Welcome back to the 155th episode of Financial Advisor Success Podcast!
My guest on today’s podcast is Derek Notman. Derek is the founder of Intrepid Wealth Partners, operates as an agent for New York Life and an IAR for Eagle Strategies, and oversees nearly $50 million of assets under management for almost 200 clients.
What’s unique about Derek, though, is the way that he’s evolved his advisory firm from a traditional bricks-and-mortar office space into an entirely virtual practice, born out of sheer necessity when he moved halfway across the country for an advisory firm merger that fell through and then had to figure out how to operate from two office locations, and evolved into a firm that has no office space at all.
In this episode, we talk in-depth about Derek’s journey from a high-volume bricks-and-mortar office-based practice to an entirely virtual one. From starting out as an insurance agent where the pressure was on generating a high volume of clients that ultimately culminated in a practice of more than 1,000 clients in his first 10 years, how a move from where Derek started in Vermont out to Wisconsin forced him to start meeting with his team and then eventually clients using video chat, the way Derek eventually built out the entire virtual team he operates with today, and the way Derek has been able to grow his income and his freedom by transitioning nearly 80% of his clients away to other advisors while working with his clients sometimes as far as a continent away.
We also talk about how Derek’s efforts on growth and business development have changed over the years. From the way he aggressively sought out networking opportunities and referrals in person to expand his client base in the early years, to a shift of generating 100% of his new clients online and virtually today through the use of a blog and social media, his decision to create a narrower niche focus on small business owners and CEOs, and how declaring that he works virtually with clients right on his homepage as their “virtual wealth partner” has actually helped him to attract new clients by promising not to meet with them in person.
And be certain to listen to the end, where Derek talks about why he regrets having tried to build a big practice in a bricks-and-mortar office, the pain points he’s worked through in trying to get a large insurance company on board with his virtual model, where the greater challenge was not running his firm virtually and digitally, but simply trying to market for clients online, and how Derek is now trying to teach other advisors the virtual tools and systems that he had to figure out the hard way.
What You’ll Learn In This Podcast Episode
- How Derek Started Out As A Young Insurance Agent [04:54]
- What Derek Learned From Starting His Own Brick-And-Mortar Shop [20:33]
- Derek Discusses the Importance of Listening To Your Gut [28:09]
- How Videoconferencing Helped Derek Improve His Work-Home Life Balance [32:15]
- The Virtue Of A Firm-Based Virtual Assistant (On The Same Continent) [57:08]
- The Efficiencies Of Growing a 100% Virtual Firm And The Value Of Establishing A Niche [05:09]
- The Fallacy That Firm Growth Is Every Advisor’s Goal And How Derek Grew His Income By Shrinking His Client Base [01:12:44]
- How Derek Characterizes His Firm Today As A Virtual Comprehensive Financial Planning Practice [01:27:26]
- The Most Surprising Thing For Derek As He Built His Advisory Business [01:33:22]
- What Success Means To Derek [01:44:17]
Resources Featured In This Episode:
- Derek Notman
- Intrepid Wealth Partners
- Virtual Advisor System
- Love Your Finances
- Jason Wenk
- Jeff Rose
- The Emergence Of The “Location-Independent” Virtual Financial Advisor
- Red Butler Virtual Assistants
- A Virtual Assistant (South Africa)
- Derek’s E-Book
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Michael: Welcome, Derek Notman, to the “Financial Advisor Success” podcast.
Derek: Hello, Michael. Thank you so much for having me. I really appreciate it.
Michael: I’m excited for today’s episode. I feel like we’ve talked in the industry for the past couple of years about this phenomenon that, in an internet-based digital world, there’s sort of this geographic disconnect that starts to occur. You don’t have to serve clients only in your area, because now we have not only email, but also screen shares, video chats, and all these different technology tools.
And more and more firms, I find, have at least some subset of clients that are virtual, who either got referred to them and weren’t in the area but still work with the firm from a distance, or were clients they worked with for a period of time and then moved and relocated, were no longer in the area, but they get to keep working with them because of all these digital tools.
But you have this fascinating practice, to me, that has taken this to perhaps the logical extreme. That you live in the world of running an entirely virtual advisory firm so much so that you are often not even in the country or on the continent while working with clients. So I’m excited today to talk about what it means to have a virtual-location independent advisory firm taken to the logical extreme that you have. And I don’t mean to paint you as a negative extremist, but just that you’ve gone way further down this road than almost anybody else that I have met with a virtual office, a virtual practice, and an all-virtual team. I’m excited to hear how this came about and how exactly this works in practice.
Derek: Yeah. I’m happy to share the story. It’s been a journey, I’ll tell you that, but it’s been a ton of fun, and I’m happy to dive in. And again, thanks for having me today. I think this is going to be a ton of fun. Do you want me to start early in my career and what I did, and kind of share that journey?
How Derek Started Out As A Young Insurance Agent [00:04:54]
Michael: Yeah. Yeah. I’d love to hear the journey of just how did you get started in the advisor business such that you’ve ended out in this world where you’re helping clients with their financial plans from a beach in South Africa. How does that journey work exactly?
Derek: Yeah, and I actually just got back from South Africa like a week ago.
So, I started as a captive insurance agent back in 2006. And I didn’t know any different. I didn’t even know how to spell investments, insurance, IRA or any of that stuff. I have had a passion for helping people for a long time.
Right out of college, I ended up working with at-risk youth in a residential treatment center. So I was on a team of boys, teenage boys, they’re 13 to 17, and literally murderers, drug dealers, rapists, arson, you name it, and I was helping them in this environment, and one, it taught me to grow up real quick, and then two, it taught me that I really loved helping people.
So I did that for a couple of years and then my wife and I decided just to try something different. So we moved out to New England. And at that time, I’m like, “Okay, I’ve kind of got an opportunity for a fresh start here. I love helping people. I also love working with money. Where can I do this?”
Michael: This guy sounds like a financial advisor gig.
Derek: Yeah, right? And I didn’t even know really what that meant, but it felt right. These are two of my passions, I’m like, “Well, I should do what I love.” So, I literally put my resume on monster.com. And I don’t even…do people still use monster.com? I don’t even know.
Michael: I think so. Monster.com and Indeed.com – they’re kind of out there. I think they’ve actually just merged into one giant job/resume octopus with a lot of different types of tentacles. But yeah, you can still put your resume online and people seem to find their way to it sometimes.
Derek: Yeah, yeah. So that’s what I did. And I threw it out there and I got some calls from some larger national firms that people would know, and they wouldn’t hire me. I had to do this four-interview process, because I literally just moved to Vermont, and I literally did not know a single person in the state when we moved there.
So they’re looking at this young kid and like, “So, you have no natural market? Who are you going to work with? How is this going to work?” But they took a flier on me. I guess I was persuasive enough, I don’t know. And I just jumped in. And I was like, “All right, I’m going to learn this thing the way that they do it initially, and then I’ll make it my own eventually.”
And my first full year as an advisor, insurance agent/advisor, whatever you want to call it, I got my Series 6 within like the first month or two of starting. I was named the leading new advisor for the whole state of Vermont. So, I found early success, and then I just kept building upon that but knew from a very early stage that I wanted to run my own shop, so to speak. I wanted to have my own brand. I wanted to do comprehensive financial planning.
So then I did what every other advisor for the last 100 years is taught to do, and that was to hire physical staff, and open a brick-and-mortar office. So I went and bought an office building in my town and rehabbed the heck out of it – it was a ton of work, ton of money, and then just built this brick-and-mortar business where I wore a suit and tie to work every day and worked within this geographic region that I lived in. And I had a lot of success.
Michael: So help me understand that early path to success. I think for a lot of people, that’s a struggle out of the gate. Which firm picked you up initially as you got started in the life insurance world?
Derek: Yeah, New York Life.
Michael: Okay. So you’re getting started at New York Life, having recently moved to Vermont with absolutely no natural market because you weren’t from there. What the heck were you doing in year one? Well, I guess, A) to survive, because a lot of people don’t, and B) to hit top advisor in the state as a new advisor in the first year – what were you doing?
Derek: Well, I think it boils down to two things. And I can share this later, but I did have dark days along the way; this hasn’t all been rosy, for sure. But one is I had the methodology or the philosophy, whatever you want to call it, of “Do what’s right for people first and eventually, I will get paid.” So, even though I couldn’t call myself a financial advisor or financial planner, I operated as one. And I made very sure to be thorough in whatever I was doing and not just trying to push a product at any given time.
And then I also was very good at marketing myself and asking for referrals, personal introductions, and things of that nature. So just doing what was right, being natural and being me, and focusing on education and process instead of product – it worked. And I was kind of making some of this up as I went, but I was just doing what I felt was right for people.
Michael: So, what were you doing to market yourself and then get yourself out there? New community, younger guy. I’m presuming you’re like mid-20s at this point?
Derek: I was 25 when I started.
Michael: Yeah. So young guy, new community, “Hey, trust me with your money and your crucial life insurance decisions.” I think this is the eternal challenge now for younger and newer advisors coming in. The good and bad news about the old days of cold calling was A) it was a simpler product sale; if you had a good product to sell, you might get them to buy. B) at least it was over the phone, so they couldn’t see you and how young you might be.
It’s a different business now of more trust, more depth, more complexity, more face-to-face, all of which I think are harder when you’re younger and newer. So, what were you doing saying you’re marketing yourself and focusing on education? What were you actually doing to get going, prospect, and find some people to talk to and do business with?
Derek: Well, very early on, I considered myself a business owner instead of a sales professional.
Michael: So, what’s the difference to you?
Derek: Oh, man, a sales professional is literally just focused on selling. And I’m not saying that’s bad, I’m just saying that that’s what they do. And a business owner has to have sales, they have to have revenue to grow their business, but they also have to do all these other things that are important to running a business.
You get this, Michael, you run multiple businesses. So, you have to have like infrastructure and processes and all that. Instead of just coming in and trying to sell on the first appointment or just say, “Hey, you should buy this because it’s a great company or it’s a great product,” I really focused on a process. And that process started with the marketing.
