Welcome back to the twenty-first episode of the Financial Advisor Success podcast!
My guest on today’s podcast is Evelyn Zohlen. Evelyn is the founder of Inspired Financial, an independent RIA in southern California that provides holistic financial planning and asset management services for 110 families, and manages nearly $140M in assets under management.
What’s fascinating about Evelyn’s firm is that her business is focused entirely on a niche – working with “women in transition”, most commonly recent divorcees or widows. And by focusing in on a niche, she’s been successful in working with affluent women, charging an assets under management fee with a minimum retainer of at least $10,000 per year, and driving almost $1.2M of gross revenue with a team of 4 advisors – including herself – and 2 support staff.
In this episode, Evelyn shares not only the details of her niche advisory practice, but how she selected this niche in particular from the never-ending list of possibilities, and how she communicated to her existing clientele the transition to her niche – given that she didn’t adopt a niche focus until after she had run her advisory firm for 5 years, and had already acquired another practice! Evelyn also shares some of the training she sought out to improve both her technical and relational capabilities in her niche, and how she leverages her niche to drive 85% of her new business development as inbound referrals from centers of influence.
And be certain to listen to the end, where Evelyn also shares the multi-advisor staff structure of her firm, how she allocates clients amongst herself and the other advisors within the firm, and the weekly meeting process that she uses to keep her team on track and well coordinated while serving all the firm’s clientele as an ensemble practice.
So whether you’ve been wondering what it’s like to pivot an existing advisory firm into a niche, what it takes to pick a particular niche and really go after it, or simply how to run an effective multi-advisor team and coordinate amongst multiple team members who all interact with the clients, I hope you enjoy this latest episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- Evelyn’s path into the industry during a career change from Vanguard, and as a former military (intelligence) officer in the United States Air Force. [2:37]
- Why Inspired Financial keeps a relatively low ratio of advisors to clients compared to most other financial practices. [7:33]
- The disciplined fee structure that Evelyn and her team developed in order protect the staff from being over-burdened and ensure they work with high-quality clients. [9:37]
- How clients are shared by the advising team, and handed off after the business development process. [24:31]
- Why using a CRM like Salesforce is so crucial to managing clients in a multi-advisor team. [27:49]
- How to run team meetings, and the importance of having a small, steady structure to make your week more efficient and focused. [31:09]
- What specific skills and marketing challenges, beyond the basics of good financial planning, come along with serving a specific niche. [38:30]
- How relational and behavioral management skills take on a new focus in a niche. [38:30]
- The importance of interpersonal skills and solid language when helping clients dealing with grief or trauma. [46:33]
- How Evelyn defines success as being the best version of herself. [1:22:47]
Resources Featured In This Episode:
- Evelyn Zohlen – Inspired Financial
- FAS Ep 009: Carolyn McClanahan On Using A Complexity-Based Retainer Model To Deliver Holistic Financial Planning
- FAS Ep 012: Delivering Profitable Financial Planning To Millennials For A Monthly Retainer Fee With Sophia Bera
- Diamond Teams by Angie Herbers
- FAS Ep 018: Taking Control Of Your Advisory Business So The Business Doesn’t Control You With Angie Herbers
- The Virtue of the Weekly Advisory Team Staff Meeting
- Traction by Gino Wickman
- No Longer Awkward by Amy Florian
- Amy Florian – Grief Training for Financial Advisors
- Tracy Beckes – Creating an Effortless, Outrageous Practice
- Sudden Money Institute – Certified Financial Transitionist
- Money Quotient
- Institute for Divorce Financial Analysts and the CDFA Designation
Did you enjoy the Financial Advisor Success Podcast?
And if you have a moment, please Click Here to leave us a rating and review in iTunes!
Full Transcript: Pivoting An Existing Advisory Firm To A Niche Serving Women In Transition With Evelyn Zohlen
Michael: Welcome, everyone. Welcome to the 21st episode of the Financial Adviser Success Podcast. My guest on today’s podcast is Evelyn Zohlen. Evelyn is a financial adviser and founder of Inspired Financial, an independent RIA in southern California that provides financial planning and wealth management services for about 110 families, and manages nearly $140 million in assets under management.
What’s fascinating about Evelyn’s firm is that her business is focused entirely on a niche, working with women in transition, most commonly recent divorcees and widows. By focusing in on a niche, she’s been successful in working with affluent women, charging assets under management fee with a minimum retainer of at least $10,000 a year, and driving almost $1.2 million of gross revenue, with a team of just four advisers, including herself and two support staff.
In this episode, Evelyn shares not only the details of her niche advisory practice itself, but how she selected the niche. The way she communicated the transition to her niche, to her existing clientele, is she didn’t actually pivot to this niche until after she had run her advisory firm for about five years and had already acquired another practice in the process.
She also talks about the training she sought out to improve, both her technical and relational capabilities in her niche, and how she leverages her niche to drive referrals from centers of influence. And be certain to listen to the end, where Evelyn shares the staff structure of her firm, how she allocates clients amongst herself and the other advisers of the firm, and the weekly meeting process that she uses to keep her team on track and well-coordinated, while serving all the firm’s clientele as an ensemble practice.
Remember, you can find a list of all the resources we mentioned on this podcast, including a number of great books and training programs that Evelyn suggests, at www.kitces.com/21, for this Episode 21. And so with that introduction, I hope you enjoy this episode of the Financial Adviser Success Podcast, with Evelyn Zohlen.
Welcome, Evelyn Zohlen, to the Financial Adviser Success Podcast.
Evelyn: Oh, thank you, Michael. Glad to be here.
Evelyn’s Path Into The Industry [2:37]
Michael: So I’ve been looking forward to this episode because I’ve kind of followed your career trajectory for years, because you and I both got involved with the Financial Planning Association, I think, like, right around the same time, in the early 2000s. I can’t even remember what the event was. We did some early event. I want to say maybe 2004 or 2005, talking about people, like, coming into the industry. I was talking about next-gen stuff, and you were a, quote, “recent career-changer” into the industry. I think Cynthia Zalewski from upstate New York was on with us, and we were telling these stories about our paths into the industry.
Evelyn: How we arrived. Yes, that would have been in San Diego, in 2005. That’s exactly what it was. It was sort of a bridge-the-gap program for folks entering the financial planning profession. I had literally been in California for about six months at that point and had my business, had my practice, for only about, oh, two-and-a-half years. So I was really early in the profession at that time.
Michael: Well, very cool. You have quite a memory. It was 2005, in San Diego. Now I think I remember that as well. That was the year Dave Bergman ran the program, because he gave everybody T-shirts that said, “I survived a Dave Bergman bridge-the-gap program.”
Evelyn: Exactly right. I’ll have to share. You’ll find this particularly funny because you know this man. But in 2005, at that same conference, I met one Mark Prendergast for the very first time.
Michael: Oh, I’ve heard of him. Don’t you kind of work with him now?
Evelyn: Yes. As a matter of fact, he’s my director of tax strategies during the day, and he’s my husband the rest of the time. So I met him for the very first time at FPA, the FPA conference in San Diego, in 2005.
Michael: See? So this is a fantastic plug for the Financial Planning Association. You can find both business partners and life partners, by traveling to a national conference.
Evelyn: Right, an exceptional organization for CFP professionals and all that care about financial planning, and you might meet your spouse there too.
Michael: Just an added bonus. Added bonus.
Evelyn: Yes, exactly.
Michael: Well, so you’ve been, I guess, about 15 years now into the firm, since that transition in the early 2000s. So let’s start. Can you just tell us a little bit about your advisory firm, as it exists today? What is the firm? What do you do? Who do you serve?
Evelyn: Right. So I…Inspired Financial is what I would dub full-on wealth management. I know we’re a little squishy in our profession about, “Oh, is it financial planning? Is it wealth management?” But we would describe ourselves as full-on wealth management. So we’re doing investment management, of course, for our clients, but deep-dive, comprehensive financial planning that includes a lot of collaboration with their other financial professional providers, like their attorneys and CPAs and such.
So the firm is quite comprehensive in nature. There’s six of us on the team, and of those six, four are financial planners. I have two client service operations types, supporting us, and we’ve got a really deep bench on the financial planning side. Three of the four are CFP professionals, and our fourth will be sitting for the exam in July. I’ve got a CPA. I’ve got two CDFAs. I’ve got an MBA in finance and portfolio management. We’re basically a bunch of nerds, which you, of all people, can appreciate that.
Michael: I can certainly appreciate that. Love the alphabet soup and all. The expertise that it brings.
