Organically Growing To $800M AUM In Less Than A Decade By Investing In Educational Marketing: #FASuccess Ep 503 With David Brooks

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Resources Featured In This Episode:

• David Brooks: LinkedIn
• Retire SMART
• Kitces Report: How Financial Planners Actually Market Their Services (2024)
• Bo Eason
• Pat Quinn Speaking Coach
• Paul Carp
• SMART Tax Mastermind
• Flourish
• Strategic Coach
• The Science of Scaling: Grow Your Business Bigger and Faster Than You Think Possible by Dr. Benjamin Hardy
• The Gap and The Gain: The High Achievers' Guide to Happiness, Confidence, and Success by Dr. Benjamin Hardy
• SMARTWay EFTs
• Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork by Dan Sullivan
• Tidal Financial Group
• Vivid Vision: A Remarkable Tool For Aligning Your Business Around a Shared Vision of the Future by Cameron Herold

Full Transcript:

Michael: Welcome, David Brooks, to the "Financial Advisor Success" podcast.

David: Michael, I'm so glad to be here. Thanks for the invite.

Michael: I'm really excited to get to chat with you today about, as I think of it, what's possible when firms really start to invest into their marketing, and what it takes to start driving hundreds of millions of dollars in new assets by building out scalable marketing systems. Because I find the reality...we have this in the Kitces research we do on advisor marketing. Most firms grow mostly from referrals and don't tend to put very much dollars into marketing. Usually, no more than 1% or 2% of revenue goes into marketing for the traditional advisory firm.

But the trend we see in the data as well is, while most firms grow mostly from referrals, the growthiest firms rely on referrals the least. It's like they don't grow faster by getting more referrals or proactively asking for more referrals. They grow faster by getting whatever referrals they're getting and then going doing other marketing beyond referrals. Usually, one or two channels they get really good at, whatever works for them, that powers the growth of the firm, and then they expand and go into more marketing tactics from there.

And I know you have lived this firsthand, David, as a firm that is anticipating hundreds of millions of dollars in new flows this year by building out a whole educational marketing series of initiatives to reach and attract retirees. So I'm excited to take into what it actually takes, what you spend, how you structure, just how you manage that level of marketing activity to drive that much growth.

Telling A Compelling Story Across Multiple Marketing Channels [1:53]

David: Well, I think you hit the nail on the head. A lot of advisors don't spend any money on marketing. So when you meet up at a conference, and you ask them about their marketing, "Oh, we're 100% referral." So I'm like, "Oh, so you don't have a marketing plan. You don't spend any money," which is fine if that's the style of practice you want to build. Our mission is to help as many people as we possibly can. And to do that, we need to get in front of as many people. So we market heavily.

And I think one of the secrets to my success is that each time we add a new marketing funnel, we don't necessarily stop doing the other one or the old one. And a lot of people will do one marketing funnel, and then they hear about a new marketing funnel, and they change marketing funnels, and then they try something new. I just look at it as a slot machine. If you put a dollar in the top, pull the lever, and it comes out as five dollars at the bottom, you want to keep putting dollars in that machine. You might find a new machine that puts out eight dollars for every dollar, but why not put money in both machines, right?

So adding marketing funnels versus taking them away. If the ROI is at least three to one, why would you stop? At least in my humble opinion, we have gotten really good at marketing. And to give you a little background, so I'm in Omaha, Nebraska, and I'd never been in Nebraska a decade ago. I moved to Nebraska nine years ago after selling a firm in Florida. And people are like, "Hey, you went the wrong way."

And so when I had to get this thing going, I had to start marketing because I didn't have a database, I didn't have a list, I had zero clients. I really didn't know many people. And so we started off with two primary marketing funnels. I started doing a radio show. I did do a radio show in Florida for several years prior. So I started doing radio here, and just a little small AM station. The signal wouldn't even get to where my office is here in Omaha. So it was really small, but it was credibility-building from day one. So radio is a fantastic way to build credibility.

But then we just did the good old-fashioned dinner seminars that first year. And so I was able to gather $25 million in assets. That first year it was just me. And by the end of that year, I had five employees I'd hired. And the next year I added a bigger radio station, a big signal here that covers a couple of states, actually a powerhouse AM station. And now, flash forward to many years later, we're on 14...our radio show airs on 14 different airings a weekend on multiple stations through some small markets in the Midwest.

But then I think the fourth year I added TV. So I do a half-hour TV show. And we've been doing that for six years. Then we added TV commercials. We added a YouTube channel. We do classroom events, college-style, classroom-style events. We have the YouTube, digital, web, client events, referrals. And then a couple of years ago, we added movies. So we're running multiple funnels, over 12 marketing funnels, all the time.

And I just did a seminar today. You and I are recording in the afternoon today, and I did a lunch, which didn't cost anything, by the way. We just use our email database for the lunch and learns that we do. We don't use the traditional mailers for that. We do that for our dinners, but we just email the database and fill up a lunch. And I just got the email right in and booked 13 appointments. So always be marketing. I grew up in old school sales world. My dad was in sales a long time. You should always be marketing.

Michael: So I'm fascinated by this on so many levels. It strikes me, even going back to your first comment. The firm that says, "We're growing 100% with referrals," when you ask about the marketing plan. So your response is, "Oh, cool. So you don't really have a marketing plan. You're just aiming to grow with referrals."

And that's cool. Lots of firms do that. We have the data. Lots of firms do that. But I'll admit, David, I've always been in a similar camp that we got to this strange point in the industry where the majority of firms get the majority of their growth from referrals. So the industry dubbed referrals as a best practice for growth, and we segment it differently when we do the research. We're like, "No, no, no, let's actually look at what the high-growth firms are doing." And the answer is always the same when you draw down the high-growth firms. They've all built marketing plans that go way beyond referrals. They still get them. If we're serving clients well, there should be some opportunities that fall from the tree and whack you upside the head.

But we found this theme for years now. If you really focus in on the growthiest firms, the growthiest firms rely on referrals the least because they're building additional marketing funnels and channels, as you said. They just keep finding things that work, and when they work, they add them on.

The challenge I think I find, though, and I'm curious as you highlight all the tactics here, and I have a lot more questions about all of them in a moment. But you had made a comment, like if the ROI on the marketing initiative is upwards of three to one, why would you stop and not keep going?

The challenge I find for so many firms is they try the marketing things. Like, "Yeah, I hired the consultant, I brought them in, we did the thing, we spent $5,000, $10,000, $20,000, $30,000, and we got no clients," or "We got a person, and that was not a good spend for $30,000."

And I see so many advisors that give up or change. They're not pivoting away from marketing that isn't... They're not pivoting away from marketing that's working. They keep trying new things because the things they're trying aren't working. And so I guess one of the themes or questions I'm going to have as we go through this is, what magical thing is happening that when you show up and do a radio show and dinner seminars, $25 million showed up in the first year? Because most advisors do not pick up a lot of activity when they just start doing radio or seminars from scratch. What are you doing that these work for you?

David: Well, you've got to tell a compelling story, whether that's on the radio or any media for that matter, or a live dinner seminar. So we choose a point of entry, if you will, a topic, and we own it, and taxes is it. So I've been talking taxes since day one. Everything I talk about, every class we teach, and we'll teach over 100 educational classes. We have about a 1,250 square foot classroom in our office. And I was always told, too, Michael, that before I upgraded, this is my third office in eight years, because we outgrew them, but I was told, "You cannot have a classroom. You have to go do it in a library or college, or it won't work." Well, we're doing over 100 classroom events right here in our office, and they work fantastic.

The point being is you've got to have information that somebody wants. So is your copy good, right? Are you just using what everybody else uses, or are you writing your own copy? Now, we write the copy here. And I actually got mad at some of the mail houses because they would take my copy and give it to other advisors. And so I was like, "Hey, look, not in my marketplace," because I'm getting an invitation. I'm of age where I get the invitations. And I'm like, "Hey, that looks familiar." So now we have a contract with the mail house that we use that, "Hey, you can use this in other marketplaces, just not mine."

But then there's a whole process of, is your...for instance, seminars, right, which I think is the most simplified and predictable ROI there is in marketing, right? I understand when people are spending on radio or TV, that's big money for a lot of advisors. And there's a drag, right? So ROI on a dinner seminar is in less than 90 days. I know the cash flow, right? Where my TV ads, it's nine months before we get the revenue. But if you're not tracking this, how would you know?

And so you have to learn how to build the marketing funnels on top of each other, which one's going to give you the ROI the fastest. And as you build your brand, you should start to put some of those marketing dollars into the brand, not the ROI, right? So in the beginning, it should be 100% ROI-based marketing, like a seminar. You mail 10,000 pieces, you know how many people will show up over a couple of nights of dinners, you know the cost of the dinners, and you know how many clients you sign on average from it, you know what the average first-year revenue is. You're able to track those numbers very specifically, and it's predictable.

And not only that, I would tell you the proof is in the pudding, is that it's not just me. I have five advisors that do the seminars, and we all hit about the same numbers because we've built a system and a process that works. And again, we can talk about this more later, but processes are critical to everything from the marketing upfront to the sales process being the exact same, to the allocation process, the planning process, the service process. You've got to have processes that are going to be followed across the board.

I started in the old wirehouse world at PaineWebber, for those that remember the name. I know a lot of your listeners probably are like, "Never heard of them." But UBS bought us.

Michael: Otherwise known as UBS now.

David: Yeah, yeah. And I was in Florida, downtown Orlando, and then I ended up over in Melbourne, Florida. And then I spent time as a branch manager in that BD world as well. And basically had 70 brokers. It was the Wild Wild West, doing their own things, their own way to allocate. It was crazy because you were also the OSJ and the compliance guy in your office, and you had to go question it by...it was not a fun job.

