My guest on today's podcast is Joseph Pitzl. Joe is the founder of Pitzl Financial, an independent RIA based in the Minneapolis area that oversees nearly $270 million of assets for almost 270 client households.
What's unique about Joe, though, is his unique next-generation career path into the advice business, which started out by working as an associate planner in a large advisory firm because he was scared to be in a sales role. And only after getting 10 years of experience, decided that he was ready to be in charge of business development and finally launched his own firm to start building his own client list.
In this episode, we talk in-depth about how Joe navigated his initial entry into financial planning, despite being an admitted bad student who struggled in a traditional classroom. The way Joe's involvement in the FPA, and with the NextGen community, built his networks to the point that whenever he needed to switch firms, he never struggled to find the next job opportunity, and why Joe has found business development so much easier in his 30s than it ever was in his 20s.
We also talk about how Joe structured and scaled his advisory firm as it's added more than $250 million of AUM in barely 7 years, including why the firm decided to outsource its portfolio management to a TAMP in order to focus more on financial planning services, how the firm structures its lean team of just five people, of which four are lead or associate advisors, to serve their 270 client households. And how Joe's firm turned local Google searches into a key driver of new clients.
And be certain to listen to the end where Joe shares how he's navigated some of the biggest challenges in his career, including finding himself out of a job at the same time he was just starting a family and had bought a house. How Joe clears his mind when he finds that he needs to regain clarity in the business, and why forming a study group with five other advisors at a similar age and career stage was so foundational to Joe's own career success and getting the support he needed at the key turning points along the way.
And so whether you’re interested in learning how Joe created opportunities towards becoming a financial advisor by utilizing the connections made through financial networks, why he places importance in creating deep and meaningful relationships with clients, or why he focuses his business on a younger clientele, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Joe Pitzl.
Resources Featured In This Episode:
- Pitzl Financial
- Financial Planning Association (FPA)
- FPA NexGen
- FPA Residency
- Buckingham Strategic Partners
- Orion Advisor Services
- GEN Financial
- Accredited Investors
- Kathy Longo
- Mindful Asset Planning
- Carl Richards
Michael: Welcome, Joe Pitzl, to the Financial Advisor Success podcast.
Joe: Thank you for having me, Michael.
Michael: I'm really looking forward to the discussion today. And what I think is an interesting example that you've lived of I just started calling it ‘the alternative journey,’ or ‘the new journey’ of how you become an advisor, because if you dial the clock back 20 years ago or so, almost everybody who became a financial advisor, and particularly those of us who went in the world of more comprehensive financial planning and getting CFP certification and going deeper with clients, it was a pretty standard journey. You came into a life insurance or brokerage firm. You sold stuff. If you sold enough stuff, you were allowed to go get your CFP marks. And if you sold a lot of stuff, you might be allowed to start doing advisory accounts or fee-based work or charging for a plan. And if that went well enough, maybe at some point you decided to go and hang your own shingle. But there was this evolution that when you started in the business, you started out by selling stuff. And if you did that well enough, you could learn how to actually give advice later.
Michael: And I feel like we've started to change that over the past 20 years. And you were, I think, one of the early people to come to that shift where you started in the business just under 20 years ago. You came in from a very different perspective of straight out of college into a financial planning-oriented advisory firm that was not selling products where you got your CFP marks in the first year that you were there and built a career in a support role learning financial planning as a profession, and then, years later, said, "Hey, maybe I'm going to go hang my shingle and get clients and do this myself," and just the 180-degree polar opposite of I feel like how we all learned the business or how we brought people into the business decades ago. It used to be you sold stuff until you could learn to do advice. And you came into this world of pioneering, "No, I'm going to actually learn to do the advice stuff first, and then I'm going to go build a business and get clients and deliver that for them." And so, I'm excited to talk about what that journey looks like maybe for all those people who are still out there because it still happens today. A lot of the firms that hire are hiring for sales jobs first and foremost. And maybe later, you'll get to learn to be a financial planner. What does it look like when you come in to be a financial planner and you actually get a financial planning job out of the gate and grow through that journey to eventually say, "Okay. Now, I actually want to run my own firm and do this myself?"
Joe: Yeah, exactly. For what it's worth, to that point, we'll talk a fair amount about just luck and lucky breaks and there was unlucky stuff along the way too. But I would say that that's one of the lucky breaks is just having this opportunity because if I would have gone into that sales side from the beginning, I don't think I'd be here.
Michael: And it's one of the things that I guess both fascinates me and, frankly, really saddens me that I do worry that we lose a lot of fantastic financial advisors, a lot of people who would have been fantastic... financial advisors in the long run because they don't survive the first 12 or 24 months of what is still often very sales-centric jobs and certainly were historically. And they never get the opportunity to discover and show that they're wonderful financial advisors because they couldn't sell enough stocks, mutual funds, life insurance, or something similar in their first 12 and 24 months to ever get to the point of actually being an advice provider and showing what good work they could do as an advice provider.
Joe: Yeah, I couldn't agree more with that. And even taking it a step further, a lot of the people that start in that type of an environment, that's what they think this industry is. So, you're not only losing talent from an advisory standpoint, but you're losing potential clients, as well.
Michael: Yeah. Yeah. I do think a lot of the black marks we've got in our profession at large in trying to interact with consumers starts with… well, look, at the end of the day, the average consumer's experience with a "financial advisor" is just mathematically very, very likely to have been one of those people that's in the first year or two of the business selling stuff because it's actually a huge number of the total financial advisors. And there's a pretty high volume of them because we only take through every 12 to 24 months in recruiting more and losing them and then recruiting more and losing most of them. And so, it leaves a bad taste, I think, in everyone's mouths when we build that career path in the industry.
What Started Joe Down The Path To Financial Planning [6:53]
Michael: So, share with us your journey, then. What got you started in the financial planning world in the first place? What led you to it? And how did that work in the college days and coming out of college times?
Joe: Yeah. It was a total accident. I went into college and like a third of the undergrads at the time, declared that I was pre-med. But to me, I always wanted to follow in the footsteps or path of my father who was a physician. He did family practice. And I just loved how he would talk about his workday. He was on his feet all the time, seeing other people, lifelong relationships, and really just trying to help people make better decisions and with their health decisions or help them identify problems or concern areas, and really just make them feel better when they leave than when they got there. But in college, a couple of early morning labs for chemistry and some of the organic chemistry type of things that...
Michael: Orgo’s the knock-out for everyone.
Joe: Exactly. That made it very obvious to me in a hurry that that wasn't going to be the path for me. And so, I was floundering around for, I don't know, another semester or so trying to figure out what I was going to do next. And eventually, as I was looking at classes for the following semester, I stumbled upon this introduction to financial planning. And at that point in time, I just decided, well, no matter what I do from a career standpoint in life, this probably seems like it's pretty good stuff to know anyway.
Michael: Sure. It was like, "I don't know if I actually want to be a financial planner. I don't know what that is. But, hey, learning about money stuff's probably helpful in general."
Joe: Exactly. And then, lo and behold, the first couple of weeks, we started learning about time, value, and money, and just concepts like that, some of the basics. And I just fell in love with it and never turned back.
Michael: That's very cool. And so, what did that look like? Were you actually getting a degree in financial planning, a concentration in financial planning, since I know different schools have different structures for that? And it was even more varied 15-plus years ago.
Joe: Yeah. And so, at that point in time, the University of Wisconsin where I went was one of the very early adopters of CFP programs. And so, again, on the lucky side of things, I didn't know what a CFP was. But it was a designation. And once I declared that as a major and learned that the course work I was going to take there was going to push me down the path to be able to obtain that once I graduated. So, I thought, "Well, this is pretty cool. Let's do it." Yeah, so all my undergrad studies were focused on or emphasized the CFP coursework with a bunch of just additional things to round it out. And interestingly, too, one of the strange things about it back then that didn't make any sense to me at all, was this financial planning program, and the curriculum was housed in the School of Human Ecology. And I'm like, "This doesn't make any sense. This is all investing and finance. It should be in the Business School."
