Welcome, everyone! Welcome to the 62nd episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Lee Munson. Lee is the founder of Portfolio Wealth Advisors, an independent RIA that manages nearly $280 million in assets under management in Albuquerque, New Mexico.
What’s unique about Lee’s practice, though, is that he built it while overcoming a rather scathing article published about him nearly 15 years ago in the New York Observer, in which he was presented as the poster-child of the excesses of the 1990s wirehouse… at the exact moment that stories on the internet that live forever became a “thing”.
In this episode, we talk in depth about Lee’s career path, from leaving his early success in the wirehouse world after both the infamous Observer article and the impact of 9/11 and the subsequent recession on the brokerage industry, to working for several years at Charles Schwab as a Schwab Private Client advisor, before ultimately founding his own solo advisory firm, and working over several years of writing on websites like Seeking Alpha and appearing on CNBC and other television media to rebuild his online persona and bring in new clients to grow the firm.
We also discuss Lee’s own process for serving clients, where he deliberately does not meet with clients on a regular quarterly basis – despite the fact that he manages their portfolios – and instead focuses not on the frequency of the communication with clients but how meaningful each touch is by engaging with them deeply and unfiltered (whether it’s in an in-person meeting once a year, or via a long email), how he justifies a fee schedule that starts at 1.5% on the first $1M despite meeting relatively infrequently with clients (by trying to delight his clients in other ways instead), and the email folder he keeps with all the positive feedback he’s received from clients, as an affirmation of the value the firm is delivering to them.
And be certain to listen to the end, where Lee talks about how he’s managed to build his practice with everything from active networking at the local level, to regularly appearing on national television… despite the fact that he’s actually an introvert, who relishes the quiet refuge lifestyle of living in New Mexico.
So whether you are interested in learning more about engaging with the media to grow your firm, overcoming adversity in the financial advisory industry, or how you can structure your fee schedule and service model based on the depth of contact rather than the frequency, I hope you enjoy this episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- How Lee went from being cast as the epitome of a 1990s stockbroker to becoming a fee-only advisor. [2:48]
- Why Portfolio Wealth Advisors does not meet with their clients quarterly. [6:24]
- How to “delight” clients through good communication. [27:47]
- Why you don’t need to show spreadsheets to clients. [29:20]
- Portfolio Wealth Advisors’ meeting and fee schedule. [35:32]
- Lee’s approach to account minimums. [45:16]
- How Lee built a quarter billion dollar practice in Albuquerque. [1:07:00]
- How Lee first got on CNBC, and some important things he learned about the process. [1:20:56]
- Why being on TV builds credibility rather than leads. [1:36:29]
- Advice for introverts to who struggle with networking, speaking, TV appearances, etc. [1:40:15]
- Lee’s definition of success. [1:48:12]
Resources Featured In This Episode:
- Lee Munson – Portfolio Wealth Advisors
- Rigged Money: Beating Wall Street At Its Own Game by Lee Munson
- Lee’s NY Observer Article
- TD Ameritrade
- DFA Funds
- Vanguard Getting Booted from ETF Model Marketplace at TDA
- John Furey, Advisor Growth Strategies
- Lee Munson on CNBC
- Albuquerque Business Journal (BizJournals.com)
- Paladin Registry
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Full Transcript: Building A High-Income Lifestyle Practice By Engaging With Clients Deeply And Unfiltered with Lee Munson
Michael: Welcome, everyone. Welcome to the 62nd episode of the Financial Advisor Success podcast. My guest on today’s podcast is Lee Munson. Lee is the founder of Portfolio Wealth Advisors, an independent RIA that manages nearly $280 million in assets under management from Albuquerque, New Mexico. What’s unique about Lee’s practice, though, is that he built it while overcoming a rather scathing article published about him nearly 15 years ago in the New York Observer and which he was presented as the poster child of the excesses of the 1990s wirehouse at the exact moment that stories on the internet that lived forever became a thing.
In this episode, we talk in depth about Lee’s career path, from leaving his early success in the wirehouse world after both the infamous Observer article and the impact of 9/11 and the subsequent recession to the brokerage industry, to working for several years at Charles Schwab as a Schwab Private Client advisor, before ultimately founding his own solo advisory firm and working over several years of writing on websites like Seeking Alpha and appearing on CNBC and other television media to rebuild his online persona and bring in new clients to grow the firm.
We also discuss Lee’s own process for serving clients, where he deliberately does not meet with clients on a regular quarterly basis despite the fact that he manages their portfolios, and instead focuses not on the frequency of communication with clients, but how meaningful each touch is by engaging with them as he puts it “deeply and unfiltered,” whether it’s in an in-person meeting once a year or via a long email in between. How Lee justifies a fee schedule that starts at 1.5% on the first $1 million despite meeting relatively infrequently with clients by trying to delight his clients in other ways instead, and the email folder that he keeps with all the positive feedback he’s received from clients as an affirmation of the value the firm is delivering to them.
And be certain to listen to the end, where Lee talks about how he’s managed to build his practice with everything from active networking at the local community level to regularly appearing on national television, despite the fact that he’s actually an introvert who relishes the quiet refuge lifestyle of living in New Mexico. And so with that introduction, I hope you enjoy this episode of the Financial Advisor Success podcast with Lee Munson.
Welcome, Lee Munson, to the Financial Advisor Success podcast.
Lee: Well, it’s great to be here, Michael.
How Lee Went From Stockbroker To Fee-Only Advisor [2:48]
Michael: I’m looking forward to this episode because I know you have had I think a particularly interesting journey in the advisory world. From, you know, starting out in the brokerage industry in the ’90s, including what is now a somewhat infamous article that the New York Observer did on you that, like, you were literally cast as the epitome of the 1990s stockbroker excesses.
Lee: They called me the swaggering relic.
Michael: A swaggering relic. Because it was 1991 so you were like a relic of the 1990s. It was 2001 so you were relic of the 1990s.
Lee: Yeah, the 25-year-old relic. Who wants to be a relic by 25?
Michael: And I know that you went, like, all the way to the opposite extreme and ended out in a fee-only firm less than 10 years later. And so just you’ve had a really interesting career and now run a phenomenally profitable lifestyle practice. And so yeah, I’m really excited to have you talk about this whole journey of what you’ve been through. From a 25-year-old swaggering relic to the practice that you’ve built today. And maybe that’s a good place to start. Can you just tell us a little bit about, like, the advisory firm as it exists today and where you are now?
Lee: Yeah. So my firm is called Portfolio Wealth Advisors, and basically, we run about $280 million in separate accounts, right? You know, we’re fee-only on those assets. I do a very small amount of insurance business, mostly some term life and some things, but I don’t even know if it’s…I’m not even sure it’s 1% of gross revenue at this point. Most of our clients are over 55. I’ve decided years ago to focus on retirees. A lot of them are in the state of New Mexico, in Oklahoma City where I have another office, and scattered around the country, from San Francisco to New York City. A lot of them are people who worked in highly technical fields. So for instance, you know, we’re out here with Los Alamos National Laboratory, Sandia National Laboratories, a lot of people that work at the labs. A lot of my clients are people who did work at the labs.
Lee: There’s a reason why that is. It’s not just demographic. Because I come off as an extrovert, but if I’m sitting across a conference table from a psychiatrist or a therapist, they’ll pick up real quick that I’m secretly an introvert. And so that helps me identify and really jive with your typical lab worker. And it’s been a wonderful journey. You know, I don’t limit myself just to that. I’ve got some younger people who’ve inherited wealth. I do a lot of multifamily, so I will handle, you know, the parents of my clients, my baby boomer clients. You know, it’s typical for somebody who says, “Oh, my kid just got a 401(k),” and I’ll do the 401(k) allocation for them and mail it off. And just this Monday I was helping a 30-year-old adult kid of one of my clients to help them fill out their paperwork for their new job, or I should say their first job. And those are the type of things I do. So I do everything and anything.
Why Portfolio Wealth Advisors Does Not Meet With Clients Quarterly [6:24]
Michael: So how many clients is it overall?
Lee: We probably have at this time…I’m going to give you the number and then I’m going to tell you how this gets broken down, right? Because these top-line numbers don’t mean a lot. So we have roughly 200 households.
Lee: Okay? Now, I have the business partner, Tracy Miller in Oklahoma. You know, probably about 80 of those are hers, right? That she handles those relationships. The rest are mine. Of those, you know, there’s probably a solid 40 of them that are mostly just investment management only. And so those might be people who might be still working, they don’t really need a lot. You know, you have people who…I get people who call me up and just say, “Hey, can you just manage my money because I know who you are, I trust you. I really don’t want to be a bother. I may only have a few hundred thousand but I just need somebody to trust. I don’t really need the planning part.” And I’m happy to take those on.
Lee: And then I have what I would consider more like 50 people that I’m more, you know, actively involved in, I’m more of a regular basis, and then there’s people that come in and out of it.
What people need to realize in a business, and I’ll tell you right now, Michael, this whole concept, these quarterly meetings was invented by mutual fund wholesalers and your branch manager trying to get you to cross-sell. So what we do is we just go for that annual review, whether people want it or not. Because I have people in their 70s who’ve known me for years, and they don’t need to talk to me. Everything is fine. I’ve earned that business when they were in their 60s. I want to be available when people need to talk to me.
And by the way, nobody ever calls me when the market goes down. I mean, anybody who’s a client of mine will tell you, “Lee needs to work at that point. We need not to bother Lee when the market is down. That’s where he’s having fun and shooting off rounds.” So I like to be completely invasive and in people’s business when they need me. And then when I’m not, I’m not making up fake meetings so that they can come in and see a report and I can tell them about the market and pie charts and all this garbage.
So that in my opinion is how…because I know you’re going to ask it, you know, “How is it that you can run all these households and your clients still say they’re completely delighted and refer business?” And that, I think, is a big secret to my success is get rid of extraneous meetings that we were taught to do at wirehouses and start to work on what matters. And quite frankly a lot of my clients specifically say, “I’m paying you for you not to call me unless there’s something that affects my life,” right?
Michael: Well, I think it’s an interesting framing that why do we do so many quarterly meetings? And, you know, I was…I didn’t start on the wirehouse side, I started on the life insurance company side, but yeah, too many. It was the same kind of thing. You know, at the end of the day, you know, the pressure from my manager to go have regular meetings with clients was basically all about finding new cross-selling opportunities…
Lee: I know, I know.
Michael: …every time I went out to see clients again. Now, I’ll admit, in our advisory firm now, you know, Pinnacle, we’re solely on the wealth management side of things. We’re doing planning, we’re doing investment management. There’s no products, there’s no cross-selling. We live in a fee-only space. But, you know, we’re not quarterly meetings with those clients but we are probably at least two to three times a year.
And I know just in practice with our clients, we kind of get a similar effect. And I’m curious if this is similar for you. The meetings tend to be a lot more frequent early on in the first few years. A, sometimes there’s just literally a lot more work to do in getting them through an initial planning process or helping them get a whole bunch of stuff and things in order or sometimes just they need some subset of regular meetings to really finish building the trust, right? I find for a lot of clients in that first year or two, you know, they obviously trust us enough because they said yes and came on board, but it sometimes takes them awhile before they really, really trust to the point that they’re willing to let go.
But then we hit this crossover point at three to five years in with most clients where when they really get there and the trust is clearly there, all of a sudden it’s hard to get frequent meetings with them even if you want to.
Lee: Oh, I know. I know.