So I finally had enough of the corporate world and decided to go independent. I built a small RIA. Now this is before I'd really figured out the marketing. So I will tell you there are some lessons to be learned here. So I built a small RIA up in Florida, and I got to about $90 million after 7 years and was gobbled up by about a $2 billion firm out of Central Florida, bought our firm.

And my wife, well, she lost pigment in her skin, vitiligo, what Michael Jackson had. So we knew we didn't want to live in Florida much longer, even though that's where she was raised. So I got recruited to Nebraska to do tax planning for another firm here in town. And we kicked the tires, flew up, met the staff, liked it, and said, "This would be nice. I don't have to run payroll or any of that nonsense anymore." So I decided to come over and work for somebody else.

But anyway, that person I went to work for, it wasn't a good fit. Let's just say about five and a half months later, I was no longer with that firm. But what I learned in that five months was unbelievably valuable. And so I'll thank that person for that, that they didn't run their practice the way I'd run mine, but they had systems and processes for everything. And I ended up hiring one of those employees…came to my firm when I started a new firm and helped me get the processes going. And so that was really critical.

You got to have processes when it comes to marketing. So going back to that seminar I just talked about, are you willing to invest because some people are just not good presenters? Well, you don't have to be the one that presents. You could have somebody else present for you, or you need to invest in getting good. I will tell you, I invested Bo Eason. I think he's the best public speaker out there. There's another one, Pat Quinn, who we've had some training from. Pat Quinn's out of Milwaukee. Bo Eason's out in California.

Bo Eason's brother was Tony Eason, the New England Patriots quarterback, went to the Super Bowl. Bo played for the Houston Astros and the 49ers. Anyway, he's a great backstory, but he's got this basically speaking mastermind you can go to. He has a three-day event, and I think just boeason.com. You can look it up, but he'll do a three-day event. You pay. I've sent several of my advisors out there to get trained on how to speak.

I went through…it was a year-long mastermind. I think I invested $30,000 the first year in it, so it's not cheap. But man, the opening five minutes of my seminar, Michael, is choreographed to the letter. Everything that I say, the story that I tell, and so all my advisors are taught to do that. There's no walking up to the... "Thank you for coming. Today we're going to talk about..." Nobody wants that. You've lost half the room already. They're looking at their phone.

So you have to start with what we call a flashbang. You got to start with a sentence that just catches everybody off guard. And so when I do the seminar, I just did it today. I did a Lunch and Learn seminar. The first words out of my mouth, it was my son's third birthday. And my wife decided to pull out all the stops. And then I go into very specific detail describing the Barney Bounce House that... He's 30 now. So 27 years ago, we had going in the backyard, the slip and slides, the ponies that were there. I described this elaborate party, and then I come to the conclusions, but I missed it because I was at the restaurants. We had four restaurants at the time, and I could not get away.

And so you tell a story at the beginning of every seminar that... You have to have a story arc where you've gone through some challenge personally that they can connect with. And then you came out the other side and overcome it. And then you need to tie that story into whatever your topic is going to be for the day.

And so I basically tell the story how I missed my kid's birthday. That motivated my wife to come up with a decision that happy wife, happy life. We just celebrated 34 years this week. So we had to come to the conclusion, I should sell the restaurants and get into a different line of work so I could be home at night with...now that I had a young family.

So we put the restaurants up for sale, and I got them sold. I had a seven-figure check, biggest I can imagine. I'm in my 20s. And I call my financial guy, he worked at PaineWebber, and, "Hey, I'm bringing his money. And so tell me about financial planning," and he tells me about it and all that. But anyway, so then he talks me into working there, and I'm like, "Dude, I didn't finish school. I dropped out in the restaurant." He goes, "Ah, they don't care. We'll get you hired if I recommend you. You just pass your exams. And then if you want to go back, they'll pay your tuition," which they did. So I graduated college 17 years after I originally started.

Michael: Very cool. Good for you, man, that's awesome.

David: Yeah, but then after the dot-com came, a few years...I got into this business in the late '90s, then everything went great for a little bit, and then the dot-com, and I got smacked for hundreds of thousands of dollars. And then in 2003, I got my second run-in with the IRS, and I got a letter in the mail that five years prior, the biggest transaction in my life, I did not correctly do my taxes, and I owed a six-figure check. And it was really, really painful.

So I've made it my mission since 2003 to understand the tax code…is really where I need to be focusing, because it's the number one expense my clients are going to face in all walks of life. And so that got me onto the tax planning machine. And so I've learned to tailor that into...so I tell that story at the opening of the seminar, right, where I've been through pain, I missed my kid's birthday party. I've lost money in the market, and I've had an unexpected tax bill, like many retirees are going to have with forced RMDs and IRMAA penalties and all that. So all that correlates back later into the presentation.

But it's getting really good at that opening story and connecting it to the topic. And then your topic should be as simple as you can make it. And for our tax presentation, basically, I tell a higher net worth story, what I call a bread-and-butter story of an average retiree with about a million bucks. And I tell those two stories and just lay out potential outcomes and the challenges they face.

And then the close is the most important part. Are you closing correctly? And we have a sales coach that we hired many years ago. His name is Paul Carpenter, paulcarp.com, if anybody wants to look him up. He's not cheap, by the way, but fantastic stuff. And he helps me dumb down as fast as I can pivot in the room. That's the other thing, is your experienced advisor, you can pivot your conference room in a heartbeat or your office when you have a client in front of you because you just have done the reps. But if you're trying to scale your practice, that's not something your younger advisor, or at least young in the business, may be able to do.

So what we hired Paul to do is come in and help us simplify our sales process. Again, everything about process, so that it matches the marketing funnel. What we promised in the marketing funnel is what we deliver in the sales process, and helps us keep our closing ratio up. Since day one, we're about 42% of the people that walk in our office, ever walk in, hire us. And from our sources, that's about double the national average, in reality, from marketing funnels. Now, referrals, if you're just referral-based, you could be, "Oh, I closed 60%." Well, if you're only closing eight clients a year, that's a different thing.

Michael: Yeah, one referral is a different...cold meetings are a lot harder.

The Metrics David Uses To Calculate His Marketing ROI [18:22]

David: We'll onboard well over 200 clients this year. So we have the systems and processes in place. We're on pace to bring in just under $300 million in assets. So you can build these systems out, but it's all about the processes. Anyway, so the point being is that first marketing funnel, we got really good at the seminar, and we deliver incredible value at the seminar. Today I booked 13 appointments. I think there was 15 possible in the room. So it's not uncommon for me to book 80% to 90% of the room.

Now there's fall-off there, but we track that. And the other thing is, you've got to know those numbers. What is your average book rate? What is your stick rate? Right? After they say yes at the event, that's your book rate. Then your stick rate is who actually shows up in your office. And there's going to be about 20% to 30% fall-off, depending on how good your follow-through and processes are.

And then from there, the minute they walk in the door, what's the closing ratio or helping ratio? Sometimes we refer to it as what percentage of clients we're able to actually help. But we slice that data every which way you can. Not only do I want to know if an advisor is working for me. If I gave him 10 appointments this month and he closed 4 of them, that's 40%. But if I gave him $30 million of potential assets and he closed $20 million of the assets, well, then he closed 66% of the assets. And I want to look at the numbers in a myriad of ways. And that's really critical. Understanding how many different ways you should step back and look at your data. And you can't do that if you don't have processes in place to track everything.

Michael: And are those numbers you shared actually typical in your world, like an 80% book rate, 70%, 80% stick rate on the bookings, and then 40% of those actually close?

David: A hundred percent, yeah. Actually, we're 41% year to date on the closing ratio. Like I said, today I just booked 13 of 15. We typically have right at...it's about 72% stick rate for us. So about 28% fall-off of who says they're going to come actually come. And then, yeah, between 40% and 45% closing ratio every year.

Michael: So if I think of this math, it's like if there's 100 people in the room, 80% of them book, close to 60 of them actually stick and come to the appointment. And then of the 60, I'm going to get 20-something who turn…

David: We do everything by buying units, right, versus people...and the mail house is where they sell you their stick, their show-up rate by the people. What you really want to track is households, right? Household count. So I had 15 households today at the lunch I did, right? It was 26 people. And I booked 13 of the 15 households, or at least they said yes at this point. Now we will get on the phone with them and do a little bit of a discovery call and qualify them, if you will, and then get them in. And some will back out, and some will save, some will ghost you. It's the numbers. But the more that you track all this with your CRM and your data points, the easier it is to make adjustments and figure out where the numbers shift.

But it's really critical, too, is that you track this over a real data set. So I've had advisors that have never done dinner seminars. And we actually do a training here. I do two trainings a year called Tax Mastermind, where we have advisors come to Omaha for three days, and we teach them everything we do. Because I'm just on a mission to help as many people as possible. And those advisors go back and try and do my seminar. And the first time they don't have the same results. And I'm like, "Look, one night is not a data set. You've got to do probably at least four months of these, and you got to be consistent with them, so then you can really mark your data and make tweaks."

But if you just run those numbers, so if our goal is to onboard 200 clients and we're going to sign 40% of the people that walk in our door, right, then I need to get about 550 people in the door for the year, right? So it's understanding those metrics and then build your marketing funnels out to make that happen.

Michael: And so now I guess, work backwards up the funnel for me. In your world, what are you doing to fill the seats to put 15 households in the room for the seminar event today?

David: So the great thing is, as we built our database over the years, I think that's a massive database. We do multiple marketing funnels. We gather data, and then we have our database. So the Lunch and Learns we do are just off the database we already have. There's no marketing expense. We just blast an email out from our system, and that filled the seats, and then we just call and confirm them, and they came. But originally, we do the traditional mail house, right? So we'll typically...