Evelyn: Yeah, all of that. And obviously, that’s…I mention it just as an indicator that we’re passionate about the profession and ongoing learners. We’re really students of financial planning, and not only on the technical side. The alphabet soup gives away the technical side, but we also are very serious about the relational/behavioral/communication side of our profession as well.
That’s important, as it relates to Inspired Financial, because Inspired Financial is a bit unique, in that we have a very focused niche that we are experts in serving, and we’ve dubbed them “women in transition,” which is a phrase that gets bandied about somewhat here in California. I, one time, had somebody say, “Does that mean they’re in the middle of a gender change?” And I had to clarify, “No, predominantly this means widows and divorcees.” Over the years, we’ve determined women are always in transition. So the transitions take a lot of forms, but we take care of a lot of widows and divorcees and their families in our firm.
So the technical is important, but the relational and communications and behavioral is equally, if not more, important for this particular niche. We take care of about 110 families, and we have about $140 million in assets under advisement or management, however you’d like to arm wrestle over that descriptor.
Why Inspired Financial Keeps A Low Ratio Of Clients Per Advisor [7:33]
Michael: Okay. Very interesting. Really, to me, speaks to kind of the service intensiveness and the relationship depth when you say 110 families, households, and six people on the team, of whom four are in financial planning roles. Right? So in a world where a lot of advisory firms staff 60 clients per adviser, 80 clients per adviser, some even go to 100 clients per adviser, you’re at about 25 to 30 clients per adviser.
Evelyn: It’s an excellent observation, because we struggle with this somewhat. We definitely have capacity. We definitely have capacity to bring on more clients without necessarily bringing on more planning staff. When we look at metrics within our profession, regarding the average number of clients per planner within a firm, I always cringe a little bit about, “Wow. We are so low, as far as the number of clients per adviser. Do I need to be doing something about that?” We talk about that as a team and have decided that, well, we definitely have some capacity.
We are always going…We are going to make a choice to have fewer clients per adviser or per planner, because of the breadth and depth, the intensity of the services that we’re providing our clients. These women…These widows and these divorcees and these other transitions are very, very intense relationships, particularly at the outset, and they need a significant amount of partnership and hand-holding, much more so than pretty much any other demographic that a firm could choose to focus.
For that reason, we are always going to need to have fewer numbers of clients per planner, because we want to take care of these ladies in that manner. That’s a choice that we’re going to have to embrace, but that also means that we can’t take all of them. This takes me to our minimums, if you will. This can be kind of a testy topic or one of spirited discussion, I’d say, within our profession, about…
Inspired Financial’s Disciplined Fee Schedule [9:37]
Michael: I was going to say, like, you know, as much as 20-something clients per adviser is called a low, in air quotes, a low number, relative to some others in the industry, 110 families and $140 million of AUMs, your average client is more than $1 million of invest-able assets. There is a healthy amount of revenue per client to make some of this math work. I guess I’m wondering. Does your firm bill assets under management? Is that still the business model for what you do?
Evelyn: Great question. Our…So for your listeners, our revenue is about $1.2 million, on the $140-ish million, and we bill on a combination of retainer and assets under management. Like many planners, 2008 and 2009 was pretty crushing, from a financial perspective. At that time, we were strictly on assets under management model and addressed that after we dug ourselves out of that hole, by putting in a minimum annual retainer for all of our clients.
So we have a minimum annual retainer of $10,000 for all our clients. It’s pretty simple to do the math on that. That’s 1% at $1 million. But on assets above $1 million, we have a graded-down fee schedule. We are very quick to communicate with our prospective clients and clients that this fee is not for asset management, although asset management certainly is part of the wealth management services we provide for you. But we use your assets as a proxy for the complexity of your situation, understanding it’s not perfect, but a rough proxy for the complexity of your situation, which is why we’re using an assets under management fee calculation model.
There’s a lot, a lot of room for discussion around this within our profession, and I think that you and a lot of other thought leaders are doing a good job of bringing out pros and cons, challenges and opportunities, for really taking a hard look at how we’re compensated. What I’ve taken away from it is that there’s no easy answer to this. But for us, this is working pretty well right now. Folks get that size of assets as a rough proxy for complexity, and they seem to be at peace with that.
Michael: Now, for clients who clear and are well-clear of your $1 million limit…So the asset base that would necessitate a $10,000 fee…So if someone comes to you with $1.5 million or $2 million or some bigger number than that, are they still some kind of blended retainer-plus-AUM fee? Or is the idea that, “No, we basically just run an AUM fee, but we have a minimum fee of $10,000. So if you’re below that, but you want to pay for our services, hey, if you got the financial wherewithal, that’s your prerogative.” You’ll take them on as a client, even if they don’t have the assets, because they’ll pay the fee. Obviously if someone’s at like $1.1 million and there’s a bear market, they’re going to bump into that $10,000 minimum fee. So you’ve got your minimum level, but once their…Once they clear the asset base necessary for a $10,000 minimum fee, are you still doing some layer of retainers? Or is it just straight AUM at that point?
Evelyn: No, it goes straight AUM at that point, straight AUM, but it does allow us to work with clients that may not have that $1 million right at that moment, for whatever reason. I always make the joke, the half-joke, that one of the nice things about being the founder, president, head janitor, and chief bottle washer of my company, is that I get to choose to work with whomever I like. Having a minimum annual retainer keeps me from giving away the farm, from bringing on everybody, because I have a soft heart and end up punishing…I’m putting that in air quotes…my team when I give into my soft heart of wanting to take care of all these ladies and their families.
So the minimum annual retainer allows me to work with the doctor up in the Bay Area, who is getting divorced, and her half is going to be…of the settlement is going to be about $800,000, but she’s saving aggressively, and she’s got a lot of complex financial planning needs. This is somebody that I feel pretty comfortable bringing in because she needs our help, our partnership, and I have a high level of confidence that it also makes economic sense for her in the long run.
Michael: Well, and I think you highlight what actually is an interesting trend about how we’re seeing retainer models play out. We’ve actually had a few people on the podcast here that have talked about different types of fees. We had Carolyn McClanahan on at one point, who I think you know as well, who runs just like a straight retainer fee model, no AUM component at all, although part of how she sets her retainer fee is she does kind of look at total assets as part of a proxy for setting her fee, but there’s no percentage. It’s just she sets a retainer fee. People can go back and listen to that if they want. It’s kitces.com/9, for Episode 9.
So Carolyn does a retainer fee. We had Sophia Berra on, who does monthly retainer fees for young folks. That was Episode 12. But I’ve also written a lot about this from the industry bench-marking perspective. We have a lot of really good studies on industry bench-marking, about what advisers are doing.
The interesting phenomenon that you see when you look at a lot of those bench-marking studies is that, notwithstanding all the chatter around retainer fees, very, very few firms are actually moving to retainer fees, and the one notable exception, basically, is a lot of firms are instituting retainer fees as a way to ensure they generate a minimum level of revenue per client. The exact version that you’re doing here.
Hey. Here’s what we need to get paid, to make sure that the solution we’re providing is fairly compensated for what we do and that we can cover our staff and the things that we deliver. So here’s our minimum fee. And if your assets don’t add up to this, but you find it meaningful to pay this, I’m not going to stop you. Maybe you just really want the services. Maybe you got $10 million, but it’s all tied up in the business, but the business kicks out hundreds of thousands of dollars a year of revenue. So paying $10,000 is not a problem for that person. But if you want their assets, there just aren’t any to manage.
I find it interesting to watch this emergence of retainer fees, as opposed to setting a minimum asset level, where it’s like, “Hey. I’m sorry. You don’t have $1 million. I won’t work with you.” It’s, “Here’s what we charge as a minimum. If you want to come up to this fee, you’re welcome to work with us, and here’s what we do.” It’ll easily make sense if you got the assets, but if you don’t, or the assets are in another form, here’s the fee. If you’re willing to pay it, we’d be happy to work with you.
Evelyn: Right, and I think that there’s power in that clarity, knowing what is my minimum to be able to provide the types of services that we want and for me to be a good business owner, take care of my team, keep the lights on, and then…Oh, yeah. Being the shareholder, so to speak, it’s nice if I get some dividends from that as well.
I also think, though, that it benefits us if we take a sort of pay-it-forward, “There’s plenty of business for all of us,” kind of a view because I’m always quick to point out if I think it’s of true value to them. I’m a very straight shooter, and I will say to her, “You have a significant amount of complexity in your life, and whether it’s us or somebody else, you really need to get with a good financial planner. I believe that we would be a good match, and here’s the value that we would provide, that would make it worth our annual minimum retainer.” As many times as I’ve said that, though, I’ve said, “Your situation is relatively straightforward. While we would be a great partner for you, I am not sure it makes economic sense.”