But sitting here today 20-plus years later, it makes total sense because this is so much more of a human experience than it is just business or finance when you're dealing with clients and things and some of the classes that I thought were an annoyance then, like counseling and psychology—back then, it didn't make sense, like, why would we do this? And today, it makes perfect sense. In fact, I wish I would have paid a lot more attention during that class and could even almost retake it. So, even in those early years, I was a lot more drawn to or interested in some of the numbers and data and the magic of compounding. But there was some groundwork laid there for household economics and the interaction of families and the dynamics that you have to navigate there, as well.
Michael: So, started taking CFP classes, fell in love with the program. This stuff's really cool. And then, what? Just graduating and needed a job, was so into it, was gung-ho like, "I'm going to find me a financial planning job." How did that build up by the end? You see a lot of us, there's the things we major in in college, and then there's the stuff we actually do after college.
Joe: Yeah. Exactly.
Using Practical Experience To Springboard Into The Advisor World [10:56]
Michael: And often, there's no connection between the two. So, what was the actual transition from college to the advisor world?
Joe: So, I am a fairly bad student, I would call it, in that... traditional classroom setting is a difficult place for me. Conferences are a great example. Sitting through a bunch of presentations over the course of a day is wildly difficult for me. So, I'm often one of the people that's pacing around in the back of the room, dipping in and out of things session-wise. Rarely, I'm sitting down. And even at conferences, I get way more enjoyment and fulfillment, I would say, out of the hallway conversations, just interacting with peers on more of a one-on-one level. So, to backdate or backpedal that to the college experience and it was the same deal. I didn't sit through classroom settings all that well. And so, how I decided to I guess take the learning process to the next level was through job experience. So, while I was there, my junior and senior year of college during the spring semester, I was working, I don't know what it was, probably 15–20 hours a week at a Jackson Hewitt filing taxes. And then, at the same time, there was some overlap with that. During different semesters, I had internships with a Morgan Stanley advisory office and what was then American Express Financial Advisors or Ameriprise, both in the Madison area. And so, both of those gave some really just interesting insight on the industry and how it works and what jobs can look like. I guess I would say that accelerated or brought to life a lot of the classroom things for me a lot more than just sitting there and reading the textbooks.
Michael: And so, what were the takeaways as you started seeing advisory firms? Because you said a Morgan Stanley office, a Ameriprise, or American Express Financial Advisors back then. That's a particular type of environment. Those are much larger firms, particularly then, still doing a lot of their own proprietary products, so a little bit more of a sales bent at the time. So, what was your takeaway as you started looking at those advisory firms and what they were doing relative to what you'd been learning in the classroom?
Joe: That's a good question. There were great takeaways and not-so-great takeaways from both of them. I definitely learned and could see how hard it was to get going in this industry and how hard it was to get clients. Especially at American Express, we were trying to support a lot of the newer advisors and help them complete financial plans and write up recommendations and things like that to free them up so that they could just sit there and hammer phones. And a little bit of the time during Morgan Stanley, a lot of what we were doing there was meeting prep, and I laugh about it now, given some of the technology and tools. But back then, we were hand-calculating rates of return on Excel sheets in preparation. But a smaller component of my time there was literally running through a phone book and calling people to try and set meetings. So, those parts of it scared me to death. I was like, "I don't know how this is going to work if this is how it goes because I don't like doing that. I don't like asking or I guess the sales process." And eventually, I learned over time, sales is only really a dirty word if you don't really believe in what you're doing. Otherwise, you're just telling the story.
Michael: That's an interesting way of putting it. ‘Sales is only a dirty word if you don't really believe in what you're selling.’
Joe: And so, I wouldn't even say that anything that was going on there was bad. I think the advisor I was working for was very good, and she had her heart in the right place, for sure. But I just didn't understand it. And so, picking up a phone and trying to talk to people about something that was almost like a black box to me was difficult. But the flip side of it is just being in a professional office and watching people, how they carry themselves. Everybody was grinding away at different levels. In some of these bigger offices, you can see the difference between those that are still trying to get there and those that have already made it, so to speak. And so, it was just fascinating to see all those interactions and also, a bit of what life could look like and be like if you make it.
Michael: So, how did that shape the experience for you as you were then deciding, okay, now I'm graduating? You're going to have to figure out where to go and what to do.
Joe: Yeah. So, after those experiences, so, I had ‘a super senior semester,’ I'll call it. So, between my fourth and fourth-and-a-half year, that summer, I did an internship at Northwestern Mutual. And I was really drawn to that as an opportunity to actually go out and start meeting with people, start helping them do some financial planning. And I just worked through that whole process. And I learned a ton from that. I know more about insurance now than I would have otherwise. It was an interesting thing where I learned once I got there, they don't hire a lot of finance people. And one of my managers said part of the reason for that is there's a tendency to ask too many questions. But I genuinely had a curiosity of how this stuff works, and really wanted to understand it rather than just going out and trying to sell the product before I really knew what was going on with it. And so, between those three, I saw enough to really get committed to this being my career path.
But I just started to scratch and claw... the concept that there's got to be a different way. There's got to be a different way to get into it, a different way to learn from it without just jumping right off of, I don't know, the proverbial ledge and into the fire. And we, my student group back then would take what I would just term glorified field trips. So, we'd visit firms in the Madison area. But then, we would go to Chicago and visit advisory firms there. Milwaukee, we would visit firms there. But I always wanted to go back to Minneapolis and St. Paul where I had grown up. And so, I coordinated and orchestrated a field trip to bring a bunch of students up to tour firms in Minneapolis. Well, the big problem that I had there is I didn't know anybody. And so, I'm going, "Well, do you just pick up the phone and starting calling firms?" And so, what I ended up doing is just going to the Financial Planning Association. I just thought, "Well, if nothing else, if I just email the president of the FPA, they should be able to make some introductions for me.
Michael: There you go.
Joe: Yeah. The president of the Financial Planning Association in Minnesota at the time was Kathy Longo, who was one of the shareholders at Accredited Investors. So, they were gracious enough to host us. They even hosted a lunch session where they invited the whole board from the Financial Planning Association here to come and visit with us and have some conversations. And we went and visited a couple other firms. But Kathy and I stayed in touch, and to make a long story short, that is how I ended up getting my first job there.
How Joe Discovered His Passion For Financial Planning [17:33]
Michael: So, a couple of questions here. One, because I'm just wondering, there are a lot of people who come in and see the sales side of the business, maybe get lucky enough to not just get sucked into a job, and then discover that there's a lot of sales at the firm. You got some internship opportunities early on to see that, okay, there is certainly a salesy side of this business. And I guess I'm just wondering for some advisors—or some I guess newer folks who may not even become advisors—they see that sales stuff, and they basically just, nope, right on out the door. And you didn't. There was something you saw that made you want to stay. So, I guess I'm just wondering what is it you saw that made you want to stay that you're still here and said, "I want to do this. I'm going to find another way to get in the door," as opposed to, "Yeah, maybe this just isn't for me because this is more sales stuff than I want?"
Joe: Well, on one hand, I can be pretty stubborn. So, that was a component of it.
Michael: That helps sometimes. I understand.
Joe: But in all seriousness, that was in the early phases of when concepts like fee-only were becoming a thing, and fiduciaries were becoming a thing. And even in our college experience, the overwhelming majority of what we interacted with was the wirehouse side, some broker-dealers, and insurance people. But rarely did we have much interaction with these things called RIAs, especially fee-only RIAs. And so, it's another one of those deals where basically, prior to college, I almost had never used the Internet. And the first time that I had an Ethernet connection was my college dorm room. Otherwise, it was all AOL dial-up stuff.
And so, there was enough information. It wasn't great. It's not like it is today. But there was enough information out there that you could find by searching around that says, "Hey, there actually is a different universe emerging out here where it isn't so sales or product-driven. It's more planning-driven and planning-focused." And so, that just led to a constant, almost obsession of trying to find a place where you could learn that side of things before having to take a leap and going to hang out your own shingle.
