those projects were born about 18 months ago of, "Well, hey, why are we trying to force people to meet with us all the time when, from a revenue standpoint, we charge more for those clients." So our ongoing planning fee is less. So it's a nice, I guess, shot in the arm from an income standpoint, and they're happy. And we get paid pretty quickly for these robust plans that we're putting together for them. So those range from our lowest at this point is $4,500 for someone who's in their late 20s, mid 30s, all the way up to the most expensive one we've done is about $12,000. It really depends on the scope. We kind of have three pre-packaged models, but we're pretty adjustable on those.

And then the majority of our business is guided wealth management, we call it. There's two tiers of that. One is kind of your lite and your pro or plus and elite, whatever you want to call it. And the base fee for that is $4,500 a year for the lite version, and then the base fee for the elite version is $6,000 a year. And it's really kind of... There's usually a trigger that moves you from one to the other, and we have a long checklist I can share. If you've got equity compensation we have to plan for, you're moving up to the next tier. It's very clearly defined so that we didn't have to feel like we're always just trying to game out what they're going to pay for or not.

Michael: So they're complexity-based triggers, in essence.

Christopher: Yep.

Michael: What else would bump people up to the higher tier besides equity comp?

Christopher: Yeah, a lot of it is either if you're going through retirement planning, so like a Roth conversion, five-year tax projection, and Social Security strategies. But we're often having the conversation of it's only a one-year increase, and then you'll go back down when we all agree that you don't need to be paying at higher tier. That's always our objective. We explain to people we don't want it to be like Netflix where you're hopefully paying that subscription and forgetting about us. We want to actively earn your business and make you value it.

And then on the AUM side of things, we have a very simple schedule. Those guided wealth management clients, we don't require it because I don't think you can say that, but it's highly encouraged that if you're working with us on this model, we're managing the reasonable assets that we can manage, whether it's a taxable account or rollover. We're not requiring you to roll over 401(k) if you don't want to. We suggest it, and it's your decision. But it's usually on the tax-loss harvesting side of things because everyone gets tax-loss harvesting in this model. Altruist's platform of TaxIQ, they call it, and direct indexing is amazing and cheap. So we just turn that on for everybody because we just feel that we're not going to hold it over people's heads, we're going to do if it makes sense. So for those types of clients, the AUM fee is 0.9% up to $2 million. And then once you have $2 million, everything drops down to 0.65%.

Michael: Okay. And so clients effectively pay sort of two fees, two services approach. I pay my guided wealth management fee of $4,500 or $6,000 for an ongoing planning, and then I pay my 90 basis points on portfolios for the pure portfolio management with the tax-loss harvesting, direct Indexing, if I want to turn it on.

Christopher: Yeah, amount of portfolios, and that's through Altruist, and we do that monthly in arrears. That was an important distinction for me, coming from a quarterly and advanced world. A lot of, I think, what you'll find, our company name, Iconoclastic, it's kind of a rejection of old standards that I disagree with in our industry, and that was one of them, of, "Why are we charging people in advance? What if the market goes down? Why can't they pay quarterly, or why can't they pay monthly? They should be able to pay however they want." And the financial planning fees, we normally do either quarterly or semi-monthly. I'm sorry, semi-annually. I've found that the monthly reminder, if we were worth it or not, I think that's kind of something people don't like. "Hey, I don't like it."

Michael: Okay.

Christopher: We don't avoid the conversation, but we don't want them to be thinking every month, "Should I be paying this anymore?" Yeah.

Michael: Sometimes there's a difference between having fee transparency and whacking them on the side of the head with it on a continuous basis, depending on who your clients are. For some, the planning fees get too lumpy relative to their income to pay semi-annually. Monthly just moves it at meaningful ways. And other clientele, it's a cash flow problem.

Christopher: Correct, yeah. And then we've iterated a million times on different ways. A recent thing that we added was a one-time onboarding fee as well, and that has helped a lot where we've put a pretty big commitment on the front end. We're spending usually two meetings with people before they become a client, and we never ask them to pay us if they decide no. But if they do onboard with us, we usually do a $2,000 or a $1,500 one-time onboarding fee. And we've even gone through the psychology around, do we present it as an onboarding fee, or do we say, "Year one fee is this, and year two fee is this?"

