Welcome back to the 108th episode of Financial Advisor Success Podcast!
My guest on today's podcast is Lisa Kirchenbauer. Lisa is the founder and president of Omega Wealth Management, an independent RIA in the Washington, D.C. area that oversees more than $100 million of assets for nearly 100 affluent clients.
What's unique about Lisa, though, is her targeted focus with two specializations: entrepreneurs and people in transition, to whom she charges a financial planning fee that starts at $7,500 a year while forming deep client relationships by implementing George Kinder's EVOKE Life Planning process and has still managed to achieve what is completely impossible for most advisors, take 2 6-week sabbatical vacations in the past 6 years.
In this episode, we talk in depth about Lisa's unique financial planning services for clients. The way she truly differentiates her services from the very start in prospect meetings by discussing everything from communication preferences to George Kinder's famous three life planning questions, the additional assessment tools that she uses, from Riskalyze to Kolbe, to better understand and connect with her clients, the four-meeting financial planning process she takes all clients through before she ever talks about signing an investment management agreement, and the way she's further honed her services into two niches: for entrepreneurs and people in transition, which aren't the only types of clients that Lisa has but are, as she puts it, the specialties where she does her best work with clients.
We also talk about how despite developing a financial planning process with clients that are especially a deep on the advisor-client relationship, Lisa still managed to take two six-week sabbatical vacations in the past six years. The way she works with her staff for an entire year in advance to prepare the firm, train the team and transition relevant and necessary tasks to take that sabbatical, how she trained clients as well to become less dependent on her and more comfortable working with the other members of her team, the way she breaks the news to clients, and her lessons learned about how she might have still done the sabbatical a little bit differently for the next time.
And be certain to listen to the end, where Lisa shares how the growth of her firm ultimately led to a rising level of turnover until she began to reallocate her own time to focus less on just the clients and more and truly managing and developing her team, and the entrepreneurial operating system that she ultimately implemented to help better run and scale her practice.
So whether you're interested in learning about what it takes to really unplug and take a sabbatical as an owner of an advisory firm, tools you can use to develop and deepen your relationships with your clients, or how to set a clear strategic direction for your firm, then we hope you enjoy this episode of Financial Advisor Succcess!
What You’ll Learn In This Podcast Episode
- Lisa’s advisory firm as it exists today. [04:34]
- What her fee structure looks like and how it has evolved. [08:28]
- How she explains her fee structure to clients. [14:47]
- The two niches her firm targets. [23:24]
- How she differentiates her services from the very start in prospect meetings. [28:55]
- Technology tools she uses. [41:27]
- How she’s using Kolbe assessments in a client context. [45:56]
- How she uses Kinder’s EVOKE process to build relationships with clients. [57:34]
- The four-meeting planning process Lisa takes all clients through before anything gets signed. [1:00:36]
- Why and how she manages to take sabbaticals from clients who have a close relationship with her. [1:08:45]
- How long in advance she prepares staff for her sabbaticals. [1:14:17]
- What she did during her six weeks off. [1:22:17]
- The hardest part about preparing for Lisa’s sabbatical [1:26:40]
- The systems she put in place for dealing with emails while she was away. [1:28:32]
- Major takeaways from Lisa’s experience. [1:31:54]
- What’s next for her advisory business. [1:33:13]
- The "easy-to-adopt" strategic planning system for entrepreneurs. [1:40:13]
- How she defines success. [1:44:23]
Resources Featured In This Episode:
- Lisa Kirchenbauer
- Omega Wealth Management
- SEI Investments
- Washingtonian Best Financial Advisors
- Sudden Money Institute
- George Kinder on Financial Advisor Success Podcast
- eMoney Advisor
- Using Kolbe In Your Advisory Firm
- EVOKE: A Life Planning Methodology
- Lighting The Torch: The Kinder Method of Life Planning
- Entrepreneurial Operating System (EOS Worldwide)
- Traction by Gino Wickman
- Get A Grip by Gino Wickman
- Being Mortal by Atul Gawande
- Living An Examined Life: Wisdom for the Second Half of the Journey
- Engagement Multiplier
Michael: Welcome, Lisa Kirchenbauer, to the "Financial Advisor Success" podcast.
Lisa: So happy to be here, Michael. Happy New Year. It's nice to get to talk with you.
Michael: It's good to get to talk with you as well. I'm looking forward to today's podcast, where we get to talk about that fun thing that I feel like no one ever seems to get to do except you, that I know of, which is take a sabbatical from your own firm.
Lisa: Yeah. Wow, I'm... well, it'll be fun to talk about it.
Michael: Yeah. I mean, you actually I know run a very interesting practice in a number of different ways around what you do and how you structure your services and what you do with clients. And so we're going to talk about that as well. But, you know, I know one of the truly, like, unique things, at least for any other advisors I know, is that you have taken sabbaticals from your own practice. Like, actual extended periods of time of disengaging or unplugging from your firm and then coming back again. Which I feel like is one of those things that we all sort of talk about in idealized sense. Like, the great thing about the advisory business is that you have all this control of your life and flexibility until you build a business with demanding clients who want all these things from you and then you can't actually have all that control and flexibility you sort of thought you were going to have. And so just the way that you've managed to find a balancing point to that I think is a really cool thing to explore further.
Lisa’s Advisory Firm As It Exists Today [04:34]
Michael: Excellent. So as a starting point, though, I think just to set the stage for everyone, can you talk about just the advisory firm itself as it exists today? Like, what is the firm? What do you do? Who do you do it for?
Lisa: Got it. So actually, we're celebrating our 20th anniversary in March. I began as an affiliated RIA, and in 2004, which seems like a lifetime ago, I went fully independent, and we custodied a couple different firms. Since 2004, we had adopted financial life planning as part of the work that we do, and we can certainly talk more about that, and a different kind of fee model, basically a...you know, I know we don't like to call them retainers, but a planning, annual planning fee with a lower investment management or AUM fee approach.