Literally, at the time, to introduce myself, I would write out letters. And I would do like 20 letters every Wednesday, mail them that day, telling the prospect I would be calling them the next week. So that way it was kind of still cold, but it warmed it up a little bit. It made me feel confident like, “Hey, I have a reason to call these people. They know I’m calling. I am introducing myself instead of just showing up out of nowhere.” Because let’s face it, no one really likes to get a cold solicitation call. I don’t care what decade you’re in.
Michael: Well, even if you do some other cold mail or lead-in just to make the call warm because you already hit them with a cold mailer.
Derek: Exactly, exactly.
Michael: But it still counts. And I think it’s fair. It still counts. It changes the context of the conversation a little at least if they saw what else you were trying to send them or reach them with in the first place.
Derek: Yeah. So just trying to take them through a process of journey instead of just a sale. Because people love to buy, they don’t want to be sold to. So just taking them through that process. And then when I sat with them, I’m not jumping in and talking about me a whole lot or about product, I’m literally asking them like, “What’s important to you? What is your future like? What keeps you up at night?” And really just learning about them and building the rapport. Building these relationships is so crucial. This is a relationship business. And then because of that, because of doing good work and being genuine and not focusing on the product, it was very easy to get in to other clients.
One of the fun tricks I used to do, or not tricks but strategies or tactics I used was, I went to, what is it, Staples or whatever, and they had these carbon copy memo pads. You could buy 50 for like $6 or something. And I would make that part of my process. Once I got to the point that the clients were willing to move forward with their recommendation, then I would ask them like, “Hey, can I be introduced to some people that you know that I might also be able to benefit?” And I will give them that carbon copy and say, “Listen, please put the names and phone numbers down, but I’m going to give you a carbon copy today because I would ask you to call these people ahead of time. And if anyone on this list doesn’t want to hear from me, please let me know and I won’t bother them.” It was simple. It was basic and literally using carbon copies, but it worked. And it led to very warm referral introductions. And then I wasn’t calling people that didn’t want to be hearing from either.
Michael: Interesting. So you were asking for the referral, setting up the conversation, “Look, you call them first, you let me know if it’s going well. This is a note for you. I’m just going to have the carbon copy memo version so that if you follow up with me and say, ‘Yes, it’s okay to contact them,’ I’ve got the duplicate copy with the contact information to contact them.”
Derek: Bingo. Yep. And it also made them feel more comfortable. Like, “Well, I don’t want you to just calling my brother-in-law out of the blue, let me talk to him first.” Which is totally fine. I think that’s normal. You don’t want to just send some new person to all your friends and family without getting their permission.
Michael: So, how did you set up even the referral conversation with somebody? You just flat out asked like, “Hey, I’ve enjoyed working with you. Can I be introduced to any others you know that might benefit from the work that I do?”
Derek: Pretty much, but it wasn’t until I had gained their trust and their business. Because I haven’t earned the right to ask for a referral until they are a client. And I’m only going to be getting them as a client if I’ve built up a rapport and built up a level of trust where they are willing to trust me with their money or their insurance decisions. I don’t deserve it before that trust is established.
But then at that point, yeah, I ask, I’m just, “Here’s the type of people I’m trying to work with at this time, if you know anybody that fits this profile, I would love an introduction to them. Don’t worry, I’m not going to try to sell them anything on the first meeting. I just want to get to know them.”
Michael: And so, I get that, once you get some people that you work with and get to do some business with. And so, again, how were you getting your initial prospects? What were you doing that worked, or what did you try that didn’t work as you’re out there, 25 years old in a cold market? Well, both because you had no natural market and because it’s literally cold in Vermont! You’re out there in a completely cold market just trying to get people to talk to in the first place.
Derek: Yeah. I don’t know, for whatever reason…it was hard, but I had consistent name flow. And I don’t know if I can attribute that to just my style and way of doing things. I worked a lot; I was working 60, 70 hours a week. If I was not in a client meeting or on my way to a client meeting, I was making phone calls or looking for other people to call. So, it was a lot of hours.
My wife was a teacher at the time, so I knew some people at the school and I asked for meetings with them. Literally, I did some of this, which was awful, earlier is the business walk-and-talks, where you literally drop into a business. I tried a lot of different things because that’s what we were told to do.
Michael: So which pieces tended to connect for you? I guess some combination of things that worked and that didn’t feel awful to you to do?
Derek: Right. I always needed a reason to contact somebody so I wouldn’t feel weird or bad about it. So referrals were always easy – personal introductions from current clients, people that my wife worked with, friends as we started to get ingrained in the community.
But most of the cold stuff, it just never went anywhere. It was a lot of heartache, a lot of getting porched. It was tough. And you’ve got to get a thick skin to get through some of that.
Michael: And what was business for you early on? Is this all good old-fashioned New York Life insurance product? You mentioned you got your Series 6 early on, but I don’t know if you actually were doing or got permission to do a lot of mutual fund or other investment business. What did it look like as you were just trying to get going?
Derek: It was really a combination, because again, even though I wasn’t a financial advisor, I really wanted to do the comprehensive planning for people, so I really focused on whatever it was they needed. So if they needed term life insurance, that’s what we’re going to deal with. I’m not going to try to sell you the most expensive thing. I’m going to try to get you what’s right for your situation. Did a ton of IRAs, small IRAs, getting people set up, like 50 bucks a month to start in mutual funds and brokerage accounts. So whatever they needed and I could help them implement, I would do. The first couple of years, I was writing 150, 200 different types of pieces of business a year.
Michael: And just writing anything you could write from anyone you can find. Again, just reflect, 150, 200 pieces of business, that is a lot of human beings to get in front of.
Derek: It is. It’s a lot. And a lot of them were small bits of business. But it was just getting out there. I learned a lot. I learned what didn’t work. I learned what did work.
Michael: How would you go out and introduce yourself? Like, “I’m Derek, I work for New York Life?” “I’m Derek, I’m an insurance agent?”
Derek: New York Life has been around a long time and they’ve got a pretty solid reputation. They’ve been in New York state obviously the longest, but Vermont was the second-longest state they’ve been in. So I would just leverage that and say, “Listen, my name is Derek. I’m a financial services professional with New York Life. I recently met with or was speaking with your friend Joe. They had some nice things to say about you and suggested that I get in touch with you.” And then most of the times it’d be like, “Oh, yeah, Bob told me you were going to be calling” or whatever, right? And then it led into a very easy conversation to get a meeting scheduled.
Michael: So the goal of the conversation was just to get a meeting, then a meeting to understand if there was an opportunity to do business, and then trying to do business with them? That was kind of the steps of it?
Derek: That was the process. Yep. Get in front of them, have a good conversation about where they’re at in life, what they’re trying to do, do an assessment, and then determine if there were needs or not, and then how to solve those needs.
What Derek Learned From Starting His Own Brick-And-Mortar Shop [00:20:33]
Michael: Okay. So, you get going, you’re getting some good volume, and getting some revenue going. You started out, as you said, going the traditional path. Then you said, “Okay, we’re going to make it bigger. We’re getting our office space and we’re hiring or building our staff, and we’re building our infrastructure.” So what came next?
Derek: I did that for a while. I bought the office building and I had a couple in-house staff for marketing, operations and so forth.
Michael: How big did it ultimately get? How many people did you have onboard?
Derek: There were five people in the office, I think, at our biggest. And then also a couple of additional advisors that we would bring in or newer agents that were looking for some more structure. So it wasn’t terribly big, but I never wanted to be terribly big. That was never really my goal.
I learned that the hard way because, again, I was basically told, and maybe not directly told, but you look at all of the men and women that had been in the industry for 20 or 30 years and that’s what they did. You’re supposed to get a brick-and-mortar business, hang your shingle up, hire a secretary and all these things, and then have this big, beautiful boardroom and do meetings. Like, “Okay, well, everyone else is doing that, I guess I’m supposed to do that.”
I foolishly didn’t question it at the time. But then I did it, and I’m like, “Oh my gosh, what have I done?” It was so expensive. It was a distraction. I remember one time the office building, I had to go there with my business partner like 1:00 am in the morning to deal with a broken sewer line in the basement.
Michael: Oh, man. That’s certainly a good moment of “Why the heck am I doing what I’m doing here right now?” Like, “When did my life quite get to 1 a.m. sewer line bursts in my office?”
Derek: It was just like, “What am I doing?” So, I had to learn the hard way. I don’t know if I’m just dense, Michael, or whatever, but sometimes I just tried to trudge through things, literally in the basement that night, and just figured out, long story short, that it didn’t feel good.
I did what I thought was the right thing and what looked like what everyone else had been doing in our industry for generations. And I tried it and I’m like, “Oh, man, this kind of sucks. I’m stressed. I’ve got a lot of overhead now. I’ve got weird hours. I’ve got all these other distractions with the building and staff that I didn’t have before.” And it actually hurt the business.
So I did that for a while, and then I actually had an opportunity to work with another advisor in Wisconsin. And this was about seven or seven and a half years ago when these conversations started. And I decided to move my family to Wisconsin to pursue this opportunity with another advisor.
Michael: And just still under the New York Life umbrella? Someone else that’s in the system?
Derek: Someone else in the system. Yep.
Derek: And that whole situation failed miserably. I don’t know if you’ve ever heard the term, I’m sure you have, that “Partners are problems.”
Michael: So what happened? Or at least in retrospect, what happened? You don’t up and move your family from Vermont to Wisconsin without at least what felt at the time like a vision that something good was going to happen. So what missed?
Derek: Yeah, everything looked really rosy on the outside. Great packaging, great message, great opportunity, potential, blah, blah, blah; but you don’t really get to know something until you get to see the inside. And it’s the whole like don’t judge a book by its cover type of thing, and the book looked pretty darn good on the outside, but then I got here and the whole thing blew up in my face, really stuff that was out of my control entirely. I was kind of sold a bill of goods, I suppose.
Michael: So, what was off? Like, processes weren’t good? Clients were actually not being served well? Like, just didn’t have the clients and revenue you thought? Staff were not happy people after all? What was the…?
Derek: All the above.
Derek: Yeah, all of the above and more. And then the person, which shall remain nameless…
Michael: Understood. We don’t need to throw anybody under the bus on the podcast.