Michael: I was going to ask how you present it.

Christopher: Yeah. We settled on year one, year two, and still kind of explain it. It's really for all the front-end work. Year one is a lot harder from just a time spent standpoint. And people were totally fine with it, and I think it was just a way where we didn't want to raise our fees. That's kind of the thing I've always not wanted to do in terms of the asset management. We've raised our planning fees a million times for new clients, but for existing clients, we don't like to raise fees. But ways in which we can for new clients, how do we add in areas that we feel more confident now that we have less bandwidth and are more busy and be loyal to those who have come before them?

Building A Niche Around Iconoclastic's Brand Identity [54:19]

Michael: So tell us now a little bit more about, I guess, the 120 households. Just in practice, who is your typical clientele? Who do you serve?

Christopher: That's a great question and something that I find funny when...I'm very open about when we're building our practice and when we're iterating. I post a lot of things on that Facebook group or on Reddit about, "Hey, here's something we're trying or something cool that you might like." A lot of feedback I often get is, "When I go to your site, who are you working with? You guys don't really have a niche." And I think that might be a big XY thing, is around creating a niche. But we started our firm after being in the business eight years, we had to transition clients with us. And we had thought about it a lot of times. We really don't have...we don't work with purely dentists or speech therapists, or we haven't really ever been able to boil it down to a demographic. I think our niche is more of our...I think our brand identity. We kind of hit you in the face with it as soon as you go to our website.

Michael: I was going to say, it feels like just you don't differentiate in doctors from lawyers. You differentiate with people, where when they come to your website and it says no buzz words, no BS, except BS is spelled out, that will either resonate or turn off a certain segment of clients because you are truly not going to see that on anyone else's website. And then I get to see if I'm a fit or not by clicking a button that says, "See if I'm a fit," and I get a fit quiz that has a meme, an actual animated GIF meme of someone screaming at me on a fence.

Christopher: Yeah, Eric Andre, yeah. And you might actually going to learn about the...we just actually paid a brand strategist, a team, $20,000 to go through a full brand analysis on how offended people do get on that, because they paid for a 100-person blind study on our website. And, yeah, the results were polarizing. So we are changing that a little bit.

Michael: I guess, as I would expect, but then you said you're, what, you've got 150 leads coming in a year. So apparently, the number of people you're not pissing off is a pretty good number.

Christopher: Yeah. And I think it's that we never want to capitulate or conform, but it's our way to do it a little bit less abrasively. I wrote that six years when we were starting out when I had a million other things on my mind, or I think we're feeling a little bit more punk rock at that moment. And I still feel that way a little bit in my core, but I also understand, yes, someone may like it, but they may think to themselves, "Can I really trust these people with my money?" So we are going to make some small changes there.

Michael: Okay.

Christopher: But, yeah, what I've found was really interesting with branding is that being average or in the middle or lukewarm is death, right? You don't want people to be meh, not have an opinion on you. An opinion is good, but how can we sway maybe some of the people away that we don't need to? Yeah, if someone comes to our site and they don't like it, it's very much, "That's great. You're not for us." But you'll find that, once you join, we form a very deep kinship with those people. They communicate with us better. We understand them better.

And that, I would say, is kind of who we work with now, is a lot of people who are...if I were to kind of summarize them, it would be people in Brooklyn who are in their late 30s, early 40s. Life, I think, goes faster and slower here, so most people are having their first kid late 30s, early 40s, they're peak of their career, and they have just gotten to the point where they're confident in their abilities, they just don't have time anymore. "This stuff makes sense to me, but I've set this up to fail where I just don't have the time to keep up with it. I need help to take that off my shoulders. I want to pay you to do that for us." That's one tier.