Years ago, you could mail 5,000 pieces and fill 2 nights or 3 nights, and now you got to mail 10,000 pieces and barely fill 2 nights. The numbers are not as good today, but it still works. The ROI, as I said, is still there, so we still do it. And so we'll mail out every month. We'll have a couple of dinners, mail out 10,000 pieces, try to fill 2 nights at a restaurant. We're trying to get about 25 to 30 people per night

And again, the restaurants in your marketplace are going to be different. We used to have a steakhouse here. It was an institution called Anthony's where I could do 56 people in the dinner and comfortable and work. But most of the rooms we have now will max hold about 28 people. And I found our highest booking rate is right when you're between 22 and 26 people. That's the sweet spot, because you're making eye contact with everybody multiple times during the presentation. It's not too big of a room to really make connection, etc.

Michael: And that's people. So again, this might be 15 to 20 buying units in the room.

David: Yeah, it's closer to...12 to 15 is going to be the norm in the amount of buying units we have in there for any...yep.

Michael: And by your conversion metrics, if I've got 15 units in the room, basically 3 or 4 of them are likely going to be clients by the end of this process.

David: Correct.

Michael: And so then what does it cost you to run a 10,000 mailer piece to start at the top of this funneling process?

David: Well, I will tell you, too, is learn what works in your marketplace when it comes to restaurant. We don't do the Ruth's Chris. I know a lot of people go do the really high-end steakhouses. We do not. It doesn't work in our marketplace, at least for us. We have some really nice steakhouses. By the way, if you ever come out here, I'll take you for the best steak of your life in Omaha. We've got the meat. But those high-end prime steakhouses here are not where we choose to go. We actually go to a mid-tier. We had a couple of local ones, the local mom-and-pop.

Today we did Biaggi's, the Italian chain. They have a fantastic room for us. And we use that one quite a bit. It's literally across the street from our office. So really convenient. But the price point's about 40 bucks, all in with the tip and everything. We over-tip. Always take care of your staff. Over-tip the heck out of the staff that helps you at restaurants. They'll be your best friend, and they'll show up at every event. So we have the same waitress that does every single event. She gets on our calendar. Anytime we book it, she knows to take it. Her name is Robin. And we take really good care of her, invite her to our Christmas party, the whole nine yards.

But anyway, so the cost is about 7,000 bucks for the mailer, for 10,000 pieces, about 70 cents each, all in with the mailing list and reservation system, all that. And then each of the dinners is about $1,400 to $1,600. So not terrible. So all in, you're maybe $11 grand for the set, 2 dinners. And out of that, yeah, we'll get six to nine clients sometimes. So the metrics work really well to me.

Michael: Oh, yeah. So at the end of the day, it's $1,000 or $2,000 per client of actual costs. And what are typical clients for you?

David: So our clients vary wildly. We do not have minimums. As I've scaled this out... I did have some minimums for some of the years when it was just me, just because the calendar was so full. As I've scaled out the advisory team, we took away minimums. We have a minimum fee of $2,000 on our ADV. So basically that's $133,000 in AUM at 1.5%, which is the top end of our fee range.

And so we build the system out that will help anybody that really wants the help. But who we're going to align that with is what advisor we're going to put them with. I'm not going to...my most experienced advisors are not... I'm not going to put a $200,000 client in front of them. I'm going to give that to one of our younger advisors in the system because it doesn't cost as much as if they miss, so to speak. But our average client comes on board, a bread-and-butter retiree with just under a million dollars, $900,000 and change.

And then we charge a financial planning fee as well to every client to onboard. We only charge that the first year they're a client. And that fee changes based on the complexity of the plan. We actually have a matrix we built out on how many things we're going to do for that client in year one. So our AUM fee is basically taking care of the investment management, the risk allocation, right? So that's your investment fee. And we sign an IPS with the risk parameters, the accounts, etc.

But the financial planning fee covers the tax planning that we're building out in year one, an income plan building out year one, reviewing your medical and healthcare and your legacy needs, etc., asset sales. All those things is built into the financial planning piece.

And what's unique is that we don't ask the client to pay that fee. We quote it to them before they sign, but we won't collect that fee until they've been a client for six months. So we put our money where our mouth is and basically just tell them, "Look, if you don't think we earned it for any reason, when we give you that invoice at your six-month strategy session, you can rip it up." And no one ever does.

Michael: And the level of this financial planning fee, just in practice of this, it could be $2 grand or $3 grand. It could be $5 grand. Can it be $20 grand, $50 grand?

David: The base fee starts at...yeah, the base fee starts at $2,375. It can get quite large. We've got them up in the tens of thousands for really complex…we just onboarded a client who's about $125 million net worth. Most of that's in real estate, but a lot of complexities and some estate planning issues and things that we're working through for them. But most of the time, a base, what we call a bread-and-butter retiree, the base plan will start at $2,375.

And then we have a little calculator we've built based on how many strategies we're going to implement on the tax side, and then how many things we're going to do outside of the investment side for the client. And that average fee is somewhere just a tick over $3,000 this year. So the client pays about a $3,000 financial planning fee year one. And then the AUM, which is a scaled tiered AUM, goes down the more assets they move over. And that's how it works.

Michael: And the AUM covers everything after the first year.

David: Yes. The only exception to that is we do have a full tax service now. We launched that in 2020. So we just hired our fourth accountant, got a couple of CPAs on staff. And so we do tax planning for business owners. I have several CEPAs in the building. I'm a CEPA as well, Certified Exit Planning Advisor. So we work with...retiree and pre-retiree is the main focus of the bread-and-butter marketing. And then we market to people that are earning over a million dollars on a W-2, which is a small subset, and then business owners, entrepreneurs that are doing at least a million in revenue.

And those clients we have, we do tax planning for, but there may not be AUM for a while, right? There may not be an exit event. Entrepreneurs are notorious for having 95% of their net worth in the company they're building and running. I was that way years ago, my restaurant certainly. And so now we set up a proactive tax planning fee where we do quarterly calls with that business owner, with our tax team, and just charge a larger fee, but it's recurring. And so that's nice, recurring revenue as well.

Michael: And what level of fee is that?

David: That's going to be for a typical business owner, typically $20,000 to $30,000 a year. We charge them quarterly, so divide that by four, and they'll pay it quarterly. And we're also checking in, are your sales up? Are they down? Do we need to add another tax strategy? Because we help a lot of business owners that are growing and scaling. And as their company goes up, there's more things we can bring to the table for them. But we, on the tax planning side, typically, if we can't save you three to one of the fee, then we'll tell you, "Don't hire us."

So there are 1,700 incentives that we have found in the tax code today, right? The tax code is written to lower your taxes. Otherwise, we would just have a flat tax, right? We've got it down to about 165 of those strategies that we work with both the retirees and the business owners who are high-income W-2 earners to reduce those tax liabilities.

And so multiple marketing funnels run for different people. And, of course, one of the things I've done now, so I don't want everybody to think they should run out and do this for all these things, is I've built this year after year, adding the funnels and adding the things that we can offer to the clients. I'm a bit ADD. So people are like, "How do you do all this?" I have an asset management team. I have an asset thing. Well, I hire the right people. And that's key.

Michael: And I just want to go back to AUM fee schedule for a moment. So where does it actually start, and where does it slow down for you?

David: So anybody can go to my website and the ADVs listed there has the schedule on it. It's retiresmartnow.com. But basically, the first $250,000 is 1.5%. The next $250,000 is 1.35%. And then the next half a million goes down 1.1%. And then after the next half a million, 0.9%. And then after that, every million or so, it drops down to...I think the lowest it gets is 0.7% or 0.75%. And so as the assets go, or we grow the assets, that's also really simple in the reviews. When you have a client that's hit that next threshold, you can tell them, "Oh, by the way, your AUM fee just dropped percentage-wise." They love hearing that. So you perform well, and you get to tell them they got a lower fee structure.

Michael: I was just saying, in your world, is it graduated, right, tax brackets, first $250,000 at one rate versus $250,000 at the next group?

David: Yeah. The first $250,000 always pays... Yeah. The first $250,000 is always going to pay the 150 [basis points]. Correct.

Michael: Okay. So it's not like it's a...

David: No, it's not all or nothing.

Michael: Once you get to a million, everything trunks down retroactively. That first tranche will always be 1.5%.

David: When I started, we did that. I had basically three fee schedules, and it was roughly based on the amount of AUM brought in. The problem is as your AUM grew or you switched jobs, had a rollover, or we grew, you're like, "Well, hey, shouldn't I be a lower fee?" Then we got to go re-sign a new IAA agreement and all that. So I found that the tiered schedule is cleaner, fairer, and easier. And as they bring more assets or we perform, then the fee goes down. And clients seem to like that. So we've been doing that for, I think, the last two and a half years. And it was really a hit with clients who made the transition. And, of course, any existing client we had, we promised them if their fee was lower on the schedule there, we would make an exemption and leave them on the old one.

Michael: So then I've got to ask, right? So many advisors, we talk about fee schedule of 1%, right? Just the traditional 1%. You start at 1.5%. So do you get fee pushback? Do you get clients asking so-and-so up the street charges 1%? Does this crop up for you, or is this just a debate we have amongst ourselves with advisors that clients…?

David: I think it's more amongst advisors, to be honest with you. Rarely do we have to have a fee conversation. It does come up, certainly. We win DIYers quite a bit, and that's due to the tax planning that we do that they don't know how to do. They might read "Motley Fool" or whatever and pick the stocks. And, of course, everybody seems to have the winners in the last few years or what have you, so they're proud of themselves.

One of the things that will challenge them is if the fee structure is, "Hey, my guy charges 1%, you're asking me to pay 1.5%." And normally, though, we show them their blended fee. In other words, rarely is anybody at 1.5%. The average client coming in with about a million bucks, we're at 1.1%. So it's not much of a hurdle there.

