Welcome back to the 178th episode of Financial Advisor Success Podcast!
My guest on today’s podcast is Daniel Zajac. Daniel is a financial advisor and partner with Simone Zajac, a hybrid advisory firm on the Lincoln Investment platform that oversees nearly $250 million of assets under management for nearly 300 clients. What’s unique about Daniel, though, is the way he’s driven an evolution of how the advisory firm markets itself, from the traditional approach of networking with local centers of influence and relying on existing client referrals, to developing a blog for those earning significant equity compensation from their employers that has turned into one to three new digital prospects for the firm every week, many of whom are bringing seven-figure accounts to the firm, even in the midst of the coronavirus pandemic.
In this episode, we talk in-depth about how Daniel built and developed a niche in working with those who receive significant equity compensation, including the years it took early on for Daniel to gain any traction with his blogging efforts, how pivoting to focus more narrowly on equity compensation accelerated his positive results, how Daniel selected equity compensation as his emerging niche in the first place, what Daniel focused on in the early years to figure out if he was on track when there were not a lot of new clients coming through yet, and how even today, Daniel has found that when blogging and marketing is focused on a niche, website traffic of just a few hundred visitors a day or a few thousand per month is sufficient to drive material new business results.
We also talk about how Daniel’s advisory firm prices and delivers its planning services to clients, the digital meet-and-greet session they start with every prospect to determine if they’re the right fit, the way the firm uses Dropbox in the data-gathering process to make it easy for prospective clients to share information, why the firm also offers tax preparation to clients as a part of its services, and how forming a niche has opened up new opportunities for lucrative hourly planning in addition to their traditional AUM business.
And be certain to listen to the end, where Daniel shares his perspective on why it’s so important to focus sooner rather than later, having struggled himself to find his own traction after his first five years as an advisor, how the path to specialization is really more about iterating incrementally deeper and deeper and not just trying to pick the perfect future niche, and the importance of recognizing that even if you commit to an initial direction, you can always pivot to another niche focus if you’re not happy with the results.
What You’ll Learn In This Podcast Episode
- How Daniel Found His Niche [00:04:17]
- How Daniel Leveraged Writing To Market The Firm And Attract Niche Clients [00:32:30]
- The Way He Attracts Digital Prospects Every Week And How He Determines If They Will Be A Right Fit [00:42:53]
- How His Firm Prices Its Planning Services [00:52:09]
- Why They Offer Tax Preparation As Part Of Their Services And The New Opportunities Forming A Niche Has Opened Up For The Firm [01:02:52]
- The Most Surprising Part Of Daniel’s Journey And The Advice He Gives To New Advisors Just Starting Out [01:18:50]
- How Daniel Defines Success For Himself [01:32:30]
Resources Featured In This Episode:
Michael: Welcome, Daniel Zajac, to the “Financial Advisor Success” podcast.
Daniel: Hey, Michael. Thanks for having me today. I’m a longtime reader, a longtime listener. A little nervous, I have to admit, today, but super-excited to be on the podcast. So thanks for having me.
Michael: I’m excited to have you on for a discussion around just the dynamics of, I guess kind of niches and building niches. Certainly, as people who are regular listeners to the podcast know, I’m a bit of a fan of building into niches or just some way to specialize and differentiate yourself in a crowded marketplace. And one of the things that I still continue to hear from so many advisors is just like, “What’s a good niche? How do I pick the niche? How do I make sure I don’t pick the wrong niche? What if I go down the wrong road?”
I know you have really spent the last couple of years building deeply into a niche, have had a couple of tosses and turns along the way, are getting a lot of traction now. And so I’m excited to have a discussion of just what does it look like when you try to create a niche, build a niche, when you’re building your practice in your 20s and 30s and trying to figure out like, “How am I going to make my mark and try to stand out in this crowded world and get some clients and grow my business in the long run?”
How Daniel Found His Niche [00:04:17]
Daniel: It’s something that I think we, I don’t want to say lucked upon. But just going through the process of getting up and started in the industry, growing up in a traditional, I’ll say practice that did a lot of retirement planning. We had a client several years ago now who had this equity compensation need, it just kind of fit our model really, really well. One thing led to another and now we’ve really focused my practice or our practice on equity compensation clients.
Michael: So for those maybe who aren’t even familiar, can you define this a little more? Like when you talk about equity compensation need and equity compensation clients, what kind of people or stuff or issues are we talking about here exactly?
Daniel: Yeah, yeah. So the thing that all of our clients have in common is they have equity comp as part of their compensation package at work, which typically includes incentive stock options, non-qualified stock options, restricted stock, and employee stock purchase plan. So the tie that binds all these clients is that as a big part of their total wealth.
Michael: Okay. So in some way, shape, or form, this is like a bunch of value on their balance sheet because a portion of their compensation from work is tied to equity: ISOs, non-quals, restricted stock, employee stock purchase. And so I guess you’re going to end out with this combination of, there’s a bunch of technical rules around how these things work. There are tax issues around how these work. There are unwind strategies about, “How do we de-concentrate you?” There may or may not be restrictions, depending on your role in the firm and what you’re even allowed to sell or not sell, or when you sell it. And the combination of those pieces together essentially forms a specialization for you?
Daniel: Exactly. Yeah. All those issues. It’s a typical financial planning client, but those are the key issues that we have unique experience in helping them with.
Taking a step back a little bit, two founders of the firm are both CPAs; I’m an enrolled agent. So we have a really strong tax background. A lot of the issues that you just touched on are financial planning, investment management, and tax-related issues as well. So we’re, we think somewhat uniquely able to help them with all of those issues, including all of that into the financial planning and the wealth management.
Michael: So talk to us in practice, what does it mean when you say you’ve got this specialization or deeper expertise in equity compensation? Is this like, you’ve got a completely different financial planning process? You’ve simply got particularly deep expertise here? You’re just the planning centers around this stuff? What does it really mean to say like, “This is where we focus” versus, “We do comprehensive financial plans? And of course, well, as a comprehensive plan, if you come in with incentive stock options, we give you some recommendations on your stock options.”
Because I feel like almost any advisor would say, “We do. Like, we studied this in my CFP classes, I can get up to speed and give clients advice on this as well.” What do you do or what does that look like that makes it different from other advisors that say, “I can do that too?”
Daniel: I think it’s a combination of doing it over and over and over again. A lot of our clients, when I compare them to our, I’ll say longer-term traditional clients, there are a lot of retirees, right? And retirees typically came to us when there was an actionable item. “Hey, I’m retiring,” or, “Hey, I got a company buyout offer,” or, “Hey, I need help rolling over my 401(k) because I switched jobs.” So something actionable that brought them to us in the first place. It’s the same thing just on the equity compensation side.
It’s, “Hey, my company granted me X amount of ISOs and I’m hitting my first vesting period,” or, “Hey, I’ve left my job now, and I have 90 days to exercise, what do you think I should do?” Or even tied into the traditional retiree who say, “Hey, I’ve retired and I’ve been participating in my ESPP plan for 10 years, and I have all this restricted stock and I’m not really sure what to do with it.” And, “Oh, by the way, I have ISOs and non-quals too because it’s accumulated over time and no one’s really paid attention to it. And I haven’t necessarily done any planning around it. What do I do now?”
So they’re coming to us because of the actionable event. Typically, this part of their compensation makes up a meaningful part of their net worth. And we, because we’ve done a lot of it, because we’ve studied it, because we have unique, we think expertise in it, we can get really, really technical and really, really granular on this topic, and provide really sound advice to the clients.
Michael: How much time does that end out taking you then, just to go this deep? Does this also mean you end out having to charge a premium because these are still really time-consuming, complex planning scenarios to dig into in the first place?
Daniel: They are complex technical areas to dig into, but the more you do of it, the more you know what to expect and the more efficient you become. So I think certainly on the front end, when we started in this area, we took a lot of time to really understand all of the rules and all the regulations and what we needed to know. And we learned each time, right?
But now that we’re doing so much of it, you become more efficient, you become more process-oriented, and you’re able to come to the solutions maybe quicker and your time more wisely. So I do think it’s a niche. I think that there’s a little bit of a premium on it because of the type of work it is. And I think our clients understand that too. And they want that expertise that goes with it.
Michael: Well, and I think there’s an interesting phenomenon that crops up with firms that move into these kinds of specializations that is sometimes lost. That look, for advisors that have been through CFP certification or just good at reading their books and doing some learning, we can probably figure out a lot of this stuff at the end of the day, right?
You went down the same road at some point. You had the first client that had these questions, and you had to research this stuff and figure it out. The difference, though, is when you’ve got a particular clientele that you do this for that you’re good at that you do repeatably, you end out with this repeatable expertise that says, by the 10th or 20th, or certainly the 30th or 50th client, there’s really not much left to research that you haven’t seen at this point, or at least if you do, you know exactly where to go and what to dig into because the other 98% of the client situation is entirely familiar. There’s just this one little thing that seems to be different. So I’m going to dig in on this further.
