Scaling To $1B AUM By Recognizing Your (Rainmaker) Strengths And Delegating The Rest: #FASuccess Ep 484 With Jake Falcon

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Resources Featured In This Episode:

• Jake Falcon: LinkedIn | Falcon Wealth Advisors
• "What Got You Here Won't Get You There: How Successful People Become Even More Successful" by Marshall Goldsmith
• Dunbar's Number And How Many True Financial Planning Client Relationships You Can Really Have
• OnceHub (formerly ScheduleOnce)
• Zocks
• Upticks Podcast
• Dan Martell
• "Buy Back Your Time: Get Unstuck, Reclaim Your Freedom, and Build Your Empire" by Dan Martell
• #FASuccess Ep 442: Attracting $100M Per Month Of Like-Minded Clients By Being Vocal About (Divisive) Issues You're Passionate About, With David Bahnsen
• Financial Advicer Manifesto
• "The Game of Numbers" by Nick Murray
• Kitces Report: How Financial Planners Actually Market Their Services (2024)
• Zoominfo
• aidentified
• Wealthfeed
• Finny
• "The Maxims of Wall Street: A Compendium of Financial Adages, Ancient Proverbs, and Worldly Wisdom" by Mark Skousen
• Ryan Serhant
• "Influence, New and Expanded: The Essential Guide to the Psychology of Influence and Persuasion in Everyday Life" by Robert B. Cialdini PhD
• "The Five Dysfunctions of a Team: A Leadership Fable" by Patrick M. Lencioni
• "Retiring Right: Smart Steps for Exiting Corporate America" by Jake Falcon
• "Traction: Get a Grip on Your Business" by Gino Wickman
• "Stocks for the Long Run" by Jeremy J. Siegel
• "The Intelligent Investor Third Edition" by Benjamin Graham
• "Built To Sell" by John Warrillow
• "The Ensemble Practice" by Philip Palaveev
• "G2: Building the Next Generation" by Philip Palaveev
• "The Million-Dollar Financial Services Practice" by David J. Mullen, Jr.
• "Prospecting Your Way to Sales Success" by Bill Good

Full Transcript:

Michael: Welcome, Jake Falcon, to the "Financial Advisor Success" podcast.

Jake: Michael, it's a pleasure to be here.

Michael: I'm really glad you're joining us today, and excited to talk about what I think of as just the very real challenges that crop up as you grow an advisory firm to a billion dollars of assets. There's a famous saying out there for founders of growing businesses from the business coach, Marshall Goldsmith, "What got you here won't get you there." Ultimately, he did a book by it, which to me is just this reflection that as a business grows, particularly for those of us who are founders, partners that lead it, often we get it off the ground because there's something that we're really good at. Building the offering, serving clients well, attracting and closing new business.

The thing that we're really good at drives the growth forward until eventually there's so many clients and people to service and growth opportunities that the thing that we used to be good at, we now become the bottleneck for because there's literally more of it than what any one human can do at a time, which then forces you to shift to make all these changes as a leader because what got you here won't get you there to the next level of growth.

Jake, I know that you have had to iterate through many versions of this doing the actual path to a billion of assets, and navigating all the ways that the role you have, the hat you wear in the business has to change to avoid becoming the bottleneck in the next stage. I'm excited to get to talk and delve into the billion dollar advisory firm that's been built and what you've done, how you shift parts of the business in your role with the team so that you can keep growing and keep the momentum going over time.

Jake: Yeah, it's perfect. I love talking about these things. It's a great topic today.

What Falcon Wealth Advisors Looks Like Today [04:30]

Michael: I think to kick off just as a starting point, tell us about the advisory firm as it exists today so we understand the context of the business itself.

Jake: Yeah, absolutely. So, we're located in Kansas City. We serve clients in 35 states, and then also Australia kind of randomly there. We don't have a big presence in Australia, but we do have a client in Australia. And I've got 17 people on my team. Like you mentioned, we manage a billion dollars for just under 900 families. That's including if the client is the core client, and maybe their child and their parent are clients, we would count that as three clients. So, 900 including all three there. And we really focus on two niches really. It's pre-retirement and into retirement planning, and then HENRYs, higher earners not rich yet, are really the two segments that we serve today.

Michael: And so, then what is revenue for the practice at a billion of AUM?

Jake: Yeah. We're right at 80 basis points on average. So, it'll be just north of 8 million we expect in 2026, give or take, of course.

Michael: Plus or minus a little based on volatility.

Jake: Right, true.

Michael: Understood. So, that's helpful. So, average client household sort of sits right around a million dollars, give or take a little. Obviously we got a few big ones and some smaller ones, but doing the math sounds like about million dollar households is sort of bread and butter clients for you, like the mass affluent, and I call them the 'mere millionaires', not the ultra, ultra high net worth, but folks with a million or few dollars that need some help.

Jake: Exactly. Yeah. So, we love the $1 million to $10 million space. We feel like that's where we provide the most value for the service, and the advice, and the investments that we offer. And our average revenue per client is just north of $9,000 a year is what our typical average client pays.

Michael: And so, tell me more about the team, 17 people on the team. How many are advisors? How many are other roles? What does that organizational chart look like in a firm at your size?

Jake: Yeah, so I've built it out a little bit different from a lot of feedback from coaches and other advisors and teams. And so, the way it's structured today is that I've got a business partner, Cory, and we are the two owners and the founders of the company. And we technically are the only two advisors on the team. So, every client is either directly associated with myself or Cory. I think I have around 400 or 500 clients, and Cory has around 300, which is a lot, obviously. And then we've got a planning group. So, the financial planners are not charged with business development, but instead they do the brunt of all of the review meetings. In fact, they do all of my review meetings with my clients, and they do probably about 90%. Eighty to 90% of Cory's reviews are done by the planners. And we've got three people in that group today. We've got a fourth joining us very soon to help with that workload.

Michael: Okay. So, I'm intrigued by this. I guess I want to understand, when you say they're doing all the review meetings, does that mean they prep the information, set up the review meeting, or literally they do the review meeting, you may not even be there? They're driving it independently of you?

Jake: Yes. So, for my 500 clients, they're literally doing all of it. We have a scheduler that is actually setting the meeting. However, I'm not attending the meetings. I am available to any client at the entire company upon request. So, if a client calls in and says, "Hey, I really want to meet with Jake. I want to talk to him about this." The answer is yes. The whole team knows that. But your normal standard review is handled entirely by my planners, believe it or not, which is a little bit different. I think a little bit unique.

Michael: I guess I'm just trying to process. I don't mean this in a bad way, so are they still your clients? Are they Jake's client if they can still get Jake if they want, but they otherwise don't actually meet with Jake, they meet with the planning group team?

Jake: Yeah, I'm very fortunate that the culture...they do see it that way. And the reason is, I've had issues with this in the past, because originally I had planners that I reassigned the clients to and said, "Okay, now these are your clients." And this is where my problem was, is that I didn't feel like the planner appreciated the effort in going and originating that relationship. And so, there was a culture shift there with where the service I don't think was handled the same way. And so, I think just from a cultural perspective, Michael, it's turning more into our clients, not necessarily Jake's. But the team knows that I originated them, and so they're technically under my number, or whatever you want to call it.

And because I'm not doing the normal review doesn't mean I'm not involved. So, instead of the normal going over the eMoney and Holistiplan and the Black Diamond reports, instead now I socialize with my clients. I'll take them to lunch, I'll have a round of golf, I'll go to charity events with them. So, I'm still involved in their lives. And I actually send them BombBomb videos, checking in on them to see if they have any questions for me. So, I'm involved just in a different way. I'm not involved in the standard review. So, I haven't washed my hands of the clients and I have no involvement. It's just a different way, if that makes sense.

Michael: Interesting. I have lots of questions here. So, help me understand a little bit more of this evolution that it sounds like you had a model where you handed off clients to a particular advisor, and that unwound, and you went to this centralized department instead. Correct me if I'm wrong, but I'd love to hear more of this story and how it played out. I feel like the standard industry guidance is find your service advisor and hand clients off. So, what happened? How did that play out? Why did that not work for you?

Jake: Yeah, maybe we should rewind a little bit further. So, let me explain. I got really lucky. This happened by accident. I used the law of scarcity to my advantage when I was new, and I didn't even know what I was doing. So, when I was a rookie advisor, I read books and listened to podcasts and do all the things. And I was under the impression that I could only maintain about 100 relationships. Michael, when I was marketing, and going and finding new clients, I would tell people, "I'm only going to have 100 clients, and then I'm not going to take on any more." And they're like, "Well, what number are you at?" I'm like, "Well, I'm at 64." And they're like, "Oh gosh, I better hurry up."

And it was weird that that worked. It was very weird. I didn't know what I was doing. Again, I was in my 20s and I got very fortunate that that worked. And then I got to 100 and I said, "You know what? I can manage more clients. This isn't that hard." So, I drifted up to 200. And that's when things obviously started getting a little bit more hairy. And I started building a team around me. I hired a paraplanner, and then we ended up hiring a trader. So, I didn't do the trades anymore. That's how the team ultimately got built out. But I think it's a byproduct of also, I had a planner that didn't really work out on my team.