Michael: And then eventually they’re just like, “Look if something is going on that actually matters, call me, and if something is going on in my life that matters, I’ll call you. And short of that, we don’t need to meet that much because there’s just nothing going on at this point.”
Lee: I would say that that’s pretty mirrored in my way. I’d like to give some insights of really what’s going on so that listeners can understand really what’s going on and what you and I are doing. I agree, I’m taking clients on at or near retirement, and it’s a massive shift in their life. It’s a huge new phase they’re going into. So generally that first year, I don’t even count the meetings in the first year. There’s just a lot of them, right? Two or three. I might be meeting four…like in the first two years, I might be meeting on average every quarter. We might be meeting with people every couple weeks for a while, right? But I don’t like to schedule them on those 90-day things, I like to schedule them when they’re coming up. Like, when the events are coming up, when they need to do these little markers that we have.
Now, I know I’m working with mostly retired people or sort of getting new retired so I’m a bit specialized in that field, but I think what you said rings true. That it’s easy for them to say yes. I’m a master salesperson, Master Yoda with that so I can get anybody to say yes. That isn’t what I’m looking for in a client. I’m looking for a client who’s going through a major phase, a major change in the phase of life, where I could add tremendous value over say a two to three-year period, and then get them so dialed into their lifestyle, get them so dialed into spending more time on the mountain that they come back to me and say, “Now the trick is not bugging me. Now the trick is if you want to keep my business, only speak to me when it really needs to happen.” And then have to feel that they can do that.
And when they say that it doesn’t mean, “Oh, great, you know, I’ve more time to go get more clients.” No, no, no, no, no, no. What that means is you did your job right, right? It means that they come to you, not because they… if somebody comes to me and they’re like, “What I wanted out of an advisor, Michael, is somebody I can meet every month or every quarter and talk about the markets and talk about the performance and go through your pie charts,” I’m just like, “Stop. Get out of my office,” right? “Because you sir…” And by the way, only a man would ever say that. Just to throw us men under the bus.
Lee: I don’t think most women would, like, actually be caught dead saying something so silly. But you can really tell the people who need help. Because while they’re concerned about the performance and markets, they’re really looking for somebody that they can trust and somebody who understands what they’re going through and somebody who they can say, “Oh, can I tell you secretly?” I’m like, “Just say it.” And they’re like, “I don’t know how much I really care about markets. I just want to go do X, Y, and Z, can you help me do that?” I tell you, it takes trust for them to just say that, where you and I are like, “Why wouldn’t they say that in the first place? Why wouldn’t they just walk in saying, “Hey, I just need somebody to take care of this for me?” Right? Because they’re brainwashed just like we are from Wall Street. Brainwash is a strong word but let’s just keep using it.
Michael: Well, it’s a fair point. And I think particularly with retirees, because, you know, often if we’re working with a retiree, we are not the first financial advisor, or I’ll put, like, “financial advisor” in quotes, but, like, we’re not the first advisory person from the financial services industry that they’ve interacted with.
Michael: Right? So someone else may have even set the rhythm with them of, “The proper way an advisor works with the client is to do quarterly meetings to look at the pie charts.” And that’s the expectation that they come in with that then has to shift. I mean, do you get clients sometimes that maybe that was their prior experience and they start with asking like, “Lee, why aren’t we meeting more often?”
Lee: No, I don’t get the why aren’t we meeting more often. It’s my job as an empath to know before they know that we need to meet more often. It’s my job to read tea leaves in the voice message, the email, the quick interaction. I have to sense that…I go tell Mike Garcia, he’s my director of operations and just 10-feet from me. I say, “Hey, hey, Mr. Smith, I need to have a meeting with Mr. Smith.” “Well, why?” You know, it’s like, “Because I sense it. They need something and I want to see them before they realize they need to talk to me.”
But that aside, I did just meet with some people last week and they said…you know, I said, “Well, what’s this other advisor that I’m telling you to fire?” You know, “What did they do?” Because they were asking me about meetings and I just said, “I do an annual overview.” And they said, “Well, every quarter, every 90 days, they had this meeting with us and they go over this pie chart. And when we ask if we can retire they just say, “Oh, yeah, you’ll be fine.” And I said, you know, “How do you feel about that?” And they’re like, “We don’t want to go over the pie chart. We want to talk about these other things,” right? So usually the clients who come to me, they’re aware of the futility of the quarterly meeting.
And by the way, just so the listeners are clear, we’re talking about the quarterly meeting as a “concept” with quotes around it, meaning a BS meeting where you just go through performance, which absolutely is meaningless, right? My viewpoint of it. And so I think people come here and say, “I want to get out of that thing because it’s just…” You know, first of all, it’s an obligation and they have to take time out of their schedule. They really aren’t engaged. And it only betrays the futility of the relationship. So I say to all those wirehouse guys, “Please keep having quarterly meetings.”
Michael: So do you ever get concerned at the other end that like, “If I’m only seeing my clients once a year for an annual review, at some point, like, either some other father advisor is going to get their foot in the door or just, you know, they’re…what if at some point start asking, “Why am I paying you so much to only see you once a year?” Like, do you…
Lee: Here’s the thing. Here’s the part that people…let’s unearth right now. I can type very, very fast, and my verbosity is not limited to my spoken word.
Lee: You’ve seen my emails that I type to you and you say, “Oh, yeah, Lee, that sounds great.” And then do I write you back? “Oh, sure,” or do I write you back a small novella, right? So you and I know that Lee Munson, when he’s going to write you an email and something is on his mind, you’re going to get it. So I like to write emails. And that’s just my thing, right? And remember, and this is not a self-fulfilling prophecy. I like to write emails. I tend to work with people who are a little bit more introverted, maybe don’t always like, you know, face-to-face confrontational things. So I’m writing emails all day long. And when it’s really humming at my office, you know what you hear? Nothing but the typing of my keyboard.
So I’m touching people multiple times throughout the year personally typing. I also am sending email updates. And they’re not email updates like, “Let’s talk about your financial future, and have you ever considered a Roth conversion?” No, it’s called Notes from the CIO. And people know when they read that they’re like, “Oh, Lee Munson wrote this email.” Like, “No,” you know, “He didn’t buy it from somebody, it wasn’t written by the ops person.”
And when Lee Munson writes an email, I don’t write it just to show you that I’m doing a touch call, I write it because oh, I intend you to read it because I don’t waste time. So I think that I’m not concerned about that. It’s not an issue. If people need attention, I tell them one thing. “If you’ve got a situation I need to trust you Mr. Client that you’re going to tell me something hurts. Because for me to be there for you 24/7 to shepherd you through a disaster or some wonderful thing or whatever, I can’t be wasting a bunch of time, you know, keeping up with appearances.”
Because as I explain to them, “I’m your mercenary.” It’s off-putting, I know. It’s not as friendly, I get it. I’m a nice enough guy. I tell jokes, I’m pretty friendly, but I’m only here to represent the client. And I’ll do anything. And I’ll go to the end of the earth to do that for them. So they need to know that. So they know that me, not sort of just shooting the breeze with them is because I’m dealing with a case that’s super important. And when they have something that comes up, they know that they have my full attention. And they know it because it’s like, “Hey, I give you my personal cell phone number. There’s not a bunch of barriers to get to me.”
And I find that by putting down the barriers and not having a bunch of gatekeepers, what happens is is when people actually feel the need they’ll just say like, “I just need to call Lee.” You know, it’s like, “Why?” “Well, he’s always telling me that if something’s up I need to, like, give him a buzz so that we can rap about it.” Yeah. And I think I show in those first few years my attention to detail how much work I put in. But I put 90% of the effort into the first year or so. They know that I’m serious when I say that.
And I do client events. That’s a great way not to have to meet your clients all the time is, you know, wine event, do the Balloon Fiesta event. You know, I like to do events, and I get to see a lot of people. And in those events, they’ll come up to me and they’ll say, you know, “I’ve been kicking around this idea about da, da, da.” And I’m just constantly writing down notes. So I do a big thing at the International Balloon Fiesta every year. It’s a lot of fun. I get, like, 100 people coming in, they’re all clients. By the way, I don’t do prospecting events. Please, waste of time. I do client appreciation events. And out of 100 people, I’ll literally get 10 people that will come up to me and kind of let me know, kind of give me the update. And that’s how I know what’s going on, right?
Michael: You do balloon events?
Lee: Okay, I live in Albuquerque, New Mexico. The largest hot-air balloon event on the planet is here in Albuquerque. It’s called the Albuquerque International Balloon Fiesta. And people come from all around the world to fly their balloons and do racing events and all this stuff. For the last, I don’t know, 30 years, it’s the most photographed event in the world. It’s in my backyard. Like, “Oh my God, really?” And so it’s really easy to get people to come and do it, right?
The reason that happens, just so all the listeners know, Albuquerque has a unique microclimate that only exists in a few places on the planet. Ones in like Africa, ones down south of…and so it creates a box in weather climate that’s very, very rare on the planet. And so you can launch hundreds of balloons up and down. It has this big box, we call it. So that’s too much information about Albuquerque.
Michael: No, it’s interesting. I mean, you’re kind of meeting…and I guess, like, meeting philosophy is sort of this deep one-to-one or some leverage one-too-many meetings. And so that’s how you do this combination of contact. I mean, is it fair to say like basically it’s less about the frequency of the contact and more about just trying to make the contacts meaningful when they happen? Like, is that a fair characterization?
Lee: I hope so or I have some explaining to do why my meetings all go an hour to two hours long. Or else I have to think I just can’t keep on topic.
Now that comic relief is serious. When I’m meeting with somebody, I meet with them until we’re done. And I don’t keep an eye…I mean, my staff keeps an eye on time. And I don’t try to waste time on these meetings, but I think the deeper the meeting, right? So when we have a meeting, for instance, what my planner does, Danny, we’re going through the last, I mean, it could be a year, it could be 14 months, it could be 3 months. Every meaningful planning material email that I send to clients I also send to the team, and they immediately put that into the plan. They ratify it live as the year goes by. So when we’re having a meeting, instead of having this big cathartic thing, the meeting is more of a referendum on all the things we’ve helped them with throughout the year, all the interactions that we’ve had.
And I’m not here to say, “Oh, I sent you a birthday card,” or, “Oh, I invited you to a white…” No, no, no, it’s about material things that we did for them, right? And post the meetings, there’s plenty of stuff. So for as little as I meet, I seem to come up with reviews that are prepped for. I mean, they say like, “You’ve actually done a lot of stuff for these people over the last year. You’ve been busy.” And I think that those meetings when you’re having with people, it’s not there to sell something or broach a new topic, you want to do that during the year through small sort of micro engagements with people.
And, you know, like for instance, I had a person call me last week and they’re retiring from the labs and they had a question about whether they should do some group life insurance post-retirement. Well, the answer was no, they’re fine. They didn’t need to waste their money doing that.
I call, we talk for about 15 minutes. I get it done. I write an email memorializing it, put in a little joke where, “Your honor, if you ever…” You know, the reason why I advise this person, you know, I’m always underscoring that I put advice in writing archived, can’t go back on it, right? And people love that. Not because they think that I’m, you know, showing how tough I am and that I’m willing to put my reputation on my advice, but it really makes them relieved that I feel strong enough to make a cheeky joke about it, that they don’t have to think about it. It’s like, “Yeah, he put a stamp approval on it. He had to think about this for a little while before he just says that and memorialize it and email. So I’m going to relax.”