And a lot of people, I think, in the Rochester demographic, it's more of the...I think we found a sweet spot with Gen Xers who are similar mindset. I have engineers, a lot of the sciences, a lot of creatives who feel confident, but they just want a sanity check that, "Hey, I've got maybe 15 years left to work. Am I missing anything?" That's kind of the big question we're answering a lot. "What am I missing? And am I doing okay?" And like I said earlier, a lot of people have never worked with an advisor before.

Christopher's Journey From The Insurance Channel To Building His Own RIA [58:33]

Michael: So now, help us understand the team and the seats on the bus.

Christopher: Yeah. So like I said, I started my career at Northwestern Mutual as a college intern at 20. So 34, I've got 14 years of experience in the field. Some days, I still feel 20. So I started in that program, and I was very much... I'm not confident. I didn't have a lot of outlook, I think, for me, in terms of career trajectory when I was a senior in college. I was thinking to myself, "I'm never going to find a job making 50 grand a year when I graduate," because I had this business administration degree, I didn't really try very hard in college, even though I was a good student. And I had a friend who was like, "Hey, I've been doing this internship, and I told them about you. They said they would interview you and could be good." Little did I know, they'll hire anybody who's in college. But luckily, for me, the Rochester program was a really great one, and we actually ranked number one in the country, the 2 years that I was in that program, out of 300.

Michael: The NM program?

Christopher: Yeah, the NM college program. It's a big one. I think everyone listening knows about it. And I think it's a really great one, where you are selling insurance. That's how you're getting started. The wool over the eyes of planning and comprehensive stuff is a good one that they pull, but you're calling people and trying to get them in the door and sell them something, and then develop it from there. So our program was good at that, and we had really good mentors and a good team. So I kind of came up through that world of insurance.

And then I think it's important to note, too, because I don't really like feeling like I'm bragging about success in a way, but a lot of times, when someone leaves, whether it's Northwestern or Guardian, name that mutual, it's because they couldn't hack it, right? We were the most successful team in our office at that point, so we left for a reason, not because we had to. So, as I got a little bit older, I kind of saw the writing on the wall in terms of assets under management. So I think, in 2013, at Northwestern Mutual, discovering assets under management was like caveman discovering fire. It was a new concept back then. But really gearing towards that business, but I was still only 22 years old. So in my mind, I had to get educated and credentials to counteract that youth. So I got my CFP when I was, I think, 23 or 24, the CLU, ChFC, all that stuff. So I've had my CFP about ten years.

And then I partnered with another...one of my former colleagues who was an intern with me, where we were both kind of going this separate career track, doing okay, but then doing the math and saying, "Well, if one of us is willing to relinquish our license, let's say, and hire the other person, one plus one could equal three or four," with the way that their contract was structured. So then my friend graciously, I think, he lapsed his agent number, let's call it, and then was absorbed by me. So we were doubling production and producing really well. And that's where we got started in kind of that team-based approach, where by the time we left, we had a team of four. And this was in 2019, 2020. I looked at the stats earlier, we had 200 life insurance policies that year that we wrote, almost like 100 new clients, over $250,000 annual premium. We're bringing in $8 million, $10 million of assets per year. We had 600-plus households that we were servicing. And there was many different things that happened, but to me, the way I wanted to build the business, I could tell, it wasn't going to happen there.

Michael: What was the gap? What was the vision of how you wanted to build it relative to what you felt like you could do?

Christopher: I think I stepped back once because someone really wanted to hire me for a planning fee, and then I just went through the thought exercise, and this is one of many things, but I went through the thought exercise of, how would I build a plan for this person? And then how would they pay me? And what would we do? And then all of the things that I listened to, I was like, "I don't want to do any of this stuff," because I don't have time to. But I know it to be right, and I know that I can't provide the best that I can for my clients under this model because I'm not allowed to. I'm not allowed to talk about these things or bill for these types of things.

Another thing that happened was I started a basic blog, because I just wanted to kind of write about... I've always liked writing. I just wanted to write about topics that I was passionate about, and I wrote a blog about student loans and how I was kind of frustrated with that system. And Earnest, I think, was the company I was kind of frustrated with. And must have put together something good because I've put it out on Twitter, and Josh Brown from Ritholtz liked it and posted it. And then, all of a sudden, I've got compliance. I posted anonymously, but it wasn't hard to figure out. Then I got put basically in compliance jail.