And part of that came out of the kind of clients that we're working with, which tend to be people in significant transition or entrepreneurs. And in both of those cases, our fee model can be pretty valuable because sometimes, you know, either in the case of business owners, the asset is tied up in the business and otherwise they wouldn't be a great client for most of my colleagues out there, or they're in transition and perhaps the money isn't showing up yet but they need incredible amounts of financial planning and transition management work, and we're able to help them.
And I have five other associates, two other financial planners and a financial planning associate, a full-time operations person. So that's another thing that we're really committed to here. That's not a pass-through position at our firm. And then an office manager. And we're based in Arlington, Virginia, right outside of Washington, D.C. I can even see the Washington Monument from my window right now.
Michael: Oh, it's an excellent view. It's an excellent view.
So I'm struck by this framing that you have this annual planning fee with lower AUM fee and that you're not necessarily doing it of just as a way to be fee-competitive per se but simply because you're trying to work with entrepreneurs, you're trying to work with clients in transition, you're trying to work with folks who just literally may not have available assets to manage but they do have financial wherewithal to pay you. You just have to charge them an annual planning fee, so you do.
Lisa: Yeah, exactly. And I think it started out absolutely that direction. I think if we're all honest with each other, I feel that it allows me to be a little more competitive on the investment management cost side now. And we've also gone to ETF models on our retirement plan accounts. So that's also keeping the cost down. So, you know, I think if I'm totally honest, we realize...I believe that there is....clients are focused more on what they're paying. And so that does allow us to compete a little differently. But it really does help, especially our business owner clients. And as we all know from a tax loss standpoint, you know, there's at least a chance that our planning fee may be somewhat deductible for the business owner, whereas we all know our investment management fees are not.
Michael: Right. Not anymore, unfortunately.
Lisa: Not anymore.
Michael: We had them until we didn't. So for the planning fee, you know, to the extent you can say it's legitimately for small business planning as a part of the client's overall services, you're essentially having the client claim that, you know, planning/consulting portion of their fee as a business expense for supporting the business.
Lisa: Yeah, exactly. And, you know, as you know I think from the past and know as a business owner, personal and business are quite intertwined.
Lisa: You know, we might be talking about the personal side one moment and all of the sudden we're back on the business side because the personal cash flow is impacted by the business cash flow was impacted by the tax planning. You know, they're all very intertwined, especially for small business owners.
What Lisa's Fee Structure Looks Like And How It Has Evolved [08:28]
Michael: Yep. So can you give us some sense as to what this fee structure looks like in practice? I would imagine you've got a couple of different tiers that you work with for different clients, but is there sort of a standard like $5 grand plus 0.5% or $10 grand plus 0.25%? Like, what does that planning fee plus AUM fee look like?
Lisa: Yeah. So at this point, and we may raise this in the next year or so, but our minimum planning fee is $7,500 a year. And that's basically for clients under $1 million worth of investable net worth. And then we have tiers from $1 million to $2,499,000, $2.5 million to $4,999,000, you know, $5 million up. And then some point higher up it's just negotiable. And then the investment management fee is generally, for most of our clients, at 35 basis points.
Michael: Okay. And that tiering of the minimum planning fee where it starts ratcheting higher above $1 million, $2.5 million, $5 million, etc., that's based on their, like, total net worth? That's based on investable assets? Like, what things go into that calculation?
Lisa: Yeah. So it's not like, you know, I know, you know, like The Planning Center and some of those other firms have that overall net worth. We're doing it on investable net worth. So, you know, it's basically going to be investments. And if they have a significant cash position, that would be included because often were advising on the cash. Certainly, you know, the 401(k) is held elsewhere, that kind of thing, but not the house, not the business. You know, I think that might be our last evolution of fee model, but we haven't gotten there yet.
Michael: Interesting. So the idea is just sort of things that are either idle assets or truly not liquid assets, right? The house, the business that they're building, just you don't plug it into that equation because you're just...like, there's only so much advice I can give you about your house. Like, "Yep, it's nice. Keep living there."
Lisa: Well, you know, we're certainly...I would say that our planning fee, though, is there to cover some of that, you know, those kinds of assets, but we're not trying to put a price tag on it.
Michael: And can I ask, like, how much does that fear start...fear, fee, excuse me, start to ratchet up? Like when I'm over $1 million, does that just go from like $7,500 to $10 grand or like $7,500 to $15,000?
Lisa: Yeah, $10,000. Yeah, and this is...again, this is one of these things that we haven't really looked at recently and I probably need to put in some sort of in-between tiers, but it goes $7,500 to $10,000 to $15,000 to $20,000, $25,000, $30,000. And I think we've got one client at $30,000 or $35,000.
Michael: Okay. So, I mean, it does kind of scale I guess, like, at a similar kind of graduated structure. Like, five times the net worth is not necessarily five times the fee. You've got some sort of break points implicitly built in there.
Lisa: Yeah. You know, interestingly, when you look at the math overall and the fee that the client is paying overall, it really doesn't look much different than 1% or 0.9% or, you know, 75 basis or 70 basis points on the higher net worth end. So it ends up looking very similar and competitive with my colleagues out there, but it's just structured differently, and we're really clear on what we're doing for each part of the work.
Michael: And then I do have to ask, so on the investment management side, you said you're at a 35 basis point fee. And what does that look like from an investment management end? Like, are you still doing all that internally? Do you outsource that? Are you a active manager or passive manager? Like, what does 35 basis points get you as the client?
Lisa: So what we would say gets them is that, you know, we're doing all the administration on the accounts. We're providing the strategies. We're doing the trading. We're providing performance reporting. So it's just really that part of the function of the investment management work. We work with SEI primarily. We have a little bit of assets at Schwab. We're about to literally probably in the next day acquire about $23 million of assets from another firm that we just acquired, and that'll be at Schwab. But the bulk of our accounts are at SEI in a combination of ETF strategies, so passive strategies and active. We're big believers in having both.