Michael: So, you were by then coming to this with a vision, a goal of saying, "I want to figure out how to find a fee-only firm, an RIA firm, because I want to do the planning stuff. And I've seen the sales side and I don't want to come in on the sales side. So, I'm consciously looking for this."
Joe: Yes. Yep.
Michael: Okay. And so then, you're looking around at firms. You want to be back in the Minneapolis-St. Paul area. You did the cold outreach to the FPA president to get some local firms to meet up with. And now, getting connected to Accredited Investors which, for those who don't know, is a very sizeable RIA in Minneapolis now—and even then was sizeable at the time. So, I guess I'm wondering, how did this actually turn into a job for all those that are so just literally trying to figure out, A) how do you get your foot in the door to get a job and, B) how do you get your foot in the door to get a job with what I'm guessing from your backstory is perhaps less-than-stellar grades?
Joe: Well, that's a good question. The actual conversation/interview/dating process—whatever you want to call it—was relatively short. It was a rapidly growing firm. When I joined there, I think I was the 11th or 12th employee. And they were probably overseeing or AUM was somewhere in the 300 or 325 range. And by the time that I left, three-and-a-half or four years later, it had grown to I think it was almost 30 employees and close to $750–800 million under management. So, they had room for someone like me to come in. I think that part of it was they didn't really even know that Wisconsin had a CFP program. And so, there was curiosity there of what is this program like? And what talent or ability is coming out of a place like this? I think that the internship experience definitely helped, having seen and experienced those places, and really just the conversation we just had that ‘I've been in those environments. And that's not really the place for me to start out. So, I'm looking for something different. I'm really drawn to this fiduciary side of the business and want to really learn from the best.’
Michael: I'm struck because I think it's an important point that a lot of advisors miss, particularly when they're looking for pathways and coming into the industry, just finding a firm that's growing, that's really growing and has a strong, organic growth rate of its own. A lot of doors get opened when firms are growing quickly because they just need people and they need good people. And they tend to create more positions over time because that's what happens when it's growing. And firms tend to promote from within if only just the known commodity of you doing the good work that you do is a lot easier than going outside anyways if they're confident that you can move up. And so, it's one of those things I think we often don't ask enough about when we're looking for jobs or interviews. I know no one had certainly ever told me the importance of just trying to find a firm that's got a good strong growth rate because it opens a lot of doors, both upfront and ongoing for your career, just to be at a place that's got a good healthy growth rate.
Michael: So, what was the role when you joined? What did that first not-sales job out of college actually look like?
Joe: The title was financial planning specialist. It's a lot of people would call I would say just in the paraplanner or associate advisor type of a role. And the overwhelming majority of it was just helping meeting prep, running financial plans, trying out and testing new software. I think that was another thing that attracted them to me is our program back at Wisconsin. Then, we had licenses for NaviPlan. And if you remember the old NaviPlan, that thing was a beast...
Joe: ...and super, super nuanced and finicky in terms of having to know and understand where to put things and how it works. And they were exploring new financial planning software, and that was one of them. So, that became one of the first...
Michael: Meaning they were not NaviPlan users but were considering NaviPlan.
Michael: And so, “Oh, Joe's familiar with the NaviPlan and knows how to use it. That seems very helpful.”
Joe: Yeah. Yep. So, I took that one on as my first major project I guess I would call it was to figure that darn thing out and determine whether that was the right software for the firm to go forward with. But I think I had at that time, the way that it worked, was there was somewhere in the neighborhood of, I don't know, four to six of us probably as financial planning specialists at that point in time. And we were all responsible for somewhere I would say in the neighborhood of 40 or 50 households. There was a quarterly meeting schedule there. So, it was a lot of just preparation for meetings, try to track down information from clients or there are other allied professionals, and organize everything within the accredited structure so that it was tidied up and all the information was there so that once the meetings came up, the advisory team was ready to do their thing.
Michael: Interesting. So, they were on a quarterly meeting cadence with clients.
Michael: Okay. So, fairly intensive by current industry standards.
Michael: And, likewise, it means lots of prep work to do, which is a great opportunity when you're trying to get going.
Joe: Yeah, exactly.
Michael: So, how did the role evolve then as you're doing this for the first couple of years with them?
Joe: The team expanded pretty significantly. So, all of a sudden, I was working with different managers and different people, shuffling client relationships around. Eventually, we were in meetings supporting some of those conversations. But more and more from the beginning was doing some of the more simple things. And then, eventually, a lot more just coordination on things like, “How do we help make the refinance process go more smoothly or easier for the client?” or we're making recommendations to adjust some things on homeowners and auto insurance or restructuring a client's life insurance program. And so, we were the ones that were interacting with the agents outside of the firm and just coordinating everything that we could possibly do in making it as easy as possible for the client.
Joe’s Decision To Leave His Firm’s HNW Niche To Serve His Peers As Clients [26:32]
Michael: And so, what came next? Obviously, you're not still there. So, how long were you there, and what ultimately led to a change or a transition to something else?
Joe: So, I ended up staying there for three-and-a-half to four years. It was an amazing experience. And still to this day, I haven't seen a more complete or comprehensive financial planning offering, I would say. There was one experience, in particular, that I remember where we had just moved into a new office space, a beautiful new office space, a super cool spot. And one of the longer-term clients of the firm came in. And they were just having this fun story. It was one of the partners, Will, the original founders, and this client, were just talking about when they first met, they had this dingy office in downtown Minneapolis. It wasn't in the nicest part of town. I think it was next door to a strip club or something like that, as the legend goes.
Michael: It's affordable rent, affordable rent.
Joe: Exactly. And so, the client was saying something to the effect of, "We almost didn't go into that meeting when we got to the parking lot." And it turned into, "Well, we're so glad we did. And this has been so meaningful for us. We'd never be where we are if we didn't engage in this relationship. And we're so happy to see the success that you're having, as well." And that also happened to coincide with the time where Accredited, I think, had just raised their minimums to $2 million for new clients. And so, I had this moment of, “This is an amazing place and they do great work. But stories like that probably aren't going to happen here because people in those early phases of life, 30s and 40s that became the core of that clientele, didn't qualify to be clients anymore.” Going back to the whole family practice thing and my dad's experience, that's the biggest draw here for me to this type of a position and this type of a career is those relationships.
And so, I had this just tugging that was there constantly for, I don't know what it was, a number of months. It might have even been a year where there was this... I couldn't shake the idea that having $2 million minimums, minimums that high, for the rest of my life, there just would have been something missing. It wasn't going to satisfy me for the rest of my life. And so, that's when I started exploring, well, there's got to be firms like this that don't have that high of minimums. And that launched this journey of I went to several other RIAs in town. I had pretty good experiences at most of them and, ultimately, led to launching Pitzl Financial a number of years later.
Michael: So, help me understand a little more just what was the blocking point exactly? You had framed this around just clients you could have long-term relationships with. But you can still have a long-term relationship if they may happen to be starting at $2 million or some higher number. But $2 million people can still turn into even more thankful $5 million people. They can still have a journey. So, just what was it that wasn't clicking or wasn't working for you?
Joe: Well, part of it there too was just thinking about career progression. At that time, there was three shareholders, and they were all the rainmakers. They were the people that were bringing in these clients. And so, I started to just tie strings together, right, wrong, or indifferent, that the opportunity to become a partner and a shareholder in a place like this is tied to your ability to bring in business. And I'm, I don't know, 25 or 26 at the time looking around going, "I don't really know that many people with $2 million, let alone liquid and investable." So, there was a little bit of that component of it. But the biggest thing was just a desire to help people get to that point and journey through the hard phases of life and work toward that ultimate end game, rather than just jumping in mid-way through or in the later stages of that process.