I had to turn the site off because I'm not allowed to talk about things that doesn't get approved. It wouldn't get approved because I like to swear. And then I had to report to our compliance officer every week with my client case notes, like I was in high school. And just all these kind of micro, I would say, death by 1,000 paper cuts. Their system is based on the GDC model. I'm sure many of you are familiar with…

Michael: Yeah, gross dealer concession.

Christopher: I'm glad I don't know what it means anymore. But theirs resets once a year, where if you have enough commissions on investments, you get paid out more. So I think we were going to go from 55% to 70%, which is a big jump for us. And we missed the 70% tier by literally $6. And they do it in a way where you can't really know ahead of time. And that was another one where I was...we missed it by so little, and that represented...

Michael: You were $6 short on insurance commissions, so the AUM side of the business got paved.

Christopher: It was on the AUM side, the brokerage business, yeah, new dollars, whatever. That represented a $30,000 pay cut, let's call it, because of this tiny, tiny thing. And that was just kind of the moment where it was, F-this, we want to control our business the way we want to. And that transition was really...it's really hard because I don't speak poorly of my experience there. I think, for those listening who are new advisors who worked there, the sales skills that you get at a place like Northwestern or wherever, I needed that desperately. I was not confident. I couldn't move people to action and explain things in a way that causes them to give us their money, right? So I think that's not really something that you can really...you can't buy it. You can't learn it on your own. You have to really get yourself into trial by fire. You had to be calling 40 people a day. We used to have to get 60 to 80 new introductions a month. A lot of them told you no. But it's that ability to move someone from a no to a yes or a maybe to a yes. That is a really invaluable skill.

But once I felt confident in that arena, then thinking through the RIA model, and listening to this podcast, XY's podcast, and then saying, "I really want to take a leap." And our team was aligned in that. And we didn't have any money. We're always in debt, had to cash out my...not a 401(k) there, it's called an agent retirement plan. Had to cash out. I had to kind of bridge the gap on the three months that we transitioned. But we planned it out in a way that we wanted to go fee-only through XYPN. We relinquished all of our LAH [Life And Health] license, Series 7s, Series 63, 65, all these state insurance licenses, because I thought, even though insurance is a big part of our business, from a marketing or from a belief standpoint, fee-only fiduciary is the way that our firm needs to be. And that proved to be right, but it was a really scary decision to make, because we had insurance business that we could have kept.

Michael: So you just walked away from all the trails, all the coverage that you were writing.

Christopher: Yeah, yeah. Because we had renewals that we were due to be paid, which we couldn't accept. And we could have wrote different insurance in our new practice and gotten paid more from other carriers, but it was something to me that I just didn't believe in and I didn't want to build as a part of this new firm.

Michael: I'm curious to hear a little bit more of your perspective there. I've watched a lot of folks who come from the insurance side of the business. It's so old hat at that point to write an app and go through underwriting and nurture clients through. And at the margin, if you already have the client, the incremental work for writing a policy and getting paid on it isn't bad. Why not keep a life and health license at least to write incrementally for clients who need it anyways and are already in your office? Why drop it entirely?

Christopher: Yeah. I think this could be a whole other podcast if you want to have me back on. I think the psychology around that conflict of decision is too big of one that can't be ignored, and that if I feel like ever that someone should be buying something because I'm going to make more money and we all do it despite all of our altruistic nature and the good we want to do, sometimes you're stressed out about money, and that bleeds into your decision-making. And I think it's impossible not to. And I think, selfishly, from a marketing standpoint, I wanted to be on XY's platform. I wanted to be a member of NAPFA. I wanted to hold ourselves out as a fee-only RIA because, in Rochester, I think there's still only 5 firms within a 50-mile radius that are, and most of them are on the retirement track in terms of their advisors. So I think that was more of a business decision, too.

Michael: So, fee-only naturally just differentiates you in your local community, just literally by being fee-only, because there aren't that many firms.