And you end out saying like, “Look, I have the expertise that some other advisor might be able to read and study and analyze and get up to speed on, but it’ll take me a fraction of the time because you get the accumulated wisdom of the last 50 clients that I did the same thing for. And I’ll probably be able to spot more and unique and different things as well if there is an exceptional situation for you because I’ve done so many of these, I also can quickly spot the unusual planning issues that might arise, whereas someone else who’s still learning it on the fly may or may not catch all that stuff because they have no context for what normal is if it’s your first time researching a client with this situation.”
Daniel: Yeah. And I think that’s where we add big value, is that first conversation when we’re talking to a new prospect or somebody that’s been referred or somebody that’s come through the blog is we hear that in the first conversation, because they’re often saying, “Hey, I’ve talked to this person or this advisor or this CPA, and maybe I’m not totally convinced yet, or maybe I’m not sure, maybe I’m just looking for a second opinion.” But when we have that conversation, I think they quickly realize that, “Okay, these guys are asking a lot more questions than other people have, or they ask a different way that I was able to understand.” And that’s where we show our value right away.
And then yeah, beyond that, you’re right, once you touch on things so many times, it is easier to identify the issues. It is easier to take them through the process that we take them through to get them to good solutions. And again, for a lot of our clients, this is…it’s not 5% of their net worth or 2% of their net worth. It’s not only in the ESPP plan that they’re coming to ask us about, this is often a material part of their net worth, 10%, 50%, 90%, pick a number. It’s a big part. So they want somebody who has a lot of experience doing it.
Michael: And so as you go through this dynamic with clients, you made an interesting comment there that just, it’s not just that you may come to the table with more and deeper expertise or at least more expedited expertise, because I’ve researched most of this stuff before. So I don’t have to do it again. It’s that, at some point, clients tend to notice like, “Oh, he seems to ask more sophisticated or more nuanced, or just more knowledgeable questions.” I think we’ve all had that experience at some point where you’re looking for someone’s expertise and they’re answering your questions and you’re thinking in your head like, “These are kind of basic questions. I was expecting harder questions about my situation than what you’re asking. I kind of feel like you’re still getting up to speed on this yourself.”
And when you have a complex problem and you hit someone that really truly has experience at it, it tends to quickly get noticeable, like, “Oh, this person’s asking a whole other level of questions than everybody else I talked to, they clearly know their stuff. They’re already asking me questions or highlighting things I wasn’t even thinking about yet. They’re two steps ahead of where I am. Oh, maybe I need to spend more time with this person?”
Daniel: Yeah. And I think that’s…like I said, I think that’s where we shine a little bit, is we are able to ask those questions. And they’re not overly technical questions all the time. A lot of times you would…if you heard them just in the casual course of conversation, you might not think, “Oh, that’s a probing question,” or, “That’s a great question.” But after you ask a series of simple questions and you help the client understand, “Hey, that’s an issue,” or, “That’s a concern,” or, “That’s an opportunity,” that’s where you can really start to make an impact with them.
And again, just having the experience, they realize that, “Hey, we’ve been down this road before. And if you’ve been down this road before, you might be able to help me get to a solution that I like sooner, better, smarter, faster, more efficiently, whatever it may be.”
Michael: So talk to us as you decided to sort of make your mark around equity compensation planning. So I guess my first question is just why, again, equity compensation planning? You mentioned like, “We had a client that had this complex need and we worked with them and went deep on it, and then it sort of became our thing.” But there’s other clients that come in with other things that you could have made your thing. Why did this end out being the thing that you said like, “Hey, we’ve got some clients with some needs, but we’re going to make our mark on this?” How do you pick that?
Daniel: I think it was a combination of things. I think it was a combination of one, that client coming to us at the right time. At that time, I had started my blog, and I started writing on…at that time it was really everything financial planning. What does a good retirement plan look like? What is an IRA? What’s a Roth IRA? Just very, very simple financial planning 101-type concepts. But at the time, I also wrote it on cash versus cashless exercise. Coincidentally, that was one of my best-performing articles on Google.
So I had a client who had this need. I had a blog where it wasn’t getting much traction at all. A lot of times it was just done as a labor of love, no real traction, but I have one article that worked. It’s also the way my brain works. I take the Kolbe tests and the DISC tests and I’m known as a Fact Finder, right? So I want to understand things deeply before I go out and advise to them. And this being a pretty technical area of the financial planning realm, it just fit really well with the way my brain worked.
And then we had the tax practice that I briefly touched on already. So the CPA background, me being an enrolled agent. It was really all those things coming together at the same time. So as I’m working with this client and researching these topics, I’m quickly realizing that one, there’s not a lot of people in this space. And a lot of CPAs are reporting on it and doing some planning, but maybe they didn’t even have all the answers all the time.
And then there were a lot of advisors who, like you said earlier, were touching on it and could get up to speed and provide some general advice. But no one is really, I’ll say digging into the nuance that I was looking for. So as I’m researching for the client, then I started writing more because that’s what’s getting some traction. And it just kind of all came together. The blog, after several years of writing, started to pick up a little bit with more of this type of content and with more hits on Google. This client turned into a couple more clients and it just really fell all into place.
Michael: I think it’s an interesting framing that I feel like a lot of the advisors we see that end out with some sort of niche or specialization have, I guess what I’ll call some kind of natural market or a natural affinity to it. We recently had a podcast with someone who specializes with management consultants at big four consulting firms because he…or big three, because he used to do that, and he left one of them, and then he went back and consulted for all the people in his own business.
We see a lot of career changers that switch into advising and make their specialization what they used to be in. I see a lot of advisors end out with things like, I specialize in teachers because my siblings are teachers, my parents are teachers, I’m from a family of five generations of teachers. I’m the only person who didn’t actually become a teacher. So I decided to make a niche out of teachers because I know them really, really well. Or I’m in the medical world because my spouse is a doctor and I see all the stuff that he’s dealing with and the other doctors at the hospital are dealing with. So I’m going to focus there.
And so we choose these things that we have some kind of connection or natural affinity for. And in some ways, I think it makes it a little bit easier to choose a niche that way because you don’t quite have to do as much research to understand that audience and what their needs are and what they care about because you already lived it, or are a part of it, or have a natural connection to it, and have probably already picked that stuff already.
Whereas the path that you chose, or the path I guess you just kind of ended out down and went deeper and it worked, was just kind of like, “Hey, here’s the thing that’s intellectually interesting to me that kind of fits my Kolbe Fact Finder tax-centric EA background. I think I’m going to do a little more of this. Oh, it worked. I guess I’ll do a little more. Oh, that worked.” And a year or a few of compounding later and it’s like, “Well, I guess this is my specialization now. All righty, then.”
Daniel: Yes, is really the short answer. The only caveat I would add to that is, it wasn’t a year, it was probably four or five years. From that first client to where we are today, it wasn’t an overnight success. I would love to say it was, but it was one client. And then I think a year later, we had another client. All this time I’m writing on this, I’m researching it, in addition to doing all the regular work we’re doing, in addition to doing, I’ll say your typical advisor marketing, where you’re going to center of influence meetings and chamber events, and whatever it may be to get your name out there.
So I’m doing all these things. I’m spending all this time. I’m kind of making a, I don’t want to say a bet, but maybe a bet on just, “Hey, I like this anyway. So I’m going to write about it. And even though it’s not turning into anything quite yet, hopefully, it will.” And it did.
But it certainly wasn’t six months or a year later. I would say, again, between that first client and really the past year or 18 months when it really turned on, there was a 4- or 5-year gap in the middle where it was a lot of work, and a lot of energy, and not a lot of payback.
Michael: So a couple of questions then. One, I guess how long did it take from when you decided like, “I think I’m actually going to concentrate on this more and at least maybe try to make it a thing” until you really feel like you started to see some material results from it?
Daniel: I would say probably three years.
Michael: And so it took about three years to get momentum. I guess first or next question is, how do you keep the faith for three years? That’s a long time of writing blog posts and continuing to grind and putting more stuff out there. How do you keep the faith and keep focused that long through the grind?
Daniel: Yeah, I think there was little successes along the way, right? And I think that’s what keeps you going more than anything, is little successes along the way. So when I was writing, I didn’t go into full transition on the blog into equity compensation only. I was still writing on other things I found interesting. I wrote on a little bit of business succession. I wrote on, again, financial planning 101, or 201, and then I would sprinkle in some equity comp.
So it was gradual, but again, even the little successes tended to be on the equity comp side of things. So through that timeframe, it wasn’t nothing, nothing, nothing, nothing. It was just little successes, little increases in Google traffic. Again, I did pick up a client or two along the way. I did pick up some positive feedback in terms of, “Hey, I read that post and…I never really got this until I read that article. And now I kind of get it a little bit. And thanks for that.” So those little successes let me know that, “Hey, I’m onto something here and I’m willing to continue to go get it.” And I think that’s a little bit of my makeup, just kind of setting the big goal, so to say, and being willing to take those little steps to try to get there.