Michael: Interesting. It's a striking point that the firm built itself when the founders were in there, it sounds like, 30s and 40s building with clients in their 30s and 40s who had the still-limited dollars we tend to have in our 30s and 40s. Then, the firm grew. The clients grew. Now, it's a much larger firm with much more affluent clients. But growing the firm at that point meant you had to get clients based on where clients had gotten to at that time, not where they were, i.e., you couldn't get the $200,000 clients that they got when they built the business. You had to get the $2 million clients that they now had with the business that had grown.
Joe: Correct. Yep.
Michael: And so, that became the blocking point of, “Not the people I'm most excited to work with and I'm not quite sure what my path to partnership is because this is not the crew I hang out with...”
Joe: That's right.
Michael: ...evenings and weekends.
How Joe's Early Groundwork Allowed Opportunities To Find Him [32:14]
Michael: So, how did you find the next leap? Where did you go next, or what was the criteria even to figure out where you were going to go next?
Joe: So, while I was at Accredited, there were a couple of specific experiences there. I started getting really involved in the FPA and FPA NexGen and built all kinds of relationships. I ended up being on a bunch of committees within FPA Minnesota. I started a couple of peer groups or study groups. And so, once I had made the decision that it was time to go finding the next opportunity was not a problem. They were finding me. And so, Janet Stanzak has been a long-time mentor of mine, a very great friend. And she had made an introduction to another advisor here in town by the name of Eric Maleski. And he and I just had a couple of conversations. And I really liked Eric's demeanor, his way of going about things. It was a much smaller firm but similar structurally in that it was a fee-only firm. And so, I ended up making the decision to leave Accredited and go and join him.
Michael: So, talk to me a little bit more about just involvement in FPA creating study groups. Just you had said by the time it was ready to...by the time you decided you were going to make a change, it wasn't hard to find the job opportunities. That's, I think, still a unique thing for a lot of advisors who are like, "Yeah, I'm not sure I want to be here. And I have no idea where to go. And who all out there has a good firm? And what would be a good place to join?" So, talk to us more about just I guess FPA or whatever you were doing that meant by the time you were ready to make a change finding a firm to work with was no big deal.
Joe: I think one of the most important characteristics of this industry and succeeding in this industry is having a genuine curiosity, whether that's about your clients or just other people in general, how other firms work. We can all get stuck in ruts real easily. There's been places that I've been in the past where it's like, "Well, this is how we've done things the last 20 years, and it works. So why change?" And that's a place I never want to get to. Complacency like that is one of my biggest fears. And so, I'm always having conversations with people, even back then. And it was legitimately just out of, well, I know one way of doing things. And you start to figure out very quickly that there are so many different ways to do it. There's so many different pieces of technology and tools. And all of it is just... You get into some of these firms and it's like, well, what's the value I'm bringing to this firm? If I really want to progress from a career standpoint, and I can't bring in clients, at least maybe I can bring in this new tool or this new resource or make this connection or that connection. And it really just became a process of trying to constantly learn what else is out there from a deliverable standpoint. And just naturally, as a by-product of that, those connections and relationships end up leading to different opportunities or, I don't know, different... You have no idea, I guess I would say, when those connections are going to come back and help you in a different way later on.
Michael: And so, what did you do just to find opportunities beyond just literally, “Pay my FPA registration fee?” What were you doing that opened doors or created opportunities?
Joe: Really basic stuff. Just going to meetings and conferences and having conversations with as many people as I could.
Michael: So, that's local meetings, national meetings?
Joe: Both. Yep.
Michael: Okay. And was that something...? Did the firm support that and let you do that, or did you have to go make that happen and write checks on your own?
Joe: No, they were super supportive of it. And I know that that's a problem area within the industry is that a lot of firms are pretty guarded against things like that. But they gave me all kinds of opportunities. And NexGen launched... In the early years, you probably remember, Michael, there was a lot of tension between the older demographic and that NexGen group.
Joe: And so, there was definitely skepticism. But still, it was more the mentality of, well, I guess let's try it and see what it's really all about. And it's almost like can you turn the ship? Can we work together as this network of a ragtag bunch of 20- and 30-somethings to change the script, so to speak? They were also super supportive of things like FPA residency. That was one of the turning points I think in terms of how I understood how financial planning mechanics and what I was doing on a day-to-day basis ultimately ends up getting delivered. And so, having experiences like that completely accelerated the growth trajectory or growth path for me. And it made me a lot more interested in being involved and staying involved in financial planning.
Michael: So, for those who aren't familiar, can you explain what FPA residency is?
Joe: It's been a long time. The basic gist of it is you show up to this setting. And every FPA residency has a dean or a lead person, and then there are mentors. I think at the time there was one dean and maybe three or four mentors that were there. And as I look back on my career path now, the majority of them, I have stayed in touch with or still, when you see them at conferences, say, "Hi," maybe a social media interaction here and there. But it was a really cool experience, and especially for me where pretty much my whole existence of day was inside of software programs and really focusing on numbers and data. Well, when you get there and there's no software, there's no computers, you're doing everything by hand on flipcharts, but trying to do financial planning and deliver financial planning to clients. And the whole basic premise of it is at first... And you go through three different phases, three different phases of life for the same client over time and how things evolve.
And so, the first version, as I recall it, everybody's sitting there and trying to make the numbers work and trying to make the results of a financial plan successful for this client. Well, it's impossible. The numbers didn't work. And so, they start to break down and beat down how you're delivering things where everybody, naturally, is anchored on numbers and data. And almost like that's the crutch, right?
And that's how the first several days went, is just you're just getting pounded about how this is about people. This is about people. Stop focusing on the numbers. And then by the end of it, naturally, the planned deliverable and how that went was way more fun. The creativity that went into how things were delivered and you lighten the mood and just make it more of a fun and interesting experience for the client. You end up tying all the client values together with what the plan recommendations and things look like. And I don't know. It's a really cool and unique experience. But it totally reframes the financial planning process from being so heavily focused on the data to really focusing you on the person.
Why Joe Places Significance On Interacting With Clients Face-To-Face [40:11]
Michael: So, you started out in this I guess really as I think of it back-office role where it's just meeting prep and plan support. When did it turn I guess client-facing? At what point in the journey do you start getting your own clients, and how does that transition?
Joe: Well, it started to inch that way more and more. Towards the end of my time at Accredited, I was in more and more meetings. It wasn't all of them. There were certain relationships where it had evolved to where there was a three-tiered structure. There was a principal or a partner on each relationship, a manager, and then the financial planning specialist. And so, certain relationships would be the partner and the planning manager. And then, others ended up being the partner and me, the planning specialist. So, there was more and more of that happening. But then, once I left there and went to work at GEN Financial with Eric, basically, from day one, he had me in meetings. And it was almost every meeting and every conversation. So, after that point forward, everything was much more client-centric or client-facing I guess I would say.
Michael: And so, how did it change for you when you went from mostly doing this behind-the-scenes to being outright in the client meetings?
Joe: The awakening moment really started to happen once I went from behind-the-scenes to actually being in there with human beings. From the point where I started to at least observe the interactions between the advisor and the client, that just brought all the numbers and data to life. When you're sitting there on the screen and you don't know the personalities of the people and you don't really hear a lot of the more goals-based or life-based conversations… I don't want to say it's meaningless, but it carries a lot less meaning.
Joe: And as soon as I started seeing people, understanding and just seeing body language and seeing and hearing what really concerns them, what are they skeptical about, and what about everything that's going on or their fears or what are they excited about, it completely changed how planning was delivered and what kind of things I was trying to solve for.
Michael: And so, what came next? So, you're doing that paraplanner or associate planner work behind the scenes. You get some time at GEN Financial. And now, you're in the meetings and getting to see clients. So, how long did that continue? And then, what came next in that evolution?