Christopher: And I think you can speak to the trends obviously better than me, but it's growing in interest. And the other side of it is declining, so why would I want to be on something that's on the decline? But I think it did also actually help with our transition away, because in that world, when you got to leave, you have to leave that day. And they're going to hassle you and your clients to win that business back. But I was able to do it in a way where we essentially told them, "Listen, we can't come after the insurance because I don't have the license anymore. So it's in your best interest to let us keep the 45 clients that we want to keep from an asset standpoint. I'll help assign the clients that we're leaving behind to the people I think they'll align with best and make that transition a lot better." At this point, I'm skipping along the way in terms of some headaches and some other things. But that did help from that regard too of...it really comes down to the regional office and how they want to kind of play ball, I guess. But if you have an understanding, managing partner, managing director who's also, "Yeah, it's not worth the trouble to..."

Michael: I'm not going to screw up your persistence about all this.

Christopher: Correct. Yeah, exactly. And that's mostly what they care about. They had a new managing director at the time. So I think we got lucky with a lot of small things like that. He was kind of in over his head with a few different things anyways. So, to him, it was... I remember that phone call. The sigh of relief that he sighed when I told him what was happening, it was so large, because he's like, "Dude, I'm so worried about all these other things. I didn't want to have to fire you. Because if you called me 30 minutes later, I was going to have to fire you, and this is going to get crappy. And I didn't want to do that." So just knowing that I had a plan and I wanted to be...so I ended up with amicable relationships there. I did my best not to disparage that model, but I do think that anyone who could make it there could be doing it more profitably and serve your clients better elsewhere. I have to believe that, right, and they have to believe the opposite to function.

Michael: So, how was it, I guess, just the mindset change, the business experience change, to go from a grid GDC world to a pay all your own stuff, deal with all your own clients world?

Christopher: It's incredible. It's so great. I love that kind of stuff, but I think it's a lot easier than people think. So we had hired...I had a business coach, who I'd worked with intermittently, who I hired for kind of a short-term sprint. After we submitted our firm registration, you kind of have a four-to-six-week clock until it's approved, and then you have to leave. So he helped me kind of organize what we're going to do in terms of communicating to clients. We actually made a script of how we communicated it to our clients. We've got to call them all in one day, on a random day.

And for them, it was an easy choice. We'd always, I think, held ourselves out as, "You're working with us, not Northwestern. And we're going to do the same thing for you, better, and we're actually going to cut your fee down by 25%." All the while, we made way more money even though they're paying less. So it was a very much a win-win across the board.

Michael: So I've also got to ask in this vein, where does all the lead flow come from? You said you're bringing in 150 leads a year, and it sounds like you've always had the volume because you wrote 100 policies the year that you were leaving as well. So, where does all the lead flow come for you at this point?

Christopher: Yeah. So that was a giant transition because the 100 policies, that's 100% referral based. You're calling people, trying to move them to action, and you're under that system, you're trained to ask for introductions at every chance you can get. And then I just had felt so sick of that process where we...I haven't asked for an introduction in almost six years now, to a point where it's actually a problem. We need to do it more. But we said, "How can we hold ourselves out there where people are going to find us?" We never paid a dollar for marketing, which is great, in terms of SEO [Search Engine Optimization] or ads or anything like that. We just, I think, created a nice, simple, clean-looking website. Like we've talked about earlier, our brand is very much, I think...

Michael: It's very succinct.

Christopher: Yeah, I think that helped us very early, where people found us as kind of a breath of fresh air. We made the calls-to-action very easy. That's a big thing that I always kind of preach, is make it easy to get on our calendar. It hits you in the face on every page, "Book a call here. Have an intro conversation." They don't want to hear about me and my experience. They want to just be able to get on my calendar if they are interested. But it's grown. I think the first year was around maybe 30. The first full year, 2021. The year 2020 was kind of lost from a data standpoint because it was the transition year. But in 2021, I think it was 30. And then it was 50. And then it was 80. And then the zeros, 140-something, year-to-date.