Michael: Okay. Interesting. And so from the SEI perspective, I think they've got their own fee that they charge for, you know, their investment management process and wrapper. So, like, do you just pass that through to the client or is that bundled into your 35 basis point fee? Like, how do those fee pieces work? Because I know that's a challenge for a lot of advisors when they're charging an AUM fee but also working with a TAMP provider like SEI is this whole like, how do you carve up the fee and who pays what? So how do you allocate that fee?
Lisa: Yeah, that's such a good question. I think that the whole fee thing could be a whole conversation on its own. But the short answer is, on the active models, you know, their internal expenses on the high side are maybe at 1 or maybe lower than that, but as you get, you know, more conservative, they're going to be in the lower, you know, 30 to 40 basis points. And those are internal fees, so those are in the price on the mutual fund models, on the active mutual fund models. The ETFs, some of it is, you know, the cost of...because they're holding brand-name ETFs, so there's a little bit of cost for the ETFs themselves, then there are some SEI-related management fees because they're doing a little tactical management. And that actually comes right out of the client's account, and then our fees are separate. So it's honestly very confusing.
And then the managed account side, a bunch of it is transparent to the client. In fact, most of it is transparent to the client on the, you know, individual stock and bond portfolios. And then there's our 35 basis points. So, you know, that's another reason to keep our costs down because they're doing a lot of the heavy lifting, but we're still the ones who are monitoring and come up with the strategy. And we do sort of a pools of wealth approach, and so we have multiple accounts. You know, so there's definitely time and energy put in there.
How Lisa Explains Her Fee Structure To Clients [14:47]
Michael: So I'm curious just, like, how do you explain that to clients that start asking like, "Wait, if I'm paying SEI, why am I paying you?" Or, like, "If I'm paying you, why am I also paying SEI?" Like, how do you...? I mean, I get it from sort of the conceptual perspective, like, "We do our things and they do their things, so we charge our fee and they charge their fee," but I'm just curious, like, how do talk that through with clients who start asking like, "Why am I paying you and them? Is this a double fee? Like, what's going on here?"
Lisa: Yeah. So interestingly was in that conversation this morning with a relatively new client and, you know, what I said to them is that... You know, in the old days when we had our models over at Schwab, I mean, you know, if you're working with active funds over at Schwab, you've got internal management expenses over there. I mean, to be clear, we're just doing it over at SEI but what we're getting is a depth of multi-manager strategies that are being monitored 24/7 by a global entity. I can't reproduce that over on the Schwab platform. I just can't do it. And so there are some costs, you know, associated with them doing their part, but we're still the ones who are working with the client to decide which strategy is right for this goal. And we're still the ones who are sitting with them to communicate the performance. And we're still the ones who were doing all the administration when we've got to fill out the paperwork or get money out to them.
And so, I don't know, the clients have seemed pretty clear. But we actually created a diagram to try to explain like when you're looking at your performance, like what fees are coming out when, but it's really hard to explain. And I think it's one of those conundrums in trying to explain what we do to clients at times.
Michael: Well, particularly because of just, I know, the layering effects, right? When you get into like, "So if you do a stock and bond portfolio with SEI, they're going to charge you this fee. But then if you do a mutual fund portfolio, they won't." It's like, "Oh, well, great, then I'll choose the mutual fund portfolio." It's like, "Well, no, no, no, no, that's because they're just using some of their own branded funds. Like, you're still paying it, you're just paying it inside the fund where you don't see it instead of outside where you don't. So actually, these aren't different, even though they look different."
Lisa: Oh, yes. Yes. I hate that sort of thing.
Michael: And just, yeah, all the problematic challenges of I guess, like, the mental lines that come up, that as soon as that fee comes out as a separate expense line item, I think it makes everybody more anxious. It makes us more anxious as advisors to justify our fees. It makes the clients sometimes more anxious because they're seeing the fees come out. And I feel like it's sort of the weird, I don't know, I was going to say dirty secret but, like, it's not a secret, that, you know, putting a client in a fund that charges 1% or 0.5% or whatever it is is so much easier than putting them into a third-party manager that charges the exact same thing but does it in a transparent manner where you see...you know, no one questions when they see an advisory fee come off and they know there's an ETF or a mutual fund expense ratio, but suddenly, there's all these questions when an advisory fee comes off and there's a third-party manager fee from SEI, whoever it is, and like, it's the same fee, it's just more transparent.
Lisa: And yet, you know, I have to tell you that normally when the fee question comes up, this is a conversation we've had internally here, often when the fee question comes up, there's a bit of a question about value. It's really about value. And we've been dealing with this for a long time because our fees have been really transparent. I mean, there's a bunch of our clients who still either write checks or we debit fees from their bank accounts, not from their investment accounts. And I remember one of our top clients saying to me that she wanted to write the check, or I think now we debited maybe, because she wants to be mindful about what she's paying every quarter. Well, whoo, you know, that's...it's right front and center. And for many advisors, you know, their fees look invisible. You know, you've seen the studies, "What are you paying your advisor?" "Nothing." "Well, yes, you are paying your advisor something."
But what's going to be interesting, I just realized as we're talking about this, is that think about on the tax return that there's actually...our fees are not even going to be on there anymore. So they just became more invisible than they already were, for many people, maybe not so much mine. But for most advisors where their client was either attempting to deduct or was deducting on the Schedule A, poof, gone. It's magic.
Michael: So then I've got to ask, have you always done this blended like separate planning fee plus AUM fee structure or were you more AUM-based in the past and have transitioned towards this?