Derek: No. And life’s all about learning anyways. I don’t want to downplay anybody. I’m sure I had my own part to play, but part of it was that I was looking for a mentor relationship. I’ve always looked for someone that I could look up to, that had more experience, that I could learn from. And that was part of the arrangement, at least that’s what I thought it was. And within a month of moving here, this person moved out of state. I’m like, “What just happened?”
Michael: You moved there to partner with him and have him be your mentor and then he literally left a month later.
Derek: Yes. Pretty crazy.
Michael: Okay. Yeah, that feels a little awkward, not the least of which because it’s hard to up and leave and move in a month without having planned that out for a while.
Derek: Yeah. So, that was really tough. Those were some dark days for my wife and I. And we had a new son at the time too. My son was like a year old, and they were just some really tough times. My wife’s sister lives in Wisconsin, but that’s the only person we knew in Wisconsin. So, I had no market there, I had no base. So it was tough, and I had to figure out, do I stay and make a go of it or do I go back to Vermont?
Michael: So I guess you’re still on the system. It’s like, you’ve still got your Vermont clients, you’ve still got your Vermont revenue, as it were, just you’re not there. So, you can’t do all the local marketing, all the local referral networking and such that you were doing before because you’re physically not there anymore.
Derek: Exactly. My wife and I had a lot of deep conversations over a lot of stressful, sleepless nights, and we decided to stay here. We’re closer to family, and having a little guy running around we wanted to be closer to family. We still have family in Minnesota as well, so it just made sense.
I was on an airplane every three weeks or so going back to Vermont for two nights and then coming back. That got expensive and it got tiring, but I did that for like a year. And it worked. I was able to maintain the office and continue production and manage the staff and the office building and all that stuff. But boy, I think it took its pound of flesh along the way too.
Michael: Yeah, that’s a drag of weekly commuting to another state, and not a close one, an airplane one.
Derek: Yeah. And the planes, because there’s no big plane that goes in and out of Vermont, so literally, tin cans or my knees are in my mouth, right? It’s just brutal.
Michael: Right. Like, from Milwaukee to a hub and from a hub on a puddle jumper to Burlington or something.
Derek: Yeah, exactly. But I did it. I had to – I didn’t have a choice at the time, otherwise, we would have gone bankrupt. Plain and simple.
Derek Discusses the Importance of Listening To Your Gut [00:28:09]
Michael: So in retrospect, could you have seen it coming, or is there something you wish you’d asked, or tried to suss out further that might have staved off such a miss on the prospective partnership?
Derek: I think so. So, one thing I’ve learned the hard way, again, is that for many years, I did not listen to my gut. I would look for the best in people and try to ignore the caution flags, if you will. And I did that in this situation. There were things, conversations, comments made… as advisors, you know this Michael, we learn how to read people really well. We read non-verbals and all that kind of stuff. There were signs, but I chose to ignore them because the opportunity seemed really good. It was a chance to get closer to family so our son could be around cousins and grandparents. So I ignored those things. And in retrospect, I should have listened to my gut, and I didn’t.
Michael: One of the things that has always fascinated me about stories like this where partnerships fall apart – not just the “Hey, we did it for many, many years, but then we sort of grew in different directions”, but the partnerships where “We came together as partners to do this thing, and then it just completely did not turn out as expected from pretty much day one” – is that I have yet to meet someone who went through that that didn’t say in retrospect, “Yeah, there were a bunch of red flags and I think I just kind of ignored them because I was too excited by the opportunity,” or “I just really thought it was going to work out,” or “I was willing to do the work to make it work.” And then in retrospect, “Yeah, I should have just listened to my gut.”
It’s an interesting thing to me that we…even for those events that don’t turn out, we’re better at detecting them, as you said, I think particularly in the advisor world, because you tend to get pretty good at reading people just from sitting across from so many clients and prospects. There always seems to be a gut signal that was there. And if you ignore your gut, it’s surprising how often it really doesn’t turn out well and that you should have just trusted your gut.
Derek: It’s so true. It’s human nature to kind of argue with ourselves.
Michael: Yeah. Well, I think in this world of being advisors and wanting to help people, that tendency of, “I want to try to see the good in people and help them” probably makes us even more prone to blindsiding ourselves or fooling ourselves, or succumbing to not trusting our guts because we want to believe in the good in people and that we can help them. And then we often find out, “Nope, gut was right. That’s unfortunate. Yeah, gut was right.”
Derek: Yeah. Well, it’s water under the bridge at this point, but boy, was it a learning experience at the time.
Michael: Yeah. And I guess the overall message to anyone out there who’s thinking about partnership or on a cusp of partnership, if you have not signed on the dotted line for whatever transition you’re making, it’s not too late to trust your gut.
Derek: Oh, definitely. Listen to it. Take a step back. There’s no fire here that you’ve got to do something today. And if it feels like there is a fire, then that’s another red flag.
Michael: Yeah. So you’re living in this kind of tortured life. You’re in Wisconsin, your clients are mostly still in Vermont. You’ve got a wife and one-year-old at home while you’re flying a couple nights a week every week out to Vermont to try to maintain the stuff over there, which doesn’t take long before that’s a really painful grinding, completely exhausting and not a very pleasant work-family life. So, what comes next?
Derek: Yeah. I was really getting tired of missing time with my family. I don’t know if you’ve got kids, Michael, but they grow up super-fast.
How Videoconferencing Helped Derek Improve His Work-Home Life Balance [00:32:15]
Derek: I didn’t want to miss special moments with my family. I really wanted to figure out, “Is there a better way to do this? Do I really have to fly out all the time?” So initially, I just had my staff in Vermont have clients come in to the office and we set up a webcam. They would put a computer monitor on a round conference table, and then I would dial in from here. And it worked!
It started saving me time, and I thought, “Wow, there’s something to this.” So I started doing more research online – what’s this whole digital marketing thing? What’s that? What’s a website? I guess technically you could consider me a millennial; I don’t know. There’s some debate on that, given when I was born, but I am not the most tech-savvy person in the world. My bachelor’s degree is in archaeology and anthropology, and they don’t use computers. They use, like, brushes, and I was going to be an Indiana Jones, right? So it was a little different. I just started going down this path of trying to figure out a better way to run my business and not have to travel all the time so I could get some of my life back.
Michael: So was this about digital marketing and growing your clients more virtually? Or was it just a digital practice like, “Oh my Lord, can I just figure out a way to meet with my clients in Vermont without flying to Vermont every week, and maybe just flying there every other week?” Was it more that end?
Derek: It was. It started there, like, “How can I just manage my practice with technology? How can I start leveraging tech?” So, that was the initial journey. And then I’m like, “Well, I’m already 1,000 miles away, why can’t I work with clients elsewhere?” And then I start hearing stories of some of my contemporaries doing some pretty cool things, like…I don’t know if Jason Wenk.
Derek: Cool guy, has done some really cool stuff. So I started reading blogs about him and what he was doing. And then Jeff Rose, I started seeing what that guy was up to and I actually chatted with Jason and Jeff both when they were much earlier on on their journeys. It was really cool. But it was a slow progression, because in the world I come from, tech wasn’t really used. We were still taught to have a yellow pad and to meet face-to-face in front of a client no matter where they were.
I was almost kind of bucking the trend a little bit. Because even today, most advisors are still taught to drive everywhere, have in-person meetings, kitchen table meetings, that kind of thing. It’s not the norm. It was not what was taught or really an accepted practice in our industry. You have your outliers as always, but it’s not the norm.
Michael: So, what was the starting point of just, “I want to cut down on this travel? I’ve got to get a little bit more virtually-savvy.” Where did it start? What did you start out doing? I get that eventually, it led you down to this whole virtual rabbit hole. Where did you get started, as you said, not being the most tech-savvy person and trying to figure out how to do more of this tech stuff?
Derek: I kind of fell into it. I do like to research. I like reading and I try to read a book a week. I’m always trying to educate myself. So as soon as I saw that there was something to this whole idea that, “Hey, I can service my clients remotely? Huh. Well, what else can I do?” And then I started research. The problem is that, at that time and even today, there’s very little out there on how to do all of it. So, Ive been really kind of cutting my teeth here.
It started with like, “All right, well, I have to maintain my current clients because they need my help and I’ve made a promise and a commitment to helping them, but I still want to grow my business. So how do I do that by not being physically everywhere?” And then that led to the rabbit hole of, “Well, you’re supposed to have a website, and you’re supposed to do this thing called digital marketing. Search engine optimization. What is that? Social media what?”
I fought social media forever. I didn’t want a Facebook page. I kind of value my privacy, given that I’m in such a public role with my clients. Like the first couple years in the industry, I refused to get a cell phone even. I really didn’t want anything to do with it. So yes, it’s been this roundabout journey like going down a path, “Oh, that didn’t work. So I’m going to go over on this one now and see what happens.”
Michael: So, did this start with GoToMeeting and just doing virtual webcam meetings with clients? What was the first thing you actually implemented to say, “Oh, geez, I have to do something different because this hurts?”
Derek: Yep. The first thing was that I had used Skype for chatting with family. We lived in Vermont for a while and all of our family is back in the Midwest, so we’d use Skype for that stuff. I had family internationally, so we had also tried to communicate that way. I was like, “Okay, I’ve got this thing called Skype and I get to do video stuff with it.”
Then I went out and bought a $29 webcam for my office in Vermont, and I bought the exact same webcam for my office in Wisconsin. Initially, we didn’t even do meetings. I just had that. Literally what we would do, this is kind of funny, is my staff there would have Skype on their entire shift with a video or like a little box window of me, and then vice versa, I’d have one on in my office. So instead of jumping on the phone every whatever, 10 minutes to talk about this or that, we would just have this thing of Skype where we could talk to each other.
Michael: That was just always on, so it was as though you were in adjacent cubicles and shouting over the wall, but the cubicles just happen to be 1,000 miles apart connected by the internet.
Derek: Ttotally. And I was like, “Wow, this is pretty cool. All right, this works. I’m not running up a huge long-distance phone bill. Okay.” And then it slowly but surely progressed into client meetings, but I was still having the clients go to my physical office in Vermont.