But yeah, you’re right. So you have big meetings and you have big meaningful meetings. You keep in contact with people. You make sure that throughout the year, you have somewhat of a calendar of smaller interactions to get the job done quickly, which clients love when you do it quickly, and you always take an opportunity like a good detective, like a good CIA operative. When people ask you something in the email, something like that, just dig a little deeper. Believe me, you’ll find something. And what you find is you find how to really do some meaningful work, and your client is delighted.
And my goal, my secret goal that I never really tell anybody but I’m telling you for the first time today is that my sort of personal ego boosting, has nothing to do with anybody but me, is I try to delight people so much. In everything I do, I’m always trying to get one email a day minimum from a client writing back to say, “Oh, thank you. This was so helpful. That meeting was so good.” Usually, it’s a recap email that’s so good by the way. And I collect those like little trophies. And I have a thing in my email folder that says, “Positive feedback.” That is what fuels me. That’s what’s kept me in the business for 20 years and my nose clean, right? And I think advisors should think about that. I think they should think about, “How can you delight them so hardcore that they’ll actually email you back and say, “Huh, thank you?” Right? Because what else do we have in this business, right? Because money isn’t going to… money can only buy so much.
How To “Delight” Clients With Good Communication [27:47]
Michael: So what do you do that is delighting people so much aside from apparently the most thoroughly comprehensive meeting recap emails ever? What are you doing that drives this? Like, is it just, you know, depth of client communication that you’ve got with, you know, engineering-oriented clients that often revel in that kind of deep communication?
Lee: Well, I try to do magic tricks. So I try to take a very complicated subject and I say, “Hey, I have a cocktail napkin and I have an extra thick Sharpie.” My clients know if they’re listening to that. “Oh God, he says that all the time. I just get sick of hearing it.” There’s cocktail napkin, your metaphorical cocktail napkin, and your metaphorical big tip Sharpie. What I do is I take a very complex subject and I boil it down. But I think what people like is that I’m very free to a fault providing context for people, right? I give them the context of why I’m giving them this advice.
The other thing that I think delights them is that I have something called credibility. Now, we all think that anybody in the business who doesn’t steal money and, you know, comes to work and does a good job, that they have credibility. I would say, “Let me just give you a fair warning. No, you don’t.” Credibility comes with empathizing with people and understanding what they really want to get. So the typical anecdotal thing is the mortgage in retirement. We know this, right?
Why You Don’t Need To Show Spreadsheets To Clients [29:20]
Michael: Mathematically, as long as your portfolio outearns your borrowing cost.
Lee: I know, I know, your 10-year cycle, you’ll make a spread….blah. Yeah, I’ve got that spreadsheet. I know how to use a spreadsheet. And by the way, I actually do the spreadsheet on my own. Rarely do I ever show my work to clients.
Let me give everybody some advice who’s listening. I know how hard you worked on that spreadsheet, I know the time and the pride of ownership of that spreadsheet, but do this. Figure out what the spreadsheet output, right? Figure out what it says and communicate that in English, in words to your client. Don’t ever show them the spreadsheet, right? That’s just a feed your ego. Or it’s because you’re so new in the business, you feel you have to show it to the client to show them that you’re not wrong. And I don’t know what to say about that. I was once young in the business. I’m not sure if I have obviously, like, you know…
Michael: Particularly with a lot of engineer clients, like, I have to admit, I’m kind of surprised you didn’t get a bunch of clients that are like, “What was the math.”
Lee: No, engineers are the first people you don’t show it to, right? Because they’re paying you not to go to work when they see you. You follow me?
Michael: Yeah, yeah.
Lee: And that’s what people don’t get. You know, people think you have to show Los Alamos National Laboratory people all this high flute and fancy stuff? Dude, they’re on their off time, right? Like, they had enough math by 5 p.m. They just want to know like, “Can I go ski now and not have to go back to work?” It’s like, “Yes.” They’re like, “Thank you. Did you do the numbers?” “Yes.” “Are you confident?” “Yes.” “Are you setting the expectation where the bar is so low you can just step over it?’ “Yes.” “Perfect. I’m gone. Thank you.” Right?
So I think what you have to do is you have to…so when you’re talking about the mortgage, and this is a good example, and I think this is a good learning opportunity for listeners is that you need to know what the answer is. You need to know the magnitude of it. It’s like, “Well could this save 100,000, 200,000 bucks and save the plan or is this just, you know, in the thousands of dollars and is nebulous because, you know, you’re calculating out 10, 15 years?”
What you have to do is you have to tell people, “Listen, here’s the deal. You’re either going to sleep at night or you’re not. If I tell you to take the mortgage, it’s because the plan requires you to do it and you don’t have enough assets not to. If I say it’s a choice then we have to talk about how much money are we really talking about here?” You know, I still like delaying Social Security. What’s the magnitude?
And so that’s what deepens my relationships with people because I’m constantly saying… You know, the two things in our business, on the investment management side that we don’t know, we don’t know the timing of corrections and we don’t know the magnitude, you know, of market volatility. What I try to do is I say, “Listen, I’m going to give you a sense of the magnitude of making these personal decisions.”
And I just met with a woman today who’s thinking about putting $500,000 into a new home instead of saving it because she has a daughter who’s a special needs child, and, you know, they had to find a…you know, the child’s going to be living with her probably for the rest of her life, and I have to make decisions on, “Can I retire this woman at 60 and just have her give me the money or do we need to back this out to 64 or 65 so her daughter can live with her in a comfortable environment?”
So you know what I put in my email? I said, “Listen, you need to do this for your family,” right? “I’ll figure out over the next 10 or 12 years how to try to not have you work to 65.” And I told her, “Do I like this? No. Do I like having to count on something…” Just say that she’s in a job where she could get, you know, a big bonus for doing something that maybe hasn’t happened yet. Do I like counting chickens before they hatch? No, but her daughter is absolutely the centerpiece of her life, right? So I have to write that. I have to transparently speak in my inside voice outside to the client, and I have to tell them what I’m thinking.
My curse and my talent, Michael, is that I’m unfiltered. And so when I tell people unfiltered things, it cuts real close to everybody’s bone who’s involved. And while that honesty can be off-putting at times, heck, sometimes I miss the mark, but I’m willing to take the risk of putting my foot in my mouth, which I’m an old hat on, because 9 times out of a 10 the clients…you know, nobody has the courage to tell me this. I don’t have the courage to tell it to myself. I told her, “Well, get the courage to tell your husband that you guys are moving,” right? So I frame it. And I think that’s how you really delight people.
And here’s the thing, younger advisors I think are afraid to just let it rip because they’re thinking, “Well, Lee Munson is 42, what does he know about being 62?” I’ve been doing this for 20 years. I’ve been doing this for 20 years. But I think as a young person, you have to take risks with your career and I think you have to take risks to say…just envision yourself here. Think about if this was your situation, right? Easier said than done, right? But if you want to know my secret sauce of how do I engage people, I just say engage deeply, engage unfiltered, and just constantly be going to the ends of the earth to figure out a solution and don’t be afraid of breaking eggs, right? You’re going to break less things than the clients are. And they’re rooting for you. My clients are my cheerleaders, right? They know that I’m trying as hard as I can to come up with solutions. And, you know, oftentimes they’re patient with me.
Portfolio Wealth Advisors’ Meeting and Fee Schedule [35:32]
Michael: So with this kind of meeting structure and this…you know, lots of upfronts, because that’s just often what it takes with clients, especially if we’re talking transitions, and then, you know, meeting frequency trails off once they become established clients, what does your fee structure look like? Like, do you charge a bigger upfront because you’ve got more work upfront and then a lower fee later? Like, how do you structure fees for all of this?
Lee: No, I just do a simple AUM fee. I don’t even stack it. You know, under $1 million the rack rates is 1.5% all-in asset-based pricing, and over $1 million, you know, 1.1% all-in asset-based pricing. And it’s not stacked. It’s either one or the other. You know, you had $900,000, you send me a couple hundred grand, you were at 1.5% now you’re at 1.1%, period, for the whole 9 yards. Because I don’t want to deal with the complex. You think clients want to deal with that crap? I don’t. So why would I put clients…that’s why I do asset-based pricing. And for those who don’t know what that means, a lot of the business now, you pay for the trades. I actually pay my custodian so many basis points, which I’m not going to say because it’s sort of a trade secret but I pay them so many…because it’s low, so many basis points, and they cover all the expenses.
Michael: So your AUM fee is actually a combination of, like, literally your advisory fee and then this underlying asset-based flat fee for all the trading, which is just built into one fee for client.
Lee: Right. And you know why I do that? I’ll tell you why I do that. Because heaven help you or anybody else, and I don’t mean you, Michael, I mean the proverbial you listeners out there in the business, that you hesitate on pulling the trigger on a flash crash or a recession, you know, whatever it is, melt-up, meltdown, because you’re worried about those $50,000 IRAs and you’re thinking, “Oh, those transaction fees,” right? It’s like, “Just take it away.”
Now, it costs me a bit of my revenue for it. I pay a pretty penny to have TD Ameritrade do that, and I pay that premium so that as the investment manager because I don’t use the damn folks, I mean, I’m a capital markets expert, right? And that’s another thing. You know, you’ve got to have confidence. You know, if you can’t run capital markets, I’m not sure you should be in the business. I know you’re probably going to disagree with that Michael and I understand why, but I believe that I don’t want to have anything in the back of my head saying, “Stop. Wait. How do the fees affect what you’re doing?” No, I just want to go and blow, right? I don’t like externalities. So it’s a big expense. I also don’t agree with, and now I’m going to have no friends, but I also don’t really buy the whole non-transaction-fee thing. You’re just selling clients up the river. You know, instead of me paying a few basis points, you’re charging them a quarter more 12b-1s.
And then we have these new marketplaces. You know, I had somebody from S&P SPDRs try to sell me… I have a no-wholesaler policy, so that ended quickly. But their whole pitch was, “Oh, hey, we have all these free-to-trade ETFs.” It’s like, “Yeah, but you can’t promise me that it’s going to be here. I mean, it was just a few weeks ago, like, Vanguard got booted off that system from TD and now SPDRs are here.” You know, it’s just like this is all just a rat race in a game. I’m not here to make a wholesaler rich. I’m not here to help Wall Street. I’m only here to help one person, the client in front of me.
So what I’ve done is I’ve taken a lot of my revenue and I’ve invested in getting myself padded, a little cage around me that says, “No externalities,” right? Focus on the work. Don’t let them into your office. They want to buy you steak dinner? Remind them you’re a vegan, right? “You want to go for this due diligence meeting?” “Buddy, I can pay for my own first-class tickets wherever I want, whenever I want. I’m booked,” right? I’m not here to be cocky, I’m here to be very direct. And I did that when I wasn’t making a lot of money, and boy, did it hurt back then, right?
Lee: Really hurt. But I stuck with it because I knew eventually…I didn’t know it was going to happen so quickly for me, but I knew eventually this would have the pay-off of sticking to your guns, always take the moral high ground, don’t let Wall Street skim off your clients, especially when you’re not taking part in the skim. And it worked. I think people out there just need to have more faith in themselves. And I’m talking about the advisors. They need to have more faith in themselves.
Michael: So maybe that’s actually a good theme to my follow-up question then. So I’ve got to ask this, you start at 1.5% up to $1 million, you’re at 1.1% over $1 million. You know, the classic discussion is the typical advisory fee is 1%, so how do you justify 1.5%?