And then also we do insurance business as well. We will use MYGAs [Multi-Year Guaranteed Annuities]. Right now, a 7-year MYGA offered to a client today, guaranteed at, I think, 7.5%, or 7.85% for the next 7 years. That's not a bad rate, and we're going to earn, I think, a percent or something like that on the commission. We disclose that, of course, to the client. But we do do insurance work. But if they have money in principal-protected, either fixed annuities or we have money market account with Flourish, a broker-dealer just for RIAs for cash, they don't get billed a fee on that. But if the cash is over, that's principal-protected dollars that they're earning cash. And we can explain to them, "Hey, you've got $1.8 million, $300,000 is going to be in the money market, there's no fee on that." So you can show them what the real blended fee is on their assets.

Michael: By the time you reflect, when I look at all the things I'm doing across all of your household, your portfolio is carrying a little bit more than its proportionate share of the weight, right? So if we're going to say across all the things we're helping you with, your effective fee on advised is lower, even though we don't calculate it on advised.

David: The thing I always ask them is, Michael, "How did you get comfortable paying your current guy over there at, we'll just call a big box, for a full fee when he's only doing 20% of the work? All he's doing is investment selection. I don't see... You just said you don't have an income plan. You don't have a risk plan. You don't have a tax plan. You don't have a legacy plan updated. So how did you come to paying a full fee when you were only getting one area of advice?"

So one of the things you can do is exactly point out your process and deliver on it, right? Are you delivering on the total holistic plan? And again, everybody is different. Not saying every advisor needs to do all areas. R is a smart planning process, right? We're Retire SMART. The S is sources of income. That's your income inflation-adjusted plan with the what-if scenarios. If we lose a spouse early, if they're married, etc., or if they both live to 100. We got to plan all that. The M is all those medical and healthcare expenditures, which there are so many studies coming out showing that that is a huge problem for a lot of people because nobody is telling about it, including IRMAA, long-term care, Medicare costs out of pocket.

The A is the asset and liability management and legacy planning. So do you have an asset you need to sell? Out here, we do a lot of farms. We have a lot of farmers and business sales. So an asset transfers from first spouse to spouse, then spouse to children or spouse to beneficiaries, whoever they may be, charities. R is risk management, and T is tax efficiencies, tax planning. So we've built a pretty holistic process that we cover. So the fee pushback really doesn't come into play much anymore.

Michael: And then when we come all the way back to the marketing structure in the first place, I spent $11 grand to get my 2 rooms of 25 to 30 people, 12 to 15 units. I'll probably convert six to nine of them. That can be, what, $30,000 to $50,000-plus in fees, depending on where average client comes in. And so I'm at $30,000 to $50,000 of revenue for $11,000 in marketing spent.

David: And there you go. You're hitting your four or five to one. There's nothing wrong with that.

Michael: Yep. And then basically, dollars cycle pretty quickly because a seminar, or just seminar sales process, doesn't take that long. It's like if they're coming on board, they're mostly done in two to three months.

David: Yes, absolutely. So the fall-off rate really picks up if you don't book them within the next two calendar weeks after an event. You can book them longer, but your fall-off rate increases by 50% by the time you get to that third week. But you should know that, right? And if you can't get them on your calendar, which is one of the problems I had when I was scaling, is I didn't have enough advisors for capacity. Now, I've gone the other way. I've hired a bunch of advisors and trained them. So now I can increase marketing, and it's just understand and control which spigot are you trying to turn on or off. Control the flow, and know those numbers and know those metrics, and then track it at the advisor level.

For instance, I have one advisor. He started as an intern several years ago, which is also a big part of our push. Now, we hire a lot of youngsters, young to me anyway, and build them all the way through the system. He's a full-fledged lead advisor, now CFP, but he started... He actually was in college, I think his junior year, and his parents came through the marketing funnel, and they asked, "Hey, can our son, who's a finance major, ride along?" Sure. And he was going to go do an internship at a large insurance company, but just leave it at that.

And I talked to him, I was like, "Let me save you some...what they're going to do to you here." And we ended up bringing him on as our first intern. That was, gosh, six years ago. And now he's one of my lead advisors, CFP, been on board for a while, and it's fantastic to see the results. But I also know he's not ready to see $10 million clients yet. So we know in our marketing funnels and tracking all our metrics, put the client in front of the right advisor, right?

Some advisors are going to be better working workshop leads, some are going to be better working classroom leads, and different people show up, which is one of the reasons you do all these different marketing funnels. A different person will show up to a tax class that has no dinner. There's no steak, right? It's just information. And we'll have coffee and maybe a cookie out. And somebody who shows up to that is typically somebody who won't respond to the dinner mailer.

Somebody who comes to the dinner mailer may not come to a classroom event. They were there for the meal. And then, of course, that's the fair trade-off you make, right? Then it's your job to impress them enough that, okay, maybe we should go see this guy.

Generating Leads By Hosting A Radio Show [40:10]

Michael: So now help us understand how the radio show version of this marketing funnel works. I get the seminar and now. And once you've got just a clear presentation, clear delivery, a way to get some butts in seats, and a way to convert them at the end, there's just a wash, rinse, repeat cycle to this. So sometimes you'll spend your $11 grand and only get 20 [thousand dollars] of revenue. And sometimes you'll spend your $11 grand and get 60 [thousand dollars] of revenue. And it'll vary because life is bumpy.

David: That's correct. And then you're also going to get to the point of diminishing returns, right? So there's only so many people that are going to hit the demographic you're trying to mail to, right, depending on how you structure, what your list is. And the mail houses will help configure all this for you. So you don't want to overmail. So you have to learn where's the point. And I found that out. We did 60 dinners a couple of years ago, and it was too many, right, in the year. So now we try to do right around 40 to 42 dinners in our marketplace. And that seems to be the sweet spot that works, right?

Michael: And I guess, because there's a natural replenishment in that you work with retirees or people transitioning into retirement. So there's always one...

David: Yeah, the mail is going to go to 55 to 70-year-olds. So we're very targeted on who we're mailing for that event. Now we get younger people through other marketing funnels, for sure.

Michael: All right. So there's always some number of people who just turned 55 and hit the front end of your funnel for the first time or have gotten it for a few years, but now they're turning 63 and actually retiring from work.

David: Correct.

Michael: And they're maybe like, "Oh, it's time for us to finally do the thing." So I'm envisioning that's why, as long as you stretch them out year after year, there is some natural replenishment that you don't totally exhaust your market. But there's only so many people who are going to get off their duff and do it in any particular year.

David: Yeah, your marketing is timing, right?

Michael: So great ROI, but eventually you can saturate.

David: Yeah. Somebody has to be motivated to take action on your marketing. And which is where radio...for instance, you're talking about radio. Radio, I have people that have been listening to me on radio for years, but now the timing is right. And then they raise their hand and call in. So radio is not as active for us as it once was. In other words, there was weekends where you would get maybe ten people call for an appointment that next week. Now it's maybe three, but they are the most ready to do because they've been listening to me. They know who I am. They know my personality. They know what I think, what I believe, because they are loyal listeners.

So when they're ready, the advisor almost has to mess that up for them not to want to move forward. Those are the best leads, if you will, the "Glengarry Glen Ross" leads, if you will, because they've been listening to me for years. They know who...so I'm a registered independent. I lean center, right? I just...but I talk all about who I am on the air. I talk about my wife, Melissa. They get to know who I am.

And that's the other thing. I think you've got to be authentic. One of our core values in your marketing and in your outreach, because you'll attract those that you really want to attract, and you'll repel those that wouldn't want to do business with, or you may not want to do business with. So there's nothing wrong…

Don't be Switzerland. Don't be neutral. Have opinions. If you're going to do media, TV, YouTube, radio, have an opinion. No one wants to hear somebody just go right down the middle with everything. At least that's my firm belief. And so the radio. And the other thing is we don't do hard call to actions on the radio. I don't talk about products on the radio. I do current events.

I do an advisor guest for the second segment. So it's an hour show. So the first 15 minutes is all current events that week. I fire off articles to my co-host who puts together the agenda each week that I see that I think are worth talking about, whatever it is, from government releasing BLS data, CPI, to jobs numbers, to stories in the news, geopolitics, Iran, oil, all that stuff, just fire off. And he puts together a format where I'll go about 12 minutes on current affairs. The second segment, I always have one of my advisors as the guest.

And we have learned we have an ensemble practice here. So the clients don't have one advisor relationship. That's just their main point of contact, but it's all the advisors work on all the cases. And so the clients get to know that because through the radio, we have our resident authorities, if you will, on various topics like our Social Security resident authority, our Medicare, our Medicaid, spend-down solutions, our long-term care, income planning, taxes on business owners.

So every quarter, I feature 13 different staff members as a guest each week, give them credibility on the air. And they get used to hearing all the resident authority, or...yes, he doesn't want to use the word expert. So we've come up with resident authority as a substitute that works. So everybody knows it's a team and it's an ensemble practice. And that really resonates through the radio. And then each one of the advisors teaches that class. That's their area of expertise, if you will.

They are the one that's going to teach the Social Security class, or the ABCs of Medicare class, or the estate planning class, etc. So we've built this out. And each advisor, we assign them their topics that they're going to become...they're going to need to go much deeper and learn, and they can go get certifications on it, whatever it is they want to do, and we'll pay for it. So really built out this amazing ensemble, but that's why radio works so well.

And then third segment is Q&A from the audience. So they'll email in questions, or whenever we do large-scale client events, we'll have a, hey, any questions you want us to read and we'll get stacks of them and take us months to go through. And I'll answer three or four a week. And then the fourth segment is just wrapping up client events. So there's no... I'm not selling anything on the radio. We do a real show, and we get pretty good ratings. You can get your ratings on it. So that's the way we do radio. There's guys that do it another way, totally different, but that's how we do it. So it works really well for us.

Michael: So how do they ultimately convert into becoming clients? Is there some action?