Michael: Oh, so client meetings, but the client meeting was the client went to your office, sat in front of the webcam that you bought for the office, and you would meet with them there?
Michael: Okay. Awesome. I love it. How did that go? Or even just telling clients that’s how you’re going to do it. Like, “I still want you to come to the office and meet with me, but I’m not going to be there, but a camera for me will be there.”
Derek: It was weird. And there were definitely some moments where they’re like…you could even see the couple looking at each other like, “What is going on here? This is kind of odd.” Because in Vermont, all of my meetings were either at the client’s home, business, or at my office, all in-person. So that’s what they had been used to from me for years. And all of a sudden, now they’re talking into this webcam, like, “What is going on here?”
Michael: So, what came next in the evolution then? So like, “First, I bought a webcam for each office. We digitally connected them, literally live feed. So I can talk to my team when we’re not there,” then, “Well, hey, this live video feed thing works. Let’s tell the clients to come in and sit in front of the webcam and then we get to do a virtual meeting with the client.” So, how did the tech evolve next?
Derek: Yeah. I had some old computers. It was a big deal for me when I upgraded to two monitors. And I did that while I was still in Vermont. We literally just did that – we ran that for a while because it worked okay. Then I started questioning, “Man, do I really need a brick-and-mortar office in Vermont? Do I really need physical staff there?” Because you still have the headaches. Just because I’m not physically there, I still have an office that has to be maintained. I still have staff that get sick or can’t show up because they broke a toenail or whatever. So, I just really started questioning that model. Because after doing these virtual meetings for a while, I’m like, “Okay, this is starting to work better. I don’t have to physically be there as much. What else can I start changing?”
Michael: Did you lose any clients in this transition?
Derek: Almost none. Other than clients passing away, I only remember one that left because I moved.
Derek: Which was pretty cool. And I was deathly afraid of it. I was deathly afraid of some mass exodus.
Michael: I feel like most of us would be terrified that, “First of all, I’ve left, second, I’m not coming back. And just in case it wasn’t clear whether or not I’m coming back, you’re talking to me on a video feed from Wisconsin. I’m not coming back.” You can read between the lines pretty quickly here. Iit sounds like you got there out of sheer necessity and desperation, “I just can’t take the back-and-forth flying anymore.” And then, as it turned out, there wasn’t a mass exodus and clients weren’t leaving.
Derek: That’s it. I was like, “Oh, this is okay. People are cool with this.” And some clients didn’t want to do the virtual meeting. They were happy with just the conference call and a screen share. So I’m like, “That’s cool. We’ll do that. Whatever works.”
Then over time, the ones that truly needed an in-person meeting, I would still fly out there, but it will be two years in a couple of weeks, since I’ve been physically in Vermont.
Michael: Wow. So I guess there was like an intermediate period of, “Okay, we’re mostly video chatting, but if there’s a real big issue, I’m still going to fly back to Vermont.” And then at some point, everyone gets so used to it that even when it’s a bigger issue, there’s just really no expectation of flying back-and-forth anymore because it’s been two years and you haven’t been back.
Derek: Exactly. I was able to slowly transition out. So then it was every couple months, and then, well, now not at all. So yeah, it was definitely a progression, partly because I was deathly afraid that people were going to leave. So I almost had this self-imposed pressure like, “I have to go. I have to be there.” And it turns out I didn’t.
Michael: I’m presuming that at some point, this shifted from all the clients coming into your office to do the video feeds to your other office, to just doing them from wherever their home or office with their own webcams as webcams became more ubiquitous?
Derek: Exactly. I think I timed it almost perfectly by complete accident, but technology really has sped up and evolved over the last 20 years for sure. But even in the last 5 to 10 years, our phones or computers all basically come with webcams now.
It was funny, I was doing a virtual meeting with an older client two months ago, and we were on the phone at first. I asked, “Well, do you have a webcam?” She said, “I don’t know.” So I told her, “All right, get your laptop out. Is there a little dot, a little circle in the middle at the top of your screen?” She had her laptop, and she said, “Yeah, there’s a piece of plastic over it. I never knew what that was!”
Michael: Well, I guess it’s good that it had plastic over it so she wasn’t like accidentally spycamming herself or something.
Derek: So yeah, so everyone’s pretty much got the infrastructure. So I timed it, and completely out of sheer luck it worked out. So yes, that’s what happened. It was this combination of, “I don’t want the overhead and stress of staff in a physical office, and this virtual thing seems to be working, so why not continue and see if I can just meet with people at their homes now virtually?”
Michael: And did you have clients that were sort of holdouts or pushbacks? I think the perception out there is a big age skew. Like, “Yeah, yeah I get it, your 40-year-olds are doing this, Derek, but my 60- and 70-year-old retired clients ain’t going to do this.”
Derek: For some of them there was resistance, but the Band-Aid that worked, and that still works, was conference calls, where we’ll literally have a conference call and then I’ll send them a link. Because most of them have email, even the older generation, because they want to stay in touch with their grandkids, right? They’re on Facebook. They’ve got to have an email. So I send them a link. All they have to do is click the link and then I can share my screen, so they can see what I’m telling them, we’re looking at the exact same stuff, but we’re just over the phone, with the older ones. The younger ones, it was like, “Yeah, I’d rather do this. I don’t want to go anywhere. I don’t want you coming to my house at night either.”
Michael: So, what does that eventually do to the Vermont office? Does that mean at some point you really did start to wind down the Vermont office because you weren’t going out there and at some point, even clients weren’t coming in because they were webcamming from their homes?
Derek: That’s exactly right. Yeah. I have not had physical staff, it’s got to be pushing three years now.
Michael: So, how did that wind down or what was the transition point?
Derek: Well, the staff member I had at that time that was there (I had already gotten rid of one person) – her husband retired. She was younger, but he retired, and I think the writing was on the wall that she was looking for a way out anyway. So it was kind of a natural progression. Instead of me freaking out and not accepting the resignation or looking for someone to replace them, I said, “Thank you, great. Best of luck to you in retirement.” And I did not replace the staff member at that time. I still had the physical location, but I wasn’t really going there. I just locked it all up.
Michael: So help me understand – there are kind of two pieces here. There’s, “Do I still need the Vermont office and staff? Because I’m not actually going to Vermont office very much anymore, neither are my clients because we’re doing this virtual thing.” And then there’s just, “Do I need staff?” Because clients still need things and have questions and there’s work to be done. And at some point, we have too many clients to do all of this ourselves. So was this about dialing down staff or was this just about dialing down Vermont staff because you were getting people in Wisconsin, or were you just starting to hire virtual staff instead?
Derek: I did not start hiring virtual people yet. I had kicked around the idea but never did anything with it. And I figured if I was going to hire a new staff person, I might as well have them sitting next to me in Wisconsin. So that’s what I did initially. Again, I didn’t question the old model. I’m like, “All right, well, I have to have staff.” So the other one retired in Vermont, and I hired a new person here in Wisconsin, physical staff, full-time, benefits, blah, blah, blah. Paid for the office next to me to have him and all that stuff. And that only lasted about four months. It was not a good fit. They were not the person I thought they were. And so I ended up having to fire that person.
And at that time, I was like, “Okay, pause, what am I doing here? All right, I’ve got an opportunity to make some changes. I’m not going to do what’s not working anymore. I’m tired of the high overhead and expense and distraction of physical staff. There’s got to be a better way to do this.” And that’s when I really started diving deep into looking at virtual staff. Because yes, you’re right, I can’t do everything. And I’m not good at operations and service work. I don’t have a CFP for that, right? I still need to rely on help to do the other things. So that’s when I took a hard look at getting virtual staff and just jumped in with both feet right away. I’m like, “Yep, this is the way I’m going to do it. It’s a lot less expensive. Oh, man, yeah, this is the way to go.”
Michael: Because by this point, you’ve gotten used to being with staff virtually because it was Wisconsin or Vermont. You’ve gotten used to dealing with clients virtually because it’s Wisconsin to Vermont. Clients are kind of used to dealing with some of your team and support virtually, because you were already starting to move staff to Wisconsin. So everybody’s kind of sort of gotten used to the fact that everybody is somewhere else.
Derek: Exactly. Yeah. And remember, none of this was really by design initially.
Michael: So from a practical perspective, what came next? Like, I know how to hire my next local person. I put a job ad out in local paper or Monster or Indeed, whatever the job site of the year is, and one of the easiest ways to filter those is whether they actually are in the vicinity of our office and are going to be able to do the commute or not. There are 300 million people in the U.S., how do you find one to work with you virtually? Because that’s a lot of people to sift through.
Derek: It is. So, the first slot I wanted to fill was what I called an executive administrator. Someone who kind of is a catch-all. They’re helping with scheduling, they’re helping with client service, all manner of behind-the-scenes operations stuff. I figured if I’m going to have somebody that’s doing all that but also is going to be speaking with clients, I want them to speak English as a first language, and it would be kind of nice to have them in the same time zone. So I literally just got on Google and googled “virtual assistants near me,” And I found two firms, actually in Madison of all places, which was kind of nice, and interviewed both firms, and ended up going with one and got hooked up with a virtual assistant from there. And it was nice.
Michael: I’ve got to ask – so you’re getting ready to find a virtual assistant. You can work with anyone in the world. Maybe ideally in the country, maybe ideally in the same time zone, but no other geographic constraints whatsoever in any way, shape, or form. So your starting search was “virtual assistant near me?”
Derek: Yes. It was.
Michael: And you thought of “virtual assistants in town.” Okay. I like this. Just want to understand the context here. Okay.
Derek: Again, I’m imposing these issues on myself because again, I was a little worried about “Is this going to work?” Again, there was no model out there.
Michael: Right, right. I understand. There’s kind of a safety net, “And if I really want to see if I’m comfortable with them, I can just go up the street and meet with them and have coffee because they’re actually still local. And I can vet them because they’re local.” Sure. I get it.
Derek: Yeah, totally. Again, I’m building this model as I go. So that’s what I did, and it worked really well, and continues to do so. But that firm ended up changing their business model and who they really wanted to work with. So sadly, I had to part ways with them earlier this year. It really was sad because they were fantastic. Great people and great at what they did. I never had any issues. All my clients that interacted with my staff from that firm, they had just great things to say about them, but they never met the people in person. That was always my barometer; that was my litmus test: “What are my clients saying about this virtual staff thing?” And it was always really good feedback.