Lisa: So, you know, I've been in the financial services industry since '85, but I started working with clients in the early '90s. And so I started out like a lot of people. I had licenses. So I was commission, flat planning fees. By '99, when I started my firm, I was already starting to do AUM and still flat planning fees, like one-time planning fees. But when we got to 2004, and this was actually...I was partially encouraged by SEI because by then I was working with them as a custodian and also just the life planning work we do. In 2004, that's the model we went to. I mean, there's a few exceptions, for a variety of reasons, but when we onboard new clients, they're coming on with that planning fee and the separate assets under management or not. Like we've got a couple of clients where assets are held elsewhere and we coordinate with their other advisor who's actually managing the money, we're the financial planner.
Michael: And, you know, that's a good news version of charging a standalone planning fee. Like, you can just get paid for your planning. You don't have to manage the assets. Like, not that it's bad to get paid for the assets and bundle the planning in, but you get to work with clients that other advisors wouldn't get to work with, or ironically that other advisors literally are also working with, because you're just doing the planning work and charging for the planning work. Well, so I guess let me ask this way, do you have clients then, if you're doing these separate fees for separate services, do you have clients that only buy one but not the other? Like, do planning but don't bring a portfolio or just do the 35 basis point portfolio fee but don't do the planning?
Lisa: Yeah. So we don't allow anybody to just buy the investment management because that's just not how our firm is built. I mean, you know, as you know, we are big believers in financial life planning. That is the beginning of all the work we do. And so you could be just a financial life planning client without the investment management piece, but you can't be just an investment management client. Because if that's what we're doing, you know, they're coming for cheap fees, they're probably chasing returns. That is definitely not our target client.
Michael: So can you talk a little bit more about, like, the size of the firm you're working with? I don't know if you measure by clients or revenue or assets under management. But, like, how can we think about the size of the firm and how many people you're working with?
Lisa: So we have about 90 families we're working with, and we'll add....and we're, you know, give or take the day, we're at about $100 million of assets under management, with another maybe $40 million or $50 million under advisement. Because we use eMoney, we can track all the other assets that our clients have. And basically, we know where everything is. And then with this new firm, we're going to pick up about, I don't know, 7 to 9 clients and about $20 million to $23 million worth of assets. So they're higher average, you know, net worth or whatever.
Michael: So your typical client then, right, just sort of doing the math is just over $1 million of assets under management. I guess with the caveat that the bulk of your fee is the planning fee, although I guess...
Lisa: It's about 60%, 60% of it. You know, well, yeah, 35, you know. But, yeah, depending on how the market is doing, the planning fee becomes a bigger part of the firm revenue.
Michael: Well, yeah, I guess if I take a client at $1 million, like, they're paying 35 basis points on their $1 million, they're paying a $7,500 planning fee, their all-in fee is just over 1% for a holistic planning offering, like, which is right on track with what everybody else kind of charges for $1 million clients for a full-service planning. So as you said, like, you're not necessarily built to be cheaper per se, just, it's just a different combination of how it comes together to fit the clients that you're working with.
The Two Niches Lisa’s Firm Targets [23:24]
So when you talk about the clients that you're working with, you mentioned a few different types that you...you work with clients in transition, you do a lot of work with entrepreneurs. So, I don't know, like, would you characterize these as niches? That you're like a firm with two niches or how do you think about client targeting?
Lisa: Yeah. So I think about as those are our specialties. I mean, certainly, there are other people who come to us. You know, we might get a couple in their, you know, 50s, they're eventually planning for retirement. Actually, most of the time when people come to us, there's more transition happening in their lives than they realize, which is sort of funny. And/or once we take them through the life planning, they create transitions. So they might have not...you know, they might be down a different path all of a sudden.
You know, and the average age of our client is about late 50s, maybe 60 at this point. So we're just...you know, it's really boomers and, you know, starting to contemplate, head into retirement in some cases. We have more women than men. We've done a lot of the demographic studies on it. But that's our specialties where we can do some of the best work are with successful entrepreneurs and with people in transition, which, you know, that can overlap. Because if you're selling your business, that's a transition. But, you know, there's inheritance, there's retirement, there's a major career change. We've certainly taken clients through that. You know, we've had a number of clients take sabbaticals, by the way. So when we get back to that, we can talk about why that's important for me to do it when I think about our clients.
You know, we don't do a lot of divorce work. We'd rather be on the back end of divorce. So in other words, helping them create their new life, helping them, you know, create their plan for the future, as opposed to being right in the middle of...you know, that's our specialty, and there's people who are really talented at that, but that's not really an area that we like to focus on.
Michael: I like how you frame these, that, you know, I mean, as you said, "These are our specialties where we do our best work," right? So it's not excluding anything or everything else, but just, "These are our specialties where we do our best work." Like, it's a nice, just, delicate way of putting it.
Lisa: Yeah. And, you know, I mean, where I think people get their money's worth, right? I mean, you know, an 80-year-old, unless they're one of the moms of our clients, which we take all the moms of our clients, but, you know, an 80-year-old couple, you know, I mean, unless they're really dynamic and they've got all kinds of balls in the air and stuff going and maybe they're still running a business, yeah, that's probably not where they're going to feel the value of our work.
Michael: But I am struck, like, you are not I guess bashful, I would say, about these specialties. Like I know if I go to the Omega Wealth Management homepage, like, you know, first thing it says, "We take a holistic approach." And then, like, immediately below that, "Are you an entrepreneur? Click here. Are you in transition? When life changes, money changes, and when money changes, life changes." I always love that saying.
Lisa: Me too.
Michael: Like, "If you're in transition, click here." Like, you are right their front and center, those two specialties on the homepage above the fold.
Lisa: Yeah, you know, we've got to do that. I mean, you know, in the D.C. area, as you know, I've got a lot of competition. I mean, there's a lot of people doing what is supposedly similar work, and I think we've got to put a flag in the ground somewhere. And we've done a lot of training. You know, this isn't just we picked this thing out of the hat, by the way, as you know. I've done a lot of training, my team is getting trained. We have unique processes that we run around this. So it isn't just we made...you know, pulled this out of the air and put it on our website, literally, you know, it is a different experience. And I think it helps us distinguish ourselves because... And we don't...we're not trying to have hundreds and thousands of clients. So we can afford to be a little picky.