David: So we pre-record, "Hey, if you would like to come to a class..." We'll promote the classes a lot and get them to the class, and a class gets them into the conference room. Basically, they book that night, or they'll just raise their hand. And during the week, we have people that come in, and then we run radio ads, promos for the show. And then we just run these pre-recorded call to actions. We offer what's called a report card. I built my own software that does the tax analysis, showing you what's possible. And that's called the report card. And basically, we offer that complimentary on the radio on these little pre-recorded bits in between the segments. And so they'll just raise their hand that way and call us, or they'll email in. And then our team will take over and call them up and try to get them booked.

Michael: So either it's come for one of our educational classes, which is another way to fill your seminars, or reach out for a report card tax analysis with ads that you're embedding in your show, or that you're embedding during the week and other things on the station.

David: Both. We have them embedded four times in our show. So four times during the show, a pre-recorded call to action comes. So we don't do it live, and it's pre-recorded, and it just sounds more professional. And then also we run those ads throughout the week, during the morning drive, etc., on the local radio stations.

Michael: Okay. And they're receptive to it because if they listen to you on the weekends, they know who you are, and they're familiar with you.

David: Yeah. And then I've gotten to be really good friends with one of the DJs here on the bigger afternoon DJ. And so I will do guest spots on his show quite frequently. When something's going on, he'll actually email me, "Hey, do you think you could jump on and do 15 minutes on?" Like when the Iran stuff popped. Yeah. Let me talk about what that might mean. And so you build that celebrity and credibility by being available. We have local news stations. When the Dow goes down over 1,000 points, NBC reporter or somebody calls up, "Hey, can we...?"

And they used to send a reporter, they're too cheap today. I'm sure you've realized now they send a camera guy who literally just reads you three questions. You just answer them on air. They have their camera on a stick, and they go back and edit it. So the news person is asking you the questions, and then you get a free 60 or 90 second blip on the evening news. And those are subtle, but it really does build credibility.

I've been doing YouTube. We decided to take our radio station and put it on YouTube because people were saying you should do YouTube, and we were... So we had to put lights on cameras, and Chip and I, who's my co-host, is like, "Oh, boy, we got to actually look a little better." And then we started...

Michael: You're on camera now. It's not audio only anymore.

David: So we started doing YouTube, and lo and behold, I got an email. I thought it was a joke. I thought it was a spam or scam from a producer at Fox Business. And "Hey, we liked your bit. You just did this bit on YouTube on Roth conversions. Maria Bartiromo would like to have you on Monday."

Michael: Wow.

David: Okay. And so I was on Maria Bartiromo's show a couple of years ago, and I had 10,000 YouTube subscribers within a week after that aired. And that was pretty cool. And from there, I think we're a little over 55,000 or something like that subscribers now on YouTube. We've learned to build…in fact we've built a whole studio I'm talking to you now out of. So we have a...we built a whole TV studio in our office.

And so I have three sets for now. I've done a lot of national hits. So I have a set where I can do national quick hits and cover topics. I have a long-form podcast setting that I record interviews with other advisors, and we put it on a YouTube channel. We call it "Advisor Talk." And then we have our set that we do our weekly radio show, which now gets cut up and is...

Our hour-long radio show is reformatted into, I think, at least five YouTube videos the following week, right? So it's cut into the segments. And then I also record...on the same day I record my radio show, I'll sometimes record Shorts, and then we'll also do five to seven-minute topics. So we've learned how to play the content game pretty good. And you build up valuable content, and that helps you in your SEO as well. And that's the thing, is the marketing. Each piece helps the other piece, right, in the tactics of how you're designing all your marketing funnels to tie into each other. And now this year we've actually signed several clients from YouTube, so now we're tracking that as a new ROI. Well, before, it was just informational, but now we actually are getting clients from YouTube.

Michael: So the shift to YouTube, you didn't eliminate the radio show. You're just rebroadcasting your own radio show to other places?

David: Correct. We just edited it into bite-sized bits, like 8 and 12-minute bits. And then we have it on podcasts on Apple and Spotify, on podcasts. And now our podcasts are getting a couple hundred thousand listens or downloads a month. So you just start to build organically, and that's the thing, is once it goes, it goes. And we added Instagram this year. I've never... I had to get an Instagram account because I never had one. I'm not much for it, but we have three videos on Instagram, just goofy videos of our staff doing stuff that have gone viral, 3.8 million views on one where we just come up with crazy little things or throwing pens in the office at each other. We've learned social media, but that helps your SEO, right? So all those things matter and get you higher in the crawlers that are going to Google, etc.

Michael: So how do we think about results from these channels and offerings, radio, and now YouTube? You seemed you were very dialed in for what seminar metrics look like. So what do radio metrics look like?

David: So radio metrics. So again, this is where I take part of the spend…so we're going to spend probably 12% of revenue this year on marketing. The first 2 years, I spent 25%. I just committed that. The first 2 years, no matter what, I'm going to spend 25 cents of every dollar back into marketing, right, to get this thing off the ground, if you will. And then I went down to 20%.

Michael: Is 12% of revenue on marketing, including internal team and what you do externally, or that's just the external spend?

David: Yep. That's the external spend. That does not include the team members, which now I think I have six full-time employees on marketing. So we have a big marketing budget. We're approaching $2 million. So it's...

Michael: How big is the team in total?

David: Forty-six, I believe right now.

Michael: Okay. So almost 15% of the staff, of the team headcount, is marketing, in addition to 12% of the revenue on hard dollars spent.

David: Yep. Yeah. We're committed to it. Absolutely. And the results speak for themselves. Now I could run a higher EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization] if that's what I was 100% focused on. But as you grow, the operational costs get cheaper, right? And the rent as a percentage of those fixed costs becomes smaller and smaller. So marketing, I anticipate in 3 years, our marketing budget will maybe be 8%, so it's working its way down quickly now as we have scaled so fast. But you got to commit to it upfront. If you really want to punch through that growth, you've got to do it. And if you have a sales system that can handle it, then let's get some butts in seats, so to speak.

Dividing Marketing Spend Between Branding And Events [53:00]

Michael: So now take me back to radio metrics. How do you look at this in some of the other channels for what's your spend?

David: So we were blessed to sign the University of Nebraska Cornhuskers Athletics almost two years ago. So that is a pretty big check that's included in that marketing budget. And that's branding, right? That's not direct ROI. However, in our contract, we got use of Memorial Stadium, and you got to understand where we are. There are no professional sports in the state of Nebraska. So the Cornhuskers are the main thing, right? We've sold out every football game since 1962, and 90,000 strong out there. So it's an amazing experience, but we get access to the stadium.

We just did it last month, our night at Memorial. We do it every year now, where we invite our clients out. They bring their kids and grandkids using a little NIL. We have players currently on the roster come out and sign autographs, throw footballs, kick field goals with them. We just had over 500 people at that event. It was fantastic, but that's the branding money. So about 20% of that marketing budget, it goes into just pure branding.

And so I would tell you now I look at the way radio is and I put that into that budget, radio and TV. There are direct... I basically think it's about 50/50. I would consider ROI versus branding because the radio feeds the seminar invitation you get in the mail, feeds the email invitation or the social media ad you got for the classroom event. So we have now built a brand. So I'm not so worried about radio. Is it going to give me a direct eight-to-one ROI like it did six years ago? No, but it's still a three-to-four-to-one that we can measure every time.

And as you know, media is expensive, right? And could I cut it because we're so established? Yes, but I also know in media advertising, once you have a footprint, you don't necessarily want to give it up. I don't know if you remember the old Yellow Pages, right? Once you had your ad, you were grandfathered in that space and size. Nobody could get in front of you as long as you kept renewing. Of course, that's where the Yellow Pages could just keep cranking up that Geiger on you, what they charge every year.

But it's that way in media. So once you have a footprint on TV or radio, you don't really want to give it up, even if the results have dimmed. I've got friends, "Oh, I did TV and then the results dropped." I'm like, "Yeah, but the branding is helping your other marketing funnels."

Michael: Because the shift for you is this used to be an eight-to-one return, and now it's more like three or four-to-one.

David: Correct. But again, still viable.

Michael: And I guess just for those of us who have never done radio, what do you buy? What does it cost?

David: Well, that varies wildly by the station, right?

Michael: Okay. Is that how it works? So just educate us for those of us who don't know the wiles and dynamics of radio.

David: All right. So the first year I spent $250 a week to have an hour show on a very small station. So it wasn't that much. Now, this is going back almost nine years ago, right? Today we spend probably $25,000, $28,000 a month for radio. Now we're on multiple markets on multiple stations. So you have to know what the ROI is and what the station reach. And, of course, we utilize a media buyer. I'd highly recommend people, if they're going to do media, have a media buyer who can... They're going to sell you CPMs, cost per million, or what have you, cost per thousand of listeners in your demographic.

And where we are, we have a big station that covers...we have people drive three hours to our office, some rural communities, because the signal gets them. They hit...and they'll come in. And then we have smaller stations that we're also on that just cover small communities, but they're very cheap to add. So again, every market is going to be totally different. You need to know your market metrics, and you can hire somebody to help you understand your media buying because it's very different. And I've learned how you can get discounts.

We had a station that wasn't necessarily performing, but we were on there for about six years, and their main personality retired, and the numbers dropped off. You could see it. The same person wasn't at the mic in the mornings, if you will. And they hit the renewal. "Hey, we're holding our rates flat." I'm like, "No, we're going to drop your... I need a 15% drop in the rate." And they agreed, and they dropped the rate because we've been a good, loyal spender.

Terrestrial radio is struggling today, if you don't know. So sometimes once you've been loyal, you can start to fight back on some of the cost, if you will. And you can ask to push that down or ask for more ads to run for the same dollar spent, etc. But it takes time. My advice is if you're going to do media, get a professional media buyer.

Michael: But if I'm thinking about this, right, if I'm understanding, it's like you may be spending as much as $28,000 a month, you're still trying to get to a 3-to-1 ratio. So you need 80 to 100 of new revenue a month, which, with your clients, is what? You might still get 8 to 12 new clients a month, 1 or 2 every week.