Michael: And I was going to ask, you mentioned a few in there, but when it’s so long to get going and kind of so potentially far and few in between and having some of those positive success moments, what were success moments for you? Just even trying to figure out the broader question of, “Is this working?” Maybe not to the level I want yet and I’m dreaming of, but just trying to figure out like, “Is this working at all?” How were you figuring out, “Are we even on the right track?” What constituted little successes?
Daniel: I think little successes, little things again, like…and I touched on a couple, but you see your traffic go up a little bit on Google. And that’s good. That’s a success. That’s exciting. You get an email, somebody said, “Hey, I read this,” or, “That made sense,” that’s a success. And again, it wasn’t no clients at all. So every time you would pick up a client or two, that was enough to keep me wanting to go forward. That was enough, in addition to other business outside of equity comp that was just coming in by continuing to do other marketing efforts too that it was enough to keep it going. And I know those are small things, but for me, they were enough. And I knew that I was getting better, and I knew that the clients that were coming in were the clients that I wanted to work with. And they were good-sized clients and clients I liked and clients I wanted to work with, so it was worth it. Just for that side of it, to see those little successes just continue to feed off one another.
Michael: Well, and it reminds me a little of the old traditional approach when advisors get started in sort of the classic sales roles. I started when cold calling was still a thing. And one of the first things they would hammer into you early on when you start cold calling is like, you can’t actually evaluate your success by the clients you get. Ultimately, the whole point of this is getting clients. It’s why we do marketing and sales strategies, whatever they are, whether it’s cold calling, or blogging, or niches, or whatever it is.
But early on, it’s so uneven, it’s so sort of lumpy, there’s so much activity that has to happen for one client to actually turn into a client that often the recommendation early on was like, you don’t look at clients that you get. Yes, that’s the ultimate end goal, but you have to measure the activity and whether you’re getting the positive incremental steps of the activity.
So like, you can’t necessarily look to how many clients you get, but…well, back then, but you can measure how many cold calls you did. You can measure how many cold calls turn into an actual conversation. How many of the actual conversations turn into a warm lead, how many of the warm leads turn into a meeting. And if you saw incremental little successes on those, then at some point it was just a numbers game. If you do enough of those, some clients are going to shake out. And then you can figure out how to do that process better, more client shake out. And if you can figure out how to do more volume, you get more business out of it.
But it was much less about trying to measure clients early on and much more of kind of a similar thing of measuring activity and incremental improvement of the activity, kind of the little successes as you frame it. And recognizing like, if you keep having little successes and they compound, it will add up to something at some point. But it’s sometimes easier to celebrate the little successes than what can still be very long, dry spells between getting actual clients and business in the early years.
Daniel: Yeah. And again, this was just clients from the equity comp. So there was not as much as I wanted, but enough clients coming in elsewhere that it was still working. But you also have to think that I was learning this at the time, too. So every time a new client came along, what we touched on earlier was you had to dig in, and you had to really kind of roll up your sleeves and say, “Okay, what’s going on here? And what are the rules and why? And how does that integrate into a financial plan?” So when those clients were coming, even though they were few and far between, it was taking a lot more time to service them because you had to know what you were talking about. And that took time.
So I’m learning, I’m servicing the clients, and then I’m writing. And writing takes a lot of time. Each article would take long enough to get it to a spot where I wanted it to be. That would take time, too. But that would also make me better because if you can write about it, then you could talk about it. And all those things were the building blocks for what it’s become today for us.
So it’s funny to think that it was a couple years of time and energy to find some real success here. But I don’t look at it as it ever being a grind. And I know that probably sounds…some people might not believe that, but it was, we were always kind of working towards something. I don’t think there was ever a question of, “Hey, is this not going to work?” It was fun. I liked doing it. So it was easy to do. It just happened that it started to roll faster for us and then things started to fall into place.
Michael: And so was there ever a challenge of justifying the time you were spending on it or anyone saying like, “Daniel, why do you keep doing that blog stuff? Just go to a networking meeting already. What are you doing?”
Daniel: Yeah, internally there was, I think a lot of that. It was a lot of, “Where is this going?” kind of thing. And there was a lot of, “Why is so much time being spent on this?” or, “Why is Daniel not in the office? Because he’s ‘writing'” So we had all those conversations.
Michael: I like how they couldn’t even just say you were writing, they had to say you are were “writing.”
Michael: We air-quoted that?
Daniel: Yes, I did air-quote that behind the scenes here. Because when you’re not in the office, people have no idea what you’re doing, right? But it was time in the office, but then it was also nights and weekends and mornings and whenever you can find time to get it done, so to say. So it was time in the office, but priority was the existing business and clients. And then spending a lot of time on my own. Again, just because I liked doing it. I liked learning about it. It was new and interesting. And again, I was having enough little successes to kind of keep it going for me.
Michael: Was there a point where you said like, “Okay, I think this is actually going to be my thing? It’s working. It’s going to work. It’s going to be my thing.” Because I’m imagining at some point, there was doubt. Now it seems there’s no doubt, you’re all in on this. So was there some transitional moments when you said like, “Oh, man, I think this is actually going to work and be my thing?”
Daniel: I would love to say there was a moment. I can remember once or twice in the office being super-excited when we had some clients who weren’t local come on board. And I remember running into the office and being like, “Yes, we have one!” Because it’s a big commitment for someone to find you on Google, to give you a call, and then to trust you to help manage their finances and create a plan.
I can remember a moment or two in the office when that happened. But then after that happened, it just happened more and more. And at this point, to us, this is a lot. To us, this is a great number, but it’s not atypical for us to have one to three new meetings a week just from people finding us on the internet of really qualified contacts that we can talk to. Yeah, there wasn’t a moment. It just kind of picked up speed, and that’s where we are now.
Michael: So, in retrospect, is there anything you could have done to make it faster or that you wish you’d done differently as you were building in this direction, or is it just like, it takes three years?
Daniel: I think that I don’t consider myself a great marketer. And I think that you have some stuff out there, the odd marketer, go out and educate and see what happens. And I think that’s a lot of what I do, is I try to write about this stuff in a very simple way, a way that’s easy to understand. I post on my blog.
And I’m very limited in my LinkedIn interaction and Twitter interaction and just promoting, repurposing the existing content. I just kind of let people find me how they find me organically. And I think that having a better process behind that even today would certainly help us get this out to even more people.
Looking backwards, finding a better process earlier would have probably sped up the time between nothing, nothing, nothing to the snowball effect. But that’s a hard sell internally when there’s not much coming out of it. So if there’s already questions of, “Hey, what’s Daniel working on?” or, “How long is this going to take to be successful, to add additional resources and time and energy?” that’s all difficult to do.
How Daniel Leveraged Writing To Market The Firm And Attract Niche Clients [00:32:30]
Michael: So I’m struck, though, your sort of making a distinction that you got some of your traction and traffic basically from Google, like search engines found you and your unique specialized content because lots of people have written about how to create an IRA and what it is, but not very many people write about optimal strategies to liquidate your ESPP.
So you got into a more specialized realm and Google found its way to you. But I’m struck as well that when you’re talking about “How else could we have gotten it out?” you’re sort of talking about other things beyond Google…relying on Google organic search of social media and repurposing content. And I guess basically, other ways to distribute the content is where you wish you’d spent more time or focus?
Daniel: I think that that would have certainly helped accelerate us, i.e. getting resources out there. Maybe being more direct with our local market as well, hitting more centers of influence to say, “Hey, this is part of the story and here’s what we’re doing and here’s why we think we’re uniquely specialized to do this, the type of clients we’re working with.” So I think having that outreach, I’ll say more nationally through the Googles and the Twitters and the LinkedIns and social, as well as more of a concerted effort internally or locally is probably a better way to say it. Reaching out to the key influencers in the area would have been another secondary strategy we probably could have put more energy into.
Michael: So not necessarily changing the content itself, but just saying, “How can we drive more reach, readership eyeballs, whatever it is?” Like more results for the content we’re creating, as opposed to, “I wish I’d written more content.”
Daniel: Well, certainly content is king. If you can write more, the more you’re going to show up, right? And the more times that people are going to have the opportunity to share you and link to you and all those other good things that make SEO so great. So additional content would be great, but then getting that content out is just as good.
Michael: And in practice, how much were you writing? Like, how many articles? How often? How long were they? What kind of content stuff were you creating that worked for you?
Daniel: An article for me was somewhere between about 1,600 and 2,500 words per article. So it was a little bit longer than the short-form stuff. It wasn’t as long as stuff that you typically put out, but it was somewhere in the middle too.
I think the goal is really to try to identify an issue or two, or an opportunity that gives some substance beyond just the stuff that was already so readily available. Maybe it was a different way to say something, or maybe it was an additional insight that I had, or maybe it was something I took away from a client experience, just something that I felt that wasn’t maybe as obvious or wasn’t talked about enough that I don’t think I could have collapsed into a 300 or 500-word article. By the time you put an intro and a footer on there, it needed to be a little bit longer to give a little bit more, I’ll say meat on the bones.