Michael: Given the non-complexity of your situation.
Evelyn: Exactly right. I’m always careful about using…I’ll give you a poke real quick and say I’m careful about saying, “Your situation is not complex.” I’ll literally…It’s crafting word choice. Your situation is relatively straightforward. Because if you’re a widow or you’re a divorcee, it does not feel good to have somebody tell you, “What you are going through is not complex,” because it is so complex.
Michael: Right. I know your life feels like it’s insane and trashed right now. But hey. We think it’s actually really simple.
Evelyn: Not too bad. No, no, no, no. So word choice matters, but I do say, “It’s relatively straightforward, and I want to be sure. While I would love to be your partner, it needs to make economic sense for you as well. With that in mind, what I’m going to recommend for you is that…I have this colleague, who I know quite well. I have done some vetting, and they provide great services, but their business model is different from mine. I think that they would be a great match for taking good care of you and having it be a good value for you as well.” The clouds part. The angels descend. Everybody’s happy because she gets with somebody who’s going to take great care of her, is going to be happy to have her as a client, and I feel like somebody I care about is going to be in good hands.
Michael: Well, and I find there’s an interesting dynamic that crops up when you set a minimum fee structure and that…The challenge with having minimums…I mean, in that same kind of sort of…The awkward judgmental kind of thing, like, I don’t…I don’t want to say to a prospect like, “Oh, your problems just actually aren’t that complex. So you don’t need me,” which may or may not sort of be technically true, but it’s very condescending and belittling to the person who feels like their problems are really, really complex.
There’s a similar dynamic that it feels horrible to tell someone like, “I know you’ve accumulated what, to you, is the most money you’ve ever had in your life, but you just don’t qualify to work with me, really.” I find most advisers feel really awkward about actually stating and stipulating minimums, minimum assets, and that…Minimum fees, I find, it turns that conversation around. Right? Because it’s not, “Oh, I’m sorry. We only work with people who have $1 million, and you don’t. So have a nice life.” It’s, “Look. Our minimum fee is $10,000. For many of our clients, we manage at least $1 million of assets. So that would be a 1% AUM fee, which is consistent with a lot of folks, but our minimum fee is $10,000. If this is meaningful for you, we’d be happy to work with you.”
So now, you don’t have to reject the clients for not having the assets. You let the client reject you for just not wanting to pay the fee, which, I guess for some of us, feels worse when you set up someone to reject you, but it’s easier to let them reject you, I find, than it is to reject them. At least that’s what I certainly find. I’ve got a soft spot as well in trying to help people. I hate turning them away, and saying, “You just don’t meet my minimums,” feels bad, but saying like, “I know this is my value, and if this value doesn’t make sense to you, that’s your choice,” shifts the onus to them and makes it easier to turn away folks without sort of belittling their assets and their savings and their net worth and just making the point, “We’re not a good fit because here’s what we charge for what we do.”
Evelyn: That takes a pretty mature planner, somebody who’s really comfortable and confident in their own skin and one who’s feeling financially secure in their own rite, to open a clear path away from them to somebody else, particularly if that planner goes so far as to say, “I have an alternate that I would recommend for you.” It may be, ultimately, that that’s what’s in the best interest of this client, but it’s tough to send away a potential client like that, and it takes somebody who’s really, like I said, comfortable in their own skin, comfortable with where they are and where their practice is, to be able to do that.
Michael: So I’m curious how the service model works at your firm. So with about 110 families and four planners, do each of you keep 20-something clients, and that’s it? Or do you tag-team clients? Like, go, “Well, there’s a pair of us that work with 50, and then the other pair work with the other 50 or 60.” What does that look like, in terms of how you actually interact with clients, amongst four different advisers?
Evelyn: That’s a great question, and we actually work off of diamond teams. I know that you interviewed Angie, and that was terrific, a terrific conversation with her. So we use a variation of her diamond teams. I joke we’ve got a half-diamond because there’s three planners, a senior planner, lead planner, and associate planner, on our half-diamond. Then I’ve got this odd-duck technical specialist, who’s my director of tax strategy. So the four of us, collectively, work on every client situation. We each bring a technical area of expertise to the table for each of our clients.
One of my planners is very knowledgeable around insurance. One is very knowledgeable around tax and estate. On my end, I’m the expert on our team regarding the investments and retirement planning. So obviously every client we have needs all of that support together. So from that perspective, we’re fully ensemble. Every client of the firm is a full client of every person within the team. Having said that, we do have a lead planner assigned or a head planner assigned to each relationship. So somebody’s always got their eye on the ball for a particular client.
How Clients Are Shared By The Advising Team [24:31]
Michael: And I take it it’s not always you who’s the lead on all of those clients?
Evelyn: No. No. As the owner of the firm and the primary rainmaker, I’m the one who’s probably making or doing most of business development. It’s essential that I not be on lead with all these relationships. I know and love every one of these clients. I know their dogs and their cats. I know their kids and when they got married. All of this. But I cannot take all of them on as my personal relationships. So it’s been a challenge for me to let them go. It’s like setting my babies free in the world. The thing that gives me peace and comfort in doing so is my amazing team, just a superlative team. I know you’ve talked with other guests on your podcast about the importance of building a great team and the importance of great hires, and all I can do is echo that, and I have. I am blessed to have some really strong team members.
So with that, I am comfortable in saying, “Okay. I’m going to handle these 30 clients, and you’re in charge of these 70 clients,” and then my associate planner might be taking care of a half-dozen clients that have very, very straightforward situations.
Michael: So I’m curious how those hand-offs work then, in a world where you’re the rainmaker. You’re doing the business development. Particularly in something as emotionally intense as working with women in transition or even just clients in transition, in general, like, “Hey. Meet Evelyn. She’s one of the area’s leading experts in working with recent divorcees,” and then you get a truce with Evelyn. Evelyn’s like, “We’d love to work with you. Have you met Kevin?” Right? They’re like, “No, I thought I was referred to you. You’re supposed to be the expert. And all of a sudden, you’re sending me to someone else, but I wanted you because…” Well, not that you’re the rainmaker, from the client’s/prospect’s perspective. You’re the one. You’re the visible one. You’re the one. So how do those hand-offs happen, especially on issues as emotionally laden as divorcees and widows and situations like that?
Evelyn: It’s a trick because it’s…Initially, when I started the business, it was all me. My friend, Carolyn, who you interviewed, says, “Evelyn, it can’t be all about you. It can’t be the Evelyn Show. You need to move then along.” I say, “Okay, Carolyn.” I’m…
Michael: I could so hear Carolyn saying that too.
Evelyn: I’m working on that. So the way that we address that is pretty much from the first moment we meet with them, our discovery meeting, which is, you know, a no-decision zone. We’re doing a mutual checking each other out, kicking of the tires. From the very first meeting, they’re introduced to members of the team. Some of our first words are, “We have an incredible team of experts who are very experienced in taking care of women who have had experiences like yours. And while you are completely unique in the path that you are walking, we’ve walked alongside others like you, and our team is able to help you in the various areas of challenge and opportunity you’re facing.”
And I, from the very, very beginning, will bring in other team members, and not just bring them in sort of as window dressings, sitting at the end of the table, but invite them to weigh in with comments and opinions and ideas. So almost from the beginning, I am in the process of making it less about me and more about the team.
We very, very rarely have run into somebody who really dug in and resisted on that. I can literally count them on my thumbs, the number of times somebody has said, “Look. I would really rather work with you,” or, “I would really rather work with Mark.” And in that situation, easy enough, we can take care of that. Obviously I’ve got a problem if all 110 are saying that, but that’s not the case.
Michael: One or two is quite manageable, given the depth of the team.
Evelyn: It actually feels so good to our clients that, when they call, anybody who picks up the phone is going to know who they are and, again, know their dogs, their cats, their kids, and when they got married. We’re all very familiar with each client situation, and it’s like “Cheers.” Everybody knows your name. They feel really good about having a whole team of people taking care of them, as opposed to maybe just Evelyn. She’s wonderful, but she’s only one person.
Why Using A CRM Is Crucial To Managing Clients In A Multi-Advisor Team [27:49]
Michael: So is there some point then where, virtually, everyone in the firm is touching every client, where you do hit capacity? You know? If we…If everyone had their own 27 clients, then clearly we’ve got some room. But if really it’s everybody is touching 110 clients, do you have some feeling or concern that you start hitting a capacity here? I don’t know. 130 families or 150 families. At some point, we’re just…There’s too many cats’ and dogs’ names to remember, just the sheer number of people and families that everybody is touching?