Lee: I don’t have to justify it. So you think I need to, and I’m making a point about that by the way. I’m not here to work with small people, right? My firm is set up to deal with $1 million and up. My time is valuable. And if you want to go work with somebody who’s lesser then you can pay lesser fee. If you want to work with the very best and you think that’s me, well then how about it? First of all, I use dimensional funds. I don’t charge ticket prices, right? There’s no other garbage fees. All the planning included, my undying attention included, 24/7 access to me included, and it’s high-touch, right? So first of all, I’m not seeing $300,000 accounts being charged a point, right?
Michael: Fair point. We talk about the 1% a lot without acknowledging, like, even by some of the benchmarking studies it’s maybe 1% at $1 million, it’s not necessarily 1% at $200 grand or $500 grand.
Lee: What are you going to do if you have $300,000 or $400,000 in Albuquerque, New Mexico? You’re going to go to Edward Jones at 1.5% plus 12b-1s plus they’re going to sell you a loaded up annuity plus, plus, plus? What are you going to do? You’re going to go to a strip mall? You’re going to go see, you know, an annuity salesman who’s going to tell you how you can only make money and never lose, right? And I have certain carnal knowledge about how things work out here. And I also, I’m not passing on the expenses of a TAMP, I manage my own money.
So people come to me, like, okay, I talked to a lady, oh God, it’s like everybody I talked to yesterday. It’s just been a busy week. I did speak to a prospective client or a prospect, and she’s paying like half of what I charge, right? I mean, literally half. Her concern is that the trust company that she’s working with they don’t do anything other than manage the money, and they’re not really doing it the way…she knows they’re just kind of fakers, right? She wanted the dimensional factor investing and they’re just like, “Oh, here’s two dimensional funds right next to all of our long short crap and our junk bonds and all the…you know, we just really want to make itself evident to any CFA that looks at your statement, we have no investment philosophy,” right? So with that, how am I supposed to compete? I don’t.
I get people who have do-it-yourself accounts with Vanguard who come and pay me 1% to manage their money. And I use a lot of index…I use index funds. People say, “Well, why would they do that?” Because they need somebody they can trust. How much is that worth? To some people it’s worth 1.5%, right?
Now, the truth be known, you may get some people pretty close to stuff. Depending on what people’s needs, you can negotiate that price a little bit, right? If they come in on a referral, maybe they’re, you know, associated with a larger client, I might give them the breakpoint price, you know. The best way to get your fees lower at my firm is be referred by a rich client, right? Because I’m more than not, you know, don’t quote me on this, your honor, SEC auditor listening, but more often than not what usually will happen if somebody comes in through a referral I pass along the rate of the main household that did that.
Michael: Yeah, yeah. So like if someone refers and they’re over that $1 million breakpoint so they’re at that lower fee then that lower fee just kind of carries over to their referrals?
Lee: Yeah, yeah. So the person with the half a million I might give them the $1 million fee. Right. And that’s fine. I mean, I make plenty of money so I’ll be okay, right? But I told my staff, you know, we’ve got a corporate getaway in Scottsdale. It’s beautiful. If anybody needs a corporate getaway, let me give you a little advice. Go to the Hotel Valley Ho in Scottsdale, Arizona, and instead of getting the… if you have a small staff of like, you know, eight or less, instead of getting the conference room and spending all that money, just get the Presidential Suite. Stay in it on the second floor, and then have everybody meet there. It’s actually cheaper and so much more awesome. Let me tell you. So, Michael, see what I just did? I told a story about my lifestyle. I spend more time in the mountain. When I convey that type of story to a client, they know they’re in the right place, right?
Lee’s Approach To Account Minimums [45:16]
Michael: Yeah. So do you at least set minimums to kind of manage all the upfront and the amount that you’re charging for any particular client?
Lee: Oh, you know, sort of like right after I emailed you months ago how I thought that was BS, I started doing that. Just to let you know. Just for your own self-edification, Michael.
Michael: So there weren’t minimums but now there are minimums.
Lee: Basically about a day after I hit send on that email that I sent you, and so people know what I’m talking about. Michael did a great podcast with somebody smart and exciting because you should all listen to his podcast, it’s all of them, and they were talking about minimums and this and that and I said, “Oh,” you know, “This is all wrong.” You know, I work in a smaller community and that’s just snobbish. Okay.
Michael: What changed?
Lee: So what changed? Number one, it’s hard for me to say no to a new client. It’s easy for me to say no to a client who’s overspending their money and is going to get messed up. When somebody comes to me and says, “I need your help. Nobody will help me.” Oh yeah, there’s a reason why. Like, I just want to help them because who else in my community is going to help them? They’ve got no one. I mean, I’m being serious, they have no one. There’s no one in my opinion in this area that’s going to help them. That won’t fleece them, right?
And I’m not trying to indict or speak badly about anybody in my business. I’m talking about smaller accounts, right? Because you walk into Edward Jones, they’re real clear, “Oh, it’s half a million and up.” Okay, snobs. Just keep saying that. For me, the problem was is I would take them on as ongoing clients, right? And then oddly enough, I would charge them less money. What was that about? So what I do I just say, “Hey listen, if you’re going to be kind of under that half a million mark, A, you either need to be younger, like in your maybe mid to late 40s, and you’ll be at $1 million soon,” right? “Oh, piece of cake.” You know, don’t really hold to that $1 million minimum, not if you’re 48, have $400,000 or high paying job and you want to work with me? Please. I always tell, “You’ll be at $1 million in a few years.”
The hard thing is when you see somebody who’s retired, has a sub-$500,000 account and really needs to rock more like a 5% or 6% withdrawal rate, whereas you and I both know is treacherous.
Michael: Right. That ain’t going to work.
Lee: Yeah, it’s not going to…I mean, it could work if you’re in your 70s.
Michael: Well, or if you get a really lucky bull market, like, it could happen.
Lee: Yeah. Yeah, it’s a little dicey, a little dicey, a little dicey. So with those people, you know, the price is the price, right? Well, I’ve also learned, since I hit send on that email, I told the staff in…and this is, like, last month, in January. I said, “Guys, I need to be open and honest with you. I have an addiction and I’m addicted to saying yes. I’m addicted to closing. I’ve never seen a person I didn’t want to help. And it’s not helping our firm and it’s going to crush us.”
So the team came together and helped me, right? They said, “Well, Lee, let’s start doing this. You need to start saying on your radio spots and saying we cater to $1 million and up,” right? “So that way, only people that really, really, really need your help will call. Versus the person with 100,000 bucks and, you know, Lee wants to close,” right? So that’s step one. So the smaller accounts only come because they really need my assistance, and for whatever reason, they believe only I can help or that they feel they can get along with me.
Number two, we hold to our 1.5% for those smaller accounts so that we’re profitable on those and it doesn’t hurt the overhead of the firm and make the firm more unstable in their revenues. Very important element.
Number three, I have done some soul-searching when people come in and I’ve started to help people but not have them as an ongoing client. And that’s really been huge. It satisfies my need. Because sometimes I just need to tell people, “Okay, you’re in dire straits. I need you to take this money, I need you to put it over at Vanguard,” right? “And, you know, put it in X, Y, and Z, wherever I feel is the right thing to do for the situation or, you know, in some cases just put it in a CD, and don’t spend any of it,” right? And I give that free advice. And I probably have a couple times a month people come in and I spend a couple hours with them, start to finish, get them all set up and it’s free, right?
And so I get what I want. Like I said, I usually do. I get what I want because I help them, I feel satisfied. I felt like I was an asset to my community. I felt I did something, but I can’t let my current clientele be disadvantaged because of my desire to bend over backward for people who need help, right?
Michael: It’s an interesting framing to say that, you know, “We’ll have a minimum for ongoing clients but look, if you need some…if you’ve got some questions you need some one-off help, we will work with you on a one-off basis.” So you’re not just flat out turning them away but you’re not permanently taking up some of your ongoing client capacity by taking them on below the minimum.
Lee: And people will say, “Well, no, no, no because they’ll solve their problems and some other advisor will get them.” It’s like, I don’t care.
Michael: And you already said they’re not…
Lee: They don’t come back, you know. And with these younger people, I’m always like, “Hey listen, just go to Vanguard, buy this thing, the VT, for the next $250,000. And when you get there, call me.” Now, little do they know I’ll just keep saying, “Well, do that again until you get to half a million then call me.” But having a little credibility like that. And I think that’s what a lot of people need to hear, right? So I think depending on where you are, you have to decide do you want to be… Okay, Michael, it’s really super easy for me to be on my high horse because I’m very successful. You know, my wife always…I always tell my wife, “Why am I so happy? Why am I so pleased?” And she said, “Because you’re very successful,” right?
You know, it’s like if you have a frown just take a $100 bill and wipe it on your mouth and I’ll smile. So from that perspective, versus somebody who’s 25 years old and just got into the business, it’s easy for me to sit on my high horse and say, “Oh, I spend a few hours a week on pro bono hard luck cases.” It’s a pleasure. Of course, it is, right? I think that that’s why I have such a problem with the aggregator model. Everybody must sell, everybody must do M&A. Organic growth is for sissy. It’s like, I worked my butt off organically to build up a quarter billion dollar practice, not just so that I could sit around with a nice lifestyle, was so that I could pick and choose who I wanted, which by the way is not a quaint idea, that started years ago, and also I can sit and I can just clear the schedule and just help somebody with no personal gain, right?
And that makes me a better advisor for my high-net-worth clients, right? And it also gives me a little humility, which I definitely need, and it gives me a view of how the other 99% live. And that makes…again, that makes me a better advisor. If all you have are $5 million and up clients, you don’t really know how the world works. I think every advisor needs a breadth of AUM. I’m not saying you can’t specialize. I don’t like to specialize in…you know, out here it’s sort of like the $1 million to $3 million, right? It’s just where the cards fall out here. But I like to have things on the tail so to speak because I learn things about it. And I learn things about the world that I can bring back to my typical $1 million to $3 million retired lab workers. You know, that type of thing.
Michael: Right? We all learn when we do something outside of our central comfort zone. That’s what happens. So whether that’s, you know, pushing new skills or learning new information or just literally working with clients that are not squarely in your standard domain. Like, that’s where the learning happens.
Lee: Yeah. And you’ve got to do that. And sometimes that requires taking on a $50,000 disaster because, oh, it’s, like, the right thing to do. And I just tell myself, “This will make you a better advisor. This will remind you how fortunate you are. And you’re going to touch this person and you’re going to help them.” And that’s kind of what I leave behind, right? And that’s why I do all that work at the university. That’s why I’m constantly mentoring kids and spending all this time doing that because it’s…you know, what’s my legacy? A big bank account? Please.
You know, I don’t have a huge staff, I’m not empire-building to feed my ego, I’m not seeking out, “Oh, the scalability, and we’ll be at a $3 billion firm.” Because somehow that’s supposed to help clients. It doesn’t. You just help yourself.
And what legacy do I have other than knowing that there are a lot of people who will say, “Hey, Lee Munson really helped me?” And then that’s why I work with all these young people so that, you know…I mean, now I have people who are hitting 30, which, my God, no wonder I got to 42. But, you know, you get a 30-year-old who comes back to you and say, “Hey, I’m successful in the business. I’m running money at a hedge fund in New York and I’m doing whatever I’m doing.” And they say, “Thank you for telling me things that nobody else told me. You told me the truth and I went and ran with it, and now I’m gainfully employed in a great business, making good money, and you are this little person that pushed that little pebble down the hill of which now is a giant boulder.”
And just as sort of a PSA, you know, public service announcement, I think that as soon as you get into the business, the first thing you need to do as a younger advisor is to take on a student. Take on an intern. Don’t worry that you don’t know what the hell you’re doing. You think I knew what the hell I was doing when I was in the business 22, 23 years old? No. But you act as if. And when I was in the business, you know, I took on cold callers that were my age because it kept me honest about what I knew. And I think that’s another secret of my success.