Michael: And I am struck, though, that just you talk about it, "We're in a competitive environment so we had to focus into these specialized niches." Because I think for a lot of advisors, they tend to go the other direction to say like, "Yeah, you know, I guess if growth and everything was going well, I could focus in, but since it's such a competitive environment, like, I have to be ready to take anyone because I don't know how many chances I'm going to get to work with clients in the first place because it's so competitive and all my other...all the other firms in the area are going after the same clients I am."
Lisa: Gosh, you know, I guess I just...I'm trying to be really intentional about what we're...the business that we're building and the work that we're doing as a team. And that's a whole other thing. You know, we may want to talk about the EOS work that I do and Strategic coaching stuff that...I'm trying to be really intentional. And we actually have a goal of getting to our financial, you know, numbers with the least amount of clients.
Michael: Interesting. Like, that's a stated goal is...
Lisa: I wouldn't say it's in writing, but it's a well-known in the firm that when we look at our financial goals for one year, three years, five years, we're always thinking, "How can we get there?" Not that we want to get rid of clients at this point, but how can we strategically get into upmarkets, get in front of the right clients and bring on less? Because we want to continue to have really deep relationships with the clients. And if we're starting to go for quantity versus quality, we can't do that, and then this becomes no fun for all of us.
How She Differentiates Her Services From The Very Start In Prospect Meetings [28:55]
So you mentioned that you've got, like, unique processes around these specialties and it is a different experience. So can you talk to us about what that looks like? Like, how do you package together and offer services to these different client specialties, and what does that process or experience look like for clients that fit your specialty?
Lisa: Well, let me focus for the moment just on, like, sort of the standard individual or couple who might walk in to our office and for whatever reason they've... We actually get a lot of people from "Washingtonian" magazine. So we get some referrals, but we actually get a lot of completely blind leads. And they've been on our website, they've checked us out, like you've gone on the website, and they decide to give us a call, and they come in. So when we initially...we normally talk to them first on the phone just to do a little bit of screening. Because sometimes they didn't go to the fee page, they don't know how our fees work, they really are looking for one-time planning, they're only looking for investment management, whatever. So we do a little bit of screening because we don't want to waste their time. We don't want to, you know, have a disconnect.
And so then assuming it's a good fit, we have them come into our office. And we have unique preparation sheets for all of this. And we've got workflows actually in Junxure for all of this stuff. But basically, what we do is it's as simple as, "Tell me why you're here," even though, of course, I've already heard a little bit about why they're here or maybe one of my associates has talked to them. But, you know, often, like, if you've only talked to one person in the couple, you want to hear from the other one to find out how engaged they are, and maybe they have a different reason for being here.
And so, we spend some time really just talking with them about that, what their expectations are of working with an advisor. You know, I think that's a great question to find out. Have they had a lot of problems with other advisors and maybe you're not going to meet their expectations? Maybe they've never worked with an advisor, so there's some education around what to expect. But I'm even looking for qualities, not necessarily where we're looking for investment management. It might be we're looking for someone that we can run ideas by. I mean, so it could be something that isn't necessarily on your list of offerings.
And then what we normally like to do is to take them through the Sudden Money Institute Communication Preference exercise. And we tee it up as, "It's really important for us to understand if we're going to work together how to communicate with you. And so we need to understand how you make decisions, how you like information delivered to you, how we should be communicating with you." And so we go through that. And most of time people are like, "Wow, nobody has ever asked me this." Sometimes couples look at each other like, "Oh, wow, okay, well, that's why, you know, we have trouble communicating sometimes."
Michael: So can you talk more about just what this is? I don't think advisors may necessarily be familiar with SMI's Communication Preference tool.
Lisa: Yeah. So there's a series of...it's a one-page worksheet and there's a series of different phrases on it as far as how we might...you know, how you want to be communicated with. One of them that's always one I want to be careful of is "remember my need for control." So they might circle that one. We always have them circle maybe about five. Another one might be "take time to invest in the relationship." That's one that always trips me up because a lot of times I'll walk into the meeting and I'm right into my agenda and the client wants to chat. And normally, you know, every single time I look at their communication preferences and I'm like, "Right. Okay, so we've just got to chat a little bit."
Michael: Right, got to chit-chat them first. All right.
Lisa: It's okay. Use a softer tone. Don't mistake...this is the longest one, don't mistake my lack of response for inattention. And we actually get a lot of clients like that, where it's not that we've offended them or whatever, they just...they're just not paying attention.
Michael: They're just busy people. Yeah.
Lisa: Right. Or it's "expect me to ask you questions or give me the bottom line." I mean, so it's a whole bunch of different phrases. We have them circle them, and then we talk through them.
Michael: And so you're giving this to prospects in an approach meeting.
Michael: It certainly sets an interesting tone around like, "Yeah, we're so serious about communicating well with you that we're literally going to give you a communication preferences questionnaire in your approach meeting with us."
Lisa: Right. And that's just...that's the surface. So we do that. And next, we normally spend a little bit of time talking about our process. We'll talk maybe a little...depending on how interested they seem to be in the investment management side, we'll talk a little bit about SEI. And then, because we think it's really important to give them a taste of the life planning work we do, we actually take them through the Kinder three questions in the prospect meeting.
Lisa: Now, not blind. So normally we have sent the three questions out as part of our marketing folder. So some of the clients who actually read through the folder are not surprised when we ask it, but sometimes people haven't read, and so it's a little bit of a surprise.
Michael: I would imagine when you get questions that deep, it gets crystal-clear the moment you get someone who has not read the folder in advance, like, they go, "Wait, what did you just ask me?"