Joe: Yeah. So, I was there for a couple of years at GEN. And there's always this kind of fit component if the client's the right fit or an employee's a good fit, or are the employers a good fit? I think people need to have that conversation maybe more than they should. Eric had a wonderful lifestyle practice. And he and I got along really well. And maybe that was part of the reason that it ultimately ended up not working out because we were just too much alike, in certain ways, just in terms of the lens of how we view life and whatnot. He was just a great person to hang out with all the time. But he was in a phase of life too. He had three young daughters, he had growth plans he wanted to, but at the same time, the types of things that I really wanted to do at a place like that would have been so disruptive to his life.
Michael: What did you want to do that was going to be so disruptive?
Joe: Coming from a place like an Accredited Investors where it's a very broad deliverable. And a lot of firms tend to stay a little bit more focused on things. So, wanting to bring a whole pile of additional planning components to the process and really just bringing a ton of more work into what we were already doing, which is just additive to the process without necessarily, at least in the immediate term, resulting in a whole lot of additional revenue, for lack of a better way of putting it.
And so, I started to push on some things. And some of it just, again, it just started to wear on me. There was just something in the back of my mind going, "It doesn't feel right and... he's got a really great thing here." But then, also, during that process, this was 2007 and into 2008, and so, I got married on September 6th of 2008.
Michael: Congratulations. Good time.
Joe: Yeah. And so, shortly after that wedding, my wife and I were on our honeymoon in Puerto Vallarta, Mexico, and absolutely oblivious to everything else that was going on. I completely shut everything off. I never really checked in from a computer or anything standpoint. And so, one morning, we were sitting around the pool bar. And there was this couple there from Houston, Texas that we had gotten to know throughout the week. And they were just lamenting what was going on. And at that time, what they were concerned with was that Hurricane Ike was about to make landfall. And so, I had this, "Oh, crap," moment - not because of anything really related to that. We live in Minnesota. It's not really a threat for hurricanes. But we had a connecting flight that was going through Texas that I had to figure out if we were going to get rerouted or what was going on. So, I went up to the Business Center. And, of course, they had whatever they had on - CNBC, probably. And the bottom of the screen basically said, "Wall Street has completely imploded."
Michael: It's like, "That's my business."
Joe: Yeah. Yep. So, then all of a sudden, we had a couple problems to deal with there. And for, I don't know what it was, maybe a few hours I just became obsessed with everything that was going on. And then, finally, I just threw up my hands and I'm like, "I have no idea. And there's nothing I can do from here. This is impossible to follow right now." And so, fast forward a couple of days later. Finally, I get on the plane and head back home. I made it back there safe. And on my first day back in the office, I think it was a Friday morning. And so, I was just sorting through emails and just trying to get caught up with what was going on in the world. And it was, obviously, like drinking completely through a fire hose. And we're trying to respond to people and triage the whole situation. And then, shortly thereafter... This was totally a preplanned thing. So, it was nothing that you could really do about it. But Eric, the following week, was going on a lifelong trip that he wanted to do. He was out doing an elk hunt somewhere out in Colorado or Wyoming with zero cell phone signal.
So, all of a sudden, the next week, phone calls started coming in. Some of these clients I hadn't even met yet. And I could have been Warren Buffet on the other end of that line, and these people wouldn't have cared. They wanted to talk to their advisor. And so, that was a really difficult week, for me. And not only the shock of what happened while we were on our honeymoon but then, that following week just trying to sort through the whole mess. Anyway, it just goes back to the same point of I absolutely had total respect for this trip that he took. And he should have taken it. But it also... As a young, aspiring planner in a support capacity, it felt like being on a little bit of an island there for a while.
Joe: And that hurt, but anyway, I generally had a really good experience at GEN. But, again, it really just was… “I want to build something and build something relatively rapidly that is probably going to disrupt this guy's life.” And so, that led to another point of exploration where I was trying to find another fit. And during that time, I had started to get obsessed about financial psychology and just the human interaction of money. So, the next firm I ended up going to was a firm called Mindful Asset Planning. And one of the big draws there is a husband and wife, Steve and Susan, and Susan actually was a financial therapist. And so, that component of it was a really interesting draw for me just in terms of learning how that interaction works and how that would weave into the overall financial planning process. A little bit of a similar story there. They had a really nice firm and were in a comfortable stage, I guess I would say, of their career. Albeit, one thing I will say was this still was 2008 or early 2009. And even in the midst of that, they made a decision to add me to the staff and hire me while, presumably, revenue's not in good shape.
Michael: Right, at least, not nearly as good as it had been not so long prior. Yep.
Joe: So, and yeah, I had, again, a really good experience there. But that was more of I guess a meeting cadence or a deliverable of this is how we deliver everything. And it was fairly uniform, which is great from a business standpoint, more of the we had one meeting a year for a few hours and maybe some interaction in between that. And that deliverable, again, just going back to the almost like the student or conference or lecture thing, I just don't sit still very well and for long periods of time. So, again, it was one of those things where it probably wasn't the greatest fit. And changing things probably just wasn't going to happen, at least not for the foreseeable future. And so, that, again, led to another, I don't know, phase of trying to find something different. And so, somewhere in the middle of there, I met what is my former partner. And he had just started to take over the business of a retiring advisor. So, he had acquired a business.
And his background was much more on the investment side of things, CFA, very analytically inclined. And so, we started to have conversations about what does this look like if I really stay fixated on the investment side and then you, Joe, can build out or focus more on the financial planning side of things? And so, again, it's one of those deals where, on the surface, it seems like a super good fit. And, in general, it was. That was, I think... When he took over the firm, there was somewhere in the neighborhood of $65 or $70 million under management. And four years later, by the time I left, we were in the $150 or $160 range, something like that. So, it had really good growth. And that's what really ended up happening is I was taking the best of everything that I had experienced at Accredited, GEN Finacncial, Mindful Asset Planning, and brought those in as the financial planning process we were going to deliver there. And that was my first experience of really doing it my own way.
Michael: And when was this time-wise? How far into your career are you at this point?
Joe: So, at that point, I was probably... seven, eight years in.
Joe’s Leap Of Faith Into Starting His Own Firm [52:24]
Michael: And so, it feels, then, like this was a turning point on the journey over the first seven years, that this was the first time you really went from the like, "I'm going to be in an employee support role. And I've got some ideas about how the firm can change. But it's their firm, and I've got to manage to that," versus getting to the point where it's like, "No, I'm actually going to build this. And this is going to be my firm or mine with a partner. But I'm ready to actually be the one that builds it directly."
Joe: Correct. Yep.
Michael: So, what brought you there? Because that's a fairly big transition in and of itself. What led you to say, "I'm taking the leap," or, "I need to take the leap,” or “now is the time to take the leap to do this."
Joe: Well, it was the first time that I really started to feel ready to do it. My older brother is a CPA. He's been running a nice-sized CPA practice for the last 12 years or so. But almost from the day that he acquired that firm and started doing it, he'd been courting me to come over just full-time and have the CPA/CFP partnership thing in place. And so, the interesting thing about you asking about being ready is at that point in time that that leap took place, I felt ready to take on more of the lead advisory type of functions or building out the planning process and doing all of that and doing it in more of a partnership capacity that we did. But I did not feel ready to go completely on my own full-time with my brother's CPA firm and take off and run from there.
So, that took a lot of conversation. And when I finally made that decision, my brother actually felt pretty rejected by that and was hurt by it. And it put a damper on our relationship for a couple of years. But it was the right decision at the time really for both of us, if you look at it honestly and objectively in hindsight. We went down that partnership path for a number of years. And a lot of what I started doing then was getting a lot more involved in writing and social media. And we had a firm there where the average client was much more the same age and demographic as the advisor that was retiring. And so, I'm looking at it from a hey, we're early 30s. We're going to be going at this for quite some time. And not to be too morbid, but it's a dying practice in its existence now. Everybody's in the withdrawal phase, a lot of aging people, and that whole interplay was at work.