Michael: So you’re kind of unapologetically working toward a lifestyle practice and not necessarily trying to build a big, huge firm. Like, fair characterization?
Lee: Yeah. Let me just say this. I’m okay with you referring to it as a lifestyle practice because I know you and I know what you mean. I don’t particularly like that term because I work my ass off all the time. To me, when I hear the word “lifestyle practice,” I think of somebody who’s lazy, that it’s all about them and not the client, and they’re not really willing to go to the end of the earth. They just want to do the minimum to collect their fee. And so to me that’s what lifestyle means. So I’m pigeonholing that word in a very specific context. To me, and I know what you mean lifestyle, all you’re saying is, “Lee, are you looking, for instance, to hire more staff around you or are you looking to…”
Michael: And add more advisors.
Lee: Yeah, more advisors, more locations. I’m the prior. I’d rather have better and better skilled, more senior talent around me. I’m not looking to have more advisors copy me. Because let me tell you, when I was made, that mold was shattered in 1 billion pieces. People come for me and me alone, but with me, they get iterations of me. They get, “What if Lee Munson did operations? God, wouldn’t that be a rock star?” Yes, his name is Michael Garcia. He works for me. “What if Lee was, like, the paraplanner? What if we could find a Lee the planner and Lee?” Oh, Danny Pendleton. There you go, right?
So when you’re buying me, the other roles that I have, they’re still leadlike in their passion and vigor. It’s just that, yeah. I mean, my rule in my office, you know, because we kind of shut it down at 4:00 because we’re on Mountain Time, and I tell Mike, I say, “Listen, if you’re going to go to the gym today and work out, you leave at 3:30,” right? “Take the half hour. My gift to you, stay healthy.” You know, if people need time off, I’m not sitting there like, “Well, let’s add up all your PTO.” You know, it’s like, “Listen, this is a little ship and I’m the little captain here. We’re all in it together. One-person-one-vote.” So that’s how I roll. It’s not a loose management style, it’s a little flatter of a management style. And I think a lot of people are afraid of that, and I get it.
I think that my goal was to have a profitable firm rather than growth. I tried to do that, Michael, in the early years. I left Schwab, I got sued on a contract dispute. I won of course. A lot of people from Private Client at Schwab, you know, this is like ’08, ’09, ‘010, huge exodus out once I showed people that you can actually stand up to Uncle Chuck and just walk away, which was quite a surprise to everybody.
And I thought that they were all going to come and join my firm. I was just going to be the guy who’s on CNBC talking markets, kind of running an internal TAMP, and I was going to make money off the back of other advisors. And I kept beating my head against the wall doing that. You know, get advisor here, advisor there. It was really taking me away from my core clientele who’d come with me, right? Who followed me, who believed in me. And I wasn’t doing them a service in those years because I thought, because of my ego, I thought that my purpose now that I was independent was to, “Oh, forget the actual thing that I was doing for clients, now I’m going to be a business owner and I’m going to just run this business and forget about my life’s work as a CFA and a CFP.” And luckily, a dude saved my life, and his name was John Furey. Do you know John Furey?
Michael: Yeah, Advisor Growth Strategies.
Lee: Yeah, yeah. Okay. So I was working with my…at the time getting together with my partner Tracy Ann Miller and he was putting the deal together for us. You know, you go to Scottsdale, you chitchat, you write him a big old check. By the way, whatever he asks for, just pay it. It’s always like, “Oh my God, it’s how much?” Just write it. You’ll never miss the money. And he told me one on one, I was in the conference room just with him, he says, “You cannot make money off the back of other advisors.” And it wasn’t a life-shaping experience, let me tell you, it was a life-changing experience. And then I realized what I was going to have to do for the rest of my career. I was going to have to do the work. I was going to have to commit to clients. And that was how I was going to fly. For better for worse, right? Big money or no money.
Michael: I’m curious then like is there an alternative or better label you would give it than lifestyle practice? Because, you know, it’s a fair point. I’m kind of doing the math here at like a quarter of a billion dollars under management, fee schedule is 1.1% to 1.5% on a quarter billion dollars with 2 or 3 staff members. So it’s not hard to do the math that there’s a lot of money moving around in this practice that you built around yourself. So, you know, it’s phenomenally profitable. You work your ass off as you noted. So, like, what would you call this?
Lee: You’re the thought leader. You’re the most famous thought leader in our industry. I mean, my God, Michael.
Michael: So I have to come up with a name?
Lee: Wait. That was why I agreed to do this podcast. “Oh God, he would come up with something other than lifestyle practice.”
Michael: I was supposed to give you a name? All right, we’ll work on it.
Lee: It’s like you know more about this industry than every single person on the planet and you don’t have…jeez, I’m so deflated. I had you built up to this godlike dude.
Michael: No, but I’m the terrible one that comes up with the names. I’m still the one that thought it would be really cool to call tech-augmented human advisors the cyborg advisors. I’m the only one who likes cyborg. So yeah, we’ve now called it, you know, bionic advice and digital advice. Like, everything except the name I gave it. Apparently, my names are a little bit dirty.
Lee: You need to get some of your wordsmith some of that stuff.
Lee: And by the way, I’m just joking about this. You are the thought leader in the industry right now. That’s not a joke but everything else was. Here’s how I describe it internally and here’s how I describe what I’m doing, okay? And this will help us get to the word. What I’m doing is I’m choosing a strategy where I’m collecting higher skilled and thus higher on the pay scale support staff around me and premium vendors around me and paying a premium to save time around me rather than try to hire a bunch more salespeople, right?
Michael: So you’re just trying to essentially delegate and leverage yourself up as much as possible.
Lee: Yes. And really get the staff to become rock stars in what they do by showing them how a rock star does it in what I do. So I would simply say, why don’t we just call it an organic practice versus an inorganic practice? Because we all use those terms already. I don’t believe that somebody hiring more advisors is organic simply because they didn’t do a merger or acquisition. To me, I still label that inorganic. And that’s hard for people to realize. Because nobody wants to say, “We’re hiring more advisors but we’re really just…”
And listen, I don’t begrudge people who do this, right? Like, I have some physicians as clients, and they’ll come to me and say, “Ugh, I don’t want sell to anybody else.” I say, “Why?” They say like, “I don’t want to clinical…” By the way, clinical means like when you’re meeting with people, right? So that’s kind of the jargon. They say like, “I don’t want to do any more than two clinical days a week. I’m burned out.” It’s like, “What do you want to do?” “Yeah, I want to get some of these young docs together. I want to try to, you know, change medicine.” And they’ll talk about their lifestyle, but what they’re really saying is that, “Ugh, I want to move on. I need another challenge and I no longer really want to work in medicine. I want to sort of help other people in medicine.”
And I love that. I’m glad they’re doing it, that’s not my path, right? I have so much to give and such a desire to give it. I want to do two things. Primarily I want to give it to the clients because it’s just getting that email saying, “Thank you. That was really helpful. I’m really glad that we have you.” I can’t buy that. It’s worth more than money.
And number two, helping young people come up in the business, helping them at that college level, where you might help them with their first job at Pinnacle, right? That’s not what I do, right? I’m not helping them with their first job, I’m helping them, like, get that first job. I’m helping them, like, wise up and say, “I think you need to go back to premed. Trust me,” right? Or like, “You’re just having a bad semester. You don’t have to go work on Wall Street. You know, that one C won’t kill your life.” So that’s how I kind of view it. But I don’t like lifestyle because to me a lifestyle practice is some guy with 10 million bucks who plays golf 3 times a week and doesn’t really, like, handle their business. And I take clients away from people like that, right?
Michael: So in the context of this organic practice, I’m going to try to run with this label.
Lee: Yeah. Maybe we could, like, redo that term.
How Lee Built A Quarter Billion Dollar Practice In Albuquerque [1:07:00]
Michael: Yeah. And so in the context of this organic practice, right? Where, you know, organic growth is about driving growth off of you, so can you talk a little bit about just where the growth has come? You know, I know you went out on your own roughly 10 years ago, 10 years later quarter of a billion dollars under management, which is a hell of a big number for you going out there and getting clients. So can you talk about just like what is marketing and sales for you? Like, where do these people come from? Particularly since I’m cognizant, like, you’re not building in New York City or San Francisco where there’s just lots and lots of money kind of flowing around all over the place, you’re in Albuquerque, New Mexico.
Lee: I would say that…and first, let me just be clear. I’ve got a real chip on my shoulder at a quarter bill. I feel I’ll never be anything until I reach a half or something like that. I know how silly that sounds, but from my perspective, I’m always shocked when my AUM is more than other people, and I feel bad about myself often because I don’t have a half a billion under management. And I know how weird that sounds, but you have to understand I’m very driven, I’m very ambitious, and I hate…and I think you’ve discussed this. Actually, I know you’ve discussed it. Is AUM really a measure of the man, right?
And I can tell you that last fall I did some significant soul-searching. And without really getting into the whole context, I’ll tell you I was writing, because I incessantly write notes to myself, and I wrote down for the first time in and 19 and three quarters of a year, and I meant myself, I’m not being sexist, I was talking to myself, I said, “AUM does not make the man.” I was also listening to some George Michael at the time and there’s a great line, but I’m not going to get into that, right? You know, it does not make the man. And I’m glad I realized that after I raised the quarter of a billion. So let’s get into that.
I leave Schwab. Oh, my God, I leave January 1st, 2008. What a moron.
Michael: Well, that’s good timing. It would have been harder to leave in January 2009, right? Or maybe it would have been easier because there were lots of people who left by January 2009.
Lee: Oh, just go with that.
Michael: You left at the peak when the market was going up. What were you thinking leaving when markets were so good?
Lee: It was just the time that I needed to leave Schwab, right? It had degraded. They had degraded the Schwab Private Client practice.
Michael: So you were on the SPC side not…like, you weren’t out in branches, you were in one of the central SPC.
Lee: I was a Schwab Private Client rep in a branch in Albuquerque, New Mexico. I wasn’t over Camelback and Phoenix. So I was their client-facing. I raised the money. Back then in those early days, we gave the advice, right? And with the conjunction…with your internal. But that was back when I could kind of run things on my own. Plus I was a CFP. You know, by that time I was sort of, like, working on or already had the CFA and my internals loved it because I would just sort of do the work for them or they would…you know, they knew what I was getting at.
The problem there, and listen, I’m not here to throw Schwab under the bus. He already threw me under the bus. He already tried to bankrupt me and ruin my career so I don’t…and he’s a billionaire, he’s doing fine, right? Well that’s a whole other issue. But what they were trying to do was they specifically were trying to do two things. One, not have a broker-centric model, which I get. Isn’t that what Morgan Stanley is trying to do with protocol? They’re like, “Oh no, you’re all employees.” It’s like, “Dude, that’s not a new idea. That’s how Schwab always ran.” That’s why Wall Street used to love them because their percentage of comp as profits was pretty low, right?
Michael: Right. Because they were paying people mostly on flat salary plus bonuses but not, you know, percentage of revenue the way that the salary model did.
Lee: That’s a lie but we have to keep saying that. You damn well did get paid off of your business but it’s called phantom revenue and it’s sort of like…and if you shoulder Schwab fund versus a Vanguard they pay you the same thing, but you got paid to convert, you got paid to convert. And we knew exactly how much it went. It was somewhere between about 8 to 12 basis points. So it didn’t matter what they said your bonus was about. They would redo the comp plans every three to six months. But when it came down to it, I look at my AUM back then and I divide it and do some math and I’m like, “It’s salary plus about 8 to 12 basis points.” And when I did it more, I got more of that, when it came down it went down on that. So don’t ever let anybody try to, like, fool you and say, “Oh, no, we just do this or that.” It’s like that’s fine. Let them have their little thing and that’s fine because it is what it is.