Evelyn: Right. Isn’t this where CRM becomes so important? Because I actually don’t have all 110 dogs’ and cats’ names set to memory. What I do have is a…
Michael: That would be a really neat parlor trick if you could though.
Evelyn: Only about half of them set to memory. But I do have a very robust CRM system. We use Salesforce. It’s integrated with Ignite, which is document management for us. We use mind mapping as part of our discovery meeting process, to capture those sorts of personal nuances that may seem insignificant, but are so important when you’re just building relationship with a client and maintaining relationship with a client. So the seriousness with which we take collecting initial information about our client and capturing it, and then referring to it regularly, going forward, helps with that relationship across all parties involved. But then you asked a great question about, “Okay. If everybody’s touching them, how do you really serve all of these people?”
Michael: Or just keep track of who did what? I mean, I know, like, the straightforward answer is what you just document it all on your CRM, but that’s a lot of stuff to document. That’s a lot of stuff to coordinate on. So do you guys just live in Salesforce? Is that just part of the deal?
Evelyn: We are pretty serious about getting it all in there. The other part that we’re very serious about is documented processes. We have…We’ve spent an incredible amount of time and energy and a fair amount of consultant dollars in building processes, procedures that integrate with our systems and are…I’ll go so far as to say the idiosyncrasies of some of our team members, to make sure that things are happening when they’re supposed to, and they’re documented, so that everybody else knows when Mark reviews a tax return, or Kevin has done a long-term care insurance policy analysis.
So I would be delusional and lying if I said that it was fool-proof, that, like many firms or most firms, there’s a…We still have things. We drop the ball on that one, and we need to have to go back and do some mopping up. I’d give us a B-plus, maybe even an A-minus, on getting things into Salesforce.
Another thing that really helps us with this is that we have a weekly team meeting. It’s got a very structured agenda, every single week, Tuesdays at 10:00, with this structured agenda. Everybody rotates through as the facilitator for that team meeting, and if you stick to the agenda on this team meeting, we do a pretty good job. This, I’d give us a solid A to A-plus on staying current with what’s going on with clients for the week past and the week coming up.
How Inspired Financial Runs Team Meetings [31:09]
Michael: So what does this weekly team meeting look like? You said Tuesdays at 10:00 a.m.
Evelyn: Tuesdays at 10:00.
Michael: And what does that agenda look like? What do you actually talk about? What do you do?
Evelyn: So we start with a check-in. That’s sharing good news or something to present or telling a joke, if you got nothing else. Then we’ve got…Second item is going through our recurring checklist items, anything that needs heightened visibility, with rescheduling client meetings or events scheduled if we…We’ll go through the recurring checklist, and then we’ll go through metrics. Our third agenda item is we have a set schedule for reviewing firm metrics. So this might be client meetings. This might be revenue. This might be net new assets or website hits. We’ve got all kinds of different data points that we track. So we’ve integrated those metrics into our weekly team meetings on a set schedule.
Then we’ll go through projects. Once a quarter, we meet offsite for a quarterly review meeting, where we set 90-day priorities, which are supporting our one-year and five-year goals. So every week, we go through our project checklist, the 90-day projects, to see how we’re doing. Then the back half of the meeting is all about brainstorming problems to be solved. It could be related to those projects that I just mentioned, or it could be reviewing the upcoming meeting, client meeting checks, to check through and see are there things that we need to tackle.
That gets to your question about, “How do you make sure things don’t slip through the cracks?” Well, we are looking at upcoming client calls and meetings, a week to two weeks in advance, which really helps us stay ahead of the curve on making sure tasks get done on a timely basis.
Michael: Interesting. So this sounds a lot like Gino Wickman’s traction framework. Is that where this comes from for you?
Evelyn: Actually I have to give total props to this to Tracy Beckes. I’ve been working with Tracy Beckes as our coach, and I will confess I don’t know if this is her original intellectual capital or if she’s putting together from other sources, but it’s been terrific for us. We’ve been doing this about two years now, and I would…It’s not an overstatement to say it’s revolutionized how we are able to keep up with information and get things done around our office.
Michael: I’ve gone through something similar. I started around my own business, doing a much more rigorous weekly meeting schedule with the whole team after, frankly, years of resisting it. I like my sort of unstructured environment because I’m a creative type. So I like my unstructured space and have a long career history of pushing back against structure. So like, I don’t want to have a standing weekly meeting on my schedule. This is just restricting and will drown me out and whatever other strange things were going through my head.
Then eventually I, hearing so many recommendations about it, I just started doing it, and ours is Monday mornings at 10:30 in the morning. So I give everyone an hour or two to get going, and actually some of my team is on Central Time Zone, and I’m East Coast Time Zone. So that let’s them kind of get in the office or get in their home office and get going.
But we’ve been doing it for probably a year-and-a-half now. Yeah, it’s really been very transformative for business, just having that steady structure, that steady heartbeat of every Monday morning at 10:30 a.m. Everybody knows what’s going on. We’re all coming together, and we’re going to go through our stuff. It’s very similar. We talk a little bit of metrics. We talk about some project priorities, look at all the to-dos for the upcoming week, and kind of make sure we’re on task about projects, and then a chunk of time just dealing with problems that have come up, that we need everybody to help think through together, and just lots of brainstorming time.
So we actually did an article on the blog, just a month or two ago, about this. So we’ll link to it in the show notes as well, for people who want to check it out, kitces.com/21, for Episode 21. But yeah, it’s just…It’s really powerful. So I’m curious. The other piece that I know at least a few firms that do is, not only do they do their weekly meetings, they do daily check-ins as well, like, five minutes every morning, just going through what’s going on in the business that day. Do you guys do any kind of daily process? Or just you’re comfortable with your weekly?
Evelyn: We have not, but I tell you what I have incorporated that’s…I’ll call it “between-the-weeklies.” We’ll do stand-ups. I’m sure you’ve heard of stand-up meetings, where it’s for exactly what you’re describing though, is that quick five minutes, “Hey. Let’s all gather round,” and we’ve got like a central bullpen area, that I call, where all of our planning team works. So I’ll say, “I’d like to do a stand-up this morning, to touch base on where are we with on-boarding our three new clients.” So we’ll all…The whole gang will gather round, and it’s literally two or three minutes. That’s the reason nobody sits. Once your butt hits a chair, things really slow down.
Michael: If people sit, then they can start hanging out, and they can start chitchatting. When you make everybody keep standing, they just kind of get their stuff done because if they want to sit down, the only way you got to sit down is get through your stuff quickly, and then you can move on with your day.
Evelyn: Exactly. So the stand-up…They’re not scheduled every day, but we probably have a stand-up twice a week, in between our weekly team meetings, which for us has been an appropriate frequency for doing that. Both the stand-ups, the weekly team meetings, and the quarterly review meetings are opportunities for us to check in on self-reflection and also to push each other, nudge each other a little bit, to strive for more than what we think we might be able to do on our own. Our team says, “I know you got more in you than that. So let’s get you to show up even bigger and better than you think you even can.” Then we hold each other accountable. It’s really easy to talk yourself out of taking care of things when life gets busy, and these stand-ups, weekly, and quarterly meetings help us hold each other accountable.
Michael: I find a lot of it is just…The accountability that goes with…Okay. Every Monday, at 10:30…For you guys, every Tuesday, at 10:00 a.m., there’s going to be a meeting, and we’re going to look at all the to-dos we were knocking through last week and all the to-dos we need to do this week. So your stuff kind of gets done because no one wants to be the one that shows up to the meeting where we go through all the to-dos, and you’re the one that didn’t do things. It’s like such a little nudge around accountability, but it works amazingly well.
Evelyn: It’s true. There’s no public shaming, but you don’t want to get the look. You know? Nobody wants to get “the look” about not having done your stuff.
Michael: You don’t have to proactively publicly shame anyone. You just put people in a room where one person knows that they didn’t do the things they were supposed to do, and they know that everybody else knows they didn’t do the things they were supposed to do. You shame yourself plenty fine, without anybody else saying anything. It still works. I’ll make sure we put a link out to Tracy Beckes’ website as well, for people who are interested. I love her coaching business. Her tagline is, “Creating an effortless, outrageous business.” It’s just such a fun aspirational statement around effortless and outrageous. So tracybeckes.com. We’ll make sure we’ve got that in the show notes as well.