And so, it's a combination of, I shifted clients to them, and if they would have been a model planner or maybe more of what I visioned, I might have gone down that road of giving clients to planners, but because I had such a bad experience with...I had clients that got bad advice is what happened. Advice that I didn't agree with, or they weren't followed up with as quickly as I might have wanted to follow up with them. So, it's a little overarching of founder owner giving up control that I didn't like. Because these are my clients. I care about these people like they're my family. These people trusted me 15 years ago, 18 years ago with their life savings. And now you're being sloppy. You're not replying to their email for a week, or you're not taking good notes. And you actually gave them some bad advice. And it really bothered me.

So, the planner is no longer on our team. My planning group is fantastic, but I've just maintained that, "Look, the structure, they're still under my name so I want to be involved and brought in anytime you have an issue or a question. I want to be back involved as a safety net almost."

But here's what I realized. It's all about the way...you mentioned what got you here won't get you there. I 100% agree with that. And what I realized is that me going through a financial plan, and performance, and a market update, and tax planning was not what I am uniquely good at. In fact, I'm not even a CFP. I'm a Chartered Retirement Planning Counselor, but I've hired, I've got two CFPs on my team that they're younger than me, sure, but they've taken their education deeper in the planning aspects. So, I let them get really technical with the rules, and the software, and the planning.

And I'm more of a relationship….I'm really good at listening and explaining things in English, and just having a good relationship with clients. So, I felt like if I could double down on that and do more of that, it'll allow our clients to get technical advice without me having to be involved while still having a relationship with me. And that's what I really enjoy doing and what am I focused on. And that leads to more business development as a result.

Creating A Centralized Planning Group To Produce Plans And Meet With Clients [13:39]

Michael: So, then tell me more about the planning group. I guess I'm just even trying to envision mechanically how this works. Are people in the planning group assigned to particular advisors? One person handles your clients, one person handles Cory's clients? Are they assigned at the client level? A client's, no, it's Jake plus this person on the planning team, or it's Cory plus this person on the planning team? Or are they just more of a centralized resource, and whoever's available for the next review does the next review?

Jake: Yeah. As we build it out, our plan is to cross pollinate more. But today I have two planners that work primarily with my clients and Cory has one. Someone just left because they moved across the country. So, we're bringing in a fourth planner. So, they're really squeezed right now. But the plan is to have Cory with a dedicated planner, lead planner. I have a lead planner. And then you could call him a junior even though he's a CFP who takes more of my clients. And then our new fourth planner will be more of a paraplanner servicing all of the planners as much as they need as he gets trained up.

So, today it's a little siloed, but the big picture is to have them work with the clients. And we use Salesforce to track all this. So, they're labeled as wealth manager one. So, we know kind of who's responsible for the relationship so that they're not scrambling on who's held accountable. But that's how we do it today. But ultimately, I'd love to see more of a central group. But today it's a little siloed still as we build it.

Michael: Why the desire for a central group? Or what's not working in the current structure that you're trying to shift it a little bit?

Jake: I want to be able to have planners involved with clients where they have the biggest impact, and not be entirely predicated on just my clients or Cory's. And so, if a planner is a better fit personality, experience-wise with a different client, I don't want that to be a hindrance of just working with mine or Cory's only, is why I want to be able to even it out a little bit.

Michael: So, if I'm understanding correctly, the end state is probably still the client has a partner you or Cory and a lead planner that's their person, their team person assigned to them. But not all of your clients will have the same lead planner. And you could even have clients who have a lead planner that's also a lead planner for one of Cory's clients because they're just the right fit lead planner for that client.

Jake: I do. Yeah. That's probably big picture down the road, but I'd love to go in that direction. I think that would be a beautiful thing. And then also, I like to standardize the service and customize the advice. And so, I don't want Cory's clients getting a different level of planning service than mine do. So, I love that they'll be able to plug into any client, and it's the same framework. Now, of course, the advice will be custom to the client, but we have the same framework amongst both of us. So, I think it'll be good for training and just congruency amongst our practice to have it that way.

Michael: So, then how do you think about capacity, and just where you are on capacity? How many clients can you and Cory go in this format? How many clients can a centralized lead planner handle if I'm assuming they don't have business development and other responsibilities, their focus is serve the clients?

Jake: Right. Right. That's what's exciting. Mine and Cory, I think our capacity is still yet to find. The only embarrassing thing is 500 clients…there's some study that we can only...isn't our minds only capable of knowing like 180 people or 170? Isn't there some number?

Michael: Yeah. Yeah. It's called Dunbar's number. The anthropologist that studied it. I mean, humans are wonderfully varied. So, someone's got a part of that brain that's larger than others and has larger social networks. But yeah, the average they find for I guess humans as a species are our standard sort of familiar core friends group is about 150 people.

Jake: Got it. So, I'm way past that obviously already with 500 clients. So, the risk I run is I go to the museum or I'm at the grocery store, and I run into somebody, they're like, "Hey, Jake." And I'm like, "Oh, no."

Michael: "Hey, Jake." "Hey, you. How are you doing, you?"

Jake: Right. Yeah. So, that's a tough one. But other than that, I feel like my capacity is very high. We do a really good job of segmenting our clients. So, we've got, A, B, C, D, platinum, gold, silver, however you want to label it. So, each segment gets a different service model from the planners, and also gets different engagement with me or Cory. So, we engage with our platinum clients more than perhaps our bronze clients, for example. And so, because we're always segmenting and kind of reshuffling the deck, I think as long as I'm able to have impact with kind of the key clients that I feel it's necessary. I think I have a lot of capacity and a lot of runway.

The planners do take on a lot more than your typical because if you think about it today, we've got almost 900 clients and I've got three planners. So, they don't each have 300 because Cory still meets with around 60. It's very interesting. We are similar and different. He likes doing the reviews more than me. So, we've identified that as saying, "You know what, Cory? You like doing that. You feel like you can add value to the relationship and the advice that way, then keep doing it if that's what you like doing." But they have a lot. I think they all have well over 200. But again, very little service, no trading, no business development. They're just meeting with the clients.

How Falcon Wealth Advisors Segments Clients By Revenue [19:31]

Michael: So, then tell me a little bit more about the segmentation, please. How do your segmented tiers work of, I guess, A, B, C, D, it sounds like you're more of a platinum, gold, silver, bronze. So, how does it work in your firm? What are the tiers? How do you determine who's in which tier? And what do you actually change by tier?

Jake: Right. So, I've researched this a lot. And again, I don't have all the answers. I've been doing this 20 years, and I feel like I'm still learning new things, particularly from your show. So, thank you again for what you do. So, today, this is our segmentation. So, our top 50 clients are platinum in revenue. We had to find a metric to use that was a little bit impartial, and more quantitative.

Michael: So, revenue is your driver at the end of the day. What do they pay? And we will align services to what they actually pay.

Jake: Exactly. Because my top clients are probably paying $40,000 to $50,000 a year. And so, I just feel like they deserve more touch points than someone paying $5,000 a year. They just do. And so, top 50 are platinum. Next 50 are gold. And then anyone paying above our average is labeled silver. And then anyone paying below the average are labeled bronze. So, we kind of know who's below and who's above the average.

Michael: Okay. And I think you'd said earlier, average fee for you is right around $9,000 of revenue to clients. So, the bottom roughly 50% are bronze, approximately half our clients are below our average. Silver is essentially above $9,000 revenue and below the top 100 clients. And then the top 100 are 50 gold, 50 platinum.

Jake: Yep. That's how we've done it today. And it feels right. And then every quarter we resegment. As billing comes in, and we sign up new clients, we just resegment it. We just readjust it.

Michael: And you'll do that every quarter.

Jake: Correct. As the billing happens.

Michael: Okay. So, quick question then, is there an overall minimum for the fee by assets or revenue? How wide is bronze? How far down does bronze go?

Jake: Yeah. Today it goes very low because Cory and I, being salespeople, especially when we're both...if your money was green, we would take it. And now it's very difficult, as you know, to transition these clients off, especially a lot of our clients are very interconnected. And so, we may have someone with $5 million who referred their neighbor who has $100,000, and we don't want to make it awkward amongst the friends. And so, it goes low. Today, we call them ideal clients are the ones that hit the $9,000 average. And then Cory and I are allowed so many bullets a year is what we've called them internally. Basically a bullet is we want one in, one out. So, if Cory and I, independently of each other, if I meet someone at a golf course, and I just, "Hey, this family is really cool. I really like them. I want to help them." And they're under our average or under our minimum threshold there. I can take them on as a client, but I've got to be willing to transition a client out so that we're not bogging the team down. That was our issue is we were bogging the team down with service for lower paying clients.

Michael: Interesting.

Jake: It's one in, one out on that one.

Michael: And that's basically anyone at the bronze. Is bronze the threshold?

Jake: Typically, yeah. Unless there's another issue. If there's a personality misfit or somebody's rude, then we'll definitely do that at any level. But normally it's the bronze. Yeah.