So I did that, and I added an executive administrator, then a virtual receptionist almost right away actually. Then I ended up hiring a digital marketing team, because I had been messing around with websites, SEO, and all this blogging and stuff, and thought, “All right, I don’t have time to do all of this. I’ve got to have the experts help me.” So with that, I was more comfortable looking outside of my direct area.
You mentioned South Africa earlier – my mom grew up in South Africa. I’ve been there countless times, so I’ve got a real affinity for the country and for the people. You hear a lot about people hiring virtual assistants from like India or the Philippines and all that. That’s great. It works. But I’m like, “All right, well, does South Africa have virtual assistants?” So, I literally just googled “South Africa virtual assistants” to see what I could find. Again, I found two firms, interviewed them virtually, ended up going with one, and now I’ve got a full team there that does all my digital marketing. And then through them, I got a developer who’s based in Cyprus.
Michael: And so, aside from, “Hey, South Africa sounds like an interesting country, I sort of like the people and think it’s interesting,” what was the appeal there or the appeal of not “virtual digital marketing assistant near me” or “virtual digital marketing assistant in the U.S. or North America”? You wanted to be further away? Was there a goal of geographic arbitrage of pricing? “Hey, South Africa’s cost of living is lower there, so the staff would be less expensive?” What was driving this?
Derek: Definitely part of that is it’s much less expensive. In general, just having virtual staff in general is much less expensive, whether they’re in the U.S. or not. But the virtual team in South Africa is a fraction of what I would pay for a U.S.-based team. As a business owner, I want to get the best return on my investment, on my business, so I’m no longer beholden to a country or geographic location. I went there and was very happy with it. But then also the time zone difference – they’re working while I’m sleeping.
Michael: Is this a good thing or a bad thing? How do you handle the fact that they’re so far away? I think South Africa is seven or eight hours ahead of U.S. time zones?
Derek: It is. Yeah. So during daylight savings now, they’re eight hours ahead of us. Otherwise, they’re seven, which actually works out really well. With a team in the Philippines or India, you’re looking at a much greater time zone difference. So there’s almost no overlap of when you can actually communicate with them in real-time, where, with seven or eight hours, when I get to the office about 7:15 in the morning, I can communicate with them and they’re still working away. They’ve been working all day, and then…like tomorrow, for example, I have an 8:15 meeting my time with my team in South Africa.
Michael: So, how does this work for clients, though? Because now my client who emails me with a question at 2:00 in the afternoon, it’s 10:00 pm in South Africa. So is that client just not getting a response until tomorrow?
Derek: So that’s the thing. I have a new virtual executive administrator, but she’s based in Texas. I did that earlier this year when I made the transition from the other firm. She’s in my time zone but I’ve never met her; she’s in Texas. What’s great is I did all the interviews, because I interviewed a bunch of firms when I was looking to make the change. I was in Ireland when I was doing the interviews.
Michael: Okay. So, the team in South Africa specifically works around things like digital marketing because that is far away and on a different timing, so that’s not a problem if we’re working at hours askew. This isn’t a live client service issue, this is a, “How are we building our marketing projects for the coming month?”
Derek: Exactly. Right. So, they are not client-facing. We’re not dealing with any fires or client things that come up.
The Virtue Of A Firm-Based Virtual Assistant (On The Same Continent) [00:57:08]
Michael: How did you find the virtual assistant in Texas then? Is this a solo person? Is this a firm or a service?
Derek: They’re part of a firm. The firm is called Red Butler. I went to Ireland for a long family trip in August of this year, and before I left, I knew that my virtual assistant situation was going to change. So, I literally Googled again, “virtual assistants USA” this time, not “near me,” but “USA.” There are quite a few, but not a whole lot that are actually that good, to be honest. So I shortlisted four or five firms that I wanted to talk to. I set up those interviews while in Ireland. I worked out of a co-working space there for a week while I was on vacation and just did my virtual interviews with all the firms from there, narrowed down the people that I liked and ended up ultimately going with this lady in Texas, who’s part of the Red Butler system.
Michael: Okay. So Red Butler is a platform for virtual assistants, and then you can work with them more deeply specifically to figure out who in particular will it be, because they give you an assigned person as opposed to just a dial-in desk?
Derek: Exactly. Yeah. I’ve got a dedicated person that works for me X hours a month, period. So, it’s always the same person. And that’s what I was looking for. What I have found is that working with a virtual staffing firm is better than working with an independent freelance type of situation. For example, the previous firm I was with, my main staff member went on maternity leave. So they took care of bringing someone else on board and training them. It was a seamless transition and it was just done. If I had been working with a freelance person, I would have been responsible for doing all that myself.
Michael: So that’s the appeal of being with a service or larger firm; not only can they help me find the person that I’m going to work with on their team, but if that person has an issue, it’s their problem, not mine. I get to be the client that says, “Well, I hope you all have a plan B because I expect to have the same service while that person’s out. So y’all should figure that out and let me know how that goes.”
Derek: Yeah. Right. Yeah. So, it’s very seamless. I would suggest for anyone listening, if they’re going to hire virtual staff, definitely go with a firm, don’t go with a freelancer. Not that there aren’t great freelance people out there, but running a good business means you have robust risk management controls in place, and one of them is that I’ve got to have staff sorted correctly.
Michael: So, you started hiring a virtual assistant for executive assistant to client administrative support work. How much are they doing relative to the business? I’m just wondering if they are down to new account forms, transfer forms, and the kinds of things that for our industry, depending on how you’re registered, are like registered person’s roles? Do you draw some lines between, “Hey, you can book my client meetings and my airline tickets, but I need someone else who’s actually going to do the account administration transfer forms and that kind of stuff because that’s FINRA or SEC brokerage paperwork?”
Derek:. Yeah. I pretty much have them do everything (except the registered stuff) because I don’t like touching that, and they’re not licensed. I have background checks done on them, so they can get into the system with their own credentials to look at all of my systems. They can access all the security systems for statements and tax records and all that stuff.
When it comes to account transfers…and that’s the other thing, is that all my applications are e-applications at this point, and they have been for a while. It’s all just part of the client’s application, so it’s not taking me any extra time to do that. It’s all electronic at this point, which has been fantastic.
Michael: So you’ve got a virtual assistant doing the administrative stuff. You’ve got a virtual digital marketing team, including a virtual developer helping you on the marketing support side. Have you added any kind of other staff and gone further down this rabbit hole now?
Derek: A virtual receptionist. So, someone will answer my phone from 8 to 5 every day, and then I have that forwarded. Because of the infrastructure and tech I have in place, I can return those phone calls from anywhere in the world and they think I’m calling from Madison.
Michael: And what person or services are you using for the virtual receptionist?
Derek: It used to be separate earlier on, but then doing all my research, Red Butler actually has another silo of services, which is virtual reception, so I ended up using them. And by bundling, it actually ended up saving me a little bit of money.
Michael: Okay. So, that bundles in a receptionist answering calls, an assistant providing administrative support, and a digital marketing developer; are there other pieces on top of this?
Derek: Not really. No. Part of the digital marketing also includes a content manager. So the digital marketing team actually writes a lot of my content for me under my direction. That team has different people; there’s three at least, depending on what we’re doing, sometimes four or five, doing a variety of different things for the business.
Michael: Okay. So what’s left for you? What does your typical day or maybe week look like in the practice at this point? What’s still on your plate that you do?
Derek: So, I’m pretty active on social media to just build awareness about who I am, what I do, and really marketing towards my ideal client. I’m active doing that. I also build the financial plans and I conduct client meetings. I do pretty much that.
Michael: And I guess a tiny bit of paperwork for account transfers, trading and such, because those are the registered investment activities?
Derek: Yeah, exactly. As those things come in, I do that. I try to set up as much of that electronically from the get-go. So if I get a call or an email, it’s just done. It’s 20 seconds on my computer and whatever request is made, it’s done.
Michael: So talk to us now about kind of building the business. This virtual setup for you started as, “I’ve just got to do virtual operations because I up and moved my family to Wisconsin for a merger that ended out going horribly and all my clients and staff are still in Vermont, and this flying back and forth thing is exhausting me.”
So, it went webcam for staff, then webcam for clients, then webcams directly, then, “I’m not even sure we need the office,” and then, “Geez, if I can do all this stuff virtually with my team, I may as well just hire virtual teams.” So we get “virtual assistants near me”, then Red Butler, and South Africa get the whole operations end. Obviously, clients that were with you, as you said, stayed with you; thank goodness, wipe the sweat off the brow.
So, how does growth work going forward? Are you marketing locally in Wisconsin? Are you building your local Wisconsin market the way you built your local Vermont market and your team is simply virtual because that’s how you’re building or is new client growth different as well?
The Efficiencies Of Growing a 100% Virtual Firm And The Value Of Establishing A Niche [01:05:09]
Derek: New client growth is all virtual now. I don’t go to networking events. I don’t do coffees. I’m usually in the office about 7:15, and I’m usually out of the office by about 1:30, just because I don’t have to spend as much time driving, for example. The amount of time wasted driving is crazy in this business. So, I’m just working more efficiently. All of my marketing efforts are digital. I have two websites: I have a blogging website and my corporate website. I have a strong social media presence, and I just continue to work on those
Michael: And I love the website – Intrepid Wealth Partners. We’ll have a link for it for anybody who wants to take a look, because it is pretty cool to see. This is episode 155, so if you go to kitces.com/155, we’ll have a link out to Derek’s website. But I just love it because you hit the homepage, and the first thing the home page says is “Your Virtual Wealth Partner”; not “your wealth partner,” but “Your Virtual Wealth Partner.” We’re just getting it really clear upfront. It’s not in your face, it’s not bold with dancing fonts or anything, it just says right there out of the gate, “Your Virtual Wealth Partner.” So, the virtual thing is on the table.
And then it says “Partnering with CEO’s, founders, and business owners who are creating our future.” So I guess you’ve gone all-in into some kind of niche or specialization around CEOs, founders, and business owners? That’s now becoming the thing?