David: So we'll onboard somewhere around 16 to 18 clients a month from our funnels. And like I said, radio might be a secondary, and we ask them on the questionnaire that they fill out, "How did you hear about us originally?" Or "Have you seen me on this station or this TV?" And they check the boxes, let you know they've seen you, but maybe they came to the Social Security class, but they checked "I listened on the station." So you know where some of that ROI comes. We have our primary source and our secondary source. And some of that's art and science. You got to massage what you think the relevance of that is.

But again, as the AUM book grows, right, so the percent of marketing goes down over time, it's just knowing your total spend. Like I said, I set a budget for the year. And as long as we hit our client acquisition numbers and our asset goals, then we'll spend it.

Michael: Interesting. And then what's your overarching goal for the year? Is it still similar, like, "As long as I'm getting a three-to-one ratio, I'm just going to keep approving or lifting this budget?" Or is it a higher target, a lower target? Tell me about the branding and the other pieces.

David: So you got new firm revenue versus recurring revenue all in, and I look at the whole thing. We operate under... I have one holding company. I'm the owner. And then we have three operating businesses under that holding company. So we have an insurance agency, Medicare policies, long-term care policies, life insurance, fixed annuities, MYGAs, etc. We have the RIA, which charges financial planning fees and the AUM fees. And then we have the tax company that does tax planning for business owners, and then tax prep for some of our clients.

Now, we actually charge those clients a fee separate if they want to hire our team to do their tax bill. And so that generates revenue. So last year, we did right at $12 million in revenue. And this year, the target is closer to $15.5 million.

Michael: Wow, which is a lot of growth. Just at that size, there's a point where growth rates can be fairly sizable, because the denominator just isn't quite as big. But now you're talking about was close to 30% revenue growth organically in a year.

David: And we've done that basically every year or better. And I know at some point, that will start to slow down, but it hasn't yet.

Michael: Because I've got to ask on some of these, why radio and seminars, right? From "modern era," these feel, I don't mean this in a bad way, but an old school and analog close.

David: Well, and I agree with you there, but those are generally getting us boomer clients, right? So basically, those clients who are about 60 to 75 years of age are coming from those funnels. The classroom gets clients a little bit younger. They may not go to a dinner. I'm a Gen Xer myself. I'll turn 58 here in about 2 weeks. Our generation may not answer the mail, but we might come to an informational session that is at a college or our classroom, whatever, that has some topic that you're very interested in, exit planning, or what have you.

And so the funnels work in different ways, which is why we run so many funnels. But yeah, you are right. It seems old school, but that's... We'd ask Willie Sutton why he robbed banks, because that's where the money is. Well, advisor that's 59.5 and up, that's the movable money, right?

Michael: I was like, "I spent $11 grand to get 30. What do you do?" So are there...? I guess if I were to draw a pie chart of where does the growth come from over the span of a year, as you add, whatever, this is 200-plus clients over the year, what does that pie chart look like? So you're like you've got the seminars and the radio show and the classroom sessions and the podcasts and the YouTube and all these different things. But if I really draw the pie chart at the end of the day, what drives the outcomes? Where does the actual client flow come from for you?

David: Seminars is 42% of our new client flow. Radio is about 28% now. And then basically, the classroom gets us somewhere around 20%. And then the rest come from either digital, YouTube, or referrals. Now we do do movies. We started doing movies.

Michael: And there's not a lot structures, there's not a lot left there. So referrals is less than 10% of your growth in total?

David: And because it's not been our focus, honestly, we do gather quite a bit of assets. We have a new asset goal, and then we have a goal from current clients and/or referrals. And we are pouring more back in there. One of the things I told the team strategically is we want to start pouring some of our marketing budget, as you mentioned, some of the things, the old school. As the boomers age out, we know we need to shift or a little paradigm shift where we spend. So we're going to spend some of that more on client events.

We're really big on doing really nice client events. I do a state of the market update every year. I've been doing that for about 16 years, where we rent a...now we have to rent a huge place out, because I have 500, 700 people show up to these events where I do a what happened last year on the markets, what happened in the world, and then the macro events that we see shaping the economy going forward. That's a really well-attended event. We get a ton of potential referrals there.

But that's a soft referral. It's not the hard book. So we don't necessarily count them as referrals. They invite a friend, but then they sign up for an email or what have you, and then we get them invited to a class or the dinner, and then they become the client.

So the referral number is actually much higher, I think, than what report... And we're working on trying to get better metrics there. But we've learned the easy way to get a referral into your system is to invite them to one of your events, one of your social events, or one of your informational or educational events, so they can just see who you are, and then they're comfortable actually scheduling the appointment and coming in and moving forward.

Michael: So do you actually encourage, nudge clients to refer you by sending them to the Social Security educational session as a pathway to introduce you?

David: We do. And so the advisors that...we give them...they each have a company credit card, so they can actually reach out to clients, take them out for breakfast or lunch or dinner or something, and then just talk about it. So somebody has a way to infer them, "Hey, would you like to meet them for dinner with me," and we'll just introduce me at dinner. We won't really talk shop other than just an introduction, and then we'll follow up with them from there. So I give my advisors a little bit of money to spend doing that. And I just love dollars, love on the client a little bit, and facilitate that referral.

And as we keep scaling and building this out, we ended up with much...everybody is doing this. I'm sure everybody is realizing that a lot more high-net-worth clients have been manufactured, if you will, thanks to the markets the last 15 years. So the amount of qualified investors is starting to really skyrocket, people that were $5 million liquid. And because of our tax focus, we attract them to our marketing.

So we launched a private wealth division earlier this year, where, actually, for a marketing, unique idea, we rented a hotel. We did a private wealth summit. So I put our clients we reached out to, basically our top 30 clients of about a little over 1,000 clients that are all pretty good in size, and invited them to our private wealth summit. And Smart Private Wealth Partners is the division for the qualified, the high-net-worth investors, and I told them PWP, it really stands for people with problems they never thought they'd have.

And almost to a man and woman in that event, we talked about, you have more wealth than you thought you'd acquire in almost all self-made people who just through harder savings, investing, or entrepreneurship ended up with $10 million, $20 million, $30 million net worths, and they don't know what to do. They don't know how to leave this to their kids. So it creates new problems.

So we created a format for them. And we had 19 of those families attend the summit at the hotel, and they could bring referrals. We got introduced to a $25 million relationship there. We just did this back in May. And I spent money on that. It was a little over $70,000 spent on this high-net-worth event. I had entertainment come in from Nashville. It was a really nicely done event at a nice hotel, prime steakhouse for dinner, and I had speakers come in.

Michael: How much did you spend?

David: About $72,000 on this event.

Michael: Okay, that's a big number.

David: Well, when I look at the top 30 clients, they represent about $160 million of AUM to the firm. Would you spend $70,000 to protect roughly $1.5 million in recurring revenue? I think so.

Michael: You're on point.

David: So that's the thing, is you got to understand some of those market dollars now are focused back inbound. You want to make sure you're taking care of these clients. But on top of that, like I said, we had a couple of really high-net-worth referrals there. And this was our first year doing it. And then we surveyed those clients that came. I had a human dynamics specialist speak to them about how to communicate with their kids. We had an economist, local economist from Creighton University who does the Midwest index, Ernie Goss, who's nationally followed, come speak.

So we had a really nice lineup of speakers and education. Had one of the CPAs come talk. We had somebody talk about some higher-net-worth tax strategies there. So we had a whole day of content, and the feedback was fantastic that we got. And so they all said, "Oh, can I bring someone next year?" Absolutely, you can. So it was a spend, but like I said, we got introduced to a $25 million relationship that is in the middle of this onboarding with the firm. But if we get two or three of those every year, then I'll spend that money all day long.

What Retire SMART Looks Like Today [1:08:45]

Michael: Right. So now zoom us out of, I guess, just metrics and scope of the firm overall. So you've said some of this, you were $12 million of revenue last year, aiming for $15.5 million this year. The team is 46 people, clients are about 1,000.

David: Yeah, a little over 1000 now. Yep.

Michael: And then where is assets AUM?

David: So regulatory AUM, we just hit $800 million, about $1.1 billion all in with the fixed insurance products, etc., as well that we service. And yeah, so the tax company is growing very fast. So we just had to hire another accountant for that. And we charge for those services, etc. So I just think that the value is provided. People are happy to pay you if you're providing real value.

Michael: And so do you envision shifts to this going forward, these marketing pillars work, and these offerings work, and we're simply scaling up the volume on the chassis that we've got?

David: We are actually now launching webinars and much more digital ads. So we are launching new marketing funnels this year that we had not really traditionally done in the past, because I think we got to the saturation point of diminishing returns. We know how many dinners we can do, how many classroom events we can host, and what those metrics are, because we've got basically almost nine years of data now. So now it's scaling more virtual.

But our difference is we challenge the client, "Look, we have all the capabilities to work with you 100% virtual if you want. But I think it's worth your time to get on a plane and fly to Omaha and come look us in the eye, see that we're a real firm, concrete. We have a real office. You can come see us. We're not working in our pajamas in a bedroom with a Zoom wall behind us. And so that's our little bit of a differentiator.

And I was six out of seven of those that flew in. And basically, they send us all their information ahead of time, we do a discovery call, Zoom. We get them to fly in, and then we have a meeting that day. And then ask some clarifying questions, usually take them to dinner that night, and have them come back the next morning, and then onboard them as clients. And we're six out of seven last year on those people that fly in. So I think...

Michael: So these particularly higher-net-worth folks…

David: Yeah, these are all typically over at least a million dollars in assets, but several of them are $7 million, $4 million, $5 million. And we get a lot of referrals in other states, "Can you help them?" And so we'll just do that. And I just challenge them, "Look, if you want to work 100% virtual, we will do that, but I think you want to come see that we're real and come look us in the eye, shake our hand, etc." And most of them take us up on that. And we just tell them, "Look, if you buy the airline ticket, we'll take care of your meals and your hotel while you're here." And so a pretty good success rate with that.