And so, I started to focus really heavily on a younger clientele. And what that turned out to be then was really the GenX demographic. And so, a lot of the things that we were writing and pushing out in terms of content and where I was interacting and choosing to spend my time and effort was creating things that would attract that type of client. And so, we started to onboard a whole bunch of those at a pretty rapid pace. At that phase of life, those were the clients that had a really good income and were starting to experience good career success. The family dynamics are starting to get more complicated running kids around to various activities. And really wanted to have someone that pays attention to the financial side of things. But at the same time, a lot of them didn't have a ton of assets, at least not in the context of what traditional minimums, traditional firms would like to work with.
So, we were onboarding high volume, low assets. And I'm a pretty fast-paced person. I'm fairly slow and deliberate about making decisions. But as soon as they're made, it's go time, and let's go. And so, it was one of those things where maybe I had more of a vision of, I want to focus more on this retiree demographic. It fits more of I guess what would be his personality type. And the type of planning that he was planning in investing, he was really interested in doing. And I was a lot more interested in this GenX type of demographic where life was just a lot messier. There was a lot more planning involved in it. And all the conversations were really about lifestyle more than they were about the dollars and cents or what kind of things we should be investing in today. And so, eventually, that led to a split. And that was four years after we had come together in the first place. And so, at that point in time, I felt ready. At the point that he told me this wasn't going to work, within three months of that, we had just had our second child. My wife and I moved to a new home. And my wife decided to stay home from work to raise our kids.
Michael: Fantastic time for major business and life changes. Yep.
Joe: Yeah. Yeah. And so, it was absurd. You want to talk about a shock when you get approached by a partner in a firm where it's we were in a pretty comfortable place at that point in time. And he says, "This just isn't going to work." And I'm just sitting there going, excuse my language, but, "Holy shit. You just can't possibly pull the rug out on somebody at this phase of life like that." And on top of that, the conversation was is he really wanted to hang onto the core of the clients that were originally acquired from their retiring advisor. And yeah, go ahead and take these younger families and households and that's how we're going to part things. And so, there was a little bit of dollars that came in the form of a buyout that actually helped flow through that whole process. But yeah, it was a total shock. And I think if I recall that the date was April 12th or April 13th. And so, by that point in time, my older brother had brought my younger brother on to join the accounting firm. And so, the two of them have been together since. And they were the first phone call I made is I'm like, "You guys, we need to talk." And, of course, they were two days from a tax deadline. And they dropped everything on the spot. We went and sat down and met for happy hour, had a few beers, and basically had the general structure of how this was going to go outlined on napkins.
And so, then, over the course of the next, well, within the next week, we had filed to establish the RIA and had gotten conversations started with the Schwaabs and Fidelities of the world. But then, I was trying to figure out, well, how is this going to work? It's basically just me and me alone. But, fortunately, I had a associate there at the time by the name of Kyle Moore that was working with us at that firm. And we wrestled with and tried to figure out how this was going to be able to work. I wanted to keep Kyle around. Kyle's a great talent, having had a ton of success in his own right now. And he was pretty pivotal in helping our firm get launched. Well, so, part of the arrangement that I made with my brothers, they wanted to be shareholders in the firm. And I was bringing in a decent amount. It was somewhere in the neighborhood of $17 million, $18 million in assets. So, it wasn't like we were starting from zero, but it wasn't a ton either. It wasn't enough to support two people, plus all the expenses of running a firm. And fortunately, he had space in the CPA firm for us.
And so, part of the handshake deal of how this was going to work is we didn't pay rent or expenses for three years. We provided a decent amount of just startup capital just to get some systems and furniture purchased and new phones and pay for software and all those kind of things. And so, they were providing the space and the technology, the tools, the equipment. We had some admin support from their team. And I was bringing over some clients and some assets and some revenue. And it was something like 45 households. But so, from that time that we met to July 1st of that year, we had our registration completed. We were appointed with the custodians we needed to be appointed with. And we had every single client relationship that was coming, all the paperwork was done and signed and ready to go from the day that July 1st hit.
Michael: So, just crammed into two and a half months.
Joe: Yeah. Yep. So, it was a super, super fast process. And one of the things that was a saving grace at the time is in terms of trying to figure out how this is going to work and how we're going to build this and how we're going to structure this and how do we have the tools and resources we really need in order to deliver what I wanted to deliver from day one, and I'll never forget, I woke up in the middle of all this crisis... And you go through those moments and you have sleepless nights and all of that. And somewhere in the neighborhood of 2:00 or 3:00 in the morning, I woke up on my couch and was like, "Well, hey, within the last 12 months, Carl Richards and Tim Maurer joined what then was BAM Advisor Services, Buckingham Strategic Partners." And I’m like, "Well, there's got to be something to that." And I had heard of BAM and hadn't had a whole lot of interaction with them in my prior years. But the way that I wanted to invest client money certainly aligned with that. And then, I know that they had gone through a little bit of a leadership change at that point in time or in the very recent past I guess I should say and really wanted to be more wealth management or advisory-centric than just being super fixated on investing.
So, I shot Tim and Carl an email in the middle of the night. And by the time I woke up at, I don't know, whatever it was, at 6:30, 7:00 in the morning, both had written back and had made an introduction to some of the people on the Buckingham team. And so, we started having those conversations with them. I really liked what I was hearing in terms of how their business had evolved and how they support advisors and what they provide. And we flew down there and spent a day, maybe two, I can't remember, interacting with the team, getting to know some people, seeing how the place works, and ended up becoming a part of the BAM Alliance, being a partner firm for their entity. And I can't say enough of what they've meant over the last seven years. But especially in that first two months or three months of just getting things transitioned over, there's no way we could have done it without them.
Michael: So, what was it that...? So, I guess just help me understand what was it that you were getting from them or looking to get from them that you wanted to work with an outsource provider on the investment side?
Joe: Horsepower more than anything. And so, we talked about... And I didn't necessarily know how this was going to play out over time. But I just knew that these are good people and they're talented people. Their heart's in the right place. Everything they said was the right things. I had a lot of faith in the conversations I was having with Carl and Tim where they spoke glowingly of the organization and how it worked. And so, we took that leap. And where it sits today, now, we have five people here on staff probably in the process of... We'll probably have a couple more maybe within the next six months or so. So, we'll be up to seven and we would have grown to right around $270 million in assets.
You think back to the earlier Accredited days where I was the 12th person at $300 million. I think you said at Pinnacle, you were $250 or something like that, and the 8th or 9th person hired there. Technology and tools have just done so much to allow us to stay a little bit leaner, so to speak. Now, we pay for that, right? Being a part of Buckingham's not inexpensive at all. When I try to add up what would it cost to purchase all of the software that we get... They serve as our de facto investment policy committee. So, have our own in-house research and investment done, our own trading done, all the administrative functions, compliance support, it's probably equivalent to having another four or five people here.
But the one thing that's nice about it is we use Orion as our portfolio management software. Instead of having one person here that is the master of Orion and takes care of everything and everything, they're the expert on it, that person... In the older days, there were plenty of firms that would have that problem of this is the portfolio center expert. And if the portfolio center expert leaves, you've got a big hole in the equation. And I don't know what the Buckingham strategic partner staff is now but it's a couple of hundred people. And it's not just one person that owns each particular thing. So, our service team down there is multiple people, although we have one or two we interact more frequently than anybody else. The fixed income desk tends to be the same several people over and over again. Our trading desk for equities and funds, it's the same people over and over again.
But if somebody leaves or if somebody's not there, it's a pretty uniform system down there where we know we're going to get a similar experience and a similar deliverable from anybody and everybody that picks up the phone. And so, where we are today is it allows us to stay so much more focused on our clients and what we're delivering and doing for them than dealing with all this back-end stuff of buy all accounts isn't working today or something didn't reconcile correctly. Fidelity charged for a trade when they shouldn't have. All that stuff is just... And that's the stuff I hate. So, it's been a really, really good relationship. And I didn't know how good it would be back then when it all started.
Who Pitzl Financial Serves And How Fees Are Structured [1:06:55]
Michael: How do you handle this from a pricing and cost structure then? For a lot of firms, just outsourcing, particularly on the investment end, just leads to the whole do I pay their fee out of my fee? Do I pass the fee through to the client? Do the clients pay my fee for my thing and their fee for their thing? How do you handle working with a TAMP platform on the investments? And I guess just what does the overall fee model look like for you at Pitzl Financial now?