Michael: And so it wasn’t necessarily that you were literally trying to write like, “I must have at least 1,600 words on this topic.” But just by the time I talk about an issue, identify something of substance, give some comments about the thing itself, give kind of a takeaway or two at the end of that. I roll all that stuff together and it’s like, “I guess that was like 2,000 words or so.”
Daniel: Yeah. And I would love to say it was more thought out than that, but that’s really what it was. It was, “How long is it going to take me to get this point across that I’m trying to talk about?” And that’s the article. That’s what it’s going to be. And just what I found, they’ve become the cadence to writing and kind of a fluidity to it. And my articles, by the time I got to that point, were typically 1,600 words, 2,000 words, sometimes a little bit longer than that.
Michael: And so you noted that writing isn’t your thing. You said like, “It’s hard for me. It still is,” yet on you go, writing articles, trying to get them out every week. So I think you are certainly not alone amongst the people that have said like, “Yeah, I think I’d like to do some of this. And I think maybe I have some expertise to share or learn. But writing is not my thing.”
You have certainly not allowed that or had that stop you. So how do you think about just, “I do all this writing, but I’m not a big fan of writing?” Or how do you get yourself through doing all this writing when it’s hard for you to do all this writing?
Daniel: I don’t have a great answer for that. I think that it’s just about putting the process together. What I’ve learned for me is that when I know I need to write, for me, it really takes blocking off a set of time and saying, “Hey, here’s the time I’m going to write.” Because the hardest part for me is sitting down and starting to get my thoughts on paper. Once I’m there and I’m 5 or 10 or 15 minutes in, I could sit there for a couple hours and write, no problem.
It’s just the hardest part is for me just getting started, right, getting over the hump, or getting the first few words on the page for an idea. So for me, it’s just about saying, “Hey, I know I need to write. I have these topic lists that I want to write about. I’m going to put away Friday afternoon or Friday all day, and I’m going to write on Friday.” And at this point everyone…it’s blocked on my calendar. Everyone knows, “Okay, Daniel’s going to write this day” and I go and write. So it’s just about…it’s about kind of carving out the time and just committing to sitting down and doing it.
Michael: Interesting. And so the actual act of blocking off time, it sounds like, is a pretty big factor and driver for you on this. Just putting time in your calendar, “This is my writing time.”
Daniel: Yeah, absolutely. For me, I’m best when I’m in somewhat of a routine. If I can block time on this day or that then I know, “Hey, this is what I need to do.” It’s worked for me. It’s helped me say, “Okay, this is a writing time. I’m going to get in the zone.”
And it is not perfect, the time moves or some days I’m a better writer than others, but you just…it’s working. And I’ve learned to, I think write like I talk. And that seems to have struck a chord with people when they read my articles.
Michael: Are there other pieces of, I guess the process of what you do just that helps you get through it and get over the roadblocks? You just said like blocking off a chunk of time is a big piece for you. It sounds like just brain dumping some thoughts so you can get through the pain of the first 15 minutes is a big one for you.
Sort of reminds me, it was like a sports metaphor there of like running through the initial pain, and then it gets easier for your run or your exercise. Are there other things along those lines of tips or stuff that you found that works, that helps to power through?
Daniel: I wish I had a great answer to that. No, I’m not sure I do, to be honest. I think it’s just about sitting down and doing it. I think that it’s easier now because I see the impact that it’s having. I see that I’m getting some education out there, which I love.
And we’re having prospects reach out to us, which, again, is great for business. And it’s still something that it’s difficult, but it’s still fun. Hard things are fun. And it’s not the most natural, just because I didn’t grow up writing.
But at the end of the day, you put the effort in, and then you have something that is usable and educational and informational. And that makes me feel really good. And that’s what keeps bringing me back. The fact that, hey, there are people reading this. And that’s fun. I like doing that. And to see the end product is great. And I love that. And that’s what keeps bringing me back.
Michael: And did you ever try pursuing, I don’t know, like writing classes or anything like that, or just done your thing that works for you and evolved it yourself over time?
Daniel: At the beginning I read books like “Elements of Style” and “On Writing Well.” A couple books just about writing in general, that gave me some good insight. I have…
Michael: Any particular ones you would recommend, like memorable or especially helpful for you?
Daniel: I think “On Writing Well” is the one that pops in my head right away, which just gave me some good insight into just writing 101 and how to say things maybe in a way that you wouldn’t otherwise.
And now there’s technology. I use things like Grammarly. And I do have an editor that now go through and scrub some of my articles and clean them up for me a little bit, which is nice because it’s really…my natural ability, I think, is, like you said, do the data dump, right? Put everything on paper. But it’s nice to have someone come in and polish it up and say, “Okay, we can say this a little bit more clearly this way,” or, “Change these words,” or even grammatically, “How do we update this a little bit more clearer?” So that’s part of the process now for me.
Michael: I think you make an interesting point of just other tools to help as well. So you mentioned Grammarly, which for those who aren’t familiar is just like a plugin that will look at your writing and help you spot everything from typos to grammar mistakes, right? Because typos are pretty straightforward to fix, grammar mistakes sometimes are harder to catch. And it just…there is software to help do this now, as well as people to help. So you say you’ve hired an editor or taken on an editor as well?
Daniel: I have not hired an editor, but I do have a consultant editor who I use for some of this stuff as well.
Michael: And so how do you find an editor to help?
Daniel: I found her through…trying to think. It’s been a couple years now, but I think it might have been through the FinCon community is actually where I ended up finding her. Just kind of asking around a little bit. That’s where I think I found her.
Michael: Is it someone that still does other editing work, someone you want to recommend for our listeners, or are we going to gobble up all of her time?
Daniel: Well, I think…candidly, I think she does other things as well. Her name’s Kali Roberge. I’m not sure I’m going to pronounce that right. And again, I found her through LinkedIn, or I’m sorry, found her through FinCon, I think, a couple years back. Yeah, she does all of my editing.
The Way He Attracts Digital Prospects Every Week And How He Determines If They Will Be A Right Fit [00:42:53]
Michael: So tell us what this looks like today. You’ve spent years building in this direction, what does it look like today of the practice as it exists, and these niche clients that are coming in? I’m presuming other clients that were not niche because they built up with you along the way before this was your thing. Paint us a picture of the advisory firm as it exists today.
Daniel: Yeah. I think I touched on, our practice was built on the very traditional retiree client, DB plan, DC plan, IRA rollovers, how much money can I spend in retirement? That’s still a big part of our practice. I think that’s a part of a lot of people’s practices out there because we’ve had a lot of those clients for a long time.
The newer clients coming into the firm, generally these equity compensation clients. So, again, we typically have maybe one to three new prospect meetings a week that are finding us through Google and other sources. And what’s interesting is the web has flown out now from that. So now we’re getting additional referrals from that. The process is, I think it’s very typical of any other firm that’s out there. It is a fact-finding conversation at the front end of it. We typically use the video software that’s out now, whether it’s GoToMeeting or Zoom, or whatever it may be.
Michael: What’s your video conferencing software of choice?
Daniel: We were using Zoom, but compliance actually gave us a no-go on Zoom recently, but I think that’s coming back. So now we switched over to GoToMeeting. And they’re all really good. I think that each one has its own intricacies. But I think, generally speaking, we like them both. And we’re happy to use both.
Michael: Having now lived in both for a while, what do you find is just, I guess either easier for you to use or easier for clients to use? Do you have a leaning between them?
Daniel: Yeah, I think Zoom is really easy to use. I really do. And it’s funny, just now in the environment we’re in, everybody is using Zoom. But it really is just super user-friendly. So I’d have to lean that way if I leaned anywhere.
Michael: And so, because now you have this expertise around equity compensation that’s not necessarily specific to the area, just it’s an interesting point that you need a process for meeting with clients initially virtually with video conferencing, because not everybody who types these Google searches in your area, you end out getting prospects that could be anywhere.
Daniel: Yeah. We’re just outside of Philadelphia, it’s kind of the home office for us. And the clients now that are finding us are literally nationwide, everywhere from the West Coast – California, Oregon, Washington – down to Florida and Texas, off the East Coast border and up through Massachusetts and everywhere in between, too. So our clients are really all over the country at this point.
They typically send an email because they found us on the blog, or use Calendly, which is also on the blog, to schedule a meeting. And typically they say, “Hey, we’ve been reading for a little bit and I’d love to set up an initial consultation.” So that first conversation is typically about 30 minutes or so, just kind of a meet-and-greet, get to know you, are we a good fit for you, are you a good fit for us. And we talk.
And at the end of that meeting, it’s really a great point, and it says, “Hey, if it makes sense for you guys, if we think we’re a good fit for you, let’s reconnect and have that hour-long data dump,” so to say. That deeper dive into, tell me about your goals, some of the expectations. Tell me about what you’re trying to achieve, your income, so on and so forth.
We use Dropbox commonly to get all their information. So that hour-long meeting is typical of any meeting. It really is just say, “Let’s learn about you, and let’s learn about us.” And then all the technical stuff, we just have them put into a file, tax returns, plan documents.