Michael: Nominally, from a growth end in moving forward, you will only grow and expand client headcount above average revenue per client. Because the agreement is if you want to take someone below the average, you have to one in, one out them. You have to find someone who is a less good fit that we will graciously find a better home. I mean, it's got to presume in practice, it's 400 something clients at bronze. There have to be a few that are not terribly well engaged. A firm that it is probably a fine thing for all involved if we just recognize the relationship isn't working in transition.

Jake: Right. And it's not easy. And Cory and I will be involved in that. I'll say, "Look, we haven't met. We've called you to me and we haven't met in five years." And they're like, "Jake, I like you. I trust you. I don't need to meet." I'm like, "I know, but you're paying us a fee and you're not using our services. We want to do more for you, and you don't need what we do." So, I've worked hard on that script and it's not easy. I don't want to rely on my team to have those conversations because, again, all the clients lead to either me or Cory. So, we have those conversations with our clients when we need to do it. And the hope is our door is still open. We do a lot of pro bono work for people. If they're not a good fit, we'll build them a plan, and give them some free advice, and kind of point them in the right direction. And I'll leave that option for them also.

Michael: So, now help me understand what are the actual service differences across the tiers? I mean, what do you actually do differently for platinum versus gold versus silver versus bronze to make this work for the business?

Jake: Yeah, so for the planners, actually the service for platinum, gold, and silver is very similar. So, I believe it's two meetings a year, and maybe they do one or two check-ins. What's different on that segmentation is my engagement or Cory's. So, for platinum, I am sending the BombBomb three times a year, and gold two times a year, and silver one time a year. So, my engagement is a little bit less on the tiers. But our thinking was that if a client's paying us above the average, we probably should be meeting with them...the planners should be meeting with them pretty regularly. And then the bronze, I believe they get one review meeting a year. And then I normally don't send the bronze a BombBomb. But of course, I'm available. So, if a bronze with $50,000 says they want to meet with me, the answer is, "Yes, let's meet." And we'll sit down, and I'll talk about whatever they want to talk about.

Michael: In practice, it sounds like you have a good centralized planning team that's driving a lot of this, how often do they actually still come and say, "No, no, no, I want Jake, I need Jake."

Jake: Very rarely. I'm very fortunate. So, to make it nice and confusing, Michael, our head of planning's name is also Jake.

Michael: We go like J1, J2.

Jake: Jake and Jake. We just tell people it's easy just to say Jake and we're good.

Michael: Yeah, just say Jake, you'll get great service. Guaranteed. It's wonderful.

Jake: But he has really done a fantastic job of owning the relationship, and following up, and treating the clients like they were his. And so, it's been a very easy transition. So, Jake Cross is the head of planning. Joe also meets with my clients, and then Tyler meets with Cory's clients, and these three guys really do knock it out of the park. And again, it's not their fault if a client requests us at all. I don't see it that way. But they really own the relationship and own the meeting, and they're getting our clients' trust every single day, as they have more reps and have more meetings. And I think that's what's good about giving these planners so many clients, Michael, is the only way to get good, in my opinion, is to have a lot of reps. And so, they have a lot of meetings, these guys. They have a lot of them and they get better as they have more meetings.

Michael: How many meetings do they have to do every week just to keep up with that many clients? Do you set expectations around what that's supposed to look like?

Jake: We do, yes. We use a software called ScheduleOnce for our scheduler. And Jake and I will review that, and look at inventory or whatever you want to call it. So, it's how many slots do you have open? And if clients are having to wait more than a couple of weeks to get scheduled, we'll typically add more slots. But Jake can have a crazy week. I think he can have anywhere from probably 20 to 40 meetings in a week, some weeks, just depending on what's going on. But again, he can laser in, and he just focuses on those reviews. He's delegating a lot of the other issues out to the rest of the team.

Michael: And how long are review meetings for you?

Jake: Yeah, I keep them focused. So, we do 30 minutes with a 30-minute buffer in between meetings. So, they do give a little bit of a leeway. And we're using what's really been a game changer, and you and I talked before we started recording, is we're using Zocks. I'm sure you're familiar with Zocks.

Michael: Yeah.

Jake: Yeah, it's been really good. So, Zocks is an AI note-taker designed for financial professionals. And I bet advisors have been doing this way before us, but it also will formulate a follow-up email that I'm getting copied on, which is great because I can kind of just peek in to see what's going on in the meetings and how it's going. And it even grades the planners, which is pretty interesting, on how well the meeting went. And so, there's a lot there with Zocks that I think is helping. Because we used to double up. So, Jake would have a paraplanner join in his meeting and take notes, but now he doesn't need that as often because he's got the AI note-taker in there.

Michael: So, in that vein, I'm wondering your description of the centralized planning team and folks like Jacob, they're doing a great job focusing on service, and being diligent, and following up, and supporting clients you wanted to see. And they're largely driving the relationship through the reviews now. So, I guess just take me back. How is that different than the version of associate advisor, service advisor you were trying in the past in, I guess, the more decentralized manner that didn't work out, and they were not giving service and advice at the level that you wanted to see service and advice occur? What changed that's making this model work more effectively for you than the prior?

Jake: It's the people. I really think it comes down to the people, and that's what's changed. And then the subtle nuance that...and for younger people, I think it's more, the subtle shift in ego is that, "No, these still aren't your clients." So, I think they treat mine and Cory's clients a little differently because they know that not only they have to answer to the client, they're also answering to us. Versus if it was just their client, they could blame the client if something went wrong. Well, now it's like, "No, no, no, I know this client. I know this person. I've known them for 15 years or 20 years. So, I know what's going on here."

Michael: Yeah, yeah, yeah. "Don't tell me the client has been hard to schedule. I know this client. They schedule right away. They're super diligent engineers. You're not sending them the thing. I know they would schedule right away."

Jake: Yes, exactly. So, there's a little bit of just accountability there. And then now, again, with Jake Cross, I really truly am seeing him more like our because he is building a relationship now. But he's good. He checks his ego. He's like, "I know that they're your clients and I'm here to give them advice. I see them as ours now because I'm helping them too." And that's great. And that's what I wanted. That's what I envisioned. I think when you give somebody clients, I feel like the ego gets artificially inflated a little bit, and they rest on their laurels a little bit too much. It's just what I've witnessed, here at least.

How Jake Manages His Personal Capacity And KPIs For His Team [30:56]

Michael: So, now take me back. I'm still trying to, I guess, process or understand where your capacity lands in all this. I mean, I understand now you don't have the bulk of the client review meetings because that's shifting to the other. So, you're doing other things to cultivate the relationship. So, golf and charity events and the other things that you can do there, but there's still just a sheer time constraint. I don't think you can fit in 500 rounds of golf in normal working hours.

Jake: Nor would I want to do that.

Michael: Five hundred clients times one round of golf each all year long. Are those kinds of relationship touches still segmented by tier, or we do as many as we can, but we're not going to touch every client every year that way? Just how do you fill that time? Where is capacity for you in this kind of model?

Jake: Yeah. So, Cory and I have challenged ourselves. Everybody on the team has KPIs [Key Performance Indicators]. And Cory and I don't really get a raise or a bonus based on our KPI, but we are doing it. So, we've created a point system that's actually pretty neat that Salesforce can track it for us. So, we get three points for a platinum client social outing, two points for gold, and one for silver. And the challenge is that for each of us to get 150 points this year. And so, if you went out with all 50 clients of the platinum and you got three points each, there's your 150 points. So, that's how we're divvying it up. So, I was like, I figure if you're engaging and going out with those many people that often, then you're doing your job as a wealth advisor.

Michael: You and Cory go for your 150 points of whatever combination of one social event with each 50 platinum will do it, or I mix and match amongst my gold and silver. I guess now I'm surely curious if you're a KPIs oriented firm. So, what are KPIs for the planning team then? How do they get valuated?

Jake: Yeah, so today, and I'm probably going to change this, and this is my team. I tell them this all the time. I was like, "Look, we're growing at a pretty good clip. You have to bear with me that I'm building this airplane in the air, or things are going to break. Every three to five years, things are going to break and we're going to change them." So, today the KPIs for the planners are client retention. Very important. Volume of meetings. So, the number of meetings. So, based on their initial start date, January, how many clients they had in each segment, that should equate to X amount of meetings. And so, that's one of their KPIs is did you do the appropriate volume, have the appropriate meetings count? And then third is referrals. So, we internally call them...we don't use this really formally, but we joke a little bit that there are more farmers, right? They're not hunting, they're farming. And so, I believe they're charged with getting 10% of referrals. So, if they had 200 clients, we'd want them to get 20 referrals in a year. And the good news is I'm helping with that.

Michael: Referral inquiries, referrals closed?

Jake: Inquiry. So, a meeting, a meeting set. And that's something I haven't shared yet either, is that I like to do all of the initial meetings for my clients. So, I do the first meeting, and then I turn it over to the planners to take it from there. And if it's a bigger client, I'll do both the meetings. So, normally it's a two meeting, we do an initial intake profile, and then we do a proposal, and then it's yes or no kind of as our process. And so, if they can get 20 profiles from referrals, that's how we're tracking that.

Michael: Okay. Very cool.