Michael: Well, I mean, ultimately, like, anybody that runs a large-scale business, like, you’re always doing the math. You know, “Here’s the gross revenue of what we charge. Here’s our staff overhead as a percentage of compensation.” So if you charge in basis points, all staff ultimately comes down to a percentage of, you know, some basis point ratio of the assets just because that’s how you tune the salaries and the bonus and the rest.
Lee: Absolutely. I think it’s always hard because, you know, people in the business are very myopic. We’re always very sort of self-centered in some way. You always feel that just all the money should just go to you and you never think about everything around. You know, you’re not thinking about, “Well, Schwab does advertise literally everywhere all the time. How much would that…” You know, so despite my outburst, I have mellowed with age. And I have a lot of respect for how they do stuff. You know, I’ve got a lot of respect for, you know, the Pirates of the Caribbean too and how they handle their business. So I think that in the end what happened was I left there. Working at Schwab, assets aren’t important, right?
Michael: Right. So you had to make a cold clean break?
Lee: Yeah. And some people came over as very lackluster. You know, the market was crazy, you know, Schwab really fought back. You know, they aren’t part of protocol or anything like that.
Michael: They fought because of the few clients that did follow you or they fought just because, like, you left the firm and didn’t leave the business entirely…
Michael: …so they were just pursuing it as a…
Lee: I mean, I can’t take anything but probably about $30 million came over. You know, nothing. But it wasn’t really….it wasn’t even what I thought would come over. Because you can’t solicit, they have to find you. Luckily it’s Albuquerque and they can find you, right?
Michael: Right. I was just saying you’re in a small town with a not totally common name. They can probably find you online fast enough.
Lee: Yeah, and I was sort of findable already on the internet, so it wasn’t a big deal. But half the people came over who I thought would come over, maybe a third. So even I was shocked about how many people didn’t come over. And some people came over later. And, you know, it kind of hurts your feelings because you thought you had a connection with somebody and it doesn’t. And it’s because some people want that corporado thing. The people who came over were really not Schwab clients in the first place. They were but they, like, sort of fell off the apple cart at Schwab because they got ripped off by a wirehouse and they just want to see what is going on.
And then they had this nice young guy in his 20s, Lee Munson. Like, “Oh, this is a nice, more ethical dude that I was looking to get,” right? So those people came over. Because in the post-mortem, which took about 10 years to figure out, the people who stayed, they were the type of people who, like, work for a corporation. You know, that kind of upright God and country, “Hey, if a corporation said it, it must be good for us,” right? And that’s why this place still exists. My clientele now are a little more skeptical and cynical, right? And so I have a very eclectic book. I hope it’s clear to everybody. I’m kind of an eclectic person, right? So your book reflects you if you let it, Michael. You have to let your book reflect you. That’s my advice. So I started marketing.
So here’s the sad part. That Observer article, which was just this embarrassing thing that I shot my mouth out one night after a night of drinking with the buddy of my desk partner at Bear Stearns during the crack, during the dot-com thing where nobody was making any money, everybody was just depressed. I’m notable only because I was the first person in our business to have a smash-and-grab… By the way, historically the Observer had written, like, smash-and-grab yellow journalism things all the time. I didn’t know this because I just didn’t read it. I didn’t know anything about it. I didn’t really know. I’d never read the Observer. I knew nothing about it. I thought the guy was writing for Vanity Fair and we were going to work on a screenplay or something like that. Oh, gee.
Now, I shouldn’t have been shooting my mouth out and saying, like, rude things. No, but I didn’t really think that it was going to go anywhere and I didn’t understand what the Observer was, right? And I had a lot of people afterwards call me. I actually had the assistant DA call me and she said, “I got, like, raked over the coals by this guy.” I won’t even say his name because he’s a loser. And so I found out, “Oh, you dummy. That’s what they do.” So it’s sort of, like, when you’re 25 and a journalist calls you. Let me give people some advice. Read the last two years of everything they wrote, right?
Michael: Just to get a little bit of a heads up before you…
Lee: Yeah, just to get a heads up. Because if I had read the last…because there wasn’t really the internet back then. I mean, you know, there wasn’t.
Lee: So if I had read the last 10 pieces by this guy, I would have been like, “Oh. You know, I’m just going to call him up and say, you know, “Whatever we’re talking about, like, please don’t…like, we’re just hanging out,” right? “Just, like, chill on that.” So the problem was when you typed in my name, that was the thing that came up or my lawsuit with Schwab. Like, “Oh God.”
Michael: Oh, just, like, literally, when you go out on your own and anybody google’s you and all they find is either Munson versus Schwab or this reformer article full of, you know, the ultimate caricature of a 1990s broker, except it was an actual biography of you?
Lee: Right, right. Like, I made it to Page Six in the New York Post when this happened. Like, my dad’s in Honolulu, or he’s in Maui on the beach reading the hot, like, the Maui Gazette or whatever, and they have a little AP thing. And he faxed it to me. He says, “What the hell?” It’s like on the top column it starts like, “Martha Stewart arrested for insider trading.” And then, ” Bear Stearns broker Lee Munson fired after, you know, suffering from, like, foot-and-mouth disease,” or something like that. I’m like, “How is this something AP news…” You know, because you’re thinking this will blow…you know, I talked to some great attorneys at the time. I’m saying, “What the hell is going on?” And they’re like, “You’re in the eye of the storm. It’ll be okay. In a week…” And it was good advice. He said, “In a couple weeks, nobody is going to remember that.” Plus, I had tons of job offers from all chop shops because they were like, “This kid’s got some brass cojones.”
Michael: All right. So true to form for the broker culture, the actual quintessential brokerage firm loved it and wanted to give you a job because of this.
Lee: Right. Including all the places nine stops off the LIE. So, of course, I’m mortified by this. I’m just like, “What have I done? I’m going to just change my life and do good,” right? I mean, it was just, like, the wake-up call of all wake-up calls. And then the industry just gives me the worst negative feedback on that, right?
Michael: So how do you even land a job at Schwab at the time? Like, was the internet just not out there enough that the hiring manager at Schwab didn’t catch this until after you got hired?
Lee: No, they don’t care, man. They knew I could sell and they needed somebody out in the middle of nowhere who could sell, right? And there wasn’t…like, I didn’t break any law. You know, I just said something stupid. And I wasn’t fired. I was allowed to resign. My U5 has always been clean, always, always, always. It was just, you know, I just said some embarrassing things and that was it. But it was something that I had to hide out for 10 years. It was the worst thing of being ashamed of yourself for years and years and years over something regarding your youth, over something that people before me had done and just lost their job or had to switch firms, you know. So like, lesson learned. You know, you’re not supposed to talk to reporters without talking to your compliance officer. And it was just a lesson learned.
The problem was is that it was the start of the internet, and so if you go back in time, I’m the first trace on the internet of that happening. Whereas I know for a fact it happened all the time, mine just landed there. And because it was so old, it always would come up to the top, right?
Michael: Right. So what was the…like, was there a goal and plan around this? Like, “I’m just going to market in local Albuquerque where people don’t look me up?”
Lee: No. I thought if I hit it head-on. What I was going to do is, you know, back in the day, you know, you write other articles, you start writing so that it pushes that down, which by the way it never did because it was too popular.
Michael: You couldn’t even knock it down on the SEO ranking?
Lee: No. I mean, I still meet people every once in a while, they’re like, “Oh my God, you are Lee Munson.” I’m like, “Why do you say that?” They’re like, “You’re that guy all those years…” I’m like, “Yeah, yeah, yeah, yeah. I know. I know.” I was also 25. Like, you know, you never did anything silly? You know, I’m like, “Don’t do anything silly, it could be on Facebook forever.” And we don’t have laws like they do in Europe called, you know, the right to be forgotten. Believe me, I cry every time I read about that.
So here’s what I need to say. So the first thing that I realized is that that Observer article isn’t good. And there’s nothing else on the internet other than that, right? Why? Because I’ve been laying low for years, right? Like, I just…because of that thing?
How Lee First Got On CNBC [1:20:56]
Michael: Except the problem is when you’re laying low that means nothing else populates about you on the internet so it continues to be the only thing people find when they search for your name.
Lee: Exactly. And nobody…it’s a bright new world, right? And I’m not thinking about that. You know, I’d moved on with my life at that point, and I worked at Schwab, right? I didn’t have to think about it. So eventually, though, some of the higher-ups at Schwab picked up on that thing and kind of knew about it. And then you start walking around with a target on your back, right?
And so I go out on my own, I realize it’s an issue, and so I thought, “I’ll start writing pieces. I always want to be a writer and do analysis as a CFA.” And I thought, “I’m just going to really get into it.” So I started publishing on the website and then I found Seeking Alpha. Oh, here’s the biggest…but I don’t write for them anymore, but let me just give them the biggest plug of their life. I started writing for Seeking Alpha back in ’08. I used to like to trade preferreds, and I still like to trade but let’s just get right down to it. I used to trade individual securities before I kind of realized that we needed to get a little more passive tilt to everything.
And I got good feedback, and it had great SEO at the time, and so it started, you know, for like a week, if I wrote a great article and lots of people read it, for like a week or two, it would be the number one hit versus the Observer article. And then a couple of weeks later the Observer would creep back up because, you know, everybody is looking. I was like, “Oh, well, what’s this thing below here?” “Wow, that’s Lee Munson?” You know, it’s that kind of thing. So it was this constant battle of not just writing stuff but writing heartbreaking pieces of staggering genius just to get a two-week respite of not having to be the number one thing. And we’re not talking about getting it off the first page of Google.
Michael: You’re just trying to get it to be second or third.
Lee: Yes. And you know what’s happening during all this? Karma is helping me, not hurting me. The universe is helping me. It’s telling me, “Dude, the only way that you will be set free is to work and is to become a brilliant practitioner in your business versus a slick caricature of a man.” And so that’s what I did and I put my head down, and I kept writing the pieces and I kept analyzing things, and I kept improving myself as a person. And I did it in the most humble of humble ways.
And by December of ’08, by doing, you know, talks at rotary and, you know, networking and being on the New Mexico Estate Planning Council, you know, just working, you know, I probably got up to, you know, $40 million, $50 million in assets and then I got my big break. And that’s when I got a call on my voicemail. I come in and it’s like, “This is…” I will protect her name. “This is such-and-such from CNBC. We’d like to talk to you and see if we can put you on today. Call us back at blah, blah, blah.” Of course, the first thing that comes to my mind…
Michael: They want to do a follow-up. It’s been, like, 8 to 10 years since the original article.
Lee: Well, I’d been blackmailed twice by journalists. I won’t say what magazines that are out there or ones out of business, good for them, but I actually had two journalists in the mid-aughts blackmail me and say, “If you don’t do a follow-up article, we’re going to call your branch manager. And how do you like that?” So can you imagine having that happen?
Michael: Just in case your branch manager has never Googled your name.
Lee: Yeah. I’m sort of like…I kind of want to say, “Well, you go for it girl,” right?
Michael: Yeah. I mean, I get the dynamic but there is a piece of like, “You’re blackmailing me over the number one hit on my name is Google?”