Michael: So you make a new, different Dropbox folder for each client and share that Dropbox folder to them?
Daniel: Yep. Yeah.
Michael: I guess I’m presuming like, compliance is fine with that. They thumbs-downed Zoom, but they’re thumbs up on Dropbox?
Daniel: They gave us the okay on it. Yeah. So Dropbox was okay.
Michael: Okay. So each client gets a Dropbox folder, “Hey, just toss your stuff in here.” And then obviously, it syncs right up to you. And you can take a look at their situation, understand further the numbers and the technical detail stuff.
Daniel: A lot of that stuff to go through the detail with a client over a call is almost not necessary on the front end. And we just find it to be a lot more productive to say, “Hey, just throw that all in there and let us just look at it. Because now we know what we’re looking at, we know what we need to see, we know how we want to see it, and we’ll get back to you at that point.”
So it just saves time. We need to know more than anything the qualitative stuff, right? What are you really trying to achieve? Tell us about your goals. Tell us about your family. That’s the stuff we need to hear from you. The technical stuff or the quantitative stuff is what it is, right? We can look at your documents. We can pull all that. We could see what the numbers are. And it’s our job to bring that together, right? It’s our job to work with you to bring together our conversation, and then everything else that you’ve given us.
Michael: So, how does this process flow from there? Like, I find one of your articles, it looks interesting, I’ve reached out, you schedule an initial kind of virtual meet-and-greet. So we get to know each other. You asked me to give some additional financial information via Dropbox. I’m presuming we’re still in the prospect phase here. Then what comes next in this kind of journey towards getting a client, particularly getting a virtual client?
Daniel: Then comes the presentation effectively. So we’ve done all we need to get quantitative stuff. You sent us the data. And then we may say, “Listen, give us two to four weeks of time. We’re going to do some due diligence. We’re going to do an analysis of everything we see. We’re likely going to come back with questions. We’re likely to come back with concerns,” or not concerns, “Additional information we may need.
Then we’ll come back to you and we’ll do what we call a presentation meeting. So basically, in that presentation meeting, we talk about everything. All the things that you’ve uncovered, all the things that we’ve uncovered. We put together some observations, we put together some recommendations then we start to build the financial plan and the investment solution.” So that meeting we typically say is 90 minutes or so, where it’s, the first meeting is you talking about you.
The second meeting is us giving you feedback on everything that we see and everything that we do. And then at the end of that, there is a specific list of recommendations and observations that we give clients. That includes things from investment management to stock option strategies, to cash flow projections. We use eMoney primarily as our go-to resource. And that’s what we use for all the plans. And they get documents for all that as well.
Michael: So for clients that you’re going through this process with, you kind of queue up to observations and recommendations. So this is still in prospect meeting phase. And if they say like, “Yes, we want help with this,” then essentially, then they would engage you as an advisor and you’re getting compensated as you go through and do implementation? How does this work at this point?
Daniel: I would say the vast majority of our clients, Michael, use us, I’ll say the traditional way a lot of advisors get paid. We’re compensated through assets under management, right? So the vast majority of our clients say, “Listen, we love what you could do. We want this fully integrated investment management, financial plan, tax planning under one umbrella. We understand you’re compensated through the assets. We’re going to implement through you, and we collect an asset fee for that or an advisory fee for that.”
For clients who don’t want to go that route, which is some, because a lot of these clients, when you think about the equity comp world, a lot of them might have all their money tied up in company stock, and there might not be any liquidity options for any number of reasons. So they might not have assets that necessarily fall into that traditional model. Or they might just want information and education on this part of it, because, for whatever reason, they’re comfortable doing their own investment management, right? But they do recognize that, “Hey, I have a need here, and I want some professional advice.”
So we do have some clients who use us hourly as well. To be honest, it’s a model that I never really thought that I wanted to get into, the hourly model, because just the concept of tracking time. And it was a little bit of a new addition to our traditional advisory model, but it’s been a model that clients have wanted and have used. So we’re happy to work with clients that way too, just to provide them the advice and do a financial plan and give them the recommendations. And some clients work with us to implement those, and other clients say, “Hey, I’m going to do it on my own.” And that’s okay too, because we recognize that we have this unique ability and this specialization, and we continue to do it.
How His Firm Prices Its Planning Services [00:52:09]
Michael: And so what do you charge for clients that are going to be hourly and not AUM to make this work for you as a business?
Daniel: We charge $300 an hour.
Michael: And is that just straight hourly? Like, however many hours it takes us to do this incentive stock option analysis for you, we’ll bill you that much? Do you tend to like project-fee it? We estimate this is going to take you six hours, so we’re going to charge you $1,800 for this analysis. How do you actually handle hourly engagements?
Daniel: We just bill the time. So we typically say on the front end, “Hey, it’s going to range anywhere from 5 to 15 hours.” Right? Because I want to give them a scope of magnitude of what it could be. Then once we get the documents, we’re able to see what’s going on and say, “Okay, well, there’s only one lot of stock option. This is not going to take as much time as someone who has multiple stock option grants over multiple timeframes.”
So we give them an estimate. And then we bill on actual time spent on their case. I think what clients… That front end, again, I quote that 5 to 15. I’d say that front end work for more of a strategic plan. I think it’s pretty typical. I’m going to say it takes normally 7 to 10 hours, I think, of time for us to give them that first run-through with 1 or 2 iterations on it. And that’s something that the client will use and walk away with.
The interesting part about equity compensation is…and I think this is actually for a lot of planning in general, but it’s not really a one-time set it and forget it-type solution, because, especially, I’ll say with equity comp, the stock price is going to move between now and three months from now, right, and potentially materially, right? So if you get three months down the line, what we set in place today, while strategically sound, might have some technical changes because of a moving stock price, for example. Oh, that front end, I said typically takes 7 to 10 hours, but more longer-term, it could be additional work if they want us to do that for them.
Michael: So, how does this come together? Do you give them a choice, like, “We can work with you on an ongoing assets under management basis or an hourly basis?” Do you start with like, “Here’s how we work on an AUM basis,” but then if they say they don’t want that, you give them hourly as a second choice? How does this actually get presented to them as solutions or options?
Daniel: Yeah. And I think it’s, “Hey, we typically work with clients. The vast majority of our clients work with us through an asset under management. This is what that fee is for us to manage your assets. For that you have comprehensive financial planning, investment management, tax planning, so on and so forth. But if that’s not for you and you’re not comfortable with that, we can certainly work with you on this hourly side, and where we just bill you for time. And it’s really simple and straightforward. We’ll do all the same work based on what you’re looking for us to do, and we’ll just bill you for the time spent.”
Michael: And do you ever worry offering hourly is going to cannibalize the AUM and someone says like, “Oh, wait, I can just pay you for a few hours and I don’t have to move a portfolio?”
Michael: Yes, it happens, or just yes, you worry about whether it might happen?
Daniel: Yes to both. Yes to both. I think that you’re right. It’s a weird dynamic, right? There’s this whole issue right now of…not issue but this whole breed that’s out there wanting to push subscription fees or hourly fees. And I do think there’s a market for that, right? But there’s also the traditional AUM model, which, again, I think is…to be fair, I think that’s our preferred model. I think that’s the model where you can fully integrate things and give this totally sound solution.
But there’s a lot of great work that can be done at hourly rates, too, and we don’t want to push those people away. And I think one of the pain points we’ve been having with growth, speaking freely, Michael, is that I want to work with these clients who maybe aren’t committed to an asset under management model, or maybe don’t have the assets to do that now, but I want to help them and I want to work with them. So what’s a way that works for them and what’s a way that works for us, too?
Michael: Because you are still getting paid $300 an hour. It’s not like AUM or pro bono work here. We are still getting paid.
Daniel: Yeah, exactly. We’re still getting paid. And it’s… clients are often coming to us for…we are still getting paid.
Michael: And so at the end of the day, like, yes, it may cannibalize, but no, it doesn’t stop you?
Daniel: It’s an evolving question. It’s something we’ve talked about, and it’s something that we’ve tried to figure out. I just think it’s a hard question also to ask somebody to commit future assets to something they’re not really sure of quite yet because it is such an unknown, I guess.
Michael: So do you get clients that progress? Like they take you for hourly and then they end out becoming AUM clients anyways?
Daniel: Yeah, absolutely. Absolutely. Because I think that what clients realize is, “Oh, man, there is a lot of value here. And now that I am sitting on all this cash, I do think I want some professional help managing the money as well.” And we’re just kind of first in line at that point to help them with that need too. So we have a lot of clients who have started hourly and progressed into that traditional asset under management model.
Michael: If they move over and do that switch, do you do a like, “We’ll waive your hourly fee if you become an AUM client later,” or is there some blending or just like, “Hey, we worked with you on this, and then if you decide you want to do that, we are happy to work with you on that as well going forward?”