Jake: Because sometimes we'll have to turn away a referral, right? So, that's not their fault is the idea. If a referral is below our average, we don't think it's a good fit. They still got the referral, so I don't want to penalize them for that.

Michael: They still got the referral, we want to give them credit. You generated engagement activity. We won't blame you or the client that they didn't actually know how much net worth their neighbor had. And that probably wasn't a good fit. So, referral target is inquiries equal to 10% of the client base volume of meetings. You can just kind of math at the beginning of the year. This many meetings, this many clients. Is there some allowance that...I don't know, my experience over the years, there does come a point in long-term client relationships where they really do respond. Like, "I love you guys. I love what you talk about. We just don't need to meet. I'm not unhappy. I'm good. I'll call you if something comes up. You call me if something comes up." So, is there some adjustment on their meeting target for that? Or do you really push, "No, no, no, these are our service standards. We need to figure out how to get them engaged twice a year."

Jake: Right, right. We leave it standard. And they also have a little cushion because what happens is when we sign up a new client, and they start doing reviews with that client, that counts as a meeting. So, I don't give them leeway if a client meets less. The idea is that we're signing up new clients and they're meeting with them. And the KPIs aren't all or nothing. So, if they have a meeting count of whatever, 500 meetings and they get 450, they're still going to get that percentage. What would that be? Ninety percent of their KPI is achieved. So, they'll get their raise based on that. So, it's not like an all or nothing either.

Michael: Okay. And then what is your client retention target that you set for them? What's a good healthy number expectation for you?

Jake: I believe it's 99%. Now this is 99% of our choosing. So, if we transition a client, that does not impact their retention for the team. Because I really work hard on the team to educate the team saying, "Look, if a client is not a good fit, we should transition them. Otherwise, every client that's here, we should want to be here." And so, that's why I have it at 99%. I think last year we were at 98%. So, it's reasonable. It's within range there.

Leveraging BombBomb To Communicate With Clients Asynchronously [36:51]

Michael: And then can you tell us about the BombBomb videos? It sounds like that's a very material part of your segmentation and service model. So, help us understand what that is. What do you actually do?

Jake: Yeah. I'm a big fan.

Michael: What's BombBomb for everyone who's not familiar?

Jake: Yeah. So, BombBomb is a very easy software that allows you to send video emails to your clients. And I'm actually a really big fan of BombBomb. And so, we have a podcast that's on YouTube that's called "Upticks." And I just feel like if I'm not in the review meetings, an email or a text, it's just not good enough. And then a phone call, you're playing phone tag with people. I'm not a fan of phone tag at all. So, to me, the video's the next best thing to being with the client. So, it's a little scripted probably because I'm not trying to reinvent the wheel as I send a lot of these videos out. But it's a quick check-in, I'll say, "Hi, Michael, this is Jake with Falcon Wealth Advisors. Just seeing if you have any questions on your financial plan or investments. If you do, let me know. If not, your next review will be in August," or whenever their review is set to be scheduled.

And then oftentimes I'll ask for an introduction too. I said, "We've expanded capacity on our team. If you know anyone that needs our help, let me know," and I'll leave it at that. And I typically get pretty good feedback from clients and BombBomb is great. It can track if they've opened it, they can respond and all that's in there. It's a really easy software to use. And it's all archived, which is great, that my compliance has been gracious to use that as an archiving mechanism for compliance reasons.

Michael: And your outreach is just kind of that brief and direct? We're not doing a whole long market update or other thing. It's at the level of what you said?

Jake: It is. Yeah. Yeah, it is. If something wacky is going on in the market, I will bring it up. I won't do anything personal though. I don't want to have too personal of a conversation over a video because it's still an email. So, I don't want to get too private with it. I don't want to talk about their performance or anything like that. If there's something crazy going on in the market, I'll give a macro update. But normally, I'm just checking in. "You have a question, let's talk about it." Because I don't know what they're thinking. I have no idea.

Michael: Okay. And nominally, if they're interested, they hit reply on the email, and it's coming back to you, and you either get to engage or hand off as appropriate?

Jake: Exactly. Yeah. And I made a mistake. I used to include my scheduling link in the BombBomb video, but what was happening is people were scheduling with me and we didn't even know why. And they didn't even know why.

Michael: They couldn't remember by the time they did it. They're like, "Why was I reaching out to you?"

Jake: Yeah. It was like, "Oh, Jake, you sent me your schedule. So, I booked a meeting." I'm like, "Oh, do you have anything?" They're like, "No, I don't. You just sent me your schedule, so I booked it." I'm like, "Oh, well, I'll stop doing that."

Michael: These are fast. You can belt through these in 30, 60 seconds a piece, but if you think about it, you've, you've got hundreds of clients who are silver, gold, platinum, some of which get multiple BombBombs. Do you end up doing a dozen a week of these or something?

Jake: Yeah. I'd say probably on average that seems about right. And Cory streamlined his even further, which I think is appropriate for him. It worked. In BombBomb, you can record one message and make it a little bit more generic, and then literally insert it into emails. I think he got behind once and he's like, "Look, I've just set one standard video, and I can send it to a lot of people."

Michael: Right. You just have to get away from the, "Hey, Michael, it's Jake from Falcon," and just say, "Hey, it's Jake from Falcon."

Jake: Exactly.

Michael: Just make sure you don't, "Hey, insert name here."

Jake: Right, right, right. Yeah. You want to avoid that. But the key is that we're looking into a camera. They're seeing that we're at work. We're in our suits. We care enough to send them this message. That's the whole point of it. We're sending them this message that, "Look, I'm here for you. If you need me, I'm here."

Using Instagram To Meet Prospective Clients Where They Are Online [40:49]

Michael: Okay. So, now, as we look at the business more broadly then, where is all the growth coming from that you're picking up this activity in 900 clients, and adding on an ongoing basis? What does growth, marketing, business development look like for you all?

Jake: Yeah, I'm fascinated by this. And so, Cory and I will bang our heads against the wall every year to try to do something new, change something up completely, restructure our calendars. And for whatever reason, this is why I think he and I are the bottleneck. It seems, Michael, almost every year, almost on the number, Cory will bring in 50 million in new assets, not net, just raw new assets. And I'll bring in 100 million. And that's just what him and I are doing every year going back a few years now. And it's like, we keep trying new things and we're getting the same result. So, maybe now we need to bring on other business development people. We're building a whole new group on our team that are only focused on business development. So, eventually, be promoted to be advisors, but they're starting with business development first, more traditional, old school way of doing things.

Michael: So, I'm struck by this. On the one hand, we keep trying to do new and different things, and it's not moving the number. Gets frustrating after a while. On the other hand, $150 million of gross new flows is a really nice number.

Jake: Well, thank you. Yeah. We're very humbled by that.

Michael: That's a lot of growth. I want to come back in a moment to what's the vision of this new team structure that you're building to try to open the funnel further as it were. But first, just help us understand, where does 150 million of new flows come from now?

Jake: Yeah. So, primarily, just like most of your audience, it's referrals. That's been the core. But that's what's great. So, our planners are trained to farm, so they're working on referrals from our clients. And so are Cory and I working on referrals. But what's fascinating about our practice is that a lot of practices get a lot of COI [Centers Of Influence] referrals. We get very, very little for whatever reason. We will even get the attorney as a client, and they still won't refer clients, or the accountant as a client, they still won't refer clients. So, we've tried the COI method a lot.

Cory, I don't know how many...I think it was last year or the year before, I think he went out and had 25 or 35 meetings just with COIs. And he has one that's been really good, but typically it's client referrals. And then we do a lot of personal marketing. So, I wrote a book, we have a podcast, we're both very active on Instagram, on LinkedIn. We've done the whole seminars and webinars and charitable events, and we're both very active. I'm a big golfer, and he's a big tennis player. And so, all of that works and none of it works if you've heard that before. We do a lot that we enjoy doing. As long as we enjoy it, we keep doing it.

Michael: So, I'm very curious to hear more about Instagram. I get books, I get podcasts, I get LinkedIn. I mean, as a few people I know have sort of joked, it's kind of hard to show wealth management on Instagram. It's not like we're a restaurant and you show the beautiful food, or a clothing shop, you show the beautiful clothing. We sell an intangible service. It's very hard to take a picture and put it on Instagram. So, tell me about Instagram, and what you're doing there.

Jake: Yeah, we're finally, and it takes a while, but we're...just like this business takes a while to start blossoming. So, we hired a coach called Dan Martell. I don't know if you've read his book called "Buy Back Your Time." Have you heard of that book?

Michael: Oh, yeah, yeah, yeah. I know "Buy Back Your Time" is a fantastic book.

Jake: It's a great book. Great book.

Michael: Very highly recommend to anyone who's building multi-team member business.

Jake: Yes, I feel like he took a lot of good ideas from other business books and put it into one. That's why I really like it.

Michael: Yeah, it's just packaged very well. Yes.

Jake: So, he sells a coaching program and we bought it, Cory and I. I don't know why we got some two for one deal, but we were both in this class. And he does a weekly Zoom call where he coaches on the principles from "Buy Back Your Time." So, if you want to get deeper than the book, this is what he does. And so, he taught us through this class on how to be on Instagram. And he actually sells by chat on Instagram, his coaching services. Believe it or not, I think we spent $9,500 and we never talked to a human. We bought it all through Instagram. That's how they sold us. Which is different than wealth management and we're not really trying to do that.