And every year, we kind of have a planning meeting where I take the compound annual growth of our new prospects, and then I just apply it to this year and say, "Okay, so for next year, this is how many are going to come in." And everyone kind of just hits their head on the table because it's great. It's a great problem to have, but it's a lot. So we're actively kind of trying to get that flow better, but a lot of it comes from Google, from AI, from NAPFA, from the platforms like NAPFA and XYPN, AdvisorSearch. Those are huge for us.

Michael: So they're just there. They're finding you in Rochester on NAPFA or XYPN. They're Googling Rochester fee-only financial planner or something to that effect. That's driving that much activity for you. Plus, the very distinct website.

Christopher: Yeah. And a lot of people, they're getting to the point where I believe the progression goes because we ask it of, "Okay, I think I need a financial planner. What's the best type?" And then they do their research around, "Oh, I probably need a fee-only fiduciary," whatever the hell that means. And then they search up how to find fee-only fiduciary in my area, and they might find NAPFA or get referred to NAPFA. On that search rate on Google, we rank number one. On NAPFA, like I said, we're one of a few. We don't rank very highly on financial advisor. There's actually a ton of financial advisors in Rochester, I think probably more per capita than in many places. So we don't really rank highly there, but I think when someone is targeting that search a little bit more, we show up there. And then even across the country in terms of...it's called GEO [Generative Engine Optimization], which is like SEO for AI, where if someone's looking for advisors that work with cryptocurrency or collectibles. Crypto is a big passion of mine and something that we advise people on. So not many people rank on that at all, so we find a lot of people nationwide on the cryptocurrency side of things.

What Surprised Christopher The Most Building His Advisory Business [1:15:27]

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

Christopher: That's a good question. I think two-fold. How to really wrangle in the constant change when you open the door up for...when you can do anything, when you can use any tech platform, any custodian, how do you sift through that and make the best decisions and not let it just completely consume your life? We made a huge mistake on the custodian side of things when we started, but that was just a good learning experience.

Michael: What happened?

Christopher: We just chose...do you remember TradingFront?

Michael: Oh, yeah.

Christopher: So we were between TradingFront and Altruist, which is... It doesn't haunt me anymore. It did at the time, where we just liked TradingFront because they were backed by and are linked to Interactive Brokers, which is just a more established business than Altruist. It was a little too early in Altruist's story. Had we talked to them a year later, we probably would have used them. And then TradingFront just didn't live up to their promises. They shut down, and then every client was defaulted to move to Interactive Brokers, which the assets were already held there, but then they had to create all new logins to Interactive Brokers. And then their business is not made for the advisory business. The client experience is horrible. We weren't able to trade the models that we wanted to. So we had to make a very hard shift, I think, in year three or four to Altruist, where no one left because of it, but you really don't want to do it in the first year when you're making your asset…

Michael: No, no, yeah. You're just thankful clients came along. It does not feel good to just drop them.

Christopher: Yeah, correct. But, yeah, the open architecture, I think, in just navigating the changes is difficult, but then, also, building out the team as we have has really been a cool experience for me. People who want to work, I think, at a firm, they're willing to make compromises on salary and other areas compensation-wise to buy into something that they want to own and that they believe in. So I'm really grateful for all four of them that work with me now, who have often made career choices where they're taking less at the start, in the buy-in of a vision, that's ultimately going to pay off a lot more in the long-term. So finding those people that you can align early on, I think that was the biggest surprise for me, was that it can't be all about my dreams and my vision. You need a lot of people who are there supporting that same dream.

Implementing A Startup-Style Equity Compensation Model [1:17:59]

Michael: So, is buy-in literal, you're compensating with a combination of comp and equity, or just trying to get them to buy into the mission, the fact that we may not be at peak salaries yet, but as we grow and scale, there's upside for everyone?