Daniel: It’s typically the latter. The time we spend working on your case was time spent. And if you want to move forward with this, we’re happy to do that as well. Now we won’t charge you hourly because we’re going to collect revenue through the asset under management side of things.
Michael: But if they do decide to be AUM upfront, you don’t do a separate planning fee for the subsequent work. That’s just bundled into the aggregate AUM model at that point?
Daniel: Yep, that’s correct.
Michael: And is there an asset minimum that you have just to run the business and make sure that math works for you?
Daniel: We don’t have an asset minimum. It’s something we’ve kicked around. Generally, the clients who are coming to us would meet a necessary minimum for us. So it’s not something we put a hard-and-fast on. That kind of gets to the right fit conversation on the front end. If we do a good job in that 30-minute conversation, we’re going to understand whether we’re a good fit for you or not and whether we can help you or not, and whether you’re a good fit for us and vice versa. So we typically identify that early and go from there.
Michael: And so help me understand kind of the amount of planning work and stuff you do leading up to observations and recommendations in this kind of initial proposal meeting when then you ask them for doing business with you, versus what you do after that meeting if they decide to become clients, or particularly if they’re going to engage you for hourly work. What are they ultimately getting after versus before and leading up to that meeting?
Daniel: Yeah, I guess maybe the distinction I wasn’t clear on in the front end was, that conversation is typically in maybe that hour-long front end piece. So if somebody is going to be an hourly client, they do sign an engagement agreement, they sign an advisory agreement that we’re going to bill them hourly. And then that presentation meeting and all the due diligence we do to get to that presentation meeting is time that we’re going to bill them for, right?
Typically, that client who is going to be the advisory client, who’s going to come over and say, “Hey, we want you to manage all of our money,” we are going to put together an investment proposal for them. And we are going to do that. And we’re going to get that agreement, so to say, on the front end. Well, we’re going to have that conversation that, “Yeah, we are going to want you to manage the money. Here’s what it’s going to look like. Here’s the investment strategies.” And then, because they’ve kind of verbally committed to doing that, now we’re willing to go ahead and do the rest of the financial planning work for them.
Michael: And so when you get into this kind of equity comp work, in particular, I think you said you’d use eMoney for your planning software. Can eMoney handle the stuff that you do in this area?
Daniel: I think eMoney is the best of the options in terms of financial planning software when it comes to what’s available for equity compensation. They do a really good job of allowing you to enter individual grants, transaction history, the tax planning module there is really strong. So from that standpoint, I think they do a really good job of getting all the data together.
When you get into, I’ll say more granular strategies and implementation of, we want to sell this lot, or we want to sell partial this lot, we want to exercise that, that’s where it gets a little bit more technical. And that’s where we rely on things like Excel behind the scenes. And then having a tax practice as well, we also have Lacerte, which is a tax planning software which we can model tax returns to. So just the nuance of this stuff, eMoney does a really good job, I think, of, I’ll say the basics, but to get really detailed on it, we do use a combination of eMoney, some Excel spreadsheets that we’ve made, and then actual tax planning software.
Michael: Interesting. And so what does the firm look like overall at this point in terms of number of clients, number of advisors, asset base? Help us understand the overall environment that you’re working in.
Daniel: Yeah. So the firm is Simone Zajac Wealth management, and we have five CFPs. Jim and Rick are the founders, both CFPs and CPAs. I’ve been with the firm since 2004. Ben has been with us since 2009, I believe, also a CFP. And then we actually purchased an RIA several years ago but integrated that, and the gentleman that came with us there, Michael, is an advisor as well in the firm. And then we have an admin staff of two to four, depending on the time of year, that helps us kind of with all the administration side of things.
Why They Offer Tax Preparation As Part Of Their Services And The New Opportunities Forming A Niche Has Opened Up For The Firm [01:02:52]
Michael: It’s a wide range of admin staff. Is that because you actually…as CPAs and EA, are you doing tax returns as part of your business with clients?
Daniel: Yeah. So we do have a small tax practice. And you’re right, that is part of that process. So there are two full-time and then two part-time, depending on the time of year.
Michael: And so is tax preparation something you do for all clients, for some clients, like part of the AUM fee, billed separately? How does that side work?
Daniel: It’s funny, it’s an area that we’ve actually…we’re a little bit getting away from, to be honest. But then as this equity comp stuff came, it’s actually an area where when you’re dealing with equity comp, you’re kind of doing a tax return anyways, a lot of times, because a big part of it is managing the cash flow, understanding alternative minimum tax, understanding how much tax you’re going to pay or the AMT credit.
So there’s so much tax planning and cash flow planning that goes on with it that you’re kind of doing a tax return often anyways, or at least projecting a tax return is a better way to say it. So naturally, we would say, “Hey, we should offer this as part of our service.” And we do offer as part of our service. And as we’re doing more, it’s becoming more common that we will bring it in-house. We do bill for it separately. Right now it’s not part of any other engagement. It is one fee that’s totally outside.
But we also wonder, you mentioned cannibalization earlier, if we are cannibalizing other relationships. And we do like having that separation of powers a little bit to say, “Hey, let’s have another set of eyes looking at this. Let’s have another person on the team.” So we do refer a lot of it out as well. And we’re totally comfortable doing it that way too.
It’s actually a little bit more client-driven than us-driven. Some clients like having the fully integrated story. Some clients still like doing their own tax return, even though they can get pretty complicated. And then other clients like having that third-party to say, “Hey, let’s have that third person on the team.” And we’re happy to coordinate with their existing CPA or refer one of the CPAs out that we’re comfortable using. So the model is really open-ended in that sense.
Michael: So I guess functionally this is, I guess an accommodation or a nice additional service to offer but not something you necessarily push as core to the business or a growth engine per se, just like, “Hey, we have this expertise. If clients want us to do it, we’ll do it. And if they don’t want us to do it, that’s cool, too.”
Daniel: That’s exactly right. And it’s really funny because we get this side of it, the equity comp side of it, the AMT projections, AMT credit, but there’s a lot of other things that go on a tax return that may not be related to this part of it. So that’s where having a CPA as part of the team can add a lot of value. Because yeah, we get this and yeah, we could speak this language, but taxes can be complicated outside of this.
Michael: And so what’s the overall breadth of the practice in terms of, I guess assets under management if you’re primarily AUM-based and how many clients is it that five CFPs-plus team are serving?
Daniel: Yeah, so I’d say assets about $250 million kind of in total. Total family size is probably 250 or 300.
Michael: So the asset base is around $250 million, the client base is 250 to 300 clients or so. So just right in that sort of roughly million-dollar average. Obviously, for most firms, a bunch that are smaller and a few that are much larger, but that’s kind of the sweet spot for clients for you guys?
Daniel: That’s correct. Yep. Yeah. And I would say that as the equity comp has started to roll, the average client size is certainly going up, kind of on the high side of that.
Michael: So talk to us a little bit more about that. What is this whole sort of, I think for some firms like famed unicorn, like, how do seven-figure clients find you on the internet? What kind of clients are finding you? How does this really work and play out in practice?
Daniel: Yeah. So a lot of my clients have incentive stock options, right? So they were issued incentive stock options at a pre-IPO company or a newly IPO’ed company or a company that’s been around for a little bit with brand prices that are really low and a stock price that’s substantially higher than that. So I don’t know, typically between 30 and 50 years old, and maybe a lot of options at a really low strike price for a company that’s been public for several years. That’s an example of somebody or a typical client that works with us.
I touched on some of the older clients who have found us on the internet, who have similar stories but have been with their companies maybe a little bit longer and have a series of ISOs, or a series of non-qualified plus some restricted stock or ESPP that has just accumulated. And now they’re at retirement or approaching retirement with seven figures or more. And this part of it, the equity comp part of it just seems to be a big percentage of that.
And they might be looking for a new advisor who has a little bit more experience in this because their existing advisor doesn’t help or isn’t as versed, and they’re just looking for a second opinion, or maybe they’ve been doing it by themselves and now they just want that additional help. So it really runs the gamut.
Or I have clients who have contributed to an ESPP for a couple years and the stock price has just shot up and now they have a lot of money in a single stock because they made some good decisions back contributing to an employee stock purchase plan. So it really runs a gamut that there’s just a big need for a little bit more detail than what they’re currently getting, and they’re willing to find it on the internet.
Michael: And so, talk to us about just how in practice this actually turns into business. Is it just literally like, they read an article on your blog and feel so inspired that they Google you and figure out a way to do business with you? How does “I read an article on Daniel’s blog” actually turn into Daniel gets an opportunity to work with this client?
Daniel: It’s really that simple. I don’t know what goes on behind the scenes. But the email I typically get first is, “Hey, I have incentive stock options. I read your blog. My wife and I have read your blog. My husband and I have read your blog. We’ve been following you for a little bit. I need some help. Can I schedule an initial consultation?” And that’s really how it happens. It sounds simple, but it’s really that framework.
Michael: And so you’re not necessarily doing like, “Hey, I’m doing a webinar, come hear me” stuff or like, “Join my email list” and then start asking them to do business. You’re putting content out there and they’re reaching out by email to say, “I read your article and I need some help. And can you help me?”