But my point is, what I've learned is the key is to be your authentic self on Instagram. People don't need to know how much you can put in a Roth IRA from Instagram, right? We can get that on Google, and AI, and your advisor, and all the things. So, what they want is your opinionated viewpoint. I'll give you an example. The Fed chair, it's been going on back and forth with Trump about rates. And Cory just posted an opinionated reel. I think it was less than a minute long. And Michael, he got 41,000 people viewed this reel. And he was just talking about his opinion on what this back and forth with the Fed is, and why the Fed's targeting this. And he just gave his opinion for a minute. That's all it was.

And there are billions of people on these platforms and our best clients are on these platforms. And so, he and I feel like it's silly to ignore these platforms. Now, we don't want to get buried into doom scrolling and only being on them. But I was at the golf course the other day talking to somebody, and someone was walking through the restaurant, they said, "Hey, Jake, I saw your video. It made me think I need to do something about my finances." And I haven't seen this guy, Michael, in two or three years. And little did I know he's watching me on Instagram or wherever my video was. So, I just think it's important for advisors to not be scared to share your opinion, to be authentic.

Michael: So, do you have a sense as to whether or how much this translates into business? I mean, is there a marketing funnel, and there's a call to action to do this thing, and sign up for our list, and take the next step? How structured is this? How much can you tell whether it's turning into business or not?

Jake: That's the hardest part. I think that's the hard part with all marketing. It's so hard to quantify, for me at least. And that's where maybe I haven't figured out the whole funnel. And I spend X dollars or X amount of time, and I get this many leads, and it spits out to business. Again, I think if you have an opinion, and you enjoy sharing it, and you're not scared of the video, it's worth it. But today we haven't quantified it. That's the next step. But Cory and I have been doing this for a year for him finally to have one go that viral. We call it viral for him and I. But it took a year of him doing this almost every day.

We are still so novice at this. Today we're just trying to get our opinion. But I'll give an example. I think we've done 380 episodes of our podcast. And one of my clients came in new maybe a couple years ago. So, we were probably in the 200s, and he came into my office and said, "I have listened to every one of your podcasts starting at number one," which is a huge compliment. So, he already knew me, and knew everything about us, and knew what I stood for, and knew how we operate, and everything that we believed in. So, my point is it's cliche, but we're just being top of mind. If I'm on somebody's feed every day, or in their stories, when they are with their neighbor, or their friend, or the family member, their coworker, and money gets brought up, the intention is for my name to get brought up in a positive light. And that's why we're doing it. So, I've got a great colleague, David Bahnsen, who I think has been on your show.

Michael: Yeah, yeah, yeah. We've had David out.

Jake: Yeah. And what I love about David, he talks about religion and politics. Which is crazy as an advisor, isn't it?

Michael: Yep.

Jake: We're trained kind of to be in the middle of the road. But I haven't seen somebody grow as quickly organically as David. And he is a true example of what it looks like to be authentic. Now, he's fortunate to be on TV a lot, but he's also out there on Instagram. He's on social media. He's got a podcast. So, he's doing the thing. So, we're doing our own version of that in our way. And so, that's why we're doing. Because I've seen him have success from that. And that's why we do it that way.

Michael: You sort of mentioned it in the discussion there. I don't know if it was a true target. Are you really aiming to try to post some one-minute reel to Instagram every day as a daily habit for you?

Jake: Yes. And in fact, our coach, we were doing three a day, believe it or not. Three posts a day, three stories a day, I believe is what he challenged us to do. And now it just depends. I try to do more relevant. In my opinion, on social media, you can either be extremely relevant, or just outrageous and outlandish. But those are your options. And I'm not that guy. I'm not going to be the Barstool guy of finance. That's just not me. So, I try to post if it's extremely relevant now, whatever's going on. So, I might not do three a day, but I definitely try to get in one a day in there at least. One to three. Sometimes it's more. It just depends on what's going on in my day and my schedule, the markets, and whatnot. I know Cory does a good job. He spends a little bit more time on his, being a little more thoughtful. And to be fair, he's having a little bit more success than me because of that.

Michael: So, I guess help us visualize some more. What do you post? What do you share? We're talking here in the afternoon. I'm assuming you've done one to three in the past 24 hours.

Jake: I have.

Michael: What were the latest things that you made reels about?

Jake: Yeah. The latest was, and again, depending on when this airs, we had a market correction and then the market rallied. So, I talked about that and not disrupting your plan. We just had the State of the Union last night. And so, I posted about that this morning on how it was almost two hours, and that shouldn't drive your decision on your investments. So, again, it's only a minute. So, it's not like you can get too much content out there. It's just I'm encouraging people to think and bringing some awareness, and then sharing my opinion when I think it's relevant on there.

The craziest things I get on, and again, it doesn't all have to be finance or economic relevant. So, I posted about how a lot of people were up in arms about the halftime show of the Super Bowl being in a different language. And I got a ton of conversation about that, for example. So, it's just what are people talking about? And it doesn't have to be. I'm also a big fan of Ryan Serhant. Have you heard of him?

Michael: No, I don't know Ryan Serhant.

Jake: So, Ryan Serhant is another Instagram...you call him Instagram famous, but he's a real estate agent in New York. I read his book. He's got a book out there. And his strategy is to have three characters. So, I'm a wealth advisor. I'm a husband to my wife. And I'm a golfer. So, to me, I can post about any of those three things to make my content not so one dimensional. I think people ultimately buy from and trust people that they feel like they know. When I go on walks with my wife, I share that, or I make fun of myself like I'm a pro husband. And I'm an amateur golfer, and whatever that means. I try to do things that I would send to my buddies, my friends as a joke. And I try to do that. And again, I'm not a comedian. I'm a wealth advisor. I'm a financial nerd, but I share my personal life. And my clients, when they come in the office, they're like, "I know you're waiting for golf season." And it's because they see it on Instagram is how they know that.

Michael: And you do it basically all with video, it's all video reels?

Jake: Not all. So, let's see. So, according to Dan Martell, he says stories should be your personal life plus commercials. Reels should be what you want to be known for. So, that's the video. What do you want to be known for? And posts should be more of your wisdom. So, what I like to do with posts is share quotes. I just bought this book. You've probably read it. "Maxims of Wall Street." Have you read that book?

Michael: No, I actually haven't.

Jake: It's pretty cool. All it is, it's really cool. It's full of quotes. It's by Mark Skouson, "Maxims of Wall Street." I subscribed to Nick Murray's newsletter and Nick had it in there. Nick had it in there as one of the great books, and so I bought it. And it's really cool because it's got a ton of Wall Street quotes. I've been sharing those under my posts. So, if you don't want to record a video, you could just start sharing quotes and what you think about the quote even.

Michael: So, let me make sure I capture that. So, stories are for your personal life or...

Jake: Commercials. You promote your services or, "I have a book," or my podcast or whatever.

Michael: Reels is for what you're known for. So, I'm an advisor. I talk about advisor things in reels. And posts are for wisdom.

Jake: Yes. That's what Dan teaches. And again, then I mix that with Ryan Serhant who says you can have these three different characters, or maybe you're educating, maybe you're inspiring, maybe you're entertaining, and you can mix and match all that as much as you want. And that's what he does. He does a really good job of that on his...the guy was an actor though. So, obviously, he's going to be way better than me or you at this. But I can pick up what he's doing. You can learn from that.

And again, I would argue our clients are there. I mean, unless you have clients that are just anti-social media and anti...because I have a lot of clients that probably aren't on there, but there's billions of people on these platforms. And so, why wouldn't you be where your clients are? We always talk about wanting to be where our clients are. And now you can do that. So much easier than having to go to...I don't mind going to networking events or charity events. I still do those things. But this is just so much more scalable. I can get in front of thousands of people, and it takes me 15 minutes to put a reel together.

Michael: And the question then becomes how long do we need to do this to drive noticeable results?

Jake: Yeah, that's the kicker. Just like this business. I think Dan said he did it for ten years. But now, the guy has...I don't know what he's got. He's probably got a million followers on Instagram. He can pretty much do what he wants on there. Not that I'm trying to be that though. And I'm really big into coaching. So, Dan's no longer my coach. I've got another coach and his argument is like, "Jake, if you're so good at referrals, why don't we figure out why you're good at that and how to get better at that?" He said, "You probably could do great on social media." So, that's why I've kind of pulled back and I'm not doing three a day as much. I'm still doing it because I think it is important.

But we're starting a new project that I just want to share with the audience. I had this data, but for some reason, it wasn't all in Salesforce. So, we're going back through and we're figuring out the origination of every single one of our roughly 900 clients. And then me and my coach have called it a star. As a star burns out. We've all had this client. When they're a new client, maybe they've referred like five or ten people. And then there's no more left to refer because they referred all their friends. So, me and my coach are going to go back through, and we're going to track the life cycle of these stars, star clients that have referred a ton of people, and figure out what happened to trigger that, and figure out how do we replicate and do more of that.