Lisa: Yeah. And you know what? That's okay because sometimes what happens is they didn't read it, they didn't do their homework. And who knows why they came to us. You know, they were looking for one-time planning and they thought we were going to be a good deal. Who knows? And so it becomes really clear, "Wow, they're really serious about this work that they do, and either it's my cup of tea and I've been waiting for this or it's not my cup of tea." And that's great. You know, we want to find that out because this is what we do.
Michael: So for advisors maybe who aren't familiar, can you just recap really quickly what the Kinder three questions are?
Lisa: Yeah. So the first question is if you had all the money in the world, you know, like you won one of the huge Powerball lotteries, what would you do? What would you be? What would you have in your life? So it's like you've won the lottery and you can do anything and money is no object. And that's always a fun question and people always have lots of answers on that page. And we'll let them write down or speak to us. Either way, whatever is more comfortable.
Michael: Okay. So it's just a...like, it's just a dream big, you know, if money was no object, describe to me what your life looks like.
Lisa: Yeah. And sometimes it's so interesting because people need a little permission to dream big. I mean, they may be like, "Oh, but, you know, my life is really great." And so sometimes it takes actually a little bit of coaching. Some people have, like, a full page or full list of answers and other people it takes a little bit more time.
But then what we switch to is something more around time, scarcity of time. So the second question is if you had...you know, let's say you went into the doctor, you had your annual physical, had some tests done, and your doctor tells you, shocks you with the news that you've got 5 to 10 years to live because you've got some illness. It's not curable, you're not going to get through it, but, you know, if there's any positive in it, you're not going to feel sick, you're not going to be in the hospital, but now your life is finite. So you don't have forever to make all these things happen that you've been dreaming about, you've been thinking about. Time has become much shorter for you. Now what changes in your life?
This is a totally fascinating question because, like with business owners, even with people who are employees, the ones who love their work, you know what they say? They say, "Well, I'd cut back my hours," or, "Well, I'd work part-time at the business." The ones who hate what they're doing are like, "I'm out of there." And, you know, so that's a great opportunity for us from a transition management standpoint to say, "Well, maybe we need to talk about, you know, your role in the business, or maybe it's time for a career change." So it opens up some really interesting conversations later on if we're going to work with them as a client.
And then the last question is, you know, you've been going to that same doctor who's been monitoring you, you know, over the 5 to 10 years but now tells you that you've only got 24 hours to live. Now, what most people think is, "Oh, I'm going to gather my family and friends and we're going to do this and we'll have a big party." No, no, no, no, that's not what this question is about. What this question is about is if I had 24 hours to live, what would I miss getting to do, getting to be, getting to have in my life? In other words, it could either be looking...it could be past regrets, things that you had hoped you had time to do and didn't get to, maybe to repair or to do, or looking forward because you're not going to be on the planet. You know, you don't get to be a grandparent. You don't get to be a parent. You don't get to do X, Y, or Z that you thought you had more time for.
Michael: So you have these three questions, like, first, essentially, if we removed all the financial scarcity from your life, what would it be? Then, you know, if time became more scarce because you've got a limited time window to live, what would you do? And then if it turns out that you're dying, what are your regrets? What have you not done? You know, parentheses, and since you're not actually dying, we might talk about these things in a minute.
Lisa: That's the whole idea. And now, you can imagine, these are people that for the most part, you know, we haven't spent any time with, and we get incredibly honest answers. We get emotion around it. Often there's tears. And sometimes it's tears of relief to talk about it. Sometimes it's sadness. It's pretty clear now that the work we're going to be doing with them is going to be different. And it's not everybody's cup of tea. And that's okay.
Michael: You know, I was going to say, I mean, do you get clients or I guess prospects at this point that are taken aback like, "I came to you because I'm nervous about my portfolio, why are you telling me I'm dying?" Right? Like, "This is not where I thought this conversation was going to go with a financial advisor."
Lisa: You know, I think sometimes we'll get, "Wow, you know, we never thought about that. No one has ever asked us that." That's why we have the process that we have on the front end. You know, that's why we send the folder out. That's why we have the screening process. We'll actually ask people to go to the website. You know, like if they call up and if they haven't gone to the website, to go to the website. And, you know, occasionally somebody might sign up to come in. You know, like otherwise, they seemed like a good prospective client for us but then honestly, they do a little more homework and they go, "Yeah, no, that's not really what I'm looking for. I just wanted somebody to manage my portfolio." And, you know, that's fine because if we're not going to be able to offer them the value that they want, they're probably not going to stay. And we invest way too much time and energy in each of these client relationships to have them walk.
Michael: So a few things, one, for anyone who's listening to this and is maybe not as familiar with Kinder's three questions and the rest of what goes behind that, because there's an entire planning process and philosophy that ties to that, you can actually go back and listen. We have had George on the podcast as well. It was episode 15. So if you go to kitces.com/15, you can go back and listen to George talk a whole lot more detail about, you know, working towards financial and life freedom and the three questions and what else he's built in the world of life planning.
Lisa, from your end, so...well, so I'm fascinated by this prospect meeting where, you know, I think for most of us, you know, a prospect meeting is like, "Okay, my goal is 70% get the clients to talk about themselves and the 30% I have to tell them a little bit about our firm and what we do and our services and, you know, what we charge and hopefully make this compelling to them so they'll sign up to become a client." You're taking them through SMI's Communication Preferences and Kinder's three questions. Like, I will admit, your prospect meeting does not look like my prospect meeting, which I'm feeling a little bit intimidated about right now because...
Lisa: Oh, come on.
Michael: You know, again, just when we talk about, "How do you differentiate from other advisors?" like, to me, this gets to the really...like, the true essence of it. You are literally having conversations with them right out of the gate from the prospect end that they will not be having in the offices of other advisors they go visit. So it won't be everybody's cup of tea, but if they all resonate with any of these questions or discussions, you are very differentiated from anybody else they're talking to immediately on the spot.