Lee: I know. So it’s kind of like I’m not sure. It’s sort of like, “Wait a minute, do I call the FBI to tell them how funny this is or that…” You know, you’re kind of like, “Wait a minute, maybe they’re just the dumbest journalists in the business,” you know.
Michael: You know, internet was early and they figured maybe not everybody…
Lee: Oh, yeah. Yeah, right, right, right, right. Yeah, none of my clients were stupid, right? They know what’s going on. And, you know, remember, I’m out in the Southwest. I’m out here in the Wild West. I’m out here where you have cowboys, you have…you know, this is an old Spanish colony that was built upon Native American culture, and on top of that is cowboy culture. So we’re a trilogy, we’re these three cultures. People come out here to be forgotten, people come out here to have privacy, and people come out here…like Oppenheimer came out here because this was the furthest place on the planet where he could focus and make that bomb and save the world, right?
Michael: Was that part of your reason for going out there?
Michael: Like, you wanted to disappear a little?
Lee: Of course. Well, I went to school out here at St. John’s College, great books program. So I spent, you know, years in Santa Fe. My wife is from Las Cruces. I moved out here after 9/11. The Observer article didn’t necessarily kick me out of New York, 9/11 kicked me out of New York. I just couldn’t handle it at that point. But, you know, New Mexico is a wonderful, lovely place, but it was a place that I could disappear and is a place where if a client does look at that, they say, hey, I was young and maybe I used to hit the bottle a little hard in my early days and said a lot of stuff. “This poor guy got written up on but, you know, people change.” And we’re out here in New Mexico where you have to be a little bit tolerant of things, right?
And so it was a great place for me to find refuge. Because I think everybody who comes to New Mexico in their deep core is trying to find refuge. That’s why we have more PhD’s per capita than anyplace else on the planet. It’s not just the labs. And that’s why we have more artists than any place, right? Because people who want to get lost in the work and not have society continually be doing a referendum on them. And, you know, if you go to Santa Fe, you know, 50 miles from here, that is the culture. That is the culture. So this was a perfect place for me to do it.
So CNBC calls and I call my wife and she says, “Do not call them back. Do not talk.” And I said, “Well, let’s just see what they want.” Because, like, I’m on my firm now. I mean, it’s a number one hit. What are you going to, like…
Michael: Yeah, they can’t blackmail you about your boss. You’re self-employed now.
Lee: You can’t make it more than number one. You know, at the time you couldn’t pin it. It’s like, well, when you search for Lee Munson, it’s going to pin this article. So I call them up and they’re like, “We love your piece on Citigroup preferred stocks and we want you to come on Closing Bell with Maria Bartiromo talk about it.”
Michael: They called you from the Seeking Alpha article.
Lee: Yes, Seeking Alpha. So, anybody who works for Seeking Alpha, they know this story. It was like, “Tell people that when you want them to write for free, right?” I know they pay now, they didn’t in the past.
So I basically…I couldn’t do it that day. I didn’t know where the insert studio was. I didn’t know how to be on TV. I didn’t know any of this. So luckily I’d already made a donation to Santa Fe Film Festival earlier that summer, you know, to try to, like, you know, network and all this stuff. I call this person and that person. Within a couple of hours, I’m talking to the GM of the only insert studio in Albuquerque, which is Franz Yocum. That man saved my life. Franz, thank you, thank you, thank you. And he said, “Here’s the deal. You need what’s called the insert studio, da, da, da, da, da, da, da, da, da, da. Call them back and say these things.” And I did, and they said, “Okay, well, you here but you do need to on December 26th.”And of course, I’m like, “Yes. Yes.” I mean, “Yes, I’m available.” And that was my first hit was Closing Bell.
And by the way, the piece was good. The writing was good. My points were good. And, you know, perhaps, did those people over there know who I am? Maybe. Yeah. Do they know that it would make interesting TV to have me do that? Yeah. But that is my life. That is who I am and that is all I have to sell.
So I did the thing. It was the most stressful two minutes of my life. And, you know, it’s on YouTube. You can go look at it. You know, December…just put “Lee Munson December 26th, 2008 CNBC,” and there I am looking like I just got out of high school, and I nailed it. And those magical words, you know the words, when the segment ends and the producer says, “Kind of shocked. That was great. Would we have you on again? Is that okay?” And you’re like, “Yes.” You know, it’s like the highest pitch, “Yes.”
Michael: I guess I’m not bad okay.
Lee: Like, “Yeah, let me know what you have.” I think that was what I said. You know, like, “Yeah, yeah, that sounds good. You know, just give me a buzz.” You know, I’m like, “Oh, my God.” And then I became a very loyal person when they needed to get a hit or when the producer called and said, “Somebody ditched out. Can you be over there in two hours?” It’s like, “Yes, I’m already in the car driving.” I became an expert in that craft. I learned everything I could. And then I started flying to New York so I could be on the floor of the stock exchange and do the interviews there.
I remember Dave Darst. You know Dave Darst? He was, like, chief strategist over at Morgan Stanley. Anyway, ancient history. But I remember being on it with Dave and I got up to the make-up…and if you have ever been on the floor, you know, you walk up this little, like, dangerous death ladder, and they do make-up on this little sort of catwalk thing. And there is Dave Darst at the time, like, you know, this high-up strategist for Morgan Stanley. And he’s like, “Lee Munson.” Like, “Oh, God, those words just…you’re supposed to be happy when people say your name, right?
And he said, “I read your article.” Oh, God. He said, “On a short-term case for deflation.” I’m like, “Really?” He says, “I loved it. You make great points.” And I was just like in shock. Dave Darst read one of my pieces, right? That I worked so hard. There wasn’t a word from the Observer, right? Because, I mean, this guy is just as crazy as I am. He’s just 20 years older and they didn’t have the internet when he was doing crazy things, right? Of course he’s also a dude that goes to Burning Man every year.
But we did the interview. He was so nice to me. We’re walking out and I say, “Dave, can I talk to you for a second?” He said, “Sure.” I said, “I don’t know how I got here, man. I got lucky. Can you tell me how I can stay here, meaning on TV?” He did and he gave me some really good advice. He told me a lot of stuff that I’m not going to repeat, but let me just put it this way. He taught me. He already had achieved success. He told me the secrets of the media thing freely, just passing it along, right? He’s already got his…he’s got a name. And that’s when I realized, “Hey, Wall Street is a small street and it doesn’t have to be a bad street. It doesn’t have to be a bad street.” And it was the same thing with Maria. I remember, like, she would advise me. She said, “You’re doing good. Just engage it.” You know, “Grab it.” Larry Kudlow, a big champion of mine. I still do his radio show.
But I would go out there two hours early, I don’t have a…see, I don’t have a PR guy. So a lot of times people don’t know. When you do TV appearances, a lot of times people are going with a PR agent. The PR agent sets up the interview because you’ve got a new book out or a new fund. And they handle you. I never had a PR until I wrote a book and I had one for a little bit. So I was my own PR guy, which is very rare. So I would just sort of walk through security. I would just go to Englewood, New Jersey. I’d just be wandering around unchauffeured because they’re not thinking that way. They’re not like, “Well, guests just arriving without their PR person you shove them in the green room.” Like, it never dawned on them that somebody who’s actually on the list, they’re just let in and then, you know, I take a beeline towards the green room and then I, like, duck out and I just go work the cubicles. Get in my car, da, da, da.
And I remember seeing Kudlow. I was going to be on his show. God only knows how I got on a show because producers move around and they invite you. And he was sitting…oh Larry, man. He’s like a king. The dude is amazing. He was sitting out in the lobby talking to his senior producer, and he recognizes. He says, “Lee Munson.” “Oh my God, he knows who I am,” right? And he said, “I like your style. You just keep doing it.” And I said, “What’s that?” You know, I always had these dumb questions, like, “What is that?” And he’s like, “You take your point and you grab it like a pit bull and don’t let go.” This is what they’re telling me. And the rest is history about that. That helped me mark…it helped me become credible. It helped put into context the Observer article.
Michael: Do you now literally get business because people say like, “I saw you on CNBC, I want you to manage my money?” Like, is it that kind of a thing?
Lee: And if any of those clients who’re still current clients or listening to me, forgive me, most of them are bad clients. They’re not the right clients, chasing out money. But yes, for many…
Michael: Well, that’s part of why I was wondering. I would think, like, the CNBC listener is usually not an investor in a DFA funds allocated for you.
Lee: No, no, no, no, no. And I was doing crazy stuff back then. Not crazy but I was a little bit more…I traded more back then. But I would. And there was a time after ’08 where everybody wants to fire their broker and I took advantage of that, right? You know, I mean, I took advantage of that market. So I did get some of those people, and that was the way I raised some money for a little while, but then I realized that they’re wrong people. It’s not a good match.
Now, all the while, I’m still writing for Seeking Alpha. I get a gig, and I don’t pay a dime, writing for the Albuquerque Business Journal, you know, bizjournals.com, that company, and I do this Money 101, and I’m super busy. I’m everywhere. I’m in New York, I’m in Albuquerque. Again, rotary speech circuit, right? Somebody is opening an envelope, I will be there to talk, right? You know, no networking event, not attending, right? Hustling.
And I start working over at UNM and I start doing talks there, and I get some clients, you know, these sort of public things that I do. But the Money 101 thing which I did for maybe three years, that was great for getting local business. The TV thing gives you credibility. So if somebody hears you, they’re thinking about you, they go on the internet and they see all these CNBC or, you know, Fox Business interviews, and they’re like, “Ugh, well if he’s on TV, he’s obviously trustworthy.”
Why Being On TV Provides Credibility Rather Than Leads [1:36:29]
Michael: So it was more about the credibility you get from the TV than actually the clients you got indirectly from the TV.
Lee: And I’ll tell you why. It’s not that somebody on TV is a good or bad person, it’s because when they looked at the interview, they could see that I had a point of view, they saw that I was articulate, and they saw that I could hold my ground. And also they saw that, you know…and the reason I don’t do CNBC anymore is because I got tired of getting canceled on and they always put me in the octagon fighting with other people. You know, Fox Business is great because I know a lot of the producers. They let me just go on solo and do my thing, right? Just, like, chat.
But people could see that nobody was going to get one up on me in an argument. I always did my homework because they were the most important things to me. It wasn’t just some throwaway interview. Because I hadn’t had 100 hits yet, I wasn’t that experienced. So I really did my research. So people thought, when they saw these things, they were like, “This guy really knows his stuff.” And that’s what made me memorable. And then you’d have, like, hosts afterwards that say, “Hey man, thanks for doing your homework before getting on here.” And of course, I’m like, “There’s some people not?” And then I thought, “Oh, okay, I think I know why I’m on here. It wasn’t because of my past, it’s because I do my homework, and I’m younger, good-looking, and I’ve got passion. I can’t sit still.” So it was just different.
Michael: Yes, you were an animated guest on TV?
Lee: Yeah, exactly. So it was a hard road. It was one client at a time, a lot of mistakes were made, but I did the business and I got clients, the bulk of them through networking with other professionals like lawyers and CPAs. It wasn’t one source. I wish I could tell you more than anything Michael that I had this little secret thing and then all the referrals started coming in. It was just constant, constant working every single thing just for years.
And then I started doing local radio. I do a little spot for three and a half minutes on Thursday mornings on KKOB, the Bob Clark show, which happens to be the highest rank in anything in New Mexico. And so people who say radio is dead, it’s like I know, but if you’re the last person in America selling buggy whips, you’re going to do just fine, right? So I started doing that kind of unsuccessfully at first. I quit after a year and took, like, six months off, which kind of pissed them off and came back. But I started getting good leads from that.