Joe: So, as far as Buckingham is concerned, how I talk about them and explain them is that they're a partner of ours and they're an extension of our firm. And so, we pay them out of what the clients pay us. So, they never see that separate pass-through fee, so to speak. But I also consider it... Like I said before, it's like having another four or five people here. And so, instead of having to hire those people, find the space for those people, buy all of their hardware, software, company benefits, the whole nine yards, all of that is just a cost that we've chosen to incur on our own and consider it just part of our business expenses.
Michael: So, it chews up a portion of your revenue. But to you, just that's the revenue you would have had to spend on staff and team and software to rent and the rest to...
Michael: ...scale up to $270 million.
Michael: Otherwise, you'd have a bunch of admin and investment team that you don't have to have now.
Michael: So, it's a staff cost tradeoff.
Joe: Exactly. You got it.
Michael: So, help fill us in on just what does the firm look like today? You had mentioned $270 million of AUM. How many clients is that? Who's on the team? And just what do you do for clients at this point as you've gone through this journey of comprehensive planning and less comprehensive planning and financial psychology-oriented planning and all these different pieces that you've gotten ahold of? So, who are you serving, and what are you doing for them?
Joe: Yeah. So, household-wise, how the ADV works, I guess, is somewhere in the neighborhood of $260 or $270. Now, there are some households that are actually clients' children where we're not managing very much for them but are helping them get started. And then, there's a couple of outliers on the top end, as well. But so, we have five of us here. Myself and another gentleman by the name of Rick Hall serve as our two lead advisors. And so, almost all of the client relationships are assigned to or overseen by one of the two of us. And then, Justin Gabriel, who's been with us for three years, a little over three years, is one of our associate advisors. But as soon as we get a couple more people hired here, we're going to have to step him up into a little bit more of a advanced role than that. And then, we hired another associate back in January, Matthew Kalkman, out of one of the local schools here. So, he's serving in the associate capacity, as well. And then our administrator or office manager, Ann, is here also.
So, we're a true ensemble or that's the model we're going to follow in that everybody's going to share duties and responsibilities and client relationships. And there's going to be a lot of interaction and teamwork involved in all of them. For the most part, for the first four or five years that Pitzl Financial has been in existence, I guess really the first four years, I was leading every single client relationship. And then, again, a little over three years ago started to search for someone that could fill in in more of a lead financial planner capacity. And at that point in time, Rick was on the verge of leaving a 20-plus career in the warehouse side of things and looking for a new position and a new role. And so, a very capable advisor and has done a terrific job since then. But while working in that warehouse environment, I think he had five kids. His wife was in school. He just never really had the chance or opportunity I guess to take the leap and give this a shot on his own. And so, I was in the stage at that point in time or the firm was in the stage at that point in time where it wasn't about needing someone to come in and go shake the trees out there and bring in business. We had that part solved.
And so, what we needed was someone that could come in and service these clients and give them the "Pitzl deliverable, the Pitzl experience." And so, I still will take on relationships that are direct referrals from existing clients that that referral is more of a, hey, you need to go work with Joe than it is Pitzl Financial. But for the last five years, we've averaged in excess of 100 client inquiries just from web search, web presence. Maybe you can call it social media. And I've launched stuff like NAPFA in there. And then, we also have the CPA side of things as well. And so, during the tax season or even shortly thereafter, there's always people that are asking what kind of things can we offer on the planning side? And we're like, "Well, why don't you just go across the hall, or at least talk to those guys."
Michael: So, a big piece of the growth engine is being attached to the accounting firm and the cross-referrals that come from the accounting business over to the advisory business.
Joe: Well, when I break down the numbers, roughly, it's somewhere around a quarter of our clients or revenue, AUM, all of them add up to about the same, have come from the accounting side. And then, another quarter or two, a third, is from just people finding us on the internet, for lack of a better way of putting it, just cold inquiries that are coming in, inbound inquiries.
Michael: Do you know just what are they searching for to find you?
Joe: It's fascinating how people get to us. There's different stories all the time. There's some that have come from the NAPFA and fee-only network type of searches. But if you search for fee-only and technically, I think we've actually fallen off of this, but for a handful of years, I really wanted to show up as a top search and first page of Google if anyone searched fiduciary or fee-only financial advisor planner or wealth manager in St. Paul, Minneapolis, or Minnesota. And we did. And so, from my standpoint, those are already prescreened people. They know what they're looking for.
Michael: Especially if they're searching not just financial advisor Minneapolis but fee-only fiduciary Minneapolis, they've got... a much clearer focus of what they're looking for.
Joe: Exactly. And so, that component was... And then we were on a couple lists for best advisory firm or top advisory firms, things like that where I'm not even really sure how we got on them. But people that would search top advisory firms in the Twin Cities or best advisory firms in the Twin Cities would end up on those websites and then, they'd call us. So, it's a wide variety but I used to spend a lot of time blogging and writing, posting things out online. And that's waned a little bit for largely what has turned out to be physical limitations, which just sucks because I used to really, really like to write. But the efforts of then still continue to flow through today.
Michael: And so, you had said about a quarter of the growth has come from the CPA side. About another quarter or a third of it has come from the, what, local search, geography-based search, search engine optimization in general. And then what's the rest of the growth? Is that classic referrals, or are there other marketing channels for you?
Joe: Existing client referrals. And I would just generically say, my personal networks, which interestingly is some of that is just friends and acquaintances that we have from a variety of places. Some of that that I lump into there is other advisory firms where maybe they have higher minimums. And these people don't fit the criteria but they're looking for a good home or good friends of mine that are advisors where the client doesn't want to work with a close friend.
And so, those introductions are made. and so, those have come from a whole host of places. But the nice thing about having the firm structured the way that it is and has been and having good staff that's really empowered to do whatever they want. Actually, I shouldn't say it quite to that extreme. But they have the ability to make a lot of decisions on their own and run with things without getting explicit permission, I guess, from me, is I am able to be involved in all my kids' activities and sports, coaching the hockey team, coaching the baseball team, being on the board at school. And those all just naturally lead to connections where I'm not out there asking people for business at all. But they see that you have... You carry yourself a certain way. You have a certain personality. They're curious about that. And then, naturally, if they end up searching the firm or have started to ask questions, those conversations can lead to something different. But yeah, that's how the breakdown really has worked out.
Michael: What I'm struck in the context of the broader conversation journey, I feel like you've just lived all these steps. You were in the big firm that was growing fast, which meant you could get in the door and have a lot of opportunity. They had all the resources to do things really comprehensively. But they had already gone so far upmarket it wasn't a good fit. So, you went to the opposite end of the extreme, which is the small firm, but they weren't growing enough. So, the nature of the lifestyle practice was a constraint when you're the young person who wants to grow. So, you found one in the middle. That was still too lifestylish. You said, "Fine. I'm going to go build it myself." So, you went with a partner and started building on your own. And that went for a few years. But then, eventually, that person wanted to go a different direction than you were. And so, there's just something to me about that journey, right?
Again, the historical model was Joe, welcome to the industry. Congratulations on your 23rd birthday. Here's a phone and a phone book. We wish you the best of luck into this evolution of no, literally, it was a 10-year journey of big firms and small firms and more investment focus and more planning focus and more financial psychology focus and building experience and building confidence and all the things that go with that to finally say, "Yeah, I've been doing this for a while now. I'm pretty good at it. I know I'm pretty good at it. I'm confident I'm pretty good at it. And now, when I have conversations with my peers, some of that turns into business. They ask me what I do and I tell them. And they're actually interested because that's okay now. And I believe in what I do, and I can do it confidently." And just that's the difference between 10 years of experience under your belt and going out to build your firm versus doing it straight out of school with a phone book.
Joe: Yeah. Exactly.