What Specific Skills And Marketing Challenges Come Along With Serving A Niche [38:30]
Michael: I want to understand a little bit more about the nature of the niche that you work in. So you said women in transition. So can you talk to us a little bit more about, I guess, what does that mean as a niche? Like, who really does that mean you serve? What do you do for them? I mean, at the end of the day, is it just…You say it’s women in transition, but you’re pretty much doing similar financial planning to what other firms would do. You’ve just got a particular group that you market to? Or does it reshape what you do? Or something in between? So tell us about that a little bit more.
Evelyn: Is it just garden-variety financial planning with window dressing? Or is there something more going on here?
Michael: You’ve got $140 million in 15 years. So if it’s window dressing, it’s working pretty darn good as well. I wouldn’t knock that. But I’m just curious to understand more how you view this as a niche.
Evelyn: Sure. We actually went through a pretty serious process in determining to select this niche. Just a tiny bit of backstory. I started my practice in 2003, in Philadelphia, because I was working at Vanguard, and I left the Vanguard Group to start my own financial planning practice. In 2005, I bought another financial planning practice here in southern California. Moved out here in March of 2005, and it was pretty much heads-down for the next 18 months, just trying to merge these two practices together, get to know all the clients, kind of build all those relationships. So truly, heads-down, just trying to get this all taken care of.
After about a year-and-a-half, I felt like I finally came up for air. You kind of look around. You look around, and you’re surveying sort of the landscape of your practice in front of you. I remember thinking, “So is this the way I want it to be? Am I serving the people I want to serve? Am I providing the services that I would like to?” Because when you buy…I’ve given this analogy several times before for colleagues who have asked about this. When you buy another financial planning practice, it’s like buying a pet store. When you buy a pet store, you get everything inside the pet store, and that might be the dogs and the cats and the birds and the snakes and the fish and the lizards. You may have just really wanted the fish and the lizards, but you’ve got all of them, and you have to make a call about, “Is that okay? Or are you going to do something else about it?”
So in our case, in 2007, we actually retained consultant to help us in a year-long process of making some choices around this, and this included things around client segmentation and around branding and service models, and it was really an extraordinary year. It was a really big pain-in-the-butt kind of a year. It was so much work. It was such a huge lift to do all of this because the end result of it was that we decided, “No. We don’t feel like we want to be all things to all people,” which is a real challenge that a lot of financial planners have. They try to be everything to everybody, and we made a conscious choice, put a stake in the ground. No, we’re not going to.
We want to serve this particular niche, and I’ll talk about the niche, per your question, in a second. But it was at that time that we also decided that we want to provide the deep-dive financial planning services. You could provide good financial planning that’s not necessarily deep-dive all the way to your toes, and we decided that’s what we wanted to do. In order to do that, we were going to have to be compensated more than a couple thousand dollars for a planning relationship.
So it was at that time that we raised our minimums, but the decision to focus on women in transition started with, “Okay. So what exactly do we mean by a woman in transition?” Because when we were doing the analysis for segmentation on our existing bulk of business, so to speak, we were really struck with what we discovered. For one thing, I was really struck by the number of engineers that I had as clients. I thought, “Well, that explains a lot,” because I ended…I was really stunned by the number of deep-dive investment conversations I was having. As a left-brain girl or woman, it made my heart sing.
But really at the end of the day, I don’t believe that deep-dive, hours-long conversations about alpha and R-squared and beta and that sort of thing really adds a whole lot to a client achieving their financial goals. So it was a choice to not go in that direction. But the other surprise was the number of women who, when they came to us, they were widowed or divorced, while they were with us, they got divorced or became a widow, and we talked a lot about the satisfaction of being a partner alongside a woman and her family at what is probably one of the most difficult moments in her life, when she is doubting herself. She’s fearful of her financial future, scared to death she’s going to make a bad decision or someone’s going to take advantage of her.
To be that partner…I’ll say trusted partner. I know that gets just beat to death. Everybody uses it, but that’s how we truly view our relationship. We’re walking with you, right by your side, and we’re going to educate and empower you, so you feel confident about making great decisions. Cue up. I am woman. Hear me roar. But right here, standing right over your shoulder, we’ve got your back. This is exciting. It’s powerful.
Then we said, “Okay. But what does that mean for actual financial planning? We can get all warm and fuzzy and excited and inspired, no pun intended, about that. But what’s that mean for actual financial planning?” That’s when we made some choices around technical expertise and then relational expertise.
So on the technical expertise side, we have spent a tremendous amount, as we talked about earlier, a tremendous amount of time and energy, becoming technical experts in taking care of women going through a divorce or women who are navigating their life after their husband has died. At the same time, a lot of relational expertise. We spent a lot of time in communications training, a lot of time in understanding behavioral finance. Why is she unable to make a decision? How tough is this, for heavens sake? Well, there’s real physiological reasons why that is, and we’ve become students of that, so that we can help her with it, and we can be patient and give her comfort along the way, as she’s learning how to make those decisions.
Then it’s something as simple as, “What’s your office look like?” I know there have been a lot of articles and even webinars and sessions around, “So what’s the message you give your clients and prospects when they come through your door? Do you have CNBC streaming? Do you have the Financial Times and Wall Street Journal sitting in your magazine rack?” And for us, very, very conscious decision, and not manipulative, but just aware of what is our client going to see or what is our prospect going to feel when she comes through the door.
So we have Travel & Leisure. We have Food and Wine. I have Wine Spectator. All in my magazine rack. When you come into our conference room, we have two big maps of the world up on our wall. And on another wall, we’ve got four clocks with four different time zones of countries around the world. The idea is about that there’s life and goals and dreams that you have, and travel is always a popular one. That’s why we’ve got the maps and the clocks. But there…You have a life ahead of you that can be greater and more rich than you may ever be able to imagine, and we want to help her get there.
So we’ll do the technical things that we need to, to help her do that, but we’ll also make sure that we are going to be communicating and relating to her in a manner that helps her gain that confidence and move forward.
The Importance Of Interpersonal Skills When Helping Clients Dealing With Grief Or Trauma [46:33]
Michael: So where do you learn this stuff? Is this just school of hard knocks? Like, after we’ve done enough clients of this, and we occasionally screw things up, we eventually figure out how to do it better next time and learn our technical and relational skills over time? Or did you find training to work with women or women in transition or women with divorce issues? How do you actually learn this stuff?
Evelyn: Yeah. Unfortunately there were plenty of the after-the-fact, “Whoa. That went really badly, and I wish I had done things differently.” You don’t…It only takes one or two of those to start remembering the lessons learned from that particular interaction, but we’re…
Michael: Fortunately we’re very well-wired to learn from…
Evelyn: Yes. The greater the discomfort, the stronger the lesson. Right? But we’re also very blessed within our profession to have a lot of big thinkers, really thoughtful, considerate folks that have discussed and become students of, “How do we help people going through these kinds of situations?” So there’s all kinds of resources. I mentioned the certified divorce financial analyst credentialing that provides us great technical expertise around divorce financial planning.
I think what folks struggle with a little more is on the relational side. Well, what do I do about that? Even there, all kinds of great resources. I’ll toss out a few, including one of my favorites: course: The Sudden Money Institute. Outstanding resources for helping clients of all types, not just widows, but any client that has come into money unexpectedly. This is just…Susan Bradley and her team are great at helping serve those types of clients.
Michael: Didn’t Sudden Money Institute recently launch like an actual designation in this? Like, a Certified Financial Transitionist.
Evelyn: Yes, and the folks I have…I and my team have not gone through that particular credentialing yet. We are all…They were both worried about CDFA, initially, but we’ve got our eye on that as sort of an ongoing or continuing education. The folks that I have spoken with, that have gone through it, have said that it was so helpful, incredibly robust curriculum. And not just the curriculum, but the community of like-minded professionals provide a lot of resources to talk about issues and compare notes and details of how you’re building these relationships with clients that are going through what is often a very difficult time in their life.
There’s also some technique around helping folks from sort of an emotional/relational perspective, with the folks at Money Quotient. Amy Mullen and Carol Anderson there have some terrific resources. Then another that may be less familiar, but I tell you what, we love her work, is Amy Florian, Amy Florian with Core Genius, out of the Chicago area.
Truly, hands-down, the number one expert, in my opinion, on how to communicate with somebody who has lost a loved one, somebody who’s dealing with the death of a spouse or a child. She has a seminar that she gives once or twice a year, around grieving communications, how you talk to somebody when they’re grieving. She has a book called “No Longer Awkward.” It is so important that it has a place of honor in the middle of our bullpen. I told you we have a financial planning bullpen, where we all work together. It’s like on the top shelf of our bullpen there because we reference it all the time in how to communicate particularly with our widows, but there’s even a section on communicating with people going through divorce because there’s a level of grief that goes along with that. That is such a powerful resource. So Amy Florian. I’m not getting any kickbacks from Amy on this.