Christopher: Yeah. For the three of us that started it together, Jack, Stephanie, and I, that was a big reason why we wanted to in the beginning because it was very much always a partnership at Northwestern, but I was never allowed to give them any sort of equity in that business. It was all under me. So giving them the ability to be co-founders and have equity at the outset was important. But then, for the other two hires we've made, we have offered equity that vests a little bit differently versus founder shares. And it's something that, as we grow, I don't think new people will have the opportunity to get as much, but I would very much like to sell...when my turn is done, when I decide if I had enough, I'd like to sell to the company. I don't want to sell to an outside buyer. So I'd like the equity to stay internal and something that's important.

Michael: So, can you help us understand further how you structured this? I'm intrigued, you use equity as compensation in an advisory firm. So, how do the shares work? How does the vesting work? Is there a buy-in? What was the structure you used?

Christopher: Yeah. In the beginning, it was very much, "Here's the business as we've had it. We're going to pay ourselves as much as we can without harming the business," which just meant a little bit less money at the start. But they were granted shares of something that wasn't worth anything at that point in the LLC. So that was just an immediate starting of a new LLC that they had equity in. We do valuations every year with FP Transitions, and then I had to pay for the 409A valuation for our new equity, which we usually just issue as grants that vest over 4 years. So I believe it's 1,000 shares total. So a new hire might get 20 shares granted that vest over 4 years. And then they can be performance-based, so you get granted more.

But very much so, everyone that we hire from here on out, their compensation from a cash standpoint is more in line with industry averages and standard, but they don't really have as much of an opportunity in the equity, whereas the founders, like I said, Jack, Stephanie, and I, really compromised on salary and income. We live in a low-cost area. We believe in this thing, we'll pay ourselves what we need. And I've always tried to structure our firm in ways where I'm paying for things that they don't have to, like our phone bill, for other benefits. We have a really generous 401(k) match to show that I didn't start this thing to get rich. I start it to live a good life and share it with others.

Michael: Wait, I just want to make sure I understand the numbers, though. So you've got 1,000 shares, 1,000 units of the company. A new hire might get 20 shares, vesting over 4 years. So it's like a little 2% slice for coming in. And then I guess you can adjust that over time, obviously, as the company gets bigger, 2% of a bigger number gets bigger over time. So you may tweak.

Christopher: Yep. And it's really about people who identify as they may want that. Other people might not, and that's totally fair. And that's where I've come to learn as a business owner, and something that Jack, my co-founder, and I have struggled with a little bit, is we very much were partners from 2016, 2017 on at Northwestern, where he was bringing in a lot of business, I was bringing in a lot of business. How do you measure that? Because I started the firm "in 2012." How do you measure the equity and distribute it? And then how does it work ongoing when we're giving it to new people? So that's something I think that we have struggled with a little bit, because I have owned the majority, but where I felt he was fairly compensated for his sacrifices, but at the same time, it keeps him motivated and invested as well, which has never been a question. But those things are great problems to have, but they are difficult.

The Low Point On Christopher's Journey [1:22:07]

Michael: So, as you then reflect over the longer 14-year journey here, what was the low point along the way?

Christopher: Yeah. I think the other one of the frustrations at a place like a Northwestern is kind of the...it's almost like the weighted vest they strap to you when you're sprinting, in that you don't have a lot of control over your rent, all the leases are negotiated by the managing partner, the managing director, and you have to pay your slice. So we were paying $55, $60 a square foot for our office space that we thought was important there. So I think that was $2,000 a month we were paying for a tiny, little area. And when we got our new office, it was $2,500 a month, and it's a beautiful carriage house. So we've reduced our rent rate by 75%. We had to pay for every page we printed, all the coffee that was bought for the office, all the insurance licenses that we felt like we needed.

And you don't really know you're getting screwed, I guess, until you leave, where you're kind of strapped with all these expenses, all these costs. It's a debt for me because I believed in this vision and invested in it. And I'm still paying it off. Because it was really just we weren't able to make enough money to live on, so we had to take on debt to finance it. And it shouldn't have been that way. But you kind of have that perpetual problem where your people are teaching younger people who are in that same model who don't know any better. But the low point for me was, I think, at a point in 2018 where we made payroll, payroll is processed, the bank account was overdrafted. I exhausted all of my resources of help, basically. My wife has always been gracious in taking up expenses where she could, but she had her own business.