Michael: Yeah, it's just striking to me about the journey. And I guess at the end of the day, it was about seven years before you went into a business development role and 10-plus before you actually started your own.
Joe: Correct. Yep.
The Surprises And Low Point On The Journey To Becoming A Financial Advisor [1:18:30]
Michael: So, as you look back at this growth and career journey, what surprised you the most about building your own advisory business that your actually building yourself?
Joe: I'll always be surprised at how much it's taken off and continues to have very positive momentum. I always knew it would be hard and there would be bumps along the way, shocks like the 2008-'09 type of situation, which happened to a degree last March with the onset of COVID and everything like that where you have to just be ready for everything. And you have to be in a position or a place where your head's right and you have escapes, outlets, relationships with other peers you can connect with when things get really tough and hard.
Michael: And what are those outlets for you? Where did you find them or create them?
Joe: My biggest one is golf. So, that one's always been a huge passion of mine. I still play a really good amount of golf. Again, there's a golf club membership involved. That's another network. But I lose myself on the golf course. The world shuts off, to a certain degree. And it's my escape. Some people find it in meditation, going for a long run, hitting the gym. Mine's the golf course. And the complicated part of that is in Minnesota, our golf season has a start and a stop point. And so, winter gets a little bit more complicated in that regard. But I still play hockey out one night a week. To a different degree, I would say that one of the escapes that I do have is coaching. I love coaching youth sports. My kids are seven and nine. And just seeing all these kids progress throughout the course of a season and all the smiles and giggles and laughs that happen along the way, it's super fun. And it's just life. And to them, it's all these horrible things that are going on all around the world that we stay so fixated on, that stuff means nothing to them. They're just out there to have a good time and be with their friends and play a game.
Michael: So, what was the low point for you on this journey?
Joe: A place I would pinpoint back to is, ultimately, being out of a job at the same time that my wife decided to stay home from work. We had another kid and had just bought another house. That sucked but I've always had a personality where the more chaotic things are, the better I do. There's an adrenaline rush there. I don't really go into the proverbial fetal position. It's more of a, I'll feel sorry for myself for a couple of days. And then, let's put on boxing gloves and go. So, yeah, I don't know. I had many days during that phase, sleepless nights, where it was just like, "How the hell is this going to work?" But I'll just speak, again, to the importance of peer relationships and network.
I have an amazing relationship with my father-in-law. My father-in-law ran a business, a personal services business, a big insurance agency, a commercial insurance, for a very long time. And he had gone through all kinds of transitions. And so, having someone like that to just lean on a little bit was a big deal. My study group then, which was comprised of six advisors from all across the country, we had, that particular year... Once a year we would get together for a several-day retreat somewhere out in the middle of nowhere. And that year, I think we were planning on going to visit... It guess location doesn't matter. It wasn't here. And when this all took place, everybody canceled those plans. And we had the retreat in Minneapolis to help Joe Lawson’s firm.
And so, moments like that, I can't speak enough to in terms of just getting through difficult times and having those friendships and relationships of people that just care that much to get you through those phases. So, I encourage the heck out of that with everybody. Anybody getting into this space and the last two years, of course, have made that very complicated for people to build and have those relationships and go meet people at conferences and things like that. But as soon as it's possible to do that, I'm going to encourage the heck out of it for people that are working here because it's pretty vital. Those are important.
The Advice Joe Would Give His Past Self [1:22:58]
Michael: So, what do you know now that you wish you could go back and tell you from seven-plus years ago when you were launching the firm about how to build and grow the firm?
Joe: That's a great question. I know if we go back further 17 or 18 years ago, I would just tell myself, "Continue to be patient. Continue to be a sponge, that some of the resources and people at your disposal along the way have so many great things to share and are willing to give so much." Over the last seven years, I would say hiring and managing talent is a much more difficult thing than I expected or thought. Not everybody comes into this type of world with the same perspective, the same lens, the same passions. And so, being able to navigate that component better, I think, would have been extremely helpful, just the confidence aspect. I don't know if it's true of everybody but it seems to me that most of the successful business owners I talk to, not just in financial planning but elsewhere, all around it, have the whole imposter syndrome going on. That's very real. And I was just being skittish and scared that it's just not going to work out. We carry that around with us. The whole thing is going to implode tomorrow.
And on one hand, that keeps you hungry and sharp I think to a certain degree. But it also doesn't let you have that perspective of, "Wow. This is really awesome. It's working out. And there is a really cool thing happening here," and just really, really enjoy the journey and invite other people in to do it. I have a personality that when things get difficult and hard, I tend to clamp down. It's almost like a defense mechanism, right? I don't want to let my wife know that I'm scared or nervous or whatever. And I also know that when I do that, that's not fair to her to stress her out. And she knows something's bothering me. And I just clamp down and won't share it and say, "No, everything's fine." I wish I would have shared more of that journey along the way so that she really does understand where I'm coming from. But I would say it's mostly things like that than anything else.
Advice To Newer Or Younger Advisors [1:25:18]
Michael: So, what advice would you give younger or newer advisors coming into the industry today in trying to find their path?
Joe: One main thing is be patient. What I've found is a very interesting way and very significant component of our clientele now are literally just friends of mine from college and high school where for the first 10 years of my career, we may not have talked a whole lot. I shouldn't say that, about financial aspects and financial things.
But naturally, as they got into their 30s and starting hitting an upward trajectory with their career path, started having families, they saw and observed from a distance that over that prior decade, I was super passionate about what I was doing. And some of the writings and things that I had been doing with the blogs and posting stuff out on various channels, I knew what I was doing, and I cared. And it was different than how a lot of this industry delivers things. And so, that led to just a sudden windfall of people coming in the door. So, with younger people, in particular, you're in a hurry. I used to have that same thing is look, I've got all the great coursework done. And I know how to do financial plans, the data, the numbers. But it was more the idea of look, I have all this great knowledge. And, hey, everybody, look at me. I want to share it with somebody. I want to show you. But during FPA residency, that was one of the comments that Gail Coleman reiterated several times during the week. So, what stuck with me is people don't care what you know until they know that you care.
Joe: And it's one of my favorite phrases and something I think about a lot. And at the end of the day, I would just say you need to care. You can't fake caring, at least for long, in this industry, or you're going to get called out for it. You're going to slip up somewhere. You've got to care. If you don't care, do something else.
What Success Means To Joe [1:27:15]
Michael: So, as we wrap up, this is a podcast about success. And one of the themes is that the word success just means very different things to different people. So, as you're building this very successful advisory firm and the business is going so well, how do you define success for yourself at this point?
Joe: My biggest thing is my time is one of the most important elements to me. Being able to participate, especially in my kids' lives to the extent that I do, that's a very, very critical element of it, and having a good relationship with my wife and my kids, being able to travel a whole pile of time, take a decent amount of vacation, create memories that are going to last forever. People ask sometimes about business metrics. I've never been somebody that says, "I want to have a certain AUM or onboard a certain number of clients this year." Those types of goals mean nothing to me. Instead, our goals are really more about remaining focused on what we're already doing, remaining focused on our clients. If we really maintain focus on vision and values, process and systems, the numbers are just going to take care of themselves. So, if we ever start to get super focused on numbers and data, dollars and cents, that's going to be a point where it feels unsuccessful and a lot less fun for me. But I would say the biggest thing really is time.
Michael: Very cool. And I'm struck just by, again, the nature of the journey that when the business development stuff comes a little bit later in our career when we've got the clarity of vision, values, like, "I've done a bunch of different stuff. I know what I want to do. I know what I don't want to do. I know how I want to serve my clients. I know which clients I don't want to serve," once you've got that clarity and the confidence that comes with it and just by then, we tend to be at an age and stage of life where people we know and interact with us tend to have a little bit more business opportunity than who we know and are maybe in our early 20s...
Michael: ...that a lot of business starts flowing. As you said, the numbers start taking care of themselves at that point.
Michael: Well, thank you so much, Joe, for joining us on the Financial Advisor Success podcast.