Technology Tools Lisa Uses [41:27]
Lisa: Yep. And there's more, as you know, you know.
Michael: And there's more. So what comes next?
Lisa: Well, so let's say they come on board and we send, you know, a follow-up email, we're big believers, and then I send a proposal and let's say they sign up. So, you know, not only do we do all the normal things everybody else does to gather data, try to get them signed up into eMoney so that we can, you know, link accounts and pull that into MoneyGuidePro and, you know, all the traditional stuff. And we do a risk tolerance questionnaire. We've been using FinaMetrica, we're switching to Riskalyze.
But the other thing we do when we onboard them is we have them do a Kolbe assessment. And that's K-O-L-B-E, for those who aren't familiar with it, because we want to dive even deeper in understanding how they're hardwired, how they're built so that we can, again, deliver the right kind of plan to them, communicate with them, coach them in the right way. And especially when there's a couple and they're different, that's really important. And with business owners, it's critical because often if they're having some challenges in the business, we find out that it might be a how they're built versus how their team is built issue.
Michael: So you actually raised a couple of things there that I actually want to pause and talk more about. So the first you mentioned is, from a planning side of things, you link accounts in eMoney, but then I think you said you pull that into MoneyGuidePro. So you're using both? Like, what's going on there?
Lisa: Yeah, because we're goals-based, we're not cash flow-based on our planning. You know, if you can imagine with life planning, a goals-based planning software tool makes more sense than cash flow-based. And honestly, a lot of clients we work with are just not very detail-oriented. You know, and eMoney is a cash flow planning tool. So I've been using eMoney literally, you know, for at least 14 years, maybe longer. Actually, longer than that. Yeah, longer than that. So it's just a tool I've used. That virtual aggregation, being able to see all the assets is critical. And when you think about our model, that it's based on investable net worth, I need to know what the investable net worth is. Right?
Michael: So eMoney comes into this specifically because you're just trying to use the eMoney portal so you can do the account aggregation.
Lisa: And the Vault to share documents securely.
Michael: I've got to ask, and like, and it doesn't bother you to basically pay for two financial planning softwares?
Lisa: It's not that expensive.
Michael: Okay. In the grand scheme of things, the business is doing okay. If this is what gets us to the experience we want with clients, off we go.
Lisa: We're paying a lot more for IT than we are for our software tools.
Michael: Yeah. Well, fair point. And then you said you use FinaMetrica or did but you're switching to Riskalyze. So what's that transition? What's going on there?
Lisa: So, you know, I don't think we're ever getting to the silver bullet out there, but eMoney and Riskalyze talk. I think Riskalyze and MoneyGuidePro talk too. I don't know how every...you know, I'd have to draw a little diagram to figure it out. But we think it's a little bit more sophisticated tool. I mean, I've used FinaMetrica, again, for 14, 15-plus years, but we're just deciding it's time to evolve the tool. And we've been doing live planning. So for our platinum clients, we do live plan updates every year, and we'd like to have a tool, not that FinaMetrica can't totally do this, but we really think the Riskalyze tool is more sophisticated to be able to talk with clients about risk tolerance versus the risk in your portfolio, especially with a brand new client. We actually did that today with one of our new clients.
Michael: Okay. So you're using Riskalyze more for just, like, the actual interactive pieces with clients of, "Okay, I can put them through a FinaMetrica questionnaire, get a risk tolerance and then talk to them about how that compares to their portfolio, or I can use Riskalyze and literally show them, because it's part of Riskalyze's visuals, I can show them like, 'Here's where your risk tolerance is, here's your portfolio, here's how your portfolio aligns with your risk tolerance.'" And all that's built into what Riskalyze does.
Lisa: Yeah. And, you know, you can talk about the downside risk, which is obviously, you know, on people's minds at various points. Yeah, so I just think it fits better with where we're going with our presentation and interaction on the technical side with our clients.
How She’s Using Kolbe Assessments In A Client Context [45:56]
Michael: And then you mentioned Kolbe, which, you know, I've certainly known Kolbe in the context of using in the employment situation. You know, we've used Kolbe in several of our businesses over the years just for hiring to understand how potential team members would work together with other team members, but you're using with clients, which is a very different context. So I guess as a starting point, just for advisors who aren't familiar with Kolbe, maybe you can walk us through a little bit of what Kolbe is, and then help me understand how you're using that in a client context.
Lisa: Yeah. So there's lots of assessments out there. Most of the assessments that people know like DISC or StrengthsFinder or Myers-Briggs are going to be personality assessments. And people tend to call this a personality assessment, but it's not. So, you know, personality assessments are looking at values, preferences, emotional, the affective part of somebody, Kolbe is looking at what's called the conative part. It's how you instinctually take action. So if you're in a room and you've got to solve a problem, regardless of your values, your preferences, your emotions, there's a certain way that you will initiate action. And it's fascinating to watch, if you ever see these demos in Kolbe training, because people are built different ways and they will initiate in different ways.
There are four modes. One is Fact Finder, which is sort of, you know, details. And Fact Finder looks at how detail-oriented you are, Follow Thru looks at how process-oriented, systems and process-oriented you are, Quick Start looks at how you handle risk and uncertainty, and Implementer looks at how you handle tangibles, or, excuse me, how tangible you are. So it's not, like, get things done. That's what people often think.
And so people can initiate from up to three areas. Even if you have lower energy in a particular area, like you're less detail-oriented, that's not a bad thing. Or being less process-oriented, that's not a bad thing. But wouldn't you want to know which clients were going to follow process and which weren't going to follow process, you know, like fill out your forms or were going to be changing their mind about things all the time, or they wanted to start an entrepreneurial venture but they really didn't have that quick start energy? You might wonder with them a little bit about how that was going to work out for them. So it's been a fascinating assessment. And we do it with pretty much every client we bring on board.