So, we're going to get a little bit more scientific...or a lot more scientific with the referrals. Because right now, I really feel like we're getting lucky, which is a little spoiled to say. Me and Cory are bringing in 150 million, but it's just because we're active. But I want to really get a little bit more scientific with the referrals. So, even though I do believe in Instagram and what it's doing, I don't want to confuse the audience that I enjoy doing it, and I think it's important, and I'm getting really good feedback from my clients. That's why I'm doing it. But my intention is actually to really get more scientific with referrals because today, that's our strength and I want to get stronger there.

Adding Staff To Avoid Business Development Bottlenecks [56:51]

Michael: Very cool. So, then now take us back to...you said you're looking at expanding the team as well around business development. Now that we have some more context for what you've been working on, help us understand more what the goal or the objective is, and what you're trying to change here.

Jake: Yeah. So, I think where I took a wrong turn is that when Cory and I were building up the business or the practice, we didn't have a problem with business development because, like I mentioned, him and I are good at it. And that's what we were trained early to do. And that's what we both enjoy doing. However, now that we've got a billion dollars in assets under management, there's 17 people with livelihoods that scares me a little bit that are basically on my shoulders and Cory's. If I have a bad quarter, I'm not growing the business for the whole rest of the team, which I don't like. I don't like having that responsibility. It's not fair to the team, frankly.

I don't mind. I like doing it, but I don't think it's fair to the rest of the team. So, Cory and I, believe it or not, and one of my colleagues couldn't believe this, but we have 5,000 leads in Salesforce that we've accumulated over the years, Michael, that neither of us were really doing anything with. Five thousand leads just sitting there, not calling them, not emailing, not doing anything really.

So, I've built out a wealth management associate program. We've hired another, basically as a junior advisor, Blake. Nice and confusing, Jake, Blake, and whatever. And Blake is charged with cleaning up the leads. So, I said, "Blake, go through these leads. Some are going to be good. Some are going to be bad. Some numbers are not going to work. Some emails aren't going to work. But I just want you to sift through them and find what's there." And then our job is to keep providing him leads, more fresh leads for him to engage with.

And the idea is that we're going to host client events that he can invite clients to, all the things. And his arrangement is a little bit unique in that I've charged him with setting 50 meetings for either me or Cory, 50 profiles, 50 initial meetings. I don't care if they're qualified or not. Just get in the habit of setting appointments to come in and meet with us. Once he does that, he gets a bonus for every meeting set. And then if we sign up a client, he gets another bonus. But no revenue share or anything like that. This is his training program, basically.

After the 50 appointments, I'm going to promote him to a wealth advisor. And then he can start setting appointments for himself and building out his own clientele. But the idea is that after these 50 meetings, he'll sit in all the meetings, he'll see what we do, and he'll get trained up along the way. But that's kind of the new program.

And I'm finding it's pretty attractive. We've got quite a few people that want to come work with us because we're providing the leads. We're providing a salary and a bonus. But we're leading with sales. And this is where I think I took a wrong turn is that when you lead with the technical aspect of the planning, a lot of advisors like to get into the weeds and do those things. And business development becomes the very bottom of the list. And they don't want to do it. Because, you know this, there's so many roads and pathways you can go down with planning that you can get lost in it for hours.

So, we're switching that to start with sales first and go from there. And what's great about Blake is he gets access to the planners. The planners will build the plan for him and do all that work. So, he's just really got to build relationships is what his focus is.

Michael: So, when he's still on this business development, track down, chase, as it were.

Jake: Hunting.

Michael: The leads, hunt for the...with the leads that we've already got in the system. So, if you're willing to share, what do you comp this? What's the salary range? How much bonus potential can they earn? What does it take to get someone in as a business owner who is excited to go after this base of leads?

Jake: Right. Okay. I'll share it. This is pretty entry level. So, it's not like Blake's a career changer. And this is Kansas City, we're not in D.C., or LA.

Michael: I don't recommend it here.

Jake: Right. Very expensive there. So, our base salary is $55,000. He gets $500 per appointment set. And then I believe, I could have this wrong, but this is close, I think if we sign up the client and they're over a million, I think he gets $2,500. And if they're over 5 million, he gets $5,000. And I think I had 70 profiles last year. Now, granted, I get a lot of referrals. I think Cory had 40 last year, or somewhere around there. So, we said, Blake, if you're doing nothing else but trying to set appointments all day, you should be able to get 50 in a year. So, that would be another $25,000. So, he could make $80,000 plus whoever we close as a client.

Michael: Plus whoever you close. You get...

Jake: Exactly. Ten more clients...

Michael: Yeah, ten more clients. And suddenly, that's another 25 grand. And suddenly, he's making 100, admittedly with a lot of variable comps. So, he's got to earn it. He's got to drive results. But he can make over a 100 just calling this giant list of leads, and doing the real hunting work that it does take for bad number, leave seven messages, trying to get through a phone tag, calendar battleship, all the fun stuff that it takes to drive business development and pursue lead opportunities.

Jake: Yes, exactly. And he's been here, I think, a month or two, and he's doing great. He's doing really good at it. So, we're very fortunate. We kind of got lucky that he just kind of worked right into the role. He doesn't have phone reluctance. He's on the phone, and he's professional, and he just keeps going. He's very motivated. And he's studying for his licenses and getting all... I am encouraging him to learn as he goes here, but yeah, he's doing great.

Michael: So, now for overall context, what is a lead in your system? I don't know what that means or how qualified that is in your system. What it takes for someone to get into Salesforce with a lead tag?

Jake: Yeah, and that's what he's cleaning. So, 5,000, you could imagine.

Michael: A lot of years in the business, and a lot of different ways that people recorded things.

Jake: So, he's cleaning them. What we're classifying as a good lead for him would be a name and a number. The email's fine, but it's just not as good as the number. So, we're going to market to people that only have names and emails differently, and let him focus on people with names and numbers. And a lot of our leads, we have where they work also, just because of the way we've acquired them over the years. So, ideally, it'd be a name, number, and where they work is the idea. That's a typical lead. That's a typical good lead for him.

Michael: So, where would you have been getting these just in the first place? Is this, someone's name got mentioned as a referral and nothing happened, but their name's in there, or did you have digital marketing or email lists or other things? Where did 5,000 names come from into your system? What were you doing over the past decade or few to fill that up?

Jake: Right, right. I wish I knew completely, believe it or not. I don't know completely. I don't remember. We did use ZoomInfo for a while. I think we downloaded quite a few from there. I don't know if they're still a company, ZoomInfo.

Michael: They're still out there now. I think within the industry, people that want to sort of get a list of cold names to go after are doing the more "AI-driven platforms." So, FINNY and WealthFeed and Aidentified and some of those. It's same principle as ZoomInfo. We're going after publicly available data to try to construct a list of names and contact information. The new platforms just better enrich their data with lots of marketing data sets to get really targeted down to who you work with, and how to financially qualify them. So, hopefully you're reaching out to financially qualified prospects in the first place.

Jake: Right. And that's actually the new one we're using is WealthFeed. So, we're letting Blake clean all these up, and then we're kind of coming in behind him with the pipeline of saying, "Okay, once you clean through these..." because they're stale and they're not the freshest. So, we're going to WealthFeed next. And that's what we're experimenting with them right now actually. We bought a couple of lists from them, and I've been very pleased with WealthFeed so far.

Michael: So, you're pouring your existing leads into WealthFeed to try to figure out who they are, or you're just getting raw new leads that Blake could go after with WealthFeed?

Jake: Raw new ones. So, I'm cross referencing it to see how many duplicates we have. And I've just started, but I've been impressed so far. I don't think there have been many duplicates so far. So, that's what I'm doing is I'm going through that to make sure we don't have anybody already in there. And then we'll turn those over to Blake and let him work those from there. But ZoomInfo, we used to do seminars, referrals, like you mentioned. It's a huge culmination of just names, and numbers, and emails over the years that we've collected.

And shame on us, nobody's really been working them or cleaning. I think we used to mass email to them, but that doesn't really work. That doesn't make sense. You don't want to spam people. So, we're really getting cleaned up on that, and letting him kind of find where there's people that are interested, or opportunity, and then kind of resegment the leads almost into another group there.

Michael: But it feels like a whole new or different level when you go from, "We've got this large base of existing leads. Let's go back and...you do the hunt and see what we can get." Versus, "No, we're actually buying cold leads from WealthFeed, hopefully that are very well targeted to our sweet spot, and who we want to work with, with all the cool data stuff that they have to do that." And doing a more pure, cold outbound that's hyper-targeted.

Jake: Yes. Yes. And then I found another deal, this was pretty interesting. Obviously, I've been doing this 20 years, and I'm involved in the community. I bet advisors listening to this could relate, sometimes it's awkward to ask your friend if they want to meet. But what's not awkward is having Blake call my friend to see if they want to meet because Blake doesn't know them. So, actually, he set an appointment here recently with somebody who works with a coaching program who we've talked about it before. So, I added him as a lead in the system. He said, "I would be interested." But again, I don't want to cross that friend zone a little bit. But Blake doesn't know who he is. So, Blake called him and he set an appointment. And I'll meet with them, which is great because I'm going to do the initial meeting. So, they know that I'm going to be involved, but I'm not soliciting the meeting directly. Blake is.