And then as you know, after so long, people just start calling you and say, “Hey, my friend told me about you,” or, “I saw you on Yahoo Finance,” right? I do a lot of stuff with Yahoo Finance and do a little web stuff. Or, “I saw you on Fox Business,” or, “I saw you on CNBC,” or, “I saw you at that rotary meeting,” or, “I read your thing on Seeking Alpha,” or, “I heard you on radio,” or, “I love those business 101 articles that you write,” even though I haven’t written one in 2 years but people just presume I’m still doing it and they just haven’t been keeping up on it. So what I can tell young people out there is that you’ve got to try different stuff and you’ve got to just keep doing it.
And, you know, one of my biggest clients I got through the Paladin referral system thing 10 years ago, whatever, you know. And that was fine for a year or two. I stopped doing it just because it just dried up. But you can’t worry and have anxiety if you’re a younger advisor out there that something you did that got you a few clients isn’t working anymore. Don’t try to make it work if it’s not doing it. Just move on to do something else. And never freak out to say, “Oh, that one great client who gave me all these referrals, who really kind of changed my life, I got them some way that it doesn’t work anymore.”
Lee’s Advice For Introverts [1:40:15]
Michael: One other thing I’ve got to ask about this before we wrap up. You know, you made a comment earlier that notwithstanding all of this, you know, from the Observer article to writing, to doing TV, you know, you made the comment that you’re an introvert. So I’m just wondering if you can kind of expand on that, right? The quintessential stereotype of the advisor, particularly the advisor who’s good at growth is entirely about the extrovert that’s really good at going to networking meetings and meeting lots of people and driving referrals and all of that. And so, I don’t know, like, are you really that introverted I guess is almost what I want to…
Lee: Not to the general public. I told you that was a secret that I was just telling everybody today. It’s a rare moment, a rare Munson secret. Here’s what I mean by this. And I get it, 99% of people who brush into me are going to say, “Lee Munson is an extrovert. He needs a stage. He wants to perform. He wants to give, give, give. If you walk up and start chatting him up, he’ll want to leave sooner than he does.” I understand that. I understand that on the surface I’m this outgoing guy. Well, I am a badass, and I’m engaged in everything that I do, but you have to understand that anybody who’s going to be on television regularly, whenever, you wear your heart on your sleeve. And I’m an only child. When I go up to Taos to go ski, to the chagrin of people that I know up there, I don’t like to be around other people. I like to be alone.
And in my office, I don’t have interns anymore because I’ve told the staff, I said guys, “I want to be alone and I want to be left alone.” And I have a nice big war room with all my little talismans and my little movie posters and little knick-knackery. And it’s my own special little space, my little sanctuary. And it’s not so much a respite area, but it’s my more natural thing. Because I have to sit in deep thought thinking about what’s going on with my clients, and envisioning myself as them and what might work for them, project. And that is very much something that I have to turn inward for. And that is where my best work comes from.
Now, in the delivery of it, you know, it’s sort of like, “Hey.” You know, I get real chatty. I love people. I like to hang around, but that’s just betraying how kind of a loner I am, you know. And I bring that up because I think for those people out there who have a complex personality profile, don’t lose hope. When you do the DISC assessment and you’re darn well a D and everybody knows it, but then you’re confused by…answer some things, you’re so polar opposite. And you’re thinking, “What’s going on here? Why can’t I be a pure dominator? Why is it that I have so much empathy for people? Why is it that I want to be the life of the party but secretly, if I don’t get kind of…”
Like, when I walk into a big room and do this stuff, the first thing I want to do is just go hide in the corner and be invisible. And I have to force myself not to because what I find out is that despite my nature, when I engage people, it’s a lot of fun. It’s not my natural disposition. I have to warm that up. That’s why I say I’m kind of secretly at the core a bit of an introvert, and I only express that extroverted side because it’s good for me.
Michael: So what’s your advice for other introverts that struggle with this?
Lee: Make-believe, act as if. Don’t let the fact that you’re inward define you. And on the flipside, if you’re kind of a brash, great salesperson, what not, and you feel that you have more to offer, don’t let the industry say, “You’ll always just be a hunter. You’ll never do any real work. We’ll have people behind you run the money and we’ll have people behind you doing the plans, you just go out there and sell, sell, sell, and just be bad happy.” No, be a renaissance person, right? Do it all. Experience all these things in life. And that’s my advice to people.
Because some of the best people in the business are people who are not like me, that don’t have belief in themselves. They don’t have confidence. They don’t think that they can really bring that Lee Munson experience. I think, “Oh, hell, yes, you can. You know why? Because you did the work. You know your stuff. You know more, you’re educated, you get your CFP. You know this business, now go out and be loud and proud,” right? And so maybe it’s just about confidence. I don’t know.
Michael: Well, I’ll admit that was the path for me. I’m very much an introvert as well. You know, you don’t need those Myers-Briggs-type systems, like, I score a very strong introvert. And it’s the same kind of dynamic. You know, I’m an introvert that does a lot of professional speaking, and it’s the same sort of thing. Like when I’m out speaking, you know, I’ve also got alphabet soup after my name, and I’ve studied the hell lot of it. And I know I know my stuff. I’m confident that I know I know my stuff. And so, you know, ask me to give a speech about the industry, I’m happy to talk in front of 1,000 people. Put me in a cocktail party with 20 and I will be the one sitting in the corner furthest from the noise and probably not talking to anyone unless someone is nice enough to have mercy and come talk to me.
Lee: We’re the exact same opposite. Let me just stop you there, Michael. When I’m in the little intimate things, like client intimate things, I really just want to hang up. I really just want to…that’s why I don’t do a bunch of prospecting events because I’m just not comfortable with it. The larger the crowd, or on TV, oh my God, just let it roll.
And I went to, like, the CFA Annual Forecast Dinner last week, I’m on fire. You know, there’s 500 people in the room, I bought 2…by the way, I buy 2 tables and I populate it, not with clients, I populate it with the student set at UNM, right? People should do that more. Like, give the kids a break. So I think it’s funny you asked me why it’s so funny that I think of myself as an introvert, but when I look at you, because I’ve seen you talk, I’ve seen you around, I think it’s hilarious that you’re sort of saying, “Well, I’m an introvert too.” It’s like, “Oh, please.” You know that nobody believe you or me.
Michael: We’ll have a quiet little…
Lee: I would love that.
Michael: …club in a corner someplace.
Lee: We meet in often and not have to talk much because I’m in. If I don’t have to really share my feelings and I could just, like, check a box to say that we attended the secret introvert meeting, I’d love to do that. Maybe you could come to Taos sometime and we could ride the chairlift together and not speak to each other. Ski down, and then just keep doing that.
Michael: Well, yeah. We’ll start organizing, like, introverts club gatherings at conferences but no one has to talk to anyone else. It’s a great gathering.
Lee: But no, it’s something you’ll overcome.
How Lee Defines Success [1:48:12]
Michael: So as we come to the end here, you know, this is a podcast about success. And, you know, one of the themes that always comes up is that, you know, success and what we’re working towards just means different things to different people. You know, sometimes it’s financially-driven, sometimes it’s personally-driven, sometimes it’s legacy-driven. So you’ve built this amazing organic practice, and, you know, have had this interesting journey over the past 15 or 20 years in your career. So as you look forward from here, how do you define success for yourself?
Lee: I used to define success all wrong. How much money, how much AUM. I think I define success in my positive feedback email folder. I define success in having young people tell me that they got that first job based on me yelling at them about their crappy resume. And I think that I define success as being somebody that my community trusts and that I can reinvest and pay forward and be part of my community in a more deeper way and share my knowledge. And that’s how I define it.
And again, it’s a lot easier to do that once you’ve become successful, but I think when you do have the opportunity to have some professional success, I think at that point, that’s when you start needing to redefine what it means. I was so hell-bent on becoming, you know a man, that once I got there, I realized that that’s great, but I’m a pragmatist and I thought, “I’ve got to change it up,” right? “I’ve got to redefine this, and it’s really about how many people did I touch? How many lives did I make better? How many clients are saying to me, “I’m really getting to do what I want to do because you helped me?” My heart flutters, right? And that’s where it’s at.
And you know what? I wish I’d known that earlier. I think I could have been just as successful with that attitude. And I think I was my own worst enemy. I think that if I were 25 all over, I would have loved to have taken that attitude. And, you know, clients who’ve known me for a long time will probably say, “He’s BSing you, Michael. He’s always cared about the clients.” But I don’t remember it that way. I always remember just the desire to achieve and to have success.
Michael: Would you have been able to convince 25-year-old you about that if you hadn’t had the Observer article and all the things that drove you thereafter from it?
Lee: That 25-year-old me, if it wasn’t for the Observer article, he would have been another New York stockbroker statistic, a disgusting piece of human wreckage, a person who only felt that their only purpose in life was the buying and selling of others. And just know by 42, that guy, without the Observer article, oh, I know people like that. I still know some of my cohorts from those days, and they’re not people that I necessarily want to interact with, talk with. They’re people who quite frankly I feel bad for. I feel bad that they didn’t lose their way, you know, 10 years ago and were able to rebuild.
Michael: So in the ultimate moment of irony, does that mean that the writer that burned you may have actually saved you?
Lee: Yes, but he was still…
Michael: It’s fair. He wasn’t doing it to save you, so.
Lee: Okay, so if I saw him on the street, would I still want to punch him out? No. If I saw him on the street now, honestly, if that…I can say his name. His name’s George Gurley, and he did me a favor for his own self-interest. And I think he and I were both kidding ourselves about what we were doing. And it did save my life. And that’s what maturity is all about, is about looking at the big mistakes in your life and realizing that there’s a higher path for you and that that had to happen or else you could never be where you are today.
And I remember a great money manager who helped me and mentored me for a little while, his name was Robert Rikoon, he still has a great practice up in Santa Fe and whatnot. He said, “Lee, the way you know that you’ve achieved something in your own moral self, your soul, is when you can put a copy of that article, frame it, and put it on your desk and look at it every day.” I haven’t got it and I don’t, like, look at it every day, and I don’t really like to talk about it. This is the first time I’ve kind of talked about it for some time. But I’m technically at that point, right? And the main thing is that you have to forgive yourself and you have to remember what put you in the position.
And what put me in that situation to be so pathetic as to pull a stunt like that, the context was very simple. I was at Bear Sterns, I was depressed, I hated everything about the business, you know, transactional brokerage firm. I didn’t feel I was helping anybody. I felt that it was a disgusting culture, which it was, and that I wanted to shoot myself in the foot so I could move on with my life, and I aimed incorrectly and hit my head. And that’s about it, right?
Michael: It’s amazing how the journeys we take end out defining us sometimes.
Lee: So thank God for bad PR sometimes.
Michael: Well, thank you for joining us and sharing the whole story and journey over the past 20 years or so. It’s a pretty amazing path.
Lee: Well, I’m sorry that it got so serious at the end with Kleenex and, you know, spiritual awakening, but that honestly is really where it does end.
Michael: Well, thank you. Thank you for joining us on the Financial Advisor Success podcast.
Lee: It’s my pleasure. Keep doing this. This is a great asset to the whole industry what you’re doing here. And I’m not just trying to give you a plug but I enjoy them. I tell other people in the business about them. And obviously this will be one of the greatest ones you’ve ever done, but I think they’re all great. And I use them as a great tool to learn new stuff. So you can never be too successful or too sure of yourself not to keep listening. Have a wonderful day.
Michael: Well, thank you.