Derek: I have, but even more so, and you’ll appreciate this, I was listening to a recording you did a couple weeks ago. It was a webinar of sorts, and you used the analogy of the ideal client bus, the school bus.
Derek: And I loved that. That was almost an epiphany moment for me, Michael, so I have to thank you for that. I have struggled since day one to define an ideal client. People talk about this all the time and ask, “Well, who’s your ideal client?” And every advisor I talk to says, “Well, I work with families and business owners.” I’m like, “So, you work with everybody.”
Michael: Yeah. Family, small business owners, retirees, institutions, and women. Just to make sure we get at all the popular specializations in there.
Derek: Right? And that’s no advisor’s fault really. I was subject to the same thing. We’re just not taught how to define an ideal client, really.
Michael: Well, I think, certainly if you’ve been in the business for more than about 15 years or so, you came in like I did, with a more product-centric future, when a qualified prospect was someone who could afford to buy what you were selling.
I feel like a lot of us basically carried that same “ideal client” over to the AUM model. Like, “Who’s your target ideal client?” “People who like to delegate and have at least $1 million.” That’s really a vague definition! Like, “My ideal clients are people who can afford to pay me and are willing to do so.” Okay, but we need to get a little bit more focused than this to figure out how you’re really trying to narrow down.
So, what led you in this direction of putting forth this bold statement like “partnering with CEOs, founders and business owners who are creating our future?” It’s got a nice aspirational kick to it, and CEOs, founders, and business owners – it’s right there on the homepage.
Derek: Yeah, it’s pretty clear. And it’s going to get clearer if you look in the next week or two as I update it, because of your webinar that I listened to. I don’t need 1,000 clients. I don’t want 1,000 clients. That’s a whole other bear to deal with. So, I kind of look at it like, instead of using the bus analogy, I’ve kind of stolen your idea, and I’m using my private plane analogy. I have a plane with 100 seats on it and I want to fill it with a certain type of client – I love that analogy. It just makes sense and it’s easy to figure out. Now I only need 100 ideal clients, if you will. So I’m really defining that.
Initially, it started off with just the founders and CEOs of startup companies because Madison’s kind of a hotbed for that. There’s a lot of startup activity here, a lot of venture capital cash coming in. I just was really fascinated with the whole journey they go on, the hard work that they go through. I saw a lot of similarities to being an advisor and building an advisory practice; it’s not 9 to 5. You can go for months with no income. You’re stressed. You’re not sure what’s going to happen in the future.
So I saw a lot of similarities, and I understood these people and felt like, “Well, gosh, no one else is really trying to help them and I should because I kind of get them.” Now I’m just trying to just hone that down even more. One of the things that I’m adding to this profile is working with CEOs, founders and so forth that are frequent flyers, because I fly a lot, although most of it is for fun at this point.
And again, on this epiphany moment, I was fortunate enough to be in first-class on my trip to South Africa. I was returning to my seat from the bathroom and as I’m walking through the first-class cabin and looking across all the seats, I thought, “Wait a minute, this is my school bus. These are the people I want to work with.” And I’m like, ‘Thank you, Michael. I get it now.”
Michael: They are literally in the first-class cabin with you. Like, “They are right here. These are my prospects and people.” And I love it because one of the things on your website, your homepage has “Our services: We do financial planning, investment management, insurance solutions, retirement income planning, and SkyMiles planning.” It’s one of your five services. It’s, literally right between the financial planning and the retirement income planning is SkyMiles planning. Like, “We’ll do a SkyMiles review of your miles, help you track your miles, teach you about the different flyer programs, and show you how to leverage them.”
Well, I get it, because if you’re a CEO/founder who has to do the road warrior thing that a lot of business founders and CEOs have to do, you rack up a ton of miles. It’s at least one of the slight perks, like, “Use it. You live it, so use it. Let me help you get the most out of your perks.”
Derek: Exactly. Yep. So, I don’t look at other advisors in the industry as competition. We’re all here to help each other. And there’s more than enough business out there, so having this ideal client really is a weight off my shoulders in a way because I know who I need to focus on. I’m super niche, so I don’t need to worry about trying to go after everyone like everyone else is. So it’s really been great.
Michael: And part of the relief for you is, “Because I only have to find 100 of them, so I’m just not stressing that much?”
Derek: Exactly, right? Like I used to be told in the early days it’s a race to 500 clients. That’s great, but now you’ve got 500 clients, that’s a ton of service work.
The Fallacy That Firm Growth Is Every Advisor’s Goal And How Derek Grew His Income By Shrinking His Client Base [01:12:44]
Michael: Yeah. Well, and there is this piece to it that I’ve observed in the industry for a lot of years now, that there’s all this discussion about growth and pressure to grow. We put ‘growthy’ firms up on a pedestal. And when you really drill down and look, I find almost all of this at the end of the day comes from our platforms. Like our insurance companies, our broker-dealers, our RIA custodians, that have awards for fastest-growing firms and prizes for top producers and all this stuff that puts growth on the pedestal, kind of makes it feel like if you’re not growing and crushing the growth formula, you’re somehow failing and not succeeding as an advisor. It totally ignores the fact that once you get a decent base of clients, you can still make a stupid amount of money by not growing anymore and just serving the 100 clients on your bus, the 100 clients on your private plane.
It can create a misalignment for advisors, because for a lot of advisors, once they get to the point where they make good income, they’re good. Their lifestyle is where they want it to be. I enjoy the work that I’m doing, what I’m doing, who I’m doing it for, and what I’m making – I’m good. I don’t need to grow anymore.
Now, if you’re a platform, if you’re a large firm in a world where the total headcount of advisors has basically been flat for a decade, the only way you grow as a platform is to poach advisors from other platforms, which is really expensive, because you’ve got to recruit them away and do that whole thing or flog all your current advisors to do whatever you can to make them grow, because if they grow, you grow, since you get a piece of their business. That’s ultimately how all platforms work by some way, shape, or form. They get a piece of your growth, your growing revenue, client assets, production, or whatever it is.
And so, we get to this misalignment where once you’ve been doing it for a while, you may get to a point where you’re good on income and the business is where you want it to be, but it’s not where your platform wants it to be, and so they extol growth even though you may not need it. I think it’s an interesting juxtaposition that you seem to have made that transition and gotten comfortable in getting off that roller coaster. And more power to the people out there who just genuinely are super excited to build ginormous businesses and hire and train and develop a lot of people and manage the business and the rest. If that’s your thing…
Derek: Go for it, right? Yeah.
Michael: Go for it. Be your entrepreneurial you. But I find for most advisors, that’s really not actually how they are. Often the growth comes down to, “Well, I feel like I’m failing if I’m not growing and not hitting those charts and not getting that recognition.” And you realize that’s kind of how the game is set up. You’re not playing for your terms and your success, you’re playing the platform’s terms of success.
Derek: The platform and just the culture in general, right? One thing that’s bothered me for a long time that I didn’t really articulate until the last couple of years is that in this industry, we are taught to help our clients through the services and products that we offer, to do everything that’s important to them. Whatever their hopes, dreams, and goals are for the future, we are taught to go help them do that. What we’re not told throughout this entire journey that we’re on is that we have to put our lives on hold as advisors to do that.
I’m like, wait a minute here. What the heck? That doesn’t make sense. You’re telling me I’ve got to work 60 hours a week, I’ve got to miss my son’s school activities, I don’t get to do date night with my wife, I’ve got to miss life for the next 5 or 10 years while I’m building this thing? That doesn’t make sense. And then maybe I’m beholden to working these crazy hours for the rest of my life because I built this behemoth of a business that owns me?
And that’s one of the beautiful things about the virtual model is that I got all my time back. I am traveling with my family all over the world. I was doing financial plans on the bullet train in Japan earlier this year. It’s just a totally different way of doing it. And I’m not saying that we shouldn’t help our clients, but I’m not saying we should put…what I am saying is that we shouldn’t put our lives on hold to do it. It should be a mutually beneficial relationship.
Michael: Well, it strikes me that there’s really two things that have shifted in your firm. One is the virtual effect – I don’t need to have the office space, and I don’t have to be responsible for hiring, training, developing staff because now I’ve got a service that does it. If there’s turnover, it’s their job to find the next person and hire them and train them and develop them. I just get my service hours to get stuff done that I need to get done, and there’s less stress around the management of staff and people when you need at least a little bit of help other than what you’re doing.
But the other thing that strikes me around this conversation is how you’re down with talking about, “I just want to get to my 100 ideal clients,” and I think you said you were already at 200 clients 2 years in, which would be about 11 years ago or something. So from a classic growth perspective, you got to 200 clients in your first 2 years and haven’t netted a single other one in 11 years since.
Now, I know that’s partly because you’re getting some folks on who are founders and CEOs that fit this target demographic that you want, while some of the people who move on are the ones that maybe weren’t as good of a fit, because in those first few years, we pretty much take anybody who can fog a mirror. So some of that is a rotation. But I’m wondering, how high did it get on your client count and where is it now? How many clients is it today and how big was it when you had all the staff?
Derek: I think we had individual names, Social Security numbers of, I want to say around 1,000, maybe 1,100.
Derek: And it was just a bear. Some of them didn’t require a lot, right, but they’re still there.
Michael: When you’ve got 1,000 of them, you can say they’re really low maintenance, that they basically only call once a year, and it’s hardly anything. Well, okay, but 1,000 people who call once a year is 1,000 phone calls. And so, if each of these just take like a half an hour or an hour here and there for the phone call and then whatever the little follow-up work is that you need to do, that’s basically a full-time staff member.
Derek: Totally, totally, totally.
Michael: Just to deal with those. And that’s only if they have easy questions that don’t actually float up to you. If 10% or 20% of these are harder questions that followed up to you and take you a few hours, then supporting these 1,000 clients actually obliterates 30% to 50% of your year and the only 10% or 20% clients who only have a question every year or two, because the sheer mass of how many of that still floats up.