Michael: Beyond they expressed enough interest at some point that, I guess, do you say, "Hey, someone from my team will follow up about that." Or just you have someone from your team follow up about it?

Jake: Yeah, it was a cold deal. His name and number was in there, and I didn't really give Blake much instruction. I said, "Just call him. Just call the people and be nice, be respectful. If somebody doesn't want to talk to you, then be very polite. We've got a reputation to uphold here and that's it." And so, no, it was basically a cold call for Blake. I don't think he knew. And so, I'm going to do more of that actually. My plan is to get more of my connections in there, and let Blake call them.

Michael: Interesting.

Jake: Yeah, this is a softer deal for me.

Michael: I mean, to me, it's a fascinating, what's old is new again. We spent 30 years getting away from smile-and-dial, cold calling world. But now we're winding back to the stranger out where the calls are still cold, but when you have lead funnels and targeted solutions like WealthFeed, and other ways to network, they're cold, warm, cold calls. And it turns out it still works. I mean, I've been fascinated with this, even some of the marketing data we get through the marketing research we do on Kitces…when we look at just all the different tactics that advisors go out there and use to do business development, and we calculate like success rates. How often did you do the thing? And at least get like a client at some point over the past year from doing the thing, whatever the tactic was.

We actually find the number one tactic is client referrals, of course. And the number two success rate is cold calling. I mean, good old Nick Murray, "Game of Numbers", If you do enough, you will get a result. It's grindy and not necessarily pleasant. But if you pull the lever enough, you do get outcomes. And when it's someone you've got some connection with by a lead in some way, shape, or form, or it's at least more targeted and pre-qualified because of some of the new AI services, cold calling still amazingly works, and any level of better targeted or better warmth works better.

Jake: Right. You're going to love this because you're a spreadsheet guy. Cory and I tracked our cold calls when we were rookies, and I made 80,000 cold calls on a spreadsheet.

Michael: Nice.

Jake: Cory did 90,000. He beat me. He did 90,000 cold calls before both of us had a book of business big enough where we didn't have time to cold call. And then we've tried different...what's so funny...

Michael: Oh, you could get a 0.1% hit rate and get 80 clients.

Jake: Right. Exactly. But it worked. We both got off the ground, and that's what I tell Blake, "This isn't easy because if it was easy, everyone would be a finance advisor."

Michael: Then everyone would do it and we'd be... Yeah. Yeah.

Jake: So, if you're willing to do it, if you're willing to get kicked in the teeth, and hung up on, and yelled at, and make thousands and thousands and thousands of these calls, you will be successful. I love that book "Game of Numbers" by Nick Murray. I read it. I asked Blake to read it. As soon as he started here, day one, we gave him that book. And he really liked it. We talk about it every week. We kind of review a little section of it to reiterate. Him, Cory, and I meet every week to go over what's working, what's not, and make sure he feels supported, and that he's doing what he wants to do.

What's Surprised Jake The Most Building His Advisory Business [1:11:04]

Michael: So, as you reflect on all of this, like what's surprised you the most about this path of building a billion dollar advisory firm?

Jake: I don't want to sound negative, and I love that you've coined the term advicers. I guess I just wish that there was more of a standard of advice across the industry. It's just crazy to me, Michael, you've seen it, how a client will walk in and they'll be either no plan, no plan present, and they have an advisor, and there's no financial plan. Or their investments are a complete mess. We can all have our own opinion and be biased on what we think is best, but sometimes...

Michael: There's no difference between, "I get it. Not how I would have allocated," and, "Oh, my goodness, what is this?"

Jake: Yes.

Michael: "A licensed person did this to you? Really?"

Jake: Yes, exactly. I hate seeing that. And it makes us look really good, but I also feel bad for the person that has engaged with this advisor for one year or ten years or 20 years. It's like, oh, my gosh. I wish there was more of a standard. And then I'm a very blue collar. I grew up in West Texas. I'm a blue collar guy. How complacent people get in this business when we have the opportunity to really help people, and make a really good living doing it. And how advisors will just coast, and give mediocre advice and mediocre service so quickly in their career when if they just worked a little bit longer, a little bit harder, they could have impacted so many more people. Even the good advisors, I guess get burned out or something. I don't know.

So, those two things, because this is weird. I feel like I'm playing a video game. Not in a ha-ha, but this isn't a job. I wake up and it's like those kids that love to play games for eight hours or ten hours. This is what I'm doing all day, and it's fun. It's a lot of fun. All of it is. So, I'm very fortunate to find this. It's a game as in I'm just trying to get better at it. I'm just trying to be the best I can be for my clients and for my team. That's it. That's a game I'm playing.

The Low Point On Jake's Journey [1:13:10]

Michael: So, then what was the low point on the journey of building this big business?

Jake: Yeah, I thought about that because I know you would ask. And so, it's when I started at zero, because yeah, there's been bull and bear markets, up and downs, things have happened. But it's really with zero clients, that was the bottom. And ever since then, I've lifted off of that. And actually early in my career, I think I was probably a year or a year and a half in. And I was kind of meandering about. I had a sit down with my cousin who I think is an excellent salesperson. He's not in the industry. And we had a heart to heart. And I think what I was doing as a new advisor is I was just thinking, you and I are similar in this I think, that I was thinking if I follow the formula exactly like they tell me, it will work. But I wasn't closing clients.

And what he shared with me is that I needed to start building a relationship and connecting with people, not being so scripted. And so, once I realized that I could go off script and be truly authentic and show these people how I cared, I actually started getting a ton more clients from it versus just being so regimented and thinking that I had to do everything exactly like I was told. I realized that only I was going to be responsible for my career. And then I needed to take that into my own hands, and make my success for myself. Nobody was going to do it for me, no matter what they told me.

And so, when that clicked, my whole career took off and I can't thank him enough for that. He had a heart to heart with me about that, about the way he talked to his clients, and the types of questions he would ask. I wasn't asking those questions, and it was getting at what's important to people, and what's important to their heart, and what do they care about. That's what he taught me, is how to get there, which is so important.

Michael: Interesting. So, you got, I guess, stuck early on this frame of, "They're teaching me the scripts and the formula. That's supposed to be the formula, so I'm just going to really focus on doing the exact formula exactly the way they tell me." And that proved to be the blocking point and the problem because it dehumanized you from being the relationship person that you're good at when you just get to be a relationship person.

Jake: Yeah. Let me be myself and authentic, and ask these questions that tugged at people's hearts, that got them thinking about things that I cared about. I was there to help them. And so, he changed everything for me. At that moment, it's like a light bulb went off. And it was so weird, I immediately started getting people to sign up, and hire me to be their advisor. And it completely changed my trajectory of my career. It's weird how that happened, but that's how it happened.

Jake's Advice For His Younger Self [1:15:41]

Michael: So, what else do you know now that you wish you could go back and tell you from ten, 20 years ago? What else would you have mentored yourself back then besides what your cousin told you?

Jake: Right. I've made a ton of mistakes, but I don't regret any of them because I've learned from them. So, I would love to make the same mistakes, but one thing. My wife, Michael, is a straight up nerd reader. She reads hundreds of books a year, just crazy. So, she has impacted this bad habit on me now. I love reading. I think I read over 30 books last year, which isn't a lot compared to her, but it's a lot for me. So, I would tell my younger self, start reading every financial book you can now. I don't feel behind, but I can't get enough of it. I read as many books on either running a practice, sales, or investments as I can. And I love it. I listen to them, I read them, whatever. And so, I would have said, start reading books sooner. There's so many good ones out there.

Michael: So, in that vein, do you have favorites you recommend of investing, or finances, or running a business?

Jake: Absolutely.

Michael: What would be your anchors, your go-tos.

Jake: Yeah. Nick Murray's "Game of Numbers" is great. I read Bill Good, "Prospecting Your Way to Sales Success," early in my career. That's a really good one to teach you to handle no's, to just move on. Thought that was a really good book. "The Million Dollar Producer," [Note: title is The Million Dollar Financial Services Practice] I think that's the name of that one. Have you read that one? The Million Dollar something?

Michael: Yeah. A long time ago.

Jake: Yeah. That's a good one though. It's held well, actually. I think I read it not too long ago.

Michael: I'm trying to remember who that was. I can't remember. All right. Yeah.

Jake: I'll have to research that. Yeah. The Million Dollar one's good. "G2" is good, on practice management.

Michael: Yes. I'm a fan of pretty much everything from Philip Palaveev.

Jake: Yes, he's brilliant.

Michael: His original "Ensemble Practice" book was also incredibly good.

Jake: Yep. Yes. Agreed. "Built to Sell" is a good one. I really like that one a lot. So, yeah, I could just keep going on. There's so many of them that I just have on my bookshelf here. Investing, I finally listened to "The Intelligent Investor." "Stocks for the Long Run." I mean, those are big, long books. But I think it's good that an advisor should know what's in those books and what they say. I think those are just fundamental to know. So, yeah, "Traction" is good. That's another good one that's non-financial related. I think that's a good one that people should read. So, yeah. I could just keep going on. And I wrote my own, "Retiring Right: Smart Steps for Exiting Corporate America," more for clients and less for advisors. But I didn't love all of the retirement books that I was reading out there. So, I was like, "I'm just going to write one the way that I think it should be written."