Michael: No, no. We’ll put a copy of…a link to the book in the show notes as well, kitces.com/21, if people want to get it. Yeah, I read her book a couple years ago, when it came out, as well, and just very powerful for perspective about how to talk to clients going through those situations. I mean, I love even the name of her book. She called it “No Longer Awkward.” The whole point is it’s written for financial advisers about how to no longer feel at least as awkward when your clients are grieving and crying and going through those trouble spots and so many little things.
I still remember the one that stuck out to me the most in reading her book was she made the point that if you have a client that’s crying, don’t reach out and hand them the tissue box, because if you reach out and hand them the tissue box, the actual subtle statement you’re making is, “I’m ready for you to be done crying now. Here’s some tissues. Please stop and get on with it,” which may actually be an accurate reflection sometimes what you’re feeling when you give someone a tissue. But if the goal is to let clients grieve and give clients the space to go through the process that they need to go through, there’s all these little things that we often do without even realizing it, that makes it more awkward for the client. So I highly recommend the book as well. We’ll make sure there’s a link in the show notes.
Evelyn: It’s impossible, truly impossible, to underestimate the value of that kind of effort. I can imagine some of your audience might be thinking, “That’s all nice, but I’m running a business. I got people to take care of. I’ve got clients that are pounding on my door, and I am just too busy for that sort of thing.” But it has an immeasurable impact on your relationships with your clients, and the effort is so worth it.
As you and I were chatting, I wanted to grab something really quick, because I had a client, not a widow, not a divorcee, just a client, actually my very first clients, all those years ago…God love them. They suffered a lot as I figured all this out. But his dad died back in February of this year, and I hauled out Amy’s book because she’s got all these little scripts for what do you say in a note, a condolence note. So you know, I used it as a starting point and put my own voice on it and sent it off to him, and he sent me a note back that says, a little handwritten note, “Thank you for your loving, comforting remarks and sentiments after my dad died recently. Your note of comfort meant the world to me. Your words were very poignant and thoughtful. I appreciate your support and outreach to me. Thanks a million, which is what I hope to gladly retire with. Sincerely and with appreciation, Randy.”
I kept this. Obviously it was right here at my fingertips, but I’ve kept this because it’s a reminder to me that all this squishy, touchy, feel-y stuff that sometimes gets such short shrift in the work that we do with our clients or where we think we should be spending our times is part of what changes lives. It’s incumbent on us to embrace that part of our relationship with our client, in addition to the investments, tax planning, estate planning, insurance planning, etc.
Michael: So I’m curious. As you got into this niche…Because you had an interesting path leading up to it. You were…You mentioned you were a relational manager at Vanguard. Then you went out, and you started your own practice, and then you bought a practice and had to go through that transition. Then a few years after you bought a practice, you decided to go into a niche. So this kind of brings to me two questions.
Number one. I’m just curious. Do you actually regret that you bought a practice, since you bought it, and then a few years later, you went to pivot other directions anyways? Then my second question is: how do you actually communicate to the people you bought, like two years ago, “Hey. I’m now going into…I’m now going to specialize in women in transition.” You know? I’m going to assume all the clients you bought were not originally women. So how does all that flow? I mean, how do you roll out such a focused niche like that, with an existing client base? And do you wish you’d actually just done that in the first place, instead of buying a practice? Or was this part of the evolution?
Evelyn: Well, I just said, “Thanks for being a client all these years, but bye-bye.” No, actually I did not say that. That is not at all what I said.
Michael: I would think that would be a little revenue-disruptive since there’s probably some payment obligations for that acquisition. How do you roll out a niche, like women in transition? I mean, like, it’s gender-specific. It’s stage-of-life-specific. There’s a…The good news: there’s a lot of specificity to that, but I’m going to assume most of your clients that you bought did not happen to fall into that niche.
Evelyn: Well, that’s actually a very interesting observation because, in fact, about half of our clients…They weren’t…They certainly weren’t all in transition when they came to us, but they…Some were in transition when they came to us. Some ended up going through a transition, you know, when they were with us. There’s just a…There was actually not as much incongruity as you might think. The other part, and I got to throw this in really quick, is when you make a choice to really narrow down and focus on a niche, like we did, I mean, we really went from the universe down to this pretty narrow pipeline.
In addition to hyperventilating and having a, “Am I crazy,” moment or moments, “What the heck am I doing? What the hell am I doing,” the other thing that we did was we said, “Okay. We know that when we put the stake in the ground and say $1 million minimum, deep-dive financial planning, women in transition, the next 10 people through the door are not going to be that. So we have to do something to make sure that, when the exceptions come, and they will, that we have clearly defined process for handling them, or we’re going to be wallowing in exceptions, breaking our own rules, and back where we are with the full pet store, in short order.
So at the same time, we created…We made the decision to focus on this niche. We created an ideal client profile, which is literally a written document that summarizes who is our ideal client. It’s almost like a checklist of a couple of dozen items that describes who she is. Now, in fact, that person does not exist. We don’t have a single client that fills all of our 25 or so items on our ideal client profile. She’s like an amalgamation of a bunch of different clients.
But what’s so powerful about having gone through that exercise, and it’s a pain in the butt…I get that. But having gone through it, it becomes the filter by which you choose which clients you work with, whether or not she’s a woman in transition. Do I make an exception? Because if they fit everything in the ideal client profile, except gender, will we consider an exception? And the answer is, “Well, sure.” I get a lot of harassment, teasing, loving I’m sure, but harassment from some of my fellow colleagues.
Michael: Will you accept a man in transition?
Evelyn: We did. I was just going to say I’ve had colleagues give me grief about, “Well, you’re telling me if you had a man in transition show up, you wouldn’t work with him?” The answer was, “Well, probably not, but I don’t know.” The good news is that I’ve got a process for making that decision. So I don’t have to figure it out on my own. About three years ago, we had a…It was a friend of ours, mine and Mark’s, from church, somebody who I’ve known for years. He was an engineer, of all things, working for a large communications company, had been with them for decades, and was told, “We’re eliminating your position, giving you a big, fat severance package. Thank you for all the service. Bye bye.” He was 62-years-old when that happened.
And he, at church, about two weeks later, said, “Hey. You know, I got all the paperwork for this severance package. I’m having a little trouble figuring it out. Can I come by? Would you just kind of help me read through it?” I said, “Of course. I’m happy to do this.” He came to the office. I start going through this paperwork with him, and I can’t help it. My little financial planner brain is starting to rack and stack everything that he’s got going with this, and I finally said, “Do you realize how much you have and are going to have to deal with here?” And he didn’t. It was about a…He thought it was about a third of what it actually was.
So I said, “Well, in fact, you’ve got a lot more going on here,” and that’s when he said, “Well, will you help me with this? Can you be my financial planner?” I immediately said, “No, I’m sorry. I cannot be your financial planner.” “Oh, come on. Won’t you at least think about it? I’ll be a compliant client,” because I joked with him about non-compliant clients and how they are no fun. I said, “I tell you what. I’m going to need to think about this.” So I sent him on his way, and it was one of the few times that we actually physically hauled out the ideal client profile. As a team, we all sat around in the bullpen and kind of ticked through the list of the 25 or so items on our checklist, and this guy was at about 90% of all of the items on our checklist.
Even so, we did give ourselves permission. We said, “Okay. We’ll bring him on board, but if we have so much as a whiff of problem from this guy, we give ourselves permission to graduate him.” And here we are, three-and-a-half years later, and he’s been a terrific client.
So I guess the moral of that story is, yes, have a niche, for sure, and be true to it. Don’t go wandering off the path, but have a clearly defined process for how are you going to handle exceptions when they come to you, and then stick to that. Because I…You asked the question, “Did I regret not…Did I regret buying this practice, given the fact that I decided to focus on a niche later?” And what did I do about all the pet store clients, so to speak?
I do not regret having bought the practice because having gone through the acquisition and transition process, it teed me up for being open to considering a niche. I don’t know that I ever would have been open or willing to consider it if I hadn’t bought the pet store and had to take care of all the animals, so to speak.
Michael: Because the size of the practice gave you some financial foundation, a focus? Or, like, because you did it with the open-ended pet store and said, “Oh, my god. I don’t want to build this way for the next 10 and 20 years. I got to buckle down.”