Michael: And so I guess the constraining factor, as I'm recognizing, like the seminars, the classrooms, even the radio that is geographically based, just your growth engine has been very Omaha/Nebraska-centric. So all the marketing funnels work great, but you can only hit that same subset of households and citizens so many times before you get to diminishing returns. So the new marketing channels is not like, "Our things aren't working." It's just, "We can't turn the dial up anymore." They're great for where they are.

David: Correct. So now we want to start to expand the marketing funnel. And we've got an advisor training program here that I think is really fantastic. We ended up hiring a director of wealth management and somebody who sits between me and the advisor team now, about two years ago, and he helped me develop. So now we have ten levels for the advisor track, if you will. So we give the advisors a pathway. And rather than try and do tuck-ins or hiring advisors with books...we've hired experienced advisors, but we're not worried about them bringing a book.

We'll do the marketing. We'll do the client acquisition for you. Because we want the client's experience to be our culture from day one, our process from day one, versus if you try to fold somebody in. I did that with my firm in Florida a couple of times, and it never really works out like you plan.

So we're now building out, and we've had fantastic success with interns. So now we get six to eight every summer. And we usually end up offering two to four of them full-time jobs. And so they start in our advisor training track, and they work their way through the path. And the first four steps of the path are where they're just learning our systems, our process, our internal language, the planning process, they're mastering all the software tools and things that we use.

And then once it gets about the fourth step in that process, which takes a year and a half to two years, depending on the individual, then we are going to sit down and have a conversation. Are they more of what we call a relationship advisor, which is like a service advisor, or are they more of a lead advisor that can close new business? And it's a different skill set.

And when I got in this business back in the PaineWebber days, it was "There's the phone kid, go get them." And it was hunt, or you're out, right? And so one of the things I wanted to build when I built this firm is I want to give these younger people an opportunity. Some are going to have sales acumen, and some can be trained it, and some it's just going to be anti for them. But they're fantastic nurturers, right? They'll love the client, they'll do all the follow-up needed.

And so we pick which path they're on, and then we go through three levels each of those paths. And I find that some clients or some advisors are just really good at onboarding new clients. They're very persuasive, they follow the processes, but they don't do the follow-up, right? So we want to make sure we're measuring that correctly, I think putting the right advisor in the right seat to be successful and manage the client relationships.

Michael: And so I'm presuming relationship advisors and lead advisors have different compensation tracks as well.

David: They do. Everybody has some form of base salary, and then they get a revenue split of the revenue that they generate. So a lead advisor gets a higher revenue split of new revenue. That's the harder job. So they get a higher revenue split payout on that. And then in our system, I also know that most people don't want to be on the closing hamster wheel, so to speak, forever. You can run hard, and it's fun, to be honest with you, if you're in that mode, but I tell the advisors. I just had one of them the other day. He's like, "You were right, David." He's hitting year six with me. He's like, "I think I do want to start to slow down a little bit." And so what I built is a system that allows that.

So basically, when a lead advisor onboards a new client, each one of us is going to have a slightly different line in the sand of what the AUM is going to look like. But my goal was that in our system, our advisors will sign between 40 and 60 new clients in a year in the lead advisor role. And so I want them to really keep about one-third of those for themselves, and two-thirds, I want them to transition to the team, to the relationship advisor that will take on that relationship and service that client from the get-go.

And what that does is, after about 5 to 7 years, they'll have about 120 or 140 families that are all their higher-net-worth families. So they'll have a really nice book of business. So if they want to go in what I call coast mode, where they just service that book and work for referrals and opportunities within that book, that opens the seat up for another lead advisor to step into the role as well, because I can't have infinite number of lead advisors. So it also lets the young advisor know there's going to be a hole opening up.

So it works really well, the system we've built. So we have a training ground, and the kids get...I call the kids, some of them are not that young, but they learn the system. And one of the things I explain to the younger advisors is, look, your compensation is not just dollars, you're getting compensated in dollars, but you're getting compensated in knowledge, and experience, and expertise with the volume of cases that they get to be part of that they wouldn't get elsewhere.

You can go work for some buddy who's only got 150 clients for the whole firm, or you can work for a shop that has over 1,000 clients, and you're going to have tons of opportunity to do service calls and all kinds of things and learn things, learn how to do everything from distributions to RMDs. So it's a really, really well-thought-out training program. And each step of the way, they get a small raise as they master new skill sets, and software, etc.

What Surprised David The Most Building His Advisory Business [1:17:00]

Michael: So as you've gone down this path, what has surprised you most about building and scaling this fast-growth advisory business, particularly because I've recognized you can contrast this with the prior one you did that was less marketing-oriented and not as fast-growing?

David: So yeah, I think you’ve got to figure out what your niche or what you want it to be, what your firm is, what your mission is. And I want to help as many people as we can help. So I'm in the mode to scale. However, I've learned too there's bottlenecks that you create when you grow too fast, or you grow really fast. So we went from just me being the advisor, all the way through 2020, had my first lead advisor that was proof of concept, did a great job in 2021. Then in 2022, I hired two more lead advisors. And I learned also, at this point, always hire them in pairs, in case one doesn't work out. But you can train two the same speed you can train one, right? So hired two, and we scaled it out.

And then, as we started to scale from that, we had basically four of us closing business, and I was still doing it. We then built out basically diamond teams or pods, if you will, where you had a lead advisor, you had a service advisor under them, you had a client service person under them, and then even a potential trainee hanging in there. So the trainee would be first base, the relationship advisor would be third base, the client service person would be the bottom home plate, and he would be at second base, the lead advisor closing.

Michael: Sure. Trainee is like a associate advisor or a paraplanner…

David: Yeah, so our first level is called a FATI, F-A-T-I, financial advisor trainee/intern. So when they're unlicensed, or they get started on board, this is where we start them as they're going through their licensing process or an intern for the summer. But they get in live meetings, get to meet people. They get to see how we really do it. And then the service advisor or relationship advisor is one that actually is handling clients.

The problem is the relationship advisor...I had built that pod system, well, they can only grow as fast as that lead advisor can close cases. And I ended up losing one or two great CFPs, who didn't want to wait around long enough for me to build a book for them that way. So that worked great for about two years, and then I had to break that system. And now we just have levels, and any relationship advisor can get a client from any lead advisor. And that's helped us unlock the bottleneck and scale again to the next level. So I just think advisors need to be thinking about where they are.

Michael: Because now you can fill a relationship advisor faster because any lead can shift to them. So you can just go to all the leads and say, "We just hired these two people, we need to fill them quickly."

David: Yeah, we launched a relationship advisor about three months ago, and he's already about 80 clients and growing. And we try to get them to about 150 to 160. And then, slowly, still give them one or two more. We want to cap them at about 200 households, is our focus. And then we have a client service team of five professionals that help everybody, make sure they do the scheduling, and make sure the service gets done. But we've built out a system. And so now I'm realizing I need more relationship advisors than I do lead advisors, right?

So at least with the current system here, as we build the virtual out, we'll figure that part out too. And Angie Herbers, I think, had a great graph she shows in some of her coaching programs. I've seen her speak a couple of times, where your revenue is bottom left to upper right, a normal growing line, but your profit goes like a snake on that line above and below it as you hit these...

Michael: Yeah, big sine wave. Up, down, up, down.

David: And so you've got to get comfortable with that. Look, I'm going to reinvest to hit this next level of growth. And see, right now, I've got 46 people. Honestly, do I need 46? No, but I'm hiring for where I'm going to be in 15 to 18 months. And it takes time to train, then I'm willing to make that investment. So it's just everybody's got to have that preference of what you're trying to accomplish. And if you're really wanting to scale, scale costs money.

The Low Point On David’s Journey [1:20:50]

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

David: Well, when I moved to Omaha, I thought I wasn't going to own a company and work for somebody else. And that didn't work out. That was actually a really rough emotional time period for me, to be honest with you. Thinking, "Ah," and now I had to start all over. But I will tell you that as you get through that, I will tell you, Dan Sullivan, Strategic Coach, and then Dr. Benjamin Hardy, I just finished "The Science of Scaling," great book, by the way. But "The Gap and the Gain" is such a great, simple little book, because sometimes we get discouraged when we have a down month or a downtime.

And we forget to look back and see all that we have accomplished. I set really big, audacious goals, and we don't get there, I'm upset. "I can't believe. Why are we...?" And I'm not happy where we are right now. We're about $140 million in the door this year. And here we are in June, and I'm like, "Hey, why aren't this..." And I got to stop. If I go back seven years ago, I'd have been, "Wow, holy, I can do $140 million in new assets in half a year" I wouldn't have believed it. So I think you need to...you will get low points. And it's typically when things happen, but you've got to push through and take a look at what you've accomplished.

The other thing I would tell you, the fastest way to get out of it, we call being in the village, by the way, is when something goes bad, you're in the village. And the fastest way out of the village is to serve someone other than yourself. So if you're feeling down, there's somebody less fortunate somewhere near you. Go serve them, and you'd be amazed. Gives you a perspective real quick, whether that's volunteering at a charity or locally or just somebody on your team that might be having a rougher week than you because everybody's got stuff going on. So you just got to keep that realistic presence going about you.

But for me, it's just from launching the asset division. We put out four publicly traded ETFs on New York Stock Exchange last year. That was exciting. So for me, I'm always looking for the new carrot, if you will. It's excitement, it's having new things to go. And if anyone wants to check those out, smartwayetfs.com, but it's just fun for me solving these problems and then hiring and training leaders in each of these divisions and areas to run. And going back to Dan Sullivan again, "Who Not How" is, I think, my favorite book exactly. I don't worry about the how. I hired the who and let them figure out the how for me.