Daniel: Yeah, that’s really it. I do have a call to action, right, a CTA on the website. So I have an e-book that people can sign up for. So if they sign up for my e-book, they then go into my queue. Every time I write an article, if I write an article that week, that email or that article gets blasted to my distribution list Thursday at 1:00. So I do stay in contact with them that way.
But other than that, that is really the…that’s really what I do. I write articles. And I have my email distribution list. That’s right now what’s generating contacts. We get some Google traffic, I’m not sure if it’s a lot or a little, depending on who you talk to. But it’s enough for us. And the people that are finding us are exactly who we want to find us. And I think that’s the most important part of it.
For us, it’s not about having 50,000 hits a day, a month, or whatever the good metric is, it’s about having the right people find us and then reach out to us because, for whatever reason, they feel like we’re authentic, or they feel like they can talk to us. Whatever that hump is for them, I don’t know, we’ve struck it. I’m not sure why. But we’ve struck that balance of being educational, being approachable, authentic. And I think that’s why clients reach out to us.
Michael: I think you make an interesting point that, particularly in the advisory firm context, when just a seven-figure client may pay you fees of close to or upwards $10,000 a year, like, you don’t actually need a huge number of hits to your website to make some really good business math, you just have to get the right people. You just have to connect with the people that you actually really want to do business with. And if you’re getting them, you need actually very, very few to have a couple of them raise their hands and decide to work with you and suddenly have an active, thriving, growing business.
Daniel: Yeah, I think if you’re getting seven-figure clients that are calling you out of the blue, what advisor wouldn’t want that, right? What advisor wouldn’t want more of that, right? And that’s what we’ve been able to do. And again, it’s happening enough for us that we’re busy. If it happened twice as much or three times as much, it would be even more interesting. We’d have to hire additional resources and staff and so on and so forth. So it’s a really nice place right now. Well, yeah, they’re the right clients that are finding us, and that’s…I think that is intention. I do say we kind of get lucked into this space. Now it is becoming more intentional about what we’re writing about and why we’re writing it and who we’re getting to. And it’s working.
Michael: So I do have to ask, for this whole, they click on a thing and they get your e-book and get added to your mailing list. So what do you…what software do you use to manage the mailing list?
Daniel: I use MailChimp right now.
Michael: Okay. And then how did you make the e-book? How did that come about? Well, I guess what is the e-book and how did you make an e-book?
Daniel: An e-book for me is just a really…it’s a longer blog article to some degree. This one in particular was on equity compensation, specifically on incentive stock options. The one that I’m working on now is a little bit more technical in terms of…the title is “Your Guide to Incentive Stock Options.”
It’s just a really long-form article on incentive stock options and how you may be impacted by how much you make, how you may be impacted by when you exercise, how you may be impacted by stock volatility. And then at the end, it touches on a couple simple concepts that, “Hey, you may want to consider these few action steps.”
And I call it an e-book, but it’s really just a long-form article. It’s a long-form blog post that I hired an editor to clean up, and then I hired a designer to put in a book format, and then we posted it on the site.
Michael: So having lived this now for a number of years and having gotten the compounding engine going with some traction, so having lived this journey successfully, what do you find the rusty advisor community doesn’t get about blogging for business?
You’ve kind of painted this cool picture of just, we put out stuff, we put out more stuff, and at some point, people start showing up. And you do a little more of it and a little more shows up and compound enough and it actually turned out to be business. But we still don’t see, in the aggregate, very many advisors particularly active in this world of blogging and content marketing. So what is it about blogging that you have figured out that others just don’t seem to figure out or pick up the same way?
Daniel: Yeah, I think that we’re still learning, first of all. I think through this conversation, you hear all these opportunities that I think that exists that we haven’t capitalized on yet because it takes a lot of time and a lot of energy. And there’s a lot of ideas that we can continue to do to move this forward. So I think there’s so many things that we can do to improve.
But I think what I realized and we realized was, we wrote a lot on simple financial planning things. And I think that’s where a lot of advisors start. You start with the things you talk about all the time, traditional IRA, Roth IRA, what does retirement planning look like? How do you manage tax in retirement? Just these things that people talk about a lot.
It’s a crowded space. And how do you stand out in such a crowded space other than just doing a lot of it, doing it over time, and putting a lot of time and energy into it. But it’s just so crowded. How do you show up on page one of Google when it’s such a crowded space? We took the time to really carve out this technical area where it is easier to show up on Google. And it is an area where there’s less crowd. There’s an area where if you do write something that’s meaningful, or you do write something that’s important, that people are going to find you quicker.
And there’s a real need too. That’s the thing. With equity compensation, there’s a lot of do-it-yourselfers out there, I think, or a lot of generalist advisors as well, which is how we started, which is great. But this is an area where there’s a constant, I think need for real technical help. And again, we kind of lucked into it, we fell into it, we ran with the opportunity we had, but that’s where we carved out this space.
So I think what advisors can take from that is find an area where you can make a difference. And maybe find an area where it’s less crowded. Or even if it is a crowded space, can you say things in a different way that somebody hasn’t said it? Or can you go deeper into an area that people haven’t gone? And that’s what I think advisors can do to really start to stand out more if they want to go into the niche route.
Michael: And as you noted, kind of linking that to earlier, finding an area where it’s not as crowded and recognizing that you don’t need a zillion people coming to your site and reading your blog to have meaningful business results. Can I ask, do you track how many people come read your blog every month that you’re getting several leads a week with seven-figure accounts on an ongoing basis?
Daniel: Yeah. So we normally get 200 to 300 Google hits a day organic. Again, I think a lot of people out there would say that’s not a lot. And I don’t think it’s a lot either. But, again, it’s enough for us.
Michael: Well, that’s striking. It’s like 200 to 300 a day. You’re talking about 5,000 to 10,000 visitors from Google per month, which yeah, relative to like media companies, MarketWatch is just like millions a day, I think. That to me, it’s just interesting, like, a few hundred hits a day, a couple thousand a month is all it takes when you’re focused and you’re getting several quality leads every week on an ongoing basis because you went after a focus thing where you can capture a couple hundred a day and not a generalist thing where it’s hard to stand out.
Daniel: Yeah. And I think that’s all it. It’s just, it is very niche, it’s very detailed, and we’re able to stand out. And it doesn’t take a lot, a lot of hits.
The Most Surprising Part Of Daniel’s Journey And The Advice He Gives To New Advisors Just Starting Out [01:18:50]
Michael: So, what surprised you the most about building a business and trying to build into a niche?
Daniel: The trouble with growth, I think is really interesting. As you have more prospects and more clients and more work to do, just creating the process to track where you are, to track who’s doing what, to track where you are in the client relationship.
It’s been really interesting to have to figure out solutions to all those, I’ll say non-client-facing issues internally to make sure that the process was working for everybody. It’s grown, I’ll say quickly enough where, just like anybody, you have some growing pains internally just getting through process.
It’s something that we’re still working on, but something that we’re getting better at as we get more at-bat. So it’s been really interesting, though, how much time and energy it takes to solve those, I’ll say growing problems with, I’ll say this accelerated growth that we’re experiencing.
Michael: So what was the low point for you in this journey?
Daniel: I don’t know if there’s a low point, Michael. I think I would have liked to have success…not that I’m successful. I think that we would have liked to figure this out sooner rather than later.
It did take a long time to get to a point where we do have these type of prospects coming through as often as they are. So I don’t know if that’s saying as a low point, but I think there was a lot of frustration in, “How am I going to really be different? I’m another Certified Financial Planner. I’m another financial advisor who does retirement planning.” All these things that I think every advisor says about themselves.
So I think that the low point or the low period was really trying to figure out a way to say, “Okay, what can we really be good at? What can we really define as ours and say, ‘This is who we are, and this is what we’re good at, and this is why and this is how.'” And I think finding that, when I’m looking back at it, really being unsure of what direction to go I think 10 years into my career and not really feeling like I’m doing enough to bring in new business or generate new opportunities or really differentiate myself, I think that was…looking back on it, that was a time where I was kind of saying, “Okay, well, how am I going to survive in this business as a career? How am I going to make this 30 years if I can’t really bring in enough new business to support the firm and what I’m doing?” So I think that was difficult when I look back on it to say, “What’s going to make me different? And what’s going to make me valuable to clients?”
Michael: But it sounds like answering, at the end of the day, wasn’t necessarily this like, “I’ve decided in a stroke of genius I’m going to be a equity compensation specialist because I believe this is the strategic business opportunity in the future.” It sounds like the way you ended out answering this was more of just, “Here’s the thing that’s interesting because I did it for a client. So I’m going to write a little bit about it. And oh, look, I got another client. So I guess I’ll do a little bit more of it. And I did it for a while, like, well, darn, this actually worked out. This is really becoming something.” That it was very organically evolving for you, as opposed to like a grand master plan of, “This is the niche I’m going to make for my future and why.”