Michael: So, for folks having trouble scribbling all these down, we'll have links out to them in the show notes. So, this is episode 484. So, if you go to kitces.com/484, scroll down a little ways on the page to the show notes section, and we'll have links out for all of these as well. So, Jake, I guess I'm still also just curious. I get it, no regrets because the things that happened were lessons learned. But what are the lessons?

Jake: Oh, wow. There's a lot of them, Michael. I'm trying to think. I was on a big team, and I spun off to start my own. I think that was a great lesson to learn about leadership. So, the problem though, when I was on a bigger team, I wasn't a leader. And then I became a leader overnight, and I wasn't the best leader because I didn't know what I was doing. I was a good relationship guy. I was a good advisor. But I wasn't a good leader. So, I think that is something that I...a skill set I could have worked on sooner. It's taken me time to get that way. And I'm still learning.

But I think recognizing...and I just saw this, I think on Instagram, recognizing that as my team, it gets bigger also…I can't expect all of them to work as hard as me, or love this thing as much as I do. I have to remember that they're trading their time to work with me on...it's my purpose and we're aligned, which is great, which is important. But I don't need them to be me. I don't need them to work as hard as me to have a successful company. And so, those types of things.

And then recognizing that everybody's different and what works. One communication style may work great for somebody that doesn't work at all for the other person. And that's because we're human. And so, learning all the things I've learned about leadership is so important. And that's why we've gotten to a billion is the people I have surrounded myself with are fantastic. And they allow us to keep growing because I don't get distracted with drama, or petty mistakes, or things that dysfunctional teams have. That's another good one. "The Five Dysfunctions of a Team" is another good book.

Michael: Oh, yeah. Patrick Lencioni is fantastic.

Jake: Yeah. Another good. And by the way, "Influence" is a really good sales book. If an advisor feels like they're stuck, I think "Influence" is a powerful, powerful…

Michael: Yeah. Cialdini's book?

Jake: Yes. Yes. Really good. You've read all these.

Michael: I love these as well. I'm always eager for book recommendations. They're fantastic.

Why Jake Doesn't Use Mutual Funds and ETFs In Client Portfolios [1:20:49]

Jake: Yeah. So, I think leadership would have been a good one. And then another thing we switched on our investments that I would have done earlier looking back, we don't use any products, which is pretty unique. And that's actually helped us in the marketplace. But no ETFs, no mutual funds, no annuities. We literally buy and sell stocks and bonds for our clients. I really love doing it that way. And I think it's a very pure way. I think if I had to start over, I would have started that way if I was starting from scratch.

Michael: So, tell us more about that. Why no mutual funds, ETFs, annuities, and just stocks directly? Because I know there are people that do that purely for a, "I've got particular investment views I want to express, and I want to buy the stocks individually." But it sounds like that is not your version of why you're doing this.

Jake: No, it's not actually. So, I started out like most advisors using products, mutual funds, SMAs [Separately Managed Accounts], ETFs. And during '08, market corrections, the clients would blame me for the performance. I'm picking the funds. Even though I'm not, right? It's a third party picking the investments with a mutual fund. And I said, "Well, if they're going to hold me accountable for the performance, then I should probably be the one picking the investments." And so, Cory and I were working together, and we did this very slow transition where we would just...we used Morningstar to track it all. I remember we would build a stock portion of the portfolio, but then keep some of it in funds. And we very slowly started tracking the performance side by side so that we didn't do something reckless.

And basically, what we do is we use the same asset allocation methodology, but instead of products, we're just buying the stocks is what we do. And so, I believe in asset allocation, and modern portfolio theory, and mean variance optimization, all those things. But we've just stripped away the products, and it's very pure and very clean. Now, today we've become far more sophisticated. I've got two CFAs on my team and two traders. And they're in Bloomberg, and it's elevated past what me and Cory started. But the fundamentals are still there that we want to own the performance and the allocation. So, I just think it's a better story to tell clients that, "Look, if you're going to trust us with $4 million, we're going to be the ones buying each and every position. And we're going to know what you own and why you own it. And we're not going to outsource that."

Michael: So, is the goal ultimately...are you are you seeking alpha? Is the goal ultimately that the CFAs and the traders and the Bloomberg Research is we can build a better portfolio, or are you just trying to replicate market performance and strip out a product cost layer?

Jake: Yeah, good question. We lead with planning. And so, every client has a target rate of return based on the plan. Okay, so 6%, 7%, whatever it is, 6%, 7%, 8%, whatever it is. So, that is the goal is to hit the client target. Now what's interesting, though, is internally my investment management group, one of their KPIs is alpha because I want them to get rewarded if they are adding alpha to the portfolio. But ultimately, for our clients, we want to hit their target. We feel that's why they hired us is to hit their target. So, it's kind of twofold. I am not foolish enough to think that any manager can beat them. We all know that, right? No one can do that. And I'm not trying to be a hedge fund, or do a mutual fund, or claim that I know anything better than the others. So, it really boils down to stripping away the products, and then giving our clients the best chance to hit their target. And then internally, we are trying to seek alpha. We're trying to do that, knowing we're not going to be able to do that every year. We know that.

Michael: So, just help me understand, visualize a little bit more, what's the difference between, "We picked this fund, and unfortunately it underperformed. And we picked this set of stocks, and now we've calculated performance for the year. And unfortunately we're a little below the benchmark because we can't beat the benchmark every year."

Jake: Great question.

Michael: I mean, underperformance will still happen. So, what's the difference for you between, "That's a result of our CFA's work," versus, "That's a result of the manager that we picked and their CFA's produced this result." I mean, it feels like there's a distinction for you. I want to understand how does this show up differently for you or in the client conversations?

Jake: Yeah, I love it. It comes down to integrity. There is no one else to blame but ourselves. And we want to own that because I find that advisors will blame the mutual fund. It's never their fault. It's always the fund. And then they'll swap in another fund and hope to do better. But that's not right. And then also there's another layer of fees that their client is incurring. So, if they're using mutual funds or paying 80 basis points or 100, I don't know, and plus the advisor fee.

And so, they're double paying, in my opinion, for investment advice on that piece of it. And I know ETFs are cheaper, but my argument against ETFs are that they don't need me to go buy an ETF. If you want cheap, low-cost market performance, go buy an ETF and don't hire me to manage your investments. That's fine. But you don't need to pay me 80 basis points to go buy you SPY. Why would you do that? I don't understand why a client would ever do that because they're going to underperform SPY every year by 80 basis points, every single year, unless there's some weird rebalancing maybe that works in their favor.

So, to answer your question, though, it's the integrity. That's the difference. We don't have anyone else to blame and we own that. And I think clients value that. They know that. And there's no finger to point but at ourselves. So, it may or may not be better. We're owning the advice. We're owning the responsibility to manage the money for our clients directly. We're not outsourcing that to a third party. And we've had success, luckily. I mean, again, we haven't beat it every year. But luckily in this business, the market goes up more than it goes down. So, it's not hard. As long as you have a proper asset allocation, I don't think it's difficult to hit a client's target rate of return as long as your modeling is reasonable.

Jake's Advice For Newer Advisors [1:27:03]

Michael: So, any other advice you would give younger, newer advisors getting started in the profession today?

Jake: Yeah, I would encourage them to do what's hard, and to get out of their comfort zone. Again, if they don't have visions of being a founder, that's fine. But just do what's hard, and get comfortable being uncomfortable and you'll become a better advisor, or planner, or investment person, or operations, whatever you do on your team. I think stretching that and getting into the hard stuff, in time you will become really good at that hard stuff. And then you'll become more impactful to your clients and the company. There's nothing better than a young person that's willing to do something hard, in my opinion. I think that's a great way to...I think it's a very fulfilled career to do that.

What Success Means To Jake [1:27:52]

Michael: So, as we wrap up, this is a podcast about success. And it's always one of the themes that comes up is literally that word success means very different things to different people. And so, you're already on this wonderful path of success for the business as you're coming up on a billion dollars of AUM. So, the business seems in a wonderfully successful place. How do you define success for yourself at this point?

Jake: That's a great question. And I've worked on this a lot. For me, success is being in perfect alignment with your purpose. Now, I don't know anyone that is like that 24/7, so we have moments of success. We go in and out of success. And my purpose is inspiring others to live healthy and happy lives personally. That's what I want to inspire people to do. At my company, we want to enhance financial literacy or enhance our clients' lives through their financial planning. So, any way you can slice and dice that and look at it, but ultimately alignment with your...whatever that purpose is, if you're aligned with that, that's a pretty cool way to live. That's a pretty successful life, in my opinion.

Michael: I love it. I love it. Well, thank you so much, Jake, for joining us on the "Financial Advisor Success" podcast.

Jake: Michael, this has been tons of fun. Thank you for having me.

Michael: Thank you. Thank you.