Derek: Exactly. It’s a numbers game, right? But that’s how we were taught to build it initially. So now, I’m actively working with and servicing maybe 200. There have been some younger advisors, agents in the industry that needed some help, and I didn’t want to have as big a client base. I don’t have anything against any clients. Well, there might have been a couple over the years that were really tough, but for the most part, I love my clients, and they’ve helped me get where I am in life today. But there are just some that you know you don’t have a relationship with like you do with the others. Those are the ones that I’ve started to hand off to other advisors that are younger in the industry, they’re more hungry. And it’s been great.
Michael: And so, that was what you did? You started looking at this list and every year you just take 50 or 100-plus and say like, “I’m just going to refer these out or hand these off?”
Derek: Yep. I just literally did this two weeks ago. I had a list of a whole bunch of smaller account mutual fund clients, over 100 people who weren’t really taking up a ton of my time, but I sent them to this other advisor, like, “Here, these are all yours. Go for it.”
Michael: And so, are these…like, do you send them to other advisors in the New York Life system? Are you doing like rev shares and split rep codes on these? Do you just literally hand them off like, “This is…the time it takes even for the occasional servicing for them just isn’t a good fit for me. So I’m just literally going to hand them off and walk away from it because it’s not enough revenue to have an impact?”
Derek: Yeah, pretty much. I would rather see these other younger advisors within the New York Life Eagle system survive. Most of the time it’s literally, “Here, take these. If you write any business in the first year, it’s an MDRT split, you keep 80%, I’ll take 20%. Any referrals are yours 100%. And after the first year, it’s all yours. I don’t want it.” There’s a little bit of revenue there, because they may need me in that first year…
Michael: To help support the handoff or to help support an initial business opportunity.
Derek: Yeah. I’m fine with that, but it’s giving them the lion’s share. Because man, early on, there were a lot of senior advisors who were like, “Well, we’ll help you, but we get 50% of everything.” Wow, that doesn’t seem fair, 50% and you’re not even doing anything.
Michael: So are you looking to ultimately winnow the 200 clients down even further? Are you trying to narrow this more, or are you good where the number is?
Derek: I’m comfortable with it. It’s very manageable at this point. It’s a great client base. It allows me to do everything that I want to do for growth and make sure that my family is taken care of.
Over time, it’ll probably shrink still, though; like right now, I’ve got an airplane with 200 seats, and over time, I’d like to get a smaller airplane, and then I’m going to be forced to start handing off some of those passengers.
Michael: So out of curiosity, how does income with 1,000 clients and all the staff and office that went with it compare to the take-home income with 200 clients and your virtual team?
Derek: 2019 will be my best year ever, and my overhead is a fraction I don’t mind sharing it. My overhead right now is for my entire team, and I do have a small office that I rent outside of the house just because I like to get away and just have some peace and quiet. I’ve got an eight-year-old and a dog at home, so…
Michael: Yeah, it’s not always quiet. Yeah.
Derek: It’s not always quiet. But it’s just a small, little, simple space. I pay about $3 grand a month for everything.
Michael: Wow. Okay. And what does the revenue base look like? How is the revenue comprised at this point for you? I know you’re doing assets under management because you’re on the Eagle side of New York Life. I’m presuming there’s probably still some New York Life product that gets written because I think technically, you have to write some to keep your contract. Your website has a bunch of figures around financial planning fees, flat fees, comprehensive financial planning for 35 basis points on net worth. So you’ve got lots of different parts of your business model now. What does revenue look like or how does it allocate out?
Derek: Yeah, it allocates out primarily on the financial planning and AUM side. That’s where the bulk of the recurring revenue comes from. I do have trails from mutual funds and insurance stuff that I do over the years. I would say maybe 20% to 30% of my overall revenue comes from that type of insurance-based stuff. So not a lot. And then financial planning. The one thing I don’t think I’ve ever actually charged for is the hourly rate, I have it advertised, but I’ve never actually charged an hourly rate.
Michael: So you have clients that’ll pay the 0.35% of net worth, because I’m assuming that basically got built for the business owner types who don’t have assets they’re going to give you, but they’ve got a significant net worth and they want advice?
Derek: Exactly. Yep. And that’s where it’s flexible. I’m not saying like, “Well, the only way you can work with me is if you have assets that I can manage.” Because that’s nearsighted for me as a business owner, and it’s kind of off-putting to some of these people who are still trying to create their wealth. So it’s really a combination of those different sources.
The other beautiful thing, because I’ve got such a low overhead, is that I’m able to charge my clients less. I’m able actually to pass these efficiencies on to my clients, so it makes me more competitive as well.
Michael: All right. So, if you’re mostly financial planning and AUM-based, what does the client AUM base look like at this point?
Derek: Like how much do I have in AUM?
Michael: Yeah. Or I don’t even know if AUM is the right measure, since you’ve also kind of got an assets under advisement and from charging a small percentage of net worth for your business owner clients. But however you look at it, AUM or AUA or some measuring point around it.
Derek: I think there’s about $50 million that we’re getting compensated on one way or another. So it’s a modest practice; It’s not a huge practice. There are lots of advisors who have a lot more out there than I do, but they also have higher overhead.
Michael: Right. So the distinction is, well, aside from whatever platform cut is that Eagle takes, your only remaining expenses after that, or your whole overhead is like 5% or 10% of your business, and you take home 90 cents on the dollar of whatever is left, basically?
Derek: Pretty much. Yep, that’s about right.
How Derek Characterizes His Firm Today As A Virtual Comprehensive Financial Planning Practice [01:27:26]
Michael: So, how would you characterize a firm like yours? I know some folks out there put out labels like lifestyle practice, solopreneur, how do you think about it?
Derek: We’re a virtual financial planning practice. We start with financial planning first. We do everything virtually. The entire infrastructure is built virtually, which caters to our clients. They’re the ones that are always on the go, and they don’t have time to come into an office or drive across town or anything like that. They don’t want someone coming to their house or their office after a long week. So, yeah, we are a virtual comprehensive financial planning practice. I don’t know if I’d really put any other term on it other than virtual, because that’s one of our unique selling points and not very many do it.
Michael: So talk to me about what that’s like in the context of a large firm. Because I feel like a lot of people that have experimented with these kinds of models as well as…running a virtual business model, the dynamics of doing digital marketing online, charging alternative fee models like your 0.35% of net worth for business owners, these are things I think in practice we see most often in independent channels, just when the span of compliance control is a little more straightforward because you’re not 1 of 1,000 reps on a large platform. It’s you, and you run your RIA. Maybe you’ve got a partner or a team of just a few. What’s it like trying to do this in a large-firm environment, from all the digital marketing, having a virtual team, charging alternative fee models in what at the end of the day is one of the oldest standing traditional life insurance companies?
Derek: Right. It’s been an educational process for them. A lot of meetings to say, “Hey, this is what I’m trying to do and why I want to do it. Here’s how it plugs into what we’re already offering in the field.” So there’s a lot of education, which slows things down because you’ve got meetings about meetings about meetings with managers that manage managers that manage managers.
Michael: Right. You’ve got to get a little ways up the line in a large firm just to get to a person who can actually look at what you’re doing and say yes or, “No, here’s what you need to do to fix it?”
Derek: Yeah. And over time, I’ve built those relationships. So now I just go directly to the top and have those conversations. It didn’t start that way, but that’s what I do now. Long story short, I’m able to do pretty much whatever it is I want to now. I authored a couple websites. I have my own brand, my own business. I’m able to charge the fees that I do. I’m not really beholden to anything. The infrastructure actually has worked really well.
And I’m able to tap into some of the stuff that they’re doing that I can get at scale, because they do have so many reps. So there are some efficiencies that are passed through that way, which is kind of cool. But it has been a challenge. I will say it’s been a long journey. I would especially say the biggest pain point has been the digital marketing side. There’s this massive fear from compliance about doing anything digital. So, it’s been a journey.
Michael: Interesting. So it’s not necessarily the virtual team dynamics, being virtual yourself, working from the road or the other countries, the other continents – it’s the digital marketing side of things that has been the biggest compliance challenge?
Derek: It really has. And in fact, when I was looking at hiring virtual staff, I talked to the compliance department. I’m like, “What do you guys think of this?” And they’re like, “We actually prefer it.” Because if I’ve got a W-2 or a 1099 employee, I’m exposed to additional risks as an employer. When I hire a virtual assistant through a firm, they’re not 1099, they’re not W-2, I’m literally paying their service off of my credit card every month.
Michael: So all the employment practice issues – employees that complain about wrongful termination, harassment, age discrimination, all that stuff that can happen when you hire a whole bunch of employees and have to deal with them – all that just vanishes.
Derek: It vanishes. It’s all gone, which has been great. FINRA and the SEC have put out guidance on what they will allow, which actually looks like they might start letting us actually have testimonials.
Michael: Yes, some new SEC guidance, at least a proposed rule, may actually open up the testimonials door, a little bit of third-party ratings, and some other of the platforms out there. Like, your party exists and apparently, the SEC just figured it out. But, hey, welcome to the 21st century! I can’t complain too much; it’s hard to make a big regulatory shift. So I appreciate they got there.
Derek: So they’re trying. But they’ve already put out guidance, and they have for a number of years now, where we can, as advisors, market with websites, we can have social media; we can do all of this. And the pain point is that a lot of the compliance departments will then overlay their own internal policy on it.
I have a love-hate relationship with attorneys because they’re really great when they’re in your corner. But on the flip side, they always think the sky is falling. And it’s the same thing with the digital marketing aspect. Like, “Nope, you can’t say that. Nope, you can’t do that.” So, I’ve really had to educate our review unit for content like, “Hey, this is what I’m trying to do. This is why I’m trying to do it. This is the message we’re trying to get across. Let me show you.” And I’ve gotten the relationship built up now where I get pretty fast turnaround on almost everything and almost everything is approved. Because everything I have out there, everything you see is archived and pre-approved before it’s published.
The Most Surprising Thing For Derek As He Built His Advisory Business [01:33:22]
Michael: Right. So what surprised you the most about this journey of building your own advisory business?
Derek: That it works. That it actually works and that clients embrace it. I was so deathly scared to make the transitionl We’re all taught, “Nope, clients will only meet with you in person. They’re only going to hand over their life savings to you in person.” And I have found that to be not the case at all. I have done business from all different parts of the world with people I’ve never met in person, and they actually enjoy the whole process. I’ve had people I’ve never met tell me that they feel like they’ve known me forever, that they love working with me. I’ve got these great relationships and I’ve never met these people in person. So yeah, that it works. It’s possible, and people actually embrace it.