Daniel: Yeah, I think it was organic. I think it was very organic. And again, that doesn’t mean along the way it was unintentional, because I think it became more intentional as it started to go. And I think just kind of reading and talking and writing and it just, it did become intentional. So I don’t want to portray that it was, just kind of fell in our lap and so be it.
But it was…yeah, it wasn’t this…it wasn’t a laid-out intentional plan from the beginning. But it was something that we realized we could be really good at. We can make a difference. And something that we did over time, just slowly put a little bit more energy into. And as we put more energy into it, because we realized we were making a difference, that it became a core part of what we’re doing.
So yeah, it sounds…it was definitely the long game. And I think we’re in the third inning or the second inning. I think there’s still a lot more to grow here. But it wasn’t a grand master plan that we sat around a conference table and drew up five years ago.
Michael: It didn’t stop you. You just found a thing that worked a little and iterated and did it a little more and let it compound.
Daniel: Yeah. And just let it compound. Yeah. And again, it was, we had other business. We had other clients that were still coming in from the traditional business and other efforts we were doing. So we certainly weren’t at a point where it was all or nothing. So that stability allowed us to be nimble and flexible more in what turned out to be a long game. And that ability has really obviously benefited us now as we’re able to do more and more of what we’re doing with this.
Michael: So then from the flip side, do you have worries or fears that as you go further in the direction of this niche that you’re going to alienate or lose existing clients because you used to be focused on, call it traditional retirees, and now you’re doing this equity compensation focus thing instead?
Daniel: Yeah, I think yes and no, right? I do think that with a niche, there is a concern that are my other clients going to feel like they’re not being serviced? But I think having the firm around us, where there are other people doing other things helps, right? And there’s a lot of truth to that where others in our firm aren’t as integrated in equity comp as I may be.
So that balance of skill set is really good for us as a firm as a whole. So I think that’s really important that we have that so we don’t alienate our traditional clients. But again, I think that all these equity compensation clients also have the needs that our traditional clients have too. They’re asking, “How can I be more tax-efficient? When can I retire? How much money can I spend in retirement? What does my investment portfolio look like?”
So, again, a lot of the questions are the same questions. The resources that are funding those questions may come from a different spot. But the questions are still the simple financial planning questions. One may come from a 401(k), the other may come from equity in a company, but the questions are still the same.
Michael: Well, and I’m struck that on the one hand, a lot of firms, I think if they’re already established, they worry a lot about moving towards a niche out of, again, I think sort of this fear of alienating clients. But I’m struck that you’re sort of framing it from the opposite end of, hey, it was a lot easier to do this steady slow build towards this deeper specialization because we have other clients, we have other business going in that actually would let us do this as a slow play.
And now even that it’s gaining momentum, we still have other advisors at the firm that are servicing those other clients. So Daniel might focus more and more on equity compensation clients, but it’s okay, there’s plenty of other advisors at the firm that can still work with our traditional clients. And that it’s easier because you had a broader firm, as opposed to being a harder pivot because you had a broader firm.
Daniel: Yeah, I think there’s a lot of truth to that. And I think a lot of the retiree clients, while I’ll say that the second generation of advisors have relationships with them, they also still have relationship with the older advisors in the firm too. So it’s a nice balance that we all have together.
And it speaks for the growth too. As you bring more clients, you do need more staff and more team-oriented services so your clients may not be talking to the same person all the time, or there may be additional resources on their team, additional CFPs. So, hey, if they can’t get one person, they can get the other. Or if there is a near-retiree client who’s working with another advisor who might have an equity compensation question but it might be a smaller part of their need, we can get pulled into that, too.
So having the different skill sets is huge, and is one of the reasons that we haven’t as a firm said, “This is all we’re doing.” Right? Because we recognize that we don’t think we ever want to be just, “This is all we’re doing.” It’s going to continue to be a big part of what we do, and we’re definitely going to service these clients. And even if we need to hire more staff to help with this particular need, we’ll do that.
But I think that we’re always going to want to balance and diversify our business to serve other people too and other types of clients too, because we do have business owner clients, we do have retiree clients, we do have other accumulators. So it is a blend of people across the board that we can service.
Michael: So anything that, having now gone down this journey that you wish you could go back and tell you from 10 years ago? Like, what do you know now that you wish you could go back and tell you from 10 years ago?
Daniel: I think that just having… I don’t know. I’m trying to think. What could I tell myself from 10 years ago? I think it’s been a pretty good ride.
Michael: So what do you know now that you wish you knew 10 years ago?
Daniel: I think if I knew it, I would have specialized sooner. I think that’s what it was. I think that coming up in the industry, I came in at 23 years old, 22 years old, right out of college. I got my CFP right away. I think after that I got my CLU pretty quickly. I got all these designations and everything. That was great for the first five years to really learn the business.
And then I think I probably had a five-year gap after that where I did struggle to find traction. Maybe even a little bit longer to say, “I have the education. I’ve been around five years, I feel like I should be having more success than I am. I feel like I’m doing the right things, but I’m not really seeing things pan out.” And I don’t want to say that was wasted time because I’m sure I learned along the way.
But if I could look back and I had started to highlight maybe this area sooner to say, “Okay, I have this great broad education now. I have the CFP. I have some experience, where can I really make a difference?” And I think if I had recognized that earlier, for me, particularly getting into this niche sooner, I can only imagine where we’d be now.
So finding a spot to make a difference sooner would have been really, really helpful, as opposed to, again, I don’t want to say flounder because I don’t think that was the case, but not really making that big of an impact as soon.
Michael: So, what advice would you give for younger and newer advisors that want to go this direction but maybe don’t have the existing client base or broader firm that you do? As you said, it was one thing to do this shift because the firm had other clients coming in and other opportunities kind of running in parallel. So if you had been stuck out on your own and it was just you on your own, would you have approached this differently?
Daniel: It’s hard to say that. I think that looking back and seeing where I am now, I think I can make an argument to say to someone, “Hey, maybe this is an area that you want to go in right away.” “This” being any niche that you like, not particularly the niche that I’ve serviced.
But find something that you like, find something that you’re good at, find something that feels natural for you, and see if you can push it. See if you could really embrace that. Don’t be afraid to pivot if it’s not working. But I think that where we found success is, it doesn’t take us kind of being out and about all the time anymore to bring in new clients because of the power of the internet.
And yeah, that’s hard, especially for someone new, but if there’s a way to commit that time early to finding that market, I think there could be a lot of value in that. You’ve got to find out what’s authentic for you. That’s a big thing. What feels right to you, the authenticity is going to shine through.
Michael: So, what comes next for you from here?
Daniel: That’s a great question. So we’re going to continue doing the blog, continuing to write. It’s actually led to a lot of other cool opportunities. I’ve had some people call to license content. So we’ve licensed some content out there, which has been a great thing that I didn’t even see coming.
We’re going to develop some online courses, and just continue to repurpose the content and expand the education. We’re licensed now to teach CE and CPE credits for CPAs and CFPs and other insurance. So starting to maybe do some of the speaking and the education that exists, hopefully doing some of that. I think there’s an opportunity, even on the technical side of things or the tech side of things more specifically to create some software that could maybe help do additional deeper dives into things like ISOs and non-qualified stock options. So I have some ideas there. I’m not sure where those will go.
But I think there’s a lot of opportunities that have kind of come out of what we’ve already created in terms of this content. We’re going to continue writing, continue to service the client, hopefully, do a great job at that, and then pursue some of these other things that have been tangential to the business, to the blog.
How Daniel Defines Success For Himself [01:32:30]
Michael: So as we wrap up, this is a podcast around success. And one of the themes that always comes up is just the word “success” means different things to different people. So you’re on this incredible path that’s now really starting to compound with business coming in. As you said, lots of opportunities to take the content in new and different directions as well. But I’m wondering, at a personal level for you at this point, how do you define success for yourself?
Daniel: Success is having fun in what we do. It’s funny because we talk about growing the business. The work-life balance right now, I enjoy what I do. We have really fun clients that we work with, but I also get to be home with my family and my kids. And maintaining that work-life balance while also doing all this fun blog, education-type stuff, working with clients, it’s a really good spot to be in. And it’s, I find happiness, and I would define that as success, to be in a spot where I’m not worried about where the next prospect is going to come from. I’m not worried where the next new piece of business is going to come from because we’ve created this flow.
And it gives me some peace of mind that I can do all the other things that I enjoy and have a really good balance because of that, where I’m not worried about, we’ve got to get a new client in the door because we have that flow now created. And to me, that’s success. All the growth that goes along with that, we’ll figure that as we go along. We have thoughts and plans in place. It’s nice to know that I can continue to work, meet really great clients, be at home with my family. That’s how I find success, just being happy doing it.
Michael: Well, amen. I love it. I love it. Well, thank you, Daniel, so much for joining us on the “Financial Advisor Success” podcast.
Daniel: Yeah, thanks for having me, Michael. Hopefully your viewers get something out of this. And I can’t thank you enough for having me. I really enjoyed the conversation.