Michael: Wait. So I want to come back to the moment. Why did you launch a bunch of ETFs last year?

David: Oh, great question. Well, so I've run money for a long time. And I think I can do a pretty darn good job of it. And people can look and check it out. I can't talk performance on here for reasons. But anyway, people can go check that out if they want. But the thing is, our best-performing models, I would need clients with higher dollar amounts to give it to everybody. And now with the ETF version of it, I can have the smaller dollar clients still get some of our best portfolios built into their overall allocation simply because somebody only has $200,000, I can't buy them the high-end, all-equity model. That might require $60 grand to buy the stocks in that model, right? That might be too much of a risk allocation for them.

So now it allows us to give some of our better-performing portfolios to clients of any size. And then, of course, we earn a sub-advisory fee on those ETFs. We rebate that to our clients, so they don't get doubled. They don't pay us an advisory fee and then pay me to manage the ETFs as well. So we rebate that to them each month.

Michael: Okay. And then by my own sheer curiosity, what does it cost actually to launch your own ETFs? How does that work?

David: Oh, yeah, well, it's not cheap. Yeah, everything's a volume game. It costs you about $200 grand a year to run one. That's just to run it. So you want to get assets in there, obviously, to pay for that. And it costs...

Michael: Is that run it per ETF? So if you've got four of these, you've got to eat it on each one?

David: Yeah. So you got trust fees, you got lawyer fees, you got trading fees, you got accounting fees, compliance fees, distribution fee, all that. So it all adds up in there. And then basically, you're going to spend several hundred thousand to launch as well. So not for someone who doesn't have a track record, not the faint of heart, if you will, if you're not sure that you can scale them. And, of course, the competition is pretty fierce in that marketplace, too.

Michael: And just curious, did you use a...? Is there a provider or a service, a platform that helps you scale all these?

David: Yeah, so we went through white labeling through Tidal, which is the largest white labeler out there of ETFs. And so...

Michael: Tidal?

David: Yeah, Tidal, T-I-D-A-L. So Tidal Trust, yep. So there's multitude of ones out there, and some are more expensive than others. If somebody were thinking about doing it, they're welcome to get a hold of me. You'll find me on LinkedIn or something and message me or something. You just need to do your due diligence. How will you market it? How will you distribute it? Do you know the costs involved in it?

And one of the things that gave me some confidence in doing it is, one, just knowing what we did with our SMAs and our historicals. And then you had to tweak the back end. You have to backtest it because it's slightly different rules when you're an ETF versus an SMA, 5/25/50 rule, which, in other words, you can't have more than 5 stocks be 25% of the allocation. So you would have to change...and these are concentrated ETFs. They only hold 30 positions.

So these are not 500 stock indexes, etc. So there can be volatility in there. But you have to learn all the rules of the road, so to speak. And we've got an educational learning process. But I've had a couple of friends do this prior and launch their ETF successfully, and they went through the same group. So that helped give me the introduction and figure out how to do it, etc. So the best way to learn something is from somebody who's already done something, right? And so you do that over and over again.

David’s Advice For His Younger Self And For Newer Advisors [1:32:15]

Michael: So then, looking back on this journey, I'm curious what other pearls of wisdom you have now from the experience that you wish you could go back and tell you when you first started.

David: Oh, my goodness.

Michael: What do you know now?

David: If I had to realize what I know now in the marketing formats, if you will, I could probably have $30 billion in assets. So I would just say it's never too late.

Michael: Because you would have started ten-year head start on where you are now.

David: Yeah, 100%. I would have started when I started the first RIA back in 2010, marketing much more growth. Back then, I was just going to networking events and chamber groups and BNI [Business Network International] and those type of things and working through professional referrals. And I would add $8 million to $15 million a year in AUM and think I was successful.

And I was fine. I was feeding my family. I had two staff members. So it was very profitable. But now, learning how to scale and how to build the systems out, I think there's comfort as you build it. Of course, there's enterprise value that gets built, which is fantastic for my own retirement someday. But I just think the biggest thing I would just tell people out there that are trying to figure out the next growth phase in them is just map out what you want it to look like. Great book is "Vivid Vision."

Michael: Cameron Herold.

David: Yeah, Cameron Herold. Yes. And just where...ten-year plans. If you do strategic coach or any of those things, Jim Collins, you have your BHAG, right, your big, hairy, audacious goal. But really, anything planning past three years is just irrelevant, right, as fast as the world changes. And my goodness, just think of what... Your technology map, just imagine what that's going to look like different with AI and how fast these things are going to change in the next couple of years.

So planning more than three years out is...you can put the vision out there, but I think you really can do a detailed plan up to three years and no more. And just have the vision of what you want your firm to look like, and doing that "Vivid Vision" exercise is fantastic. If you wake up three years from now, tell me what your firm looks like. And then you can work back into, hey, I'm going to do this marketing funnel, it's going to give me these results. And then if you don't know how to do that, go find an advisor who's done it.

So I think the other thing, too, is live in the world of abundance. It's really important. I got friends right here in my marketplace that are my direct competitors that I'm friends with, and I've got no...there's just no reason to get mean or upset, yet there are some people that they get a little sideways, and I'm like, "Man, there's so much money out there."

In the real world, if you're an RIA or in the independent space, your competitors, the big box, wirehouses, and the regionals, there are so many people that want and need good advice, good help, that you just got to figure out how you want to...what's your client avatar? Who do you want to focus on? And then design a marketing program to get it, and then build it.

Michael: So what advice would you give to younger, newer advisors looking to become a planner, coming to the profession today?

David: I think they need to have a clear understanding. There's three main paths you can go in this business, right? So the first is probably the smallest group, but that's the back-of-house portfolio analyst, somebody who wants to become a CFA. They want to manage portfolios. They're probably not going to be client-facing, right? They're going to...they may get there, but they're going to be more of the portfolio…so I've got a couple of guys that sit in our market lab, as we call it here, to help me run our models. That's their job. Occasionally, we'll put them in a conference room with a client to explain how the model works and why it works, etc., but they don't really want to be client-facing.

Then you've got the client-facing type that are going to either be more nurturers, and are going to be well suited to be a relationship or service advisor under some RIA, and they're going to really like that because it's their personality.

And you have some that enjoy the sales portion of it, or the closing part of it. And it's not for everybody. So it's figuring out what your natural abilities are, and then finding a firm, even if it's not forever. If you want to start your own firm, there's nothing wrong with that. Just be honest and open with the leadership of where you're going. We have kids that come along, I keep calling them kids, but youngsters, that may want to move to another state and start their own RIA in the future. I've got no problem with that. Just be open and honest with me on how to do it. We'll train you, and as long as you're providing value for us as a firm and for our clients, it's fantastic.

So it's just figuring out where that is, but don't rush too early to open your own firm is the only thing I would say, is until you have a firm plan of how you're going to market that. Because it's tough when you go out on your own, and you don't have a marketing plan, and if you're just waiting on referrals, and maybe you've got a small amount of AUM, you're thinking, "Okay, this will cover my revenue."

A lot of advisors out there have not been through a real bear market in their career yet, right? Not a prolonged one like 2007 through '09 or 2000 to 2003. I've been through all of that. And so if you thought you had enough AUM to go independent, well, what if it got cut in half? Would you still be able to survive? So think through the planning of what you want, and then find a firm that will execute and train you. And remember, the compensation is not just monetarily, it could be that education you're getting to learn an experience.

So a high-volume shop, if you will, is going to give you more at bats. I will put our client service team against any branch office administrator from that firm that has an office in every town with one advisor, right? Because of the sheer volume that we interact with, where a lot of those firms might onboard eight clients a year, right? And we're doing double that in a month.

What Success Means To David [1:38:30]

Michael: So as we wrap up, this is a podcast about success, and just the theme that comes up, that word success means very different things to different people, right? It can even work for us as we go through stages, seasons of life. And so you're on this amazing path for building the business as you're adding hundreds of millions of dollars, I guess, closing in on a billion of AUM later this year, or early next year. So the business seems to be in this incredible place. How do you define success for yourself, personally, at this point?

David: I think success is about being proud of who you are, or where you're going, or who you're trying to become, and living a life that showcases your real values, right? So are you happy when you wake up every day? I get so excited for business. I'm about a 4 a.m. start every day. I just can't... I wake up fired up for the day.

Michael: Ooh that’s an early start, my friend.

David: I can't help it, man. I literally just wake up, and I'm so excited about the day. And my problem is, I come up with a million-dollar idea every hour. At least, I think I do. And my wife's the one there to always pare me down. She always says, I make the dollar, she watches the cents. She tries to keep me grounded. But success is really... I think somebody once said, it's doing what you want to do, when you want to do it, and doing as much as you want to. I love what I do. I love coming in every day. And I love teaching these younger advisors.

And I never thought that I could not be in the conference room anymore, closing business, or at least still servicing certain clients. And to my surprise, the clients don't care. They still, every once in a while, request me to pop in a meeting. But success is having the firm run without you. My wife went through a...unfortunately diagnosed with a life-threatening cancer two years ago. And that was a shock to the system. Now, God bless, she's cancer-free today. And God bless, I have the income that we could get second opinions and take her anywhere she wanted to go with the treatment process.

But I stepped away a little bit. And lo and behold, I have a business that runs itself. And that's a real business, incredibly valuable if I'm not required part of the business. I still do all the media and what have you. So that made me really step back and realize, okay, we are in pretty good shape. So success to me is just literally being proud of who I am today, proud of the person I think I am, and living my values. We give back a lot of money to a lot of charities here, and the six figures every year. We're blessed to be able to do it. And we're growing a team of fantastic employees who are bought into the goal.

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

David: Hey, my pleasure, Michael. This has been a lot of fun.

Michael: Likewise. Likewise. Thank you.