Evelyn: Yeah, yeah. Certainly buying the practice gave me some financial wiggle room. Although, that financial wiggle room disappeared. Thank you very much. I’m looking at you, 2008. I’ll talk about that in a second. But it did give me some financial wiggle room. But more so, it was a very concentrated exposure to having to deal with all kinds of different clients with all kinds of different financial planning needs. You know? You’ve heard the analogy about boiling a frog and how the frog…You put him in a pot of water, and you turn on the heat, and they don’t realize they’re boiling because the heat just goes up around them, and they don’t really notice it.
I think that happens sometimes with financial planners, when they open the door, put out the shingle, and they just start working with anybody that has two dimes and can fog a mirror, that they’re just going to do what they need to do to take care of the clients that come to them. What they don’t realize is that every time they have a client come to them that’s got an issue that’s completely different than any other client they’ve got, they’re like that frog that’s boiling and doesn’t realize it, because they’re running off and spending a ton of time researching and getting up to speed to make good recommendations to this client, where if they had just said, “No, thank you,” and waited for two or three more of the kind that they’re already really good, it would have been time much better spent.
So for me, I wasn’t the frog that was in the pot of water, and they turned on the heat. I was the frog that they threw into the boiling pot, and I was like, “Who, Nelly. I don’t want to have any part of that,” and it really did provide some motivation for me to streamline and make some choices about who do I really want to serve. But once you make that decision, what do you do with all the rest?
Michael: Yeah. I mean, are the…Is that original base that you bought…Are they still around? Did you tell them you were making a…I mean, did you tell all the dudes in the existing practice you were making a niche for women in transition?
Evelyn: It was a multiple…It was a multi-year, carefully crafted process that we had in place. Some of it was very straightforward. We did a racking and stacking of the clients, and we would put together a graduation list, is what I called it. It was my job, as the chief, head janitor, chief bottle washer, to graduate these clients. Every year, I would get…We would create a new list. So for a couple of years, I was graduating a lot of clients, and I would graduate them to other financial planners. Sometimes it was such a straightforward situation, a retired teacher with a pension and a $85,000 IRA, who was renting an apartment. You know? For that, I would hand-hold her to Vanguard and get her set up in an account at Vanguard. So I graduated clients that were very far off, off the niche.
Michael: By “graduating,” that’s literally kind of the messaging, you know, “Hey. We’ve worked together for a while, but I’ve helped you through the journey. You’ve gotten to a good place. I’m going to graduate you away from working with me as a financial adviser and move you on to the next stage of your financial planning journey.”
Evelyn: So of course, language and communication is very, very important. So that message would be delivered, roughly, as follows, “It’s important to me that you are always cared for, from a financial perspective, and that you’re getting great value for the fees that we are charging you for our financial planning services. In the last year or so that we’ve been working together, I have noted that your situation has simplified over the years, and I have a suggestion for you, and that is I’d like to recommend to you a change to a financial planner who is going to be a bit less expensive than we are, because I want to make sure da, da, da, da, da.”
So again, this goes back to, “I want you to be cared for. I want it to make…to be good value for you. I want it to make good economic sense for you. So I have a suggestion. Tell me what you think about this.” I’d ask them about it. Not one of them said…Oh, I take that back. I had one. Just only one said, “Are you firing me?” I graduated a lot of clients. I probably graduated a good 30, 40 clients, and only one got really cranky with me, said, “You’re firing me.” In her case, it was. I was firing her. There was no graduating. I was firing her. But part…
So those are…That works for clients that it’s clearly not a fit, but there’s always a gray area. Back to that’s why we’ve got the written ideal client profile, is things can get a little bit gray. So for the gray area, we will…We’ve kept them. That’s why, although all of our new clients for the past 10 years, literally, have met our $1 million minimum, I’ve got some of the pet store clients left that I cannot, in my good heart of hearts, graduate them. So I will take care of them until the day they die. Then I will graduate their kids.
Michael: And they’re okay that they may be a dude who’s an engineer and feeling very stable in life, working with a firm that specializes with women in transition.
Evelyn: Yeah, because the way that we communicated that is that we…Instead of saying, “Only forevermore, in the future, we are working with women in transition,” what we’ve said is that we have developed an expertise in serving women in transition. So many, many of our new clients are widows and divorcees. We love our engineers, and we love our client couples. We do have a lot of women in transition coming to us now because we have such expertise in this particular niche.
So it wasn’t a, “We’re giving the rest of you the boot.” It’s that we have really become good at this. So we are seeing a lot more of these types of clients coming to us.
Michael: So what does that look like on a new client basis, going forward? Where do your clients come from in this niche?
Evelyn: One thing that we did is while…Communicating with our existing clients was soft around the niche and where they fit in it and who we’re serving, going forward. All of our…I’ll call it collateral. Our website, our digital presence, all of our printed material, and, as importantly, if not more importantly, what I say and what my team says when we communicate with anybody else about what we do, is always about our specialty in taking care of women who are going through a very difficult moment in their life.
I mention that because we’ve noted a pretty dramatic shift in the source of our referrals, because as recently as seven or eight years ago, the vast majority of our referrals were coming from existing clients. I’d say 75% of our client prospect referrals were coming from existing clients, with another, call it, 23% coming from centers of influence, and then the tiny, little, “Oh, my gosh. Where on Earth did they come from?” You know? They find you online and other weird things like that.
In the last seven to eight years, it’s swung around so dramatically that I would say, at this point, about 85% of our clients are coming from centers of influence, and these are specifically divorce attorneys, estate attorneys, CPAs, and other professional service providers who are excited about knowing exactly which financial planner they should send their client who’s just lost her husband.
Because one of the challenges I think financial planners have is a fear of saying they only focus on a niche because they’re afraid of losing business. And my experience, it is empower-full to say, “This is what I do,” because it leaves no doubt in anybody’s mind who’s a good client for you, and there’s so many of those kinds of clients, that I will never run out of business. And yet, if you’re a financial planner who answers the, “What do you do,” question with, “I own a financial planning practice. We provide comprehensive financial planning to small business owners and families, helping them to achieve blah, blah, blah.”
Michael: Yeah, I had seen a website the other day that their…They said they work with individuals, families, institutions, and women.
Evelyn: There we go. That narrows it down. It’s so…
Michael: Who do you not work with at that point?
Evelyn: If you’re an estate attorney or divorce attorney, how do you know, “When should I send a client to Joe? Or Kathy? Or Evelyn? Or Pete?” You know? How do you know that?
Michael: Because deep down, they know we don’t literally work with everyone. Clearly, like, we run a business. So I find that’s the issue. You say you work with everybody. We know you don’t really work with everybody and that you’re going to be better at some people than others. But if I don’t know who you’re good at, I avoid my embarrassment by just not referring you to anyone.
Evelyn: Exactly. Right. We have developed a pretty powerful reputation within our community here, in Orange County. I’ll even extend that up into Los Angeles County, here in southern California, because everybody knows us as, “Oh, you’re the financial planners that work with women in transition.”
It was so funny. I was at a breakfast, a three-person breakfast this morning. It was a little professional networking breakfast, and the gentleman at the table as met me once. He met me once, six weeks ago, at a networking meeting where everybody kind of got up and, around the table, said who you are and what you do. Then afterward, you get together for these three-person meetings. He and the other woman were chatting about what their respective work was, and he…Afterward, he looked at me, and he said, “Okay, Evelyn. Tell me more about what you do, because I don’t remember too much about it, but I do remember you focus on women in transition,” and I could have leaped over the table and kissed the boy because I was like, “Hallelujah, brother. That’s exactly right. The fact that you’ve met me once, six weeks ago, and you remember that, this is why our centers of influence are sending us so much business.”
This is truly the power of a niche, because people know when to send you a particular client, and you can truly be the expert in serving that client. That is such a win-win.
Michael: So you just go out there to local networking meetings, attorney meetings, accounting meetings, chambers of commerce, things like that, and just put out there that you’re the women in transition financial adviser specialist, and just try to get the word out through networking meetings? Is that what the marketing process looks like for you?
Evelyn: Yeah, I belong to a professional networking association, called ProVisors, which has been…
Evelyn: ProVisors. ProVisors. That’s been a very positive experience for me, not only because I’ve been able to share the word, get the message out regarding Inspired Financial as the place that you’d like to send your women clients who are going through a difficult change in their life, and I’m not talking menopause, and also because they’ve been an incredible source of resources for me if I need to find an estate attorney, a CPA, a life coach. You know? There’s all kinds of different professionals that are part of ProVisors. So it’s been a really great resource for me.
But beyond just the professional networking group, it’s…At my business club, when I have an opportunity to attend women’s networking events there, I’m pretty straight…I’m very straightforward about who we serve and what we do. I get asked to speak at women’s events all the time. Constantly being asked to speak at women’s events, and it’s a great opportunity for me to say…
Michael: Because that’s what happens when you’re recognized in a niche. Right?