Michael: But it strikes me that part of what makes it work for you, at least for getting new clients, is that you’ve built this focus around CEOs, founders, and business owners. You’re not just trying to thrive on people Googling “virtual financial advisor,” or I don’t know, maybe you do get leads off of people Googling “virtual financial advisor.”
Derek: I do.
Michael: So that’s actually a niche unto itself.
Derek: Not a big one, but I don’t need a lot. I don’t need…
Michael: Advisors don’t have to meet in person. Thank goodness.
Derek: That’s it. And the one client I have, who searched and researched and talked to some of them; they weren’t really virtual, they just said they were virtual but they still wanted to meet in person after they did a phone consult. And I’m like, “No, no, no, turnkey virtual structure, that’s what we have. That’s what you get when you work with us.” But yes, I think you still need to identify an ideal client. I think that’s terribly important for a lot of reasons. But if you are smart with SEO, if you are smart with the content you’re putting out and you have a process there, it’s a lot easier to capture new clients online.
There’s an old marketing trick out there. It’s been there forever. This is something I learned through my journey: don’t try to create your own following or community, just go where people already are and start talking to them. If people are online, they’re already there. I’m not going to go try to start some new website or coffee meetup once a month or whatever. I’m just going to go where everyone already is and then I’ll just be present.
Michael: Which I guess is a version of what you were doing around marketing from day one, just trying to find where people are and networking your way around them. Not necessarily trying to put on your own big show and make everybody show up for your thing.
Derek: Exactly. Yeah. Just go where they are and educate. People are buyers, and they’ll find you.
Michael: Yeah. So, what was the low point for you?
Derek: There were a couple. During the brick and mortar days, I remember one day – I had high overhead, I was stressed, I was using a shotgun approach and I didn’t know what I was doing. I was working a ton of hours. I literally had not had a paycheck for a while and went home and looked at my baseball card collection to see what I could sell just so we could eat. That was tough.
Michael: And that was a point when you had clients. You had clients and revenue, you just also had an office and staff and all the rest. So you were on that treadmill of, “I don’t just have to get revenue so I can eat, I have to get revenue to pay my office and my rent and my team, and then if there’s anything left, I get some.”
Derek: Yeah. There was a period of months where I didn’t pay myself anything. It all went to staff and all these other office-related expenses, and boy, was it stressful. I lost a lot of weight. I did not look healthy. So, that was a low point for sure.
And then the other one was coming to Wisconsin initially and having that whole thing blow up on my face and like, “What do I do? Do I stay? Do I not? How do I do this?” And there was no roadmap. There was no blueprint on how to do what I’ve done now, which, yeah, boy, that was stressful. It was like picking the destination but not knowing the destination and then not knowing how to get there.
Michael: Right. So, you’ve now kind of lived this journey, kind blindly stumbling through, and found some things that work. Now that you’re a ways into it, what do you know now that you wish you could go back and tell you from 10 years ago?
Derek: Yeah. So don’t build a brick-and-mortar office. Don’t do it. Stay away from it. Let’s look at the consumer. Let’s look at the general population. Where are we doing all of our business? We buy our groceries online. We date online. We do our banking online. We can talk to our doctors online. We’re doing everything online. So it’s only natural that people are going to want to meet with us advisors online.
I don’t think that robo-advisors are ever going to replace humans. Human beings are wired to connect. That’s part of our DNA. So people still want customized expert human advice, but the way they want it, the medium has shifted. It’s not a kitchen table anymore, it’s a computer. So yeah, coming into the business today, don’t build a brick-and-mortar office. I would also say identify your ideal client as fast as possible.
Michael: I think you make an interesting point that you really do have to split apart this distinction that without meeting with clients in person, there is no longer human advice. That’s not the right dichotomy. It’s when you’re going to meet with people for human advice, do you meet them over their kitchen table, at your conference table, or through a computer? Those are all different mediums to have human-to-human conversations.
Derek: Exactly. And I’ll sometimes joke that I’m not on their kitchen table anymore, I’m sitting on their lap. They’ve got the laptop right there.
Michael: Well, if that doesn’t make you more tightly bonded to clients, I don’t know what does. There is a strange intimacy, though, of sitting in their lap and literally talking in their ear because they’ve got earbuds in while we’re having our meeting. I do think people sometimes underestimate the odd level of intimacy that actually comes from videos and modern technology communication tools.
Derek: No question. Yeah, I think they underestimate it. That was one of the other things I’ve learned, because I’ve mentored a number of advisors who are starting to transition to a virtual model. The biggest roadblock or challenge all of them have faced is getting out of their own way. They all are so worried that the virtual thing doesn’t work, because they’ve got this like “I have to be across the kitchen table” mentality. And you don’t, you don’t. Just get out of your own way.
Michael: So, what comes next for you?
Derek: So I’m going to continue to do this thing; I love what I do. I love working with people. I’m filling that private plane, if you will. I’m working on that over time. But what I’ve also done, which has been a passion project, a side hustle that’s turned into something a bit more now, because I’ve got all this extra time, from the virtual business that has allowed me to pursue other passions.
I got bitten with the startup bug, so I created an education technology company earlier this year geared all around helping other advisors build or transition to an entirely virtual model. Now, I realize it’s not for everyone, but those that are looking, especially the younger generations, they’re looking to do something differently and to kind of challenge the status quo. Well, it took me 5 years to figure out how to do it, but now, I’ve put it together in a way where people can figure it out in 30 to 60 days.
Michael: Just a “good thing,” well, the “good thing” in air quotes, the “good thing” of having lived the pain of the journey over the span of five years, like, “I learned some things, I can tell someone else about them so they don’t have to go through the pain that I went through.”
Derek: Exactly. I’m a creature of learning, and there’s are essentially three ways to learn: doing, reading, and then learning from others. So, this is a way that I can give back to the advisor community that I think is, as you said, is stagnant, right? The advisor population numbers really haven’t changed. And as a 25-year-old today, if I were 25 coming in today and I came in and I was told, “Hey, you need to cold-call as many people as you can, you have to drive all over place, you’re going to work nights and weekends, oh, and that thing, that digital media, social media that you love so much, you can’t use it.” I’d be like, “No, I’m not working…” “Oh, and by the way, you don’t get a paycheck either.”
Like, why would a young, aspiring professional want to come into an industry that’s doing things that were done 100 years ago? So, I’m trying to change that. I hate the word “disrupt”; it’s so cliché, but at the end of the day, it’s what I’m trying to do – to change the industry and make it easier for advisors to live life on their terms but still build an awesome advisory practice in the process.
Michael: And so, for advisors who are curious and want to learn more about this, where do they go to learn about it?
Derek: Yeah. So, you can check me out on LinkedIn. I’m happy to chat there. And there’s some links in my profile there. Also, you can just go to our website called virtualadvisorsystem.com, and it tells you everything there. And actually, what I would encourage people to do, and I don’t know if you can do this, Michael, but I’ve got this really cool ebook I put together that tells more about my journey and where I see our industry headed. That kind of stuff.
Derek: If you want, we can put that in the podcast notes, whatever, and people can download that. I would actually encourage people to start there because it’s just like 20 pages, and it has good information to give people some context and open their eyes as to where the industry has been and where I think it’s going.
Michael: Okay. We’ll put links out to this for people who are interested. Again, this is episode 155. So if you want to check out Derek’s further writing about his journey or the Virtual Advisor Systems, go to kitces.com/155 and we’ll have links out for all of this so you can get a copy or take a look for yourself.
Derek: Brilliant. No, I appreciate that.
What Success Means To Derek [01:44:17]
Michael: So, Derek, as we wrap up, this is a podcast about success, and one of the things I’ve always observed is the word “success” just, it means different things to different people, sometimes different things to us as we go through the journey. So you built this successful practice for yourself, freed up your time, got to a better place – how do you define success for yourself at this point?
Derek: That’s a great question, and it’s a tough one. Thanks for throwing the hardest one at the end.
Derek: Success for me is waking up in the morning and loving what I do and loving that I don’t have to put my life on hold to do it. I’m my eight-year-old son’s number one fan, and I see how fast life changes. My father-in-law had some serious health issues in the last year, and I’ve seen how if you don’t have your health, life can change overnight for you.
I love building businesses and I love helping people, but there’s got to be balance to it. I think that the success I’ve finally realized at this point, and I hope there will be a lot more and that it continues to grow, is that I’ve kind of figured out where that balance is, where I can pursue my passions but also not always work. I don’t know if that really answers it. That’s kind of a roundabout answer, but I guess that’s how I feel about it.
Michael: Oh, I love it. I love that framing of how you don’t have to put your life on hold. You don’t have to make this a system of, “I’m going to toil away for years and years without doing other stuff in my life, trying to build a firm to a point and then I’ll get to do the life stuff that I want to do.” You do have a choice. You can build these more in parallel, but you just have to take control of those choices.
So as you did, like, “Who exactly am I going to work with? Who am I not going to work with? What staff am I going to hire? What staff am I not going to hire? What office am I going to have? What office am I not going to have? What kind of freedoms do I get when I have to show up in a particular office space at a particular time to manage certain people?” Those are choices we have that sometimes we don’t allow ourselves because we put our own constraints on, like, “Oh, well, clients are never going to work with me virtually, so I have to stay here and do this thing.” I think part of what’s cool about your story is that you rejected some of those assumptions and went and did your thing anyway, and lo and behold, it worked just fine. And those assumptions weren’t right.
Derek: Exactly, yeah. You have to be willing to question some things instead of having the blinders on. And it’s tough. It really is tough, especially when dealing with a really old industry that’s done it that way for so long.
Michael: Yeah. Yeah. Well, thank you so much, Derek, for joining us on the “Financial Advisor Success” podcast.
Derek: I really appreciate it, Michael. It’s been a blast. It’s awesome. Love it. Great experience. And I hope the listeners get some value out of it.
Michael: Oh, I think they will. Thank you.
Derek: Very good. Thank you, Michael.