And literally, I had a jar in my car back then that was an empty Peter Pan peanut butter jar, I can still picture it, full of just loose change. I think that has probably gone away a lot with tap-to-pay now, but I took that empty jar of change that I probably kept since I was in high school in my car that I used to either pay at the window or whatever, and dumped it into Coinstar. And I think it was maybe 160 bucks, which is what I needed to put in my bank account that I had to walk over to Chase and deposit it. And we had maybe $4 in there. So that's a lot of stress, especially the irony of being a financial advisor and overdrafting on your business account and giving advice to people who have considerably more money than you at that point. That's kind of something that you beat yourself up with a little bit.

Christopher's Advice For His Younger Self And For Newer Advisors [1:24:50]

Michael: So then, what do you know now you wish you could go back and tell you ten-plus years ago, in the early days?

Christopher: I think I would be a little bit nicer to myself in those moments and not comparing. I think this podcast is incredible in terms of the information you're able to put out and what we're able to glean. But I think, often, sometimes I would listen to somebody who's at their point F in life, and I was at my point A, in my beginning, but I was thinking to myself, "Why aren't I doing better? Why aren't I like this person I'm listening to? What have they done that I haven't figured out?" And it's all kind of a journey that's unique to all of us, right? For me, I'm proud that we've never taken a dollar from family, from investors. It's all been financed internally through debt. But I didn't feel that way six years ago. So I'd just be a little kinder to myself and believe in that vision.

But then, also, I think, alternatively, not to keep talking about this depressing area, but not letting great be the enemy of good when it comes to some of the things we do for our clients. Don't let your chase of perfection in certain areas take away from the time you're spending with your clients. They care more about you than you ever think and value you more than you ever think. So just showing up and being prepared is, I think, a lot more valuable to them than you realize, where you don't need to figure out every little thing right away throughout your career. You'll learn as you go. I think that that's something that helped me back a little bit too, I really want to, as I'm younger, show that I know what I'm talking about.

Michael: Any other advice you would give younger, newer advisors coming into the profession today?

Christopher: Yeah. I think, going back to what I talked about around Northwestern's internship program, that I think they have a really strong new advisor program, where developing your sales skills is way more important than learning the science of the craft, I would say. You can be the world's best financial planner, but if no one's listening to you, it's wasted, unless you start a blog or something. But that skill set, I think, is almost dying, to a sense, where if you can show up to our firm and say, "Hey, I have two years of experience in this industry, but also that experience has been running my own," I hate the term book of business, but it's still widely used, "I've been running my own book and getting clients on my own," that person is way more valuable to me than a CFP is. Because they can get their CFP. I can help teach them that stuff. But I can't help them learn all that rejection and all that experience. So I would say don't just thumb your nose at the Northwesterns and those opportunities because they're not always going to fall into your lap, the perfect job the first time you're looking for it.

What Success Means To Christopher [1:27:48]

Michael: So, as we come to the end, this is a podcast about success, and just one of the themes that often comes up is that that word "success" means very different things to different people. And so you're on this wonderful stage of the journey as the firm closes in on $1 million of revenue next year, and so the business seems to be in a great place, with great lead flow. How do you define success for yourself at this point?

Christopher: Yeah. It sounds like, obviously, yes, it's for everybody, so I'd thought about it for a little while, because I think we all need to actually pause sometimes and think through it. But for me, it's more of providing...it's two things. It's providing a place or building a place that people can come to, that they almost find as a haven from the industry standard or the bad things you want to say about other bad actors in our industry, but finding a place where they feel seen and they feel like they can do their best work. And then, ultimately, I would love to just be like a footnote on my firm's history someday of, "Yeah, what's the guy's name who started it?" where it's so big to point where the next generation can take it even further and becoming a household brand or a household name. And hopefully, I'm just forgotten about someday. So I think that would be success to me in the highest form.

Michael: I love it. I love it. Thank you, Chris, for joining us on the "Financial Advisor Success" podcast.

Christopher: Thanks for having me, Michael. It was a blast.

Michael: Thank you.