Evelyn: Yeah. This is who I serve, and we are not a good fit for everybody. Although, I’m happy to speak with you because I know everybody here in Orange County, and I can make a great referral for you, but this is who we serve. We are the firm for taking care of you or a woman you love who’s in this kind of a situation.
Michael: So what if you…Do you ever still get people who come in and want to work with you and don’t actually fit the niche, aside from the engineering dude that you took anyways? But like the…Do you still get others that come in, that don’t fit the niche? What do you do with those folks when they come up?
Evelyn: We have a prospecting, I’ll call it, checklist or phone conversation that we will have with somebody to…if they are just nowhere in the park, in the ballpark, so to speak, as far as being a fit for us. We want to honor their time and try to help them get to the right resource, right away. Now if we have that phone conversation with them, and it seems like, “Well, there might be something here,” we’ll invite them in for that discovery meeting.
I can tell, pretty quickly in a discovery meeting, whether or not we’re going to be able to help these people and if they’re going to be a good fit for us. Part of that discovery meeting is my own mental running-through of the prospect or, excuse me, the ideal client profile. Because I know what it is. After 10 years of implementing it, I’ve got it pretty well-etched in my brain.
So I’ll give you a for-example. Our most recent client that we brought on board was a couple that we referred to us by a professional colleague that…He’s a business coach. The relationship between my colleague is with the husband, because the husband owns a small family business, and husband is going to inherit a lot of money. So we got a transition that’s eminent there, but he and his wife are having a really hard time talking about money. They’ve got three grown or nearly grown daughters, that they have lavished with money and tuition and ongoing support, and there’s some conflict about, “Helping our daughters become good financial decision-makers and helping my wife and I communicate about money and money choices, on the cusp of this big financial change that’s coming into our lives.”
So as I’m having a conversation with him, I’m clearly on the ideal client profile. This is not a woman in transition. That one, he fails. But I start…It’s a discovery meeting with him and his wife, and I’m kind of going through the rest of the checklist, and there’s a lot that matches up on the rest of the checklist. So there’s a situation where it makes sense for us to invite them into a relationship with us, and we’re cognizant of where they don’t meet the checklist, and we coach them.
I don’t say, “Look. You’re missing it on this part of our checklist,” but what I do say is, “You are aware that we normally focus on serving women in transition. Clearly you’re not divorcing, and neither of you are widowed, but I believe that the technical and relational skills that we bring to bear in helping our women in transition will be helpful for you too.” Then I connect the dots for them.
Michael: So what about the ones that just flat-out don’t match? Like, they’re not in the niche, and you can’t map them to the niche.
Evelyn: Right. So if it’s really apparent…I’ll give you an example. We received a phone call today from a woman who saw me speak, and she’s getting divorced and really needs some help. These are very difficult ones for me because she needs help. She really needs a planner to coach her on some of the property settlement decisions that she’s got to make, but our fees are going to be way out of line for her. You know? In this particular situation, it sounded like she was going to end up with net worth of about $400,000. So for me to come in and say, “Yeah, I can do that, but I’m going to have to charge you $10,000,” just not appropriate. So in that situation, we have a shortlist of other CDFAs that will charge just on an hourly basis, and she’s a perfect fit for that kind of a situation, just both from a value perspective and also from a complexity perspective.
Now, the tougher ones are the ones that sort of make it through our initial phone call. I bring them in for a discovery meeting, and we get, you know, 30, 40 minutes into a discovery meeting, and all the bells and whistles are going off in my head that this is not ever going to work.
Michael: Not the good bells and whistles. The bad bells and whistles.
Evelyn: Yeah, not the good kind. I’ll call them the sirens and warning hoots that this is never, ever in my lifetime is this going to work. In those situations, I don’t want to say I wing it, because I don’t, but I’ve got a…I’ll call it a half-dozen scripts that I have prepared and practiced and practiced on the team, but also practiced in conversations with other prospects that weren’t a good fit, that I will break them out, and I will say, “I am concerned that we may not be a good fit for you. So let me just share with you why I think that is and get your feedback on that.” Straight-shooting girl that I am, I just give it to them straight, honest, direct, and respectful.
The vast majority of the time, they say, “I think you’re right,” and we’re all nodding in unison, and I thank them for their time. I make a referral if it’s appropriate, and I send them on their merry way.
Michael: So you’ll just refer them to another adviser in the area that’s…
Evelyn: Yeah, that’s a better fit for whatever reason. A lot of times, that revolves around investments. You know? If they are really, really working me over during the discovery meeting, this very, very first meeting, if they’re really working me over on stock tips and investment strategies and, “How did your recommendations do last year,” and that kind of a thing, that is a big warning sign for me because that’s not going to be a good relationship, and I need to send them off to somebody that all they do is investment management, and that’s where they hang their hat on their value.
Michael: So where do you see the business going from here, like, as you look forward? Is it…We’ve got good momentum in this niche. We’re just going to keep powering forward and adding clients, and we’ll add another staff member too as we need to, and just iterate on where we’re going? Or do you have other plans or visions about shifting it somewhere else? I’m curious where you see it from here, with kind of the momentum that you’re getting now.
Evelyn: Right. That’s an excellent question, and we actually sort of started tackling this about a year ago. The impetus for that was that we had been growing, and we were going to need to hire some new people and bring…We’re a small team. So you bring on just one person, and there’s culture issues. You know? You have to really be careful about who you’re selecting and how they’re going to play with the rest of the team. So it was a good moment to pause and ask, “Where do we see this going?”
Another factor that had come up right around that same time is that we had actually just referred away, like, literally, four or five prospective clients that were not small prospective clients. These were from strictly an AUM perspective. These were folks that were, call it, $700,000 to $800,000. So this isn’t small, even in southern California. That’s not small.
So I know that some of the younger team…the junior team members were chafing a little bit around, “Okay. What are we doing? You know? Why on Earth would we send that away? And what’s this mean for us hiring a new person?” So we actually spent a lot of time. It was almost an opportunity for us to reset around the niche. Do we stick with this niche? How about the depth services? How about the price point, if you will, how we’re being compensated for this? It was a collective decision that we are going to go ahead and carry on with this niche, and we are going to maintain the service level, which means we’re going to have to hire another planner and another client services associate to help us out.
So fast-forward a year later, to where we are today. I had just the most interesting conversation with my team, at our last quarterly review meeting, which was just back in beginning of March, because one of the things that came up during our conversation was that we love the work we’re doing, and that’s great. There was some conversation around, “Do we need to raise our minimums?” Which was such an interesting conversation to have, given that, a year ago, there was a lot of conversation about, “Why aren’t we accepting clients that don’t have as much, but can still use our services?”
So to specifically answer your question of where is it going from here, we’ve spent so much time and energy and passion over the past year to two years in reaffirming the niche that we serve, and then to build structured processes to support the care of these ladies and their families and all of our clients. I feel like I’m on the edge of grand adventure, that we are about to push off in our boat and set sail on these seas, because we’ve put so much effort into creating it. I’ve built it, and now they’re going to come.
So we are not just going to carry on the way we are. We are about to launch, based off of this incredible platform that we have created over the past couple of years. I can hardly wait to see where we go from here.
How Evelyn Defines Success [1:22:47]
Michael: Very cool. Very cool. So as we get to the end here, this is a show about financial advisers sharing some success stories that they’ve had. One of the things I’ve long observed is success means very different things to different people and even different things to us at different stages in our life. So I’m curious. As someone who’s created what I think most people would objectively call a very successful business, with clients coming in and paying more for your services and $1.2 million of revenue and good metrics to the practice, I’m curious how you define success and whether it even ties to that stuff or drives off of different things. So what does success mean to you?
Evelyn: Sure. Where I am today has been a cumulative result of the path that I’ve walked to get here. Success, for me, along that entire path, has always started with being the best version of myself that I can be, to show up with the very best Evelyn that is available, and then in doing so, to inspire my team, my clients, my colleagues, and my communities, to be the best versions of them that they can be. If I have done that, when it’s all said and done, if I can look back and say, “I showed up well, consistently, and as a result, everybody who was with me on the journey showed up well and exceeded everything they thought that they could have done, as a result, then that’s great success.”
Michael: Very cool. I like that. I like that a lot. Well, thank you so much for joining us on the Financial Adviser Success Podcast and sharing your story with us.
Evelyn: It’s been a pleasure and a privilege, Michael. Thank you very much for having me.