Michael: Interesting. You know, again, I've always known it from the business perspective. You know, I'm a...perhaps not surprisingly, I'm a long Fact Finder. So I like to...
Michael: Yeah, it's shocking. I like to start everything by studying facts and details. And I'm a very low Quick Start because I like studying the bejesus out of everything before I ever take a step forward. Whereas, you know, some of my business partners over the years and I think frankly a lot of advisor entrepreneurs, in general, tend to be much higher on the Quick Start end.
Lisa: At least Gen one. Gen one. Not necessarily Gen two or three.
Michael: Where, you know, the whole structure is you like to imagine and create, you like to try things and figure it out as you go. And, you know, that's what gives you some of the entrepreneurial drive and courage to go, like, start a business from scratch and do crazy things like that. But, you know, as you know, like, it's not a right or wrong. I happen to study the heck out of things and then I start doing them. Other people like to start doing things and then figure out as they go what's working, what's not. And like, it's not right or wrong. You can start a business or work with clients or do whatever you're going to do either way, but it is a distinctly different style.
Lisa: Yes. And understanding that. You know, I think without knowing this, sometimes... I mean, we can't help it as advisors, we're going to inadvertently communicate and deliver things, you know, from our preferred mode. So maybe you're very detail-oriented, so you're sitting with a client, they're not very detail-oriented, so you're going...I mean, I hate to say, it's going on and on and on and on about X, Y, or Z recommendation, and the client just want the bottom line about why they should do this or why they shouldn't do it, and that's it.
And, you know, you can end up...what can happen, and it happens in business, you know, with employees often, is when people have these different approaches, we assign affective reasons for the differences. In other words, as an example, somebody who's more detail-oriented might be much more analysis-driven, might take much more time, may seem slow to initiate action because they don't have all the details they need, I may affectively decide that well, they're slow, or cognitively they're slow. You know, they're not sharp. They don't care. They're not interested. And so really trying to separate that that's not the case.
Michael: And I've been on the other end of that. You know, as the long Fact Finder working for times for people who were high Quick Starts, you know, you get the opposite end, which is like, "I'm doing all this analysis, I'm doing all this research, I'm trying to get all this information, and they're not even bothering to let me get it. Or I'm giving it to them and they're ignoring it, just trying things anyways. And, like, you know, therefore, you know, they're bullheaded or they don't value me and the work that I'm doing." And it's like, no, I like to nerd out on things before I do them and some people like to try them first and figure it out as they go. And they're just different approaches. But if you don't recognize that up front, you just end out with some conflict and potentially negative emotions. You know, "They don't value my work. They're too bullheaded. They're too slow. They can't make a decision and get off the gun, get off the start line." You know, all those, as you said, all those affective explanations that crop up when people just literally have different perspectives and different approaches but don't recognize the difference.
Lisa: Yeah. And so, you know, you can imagine how important it would be in client relationships, obviously within the team, when I'm working with business owners. I've gone into not only a number of my clients' businesses but actually my colleagues' businesses, you know, our peers' businesses and done Kolbe consults for their entire team to help them be able to communicate better with each other, avoid conflict and appreciate and build, you know, a well-diversified team that can work with a variety of clients because not all of our clients are built like us.
Michael: So that's a striking extension, that you're...like, I guess you got trained in Kolbe consulting and, like, you literally go out and do Kolbe consulting in some of your clients' businesses.
Lisa: Yep. Yeah. Because with business owners, if I can help them, you know, and this is that more holistic, comprehensive approach, integrator approach with business owners, if I can help them create a better running business that is worth more then, you know, in the end, that helps them personally and it helps us in our relationship with them.
Michael: Well, I mean, the truth at the end of the day is, for business owners in particular, like, helping them make their business more financially successful, better profit margins, better growth rate is, like, exponentially more valuable than helping their portfolio returns. I mean, like, orders of magnitude different in actual financial impact for the end client to help them make their business more valuable than working on the portfolio.
Lisa: All right, so, you know, Kolbe is one example. You know, getting them to consider things, you know, bringing resources, books, things like Entrepreneurial Operating System, maybe getting them into Strategic Coach. All those kind of things are really important in helping them become more intentional business owners, more successful, hopefully, more happy business owners.
Michael: And I guess just from a practical perspective for even the typical client, like, just knowing, "Okay, this client is a Quick Start, so, you know, they're going to move to decision fairly quickly. Hitting them with a whole bunch of facts isn't necessarily going to be constructive." Or, "This other client is really long Fact Finder, so if we don't come in with all the information in detail, they're going to blow up the meeting, or they're going to blow up the decision." Or, "This client is really, you know, high Implementer into the tangible, so, like, we've got to have a printed report. We've got to have physical things for them to look at and have takeaways. They're not going to do well in a purely conceptual conversation space."
Lisa: Yeah. And we actually have two different initial financial plans that we present. One that is more graphical, less detailed for the Quick Start Implementer folks, again, the more tangible folks, and then we have one that is, you know, traditional qualitative write-up with lots of detail and bullet points and all that jazz.
Michael: So you have literally, like, two different financial plan templates basically?
Michael: That's pretty cool. And then whatever client...all right, so I've got to ask, like, what if one spouse is one and one spouse is the other?
Lisa: Right. So then, you know, you try to split the difference. You know, it might either...so for Quick Starts, you have more color. So we might purposely put more color into the write-up. Or the one thing we do in our newsletter as well for Quick Starts is we bold the stuff we want them to read. So we might do more bolding, more color. Or if, you know, really the one spouse is definitely more Implementer Quick Start, you know, we might have something that's graphical and then have a lot of detail behind it. So, yeah, that always gets a little trickier.
But, you know, it's really fun for couples as part of the life planning process when we present the Kolbe results. So we don't just keep this internally, we share it with the client. And we can actually run reports comparing the two profiles. And it has this little thing that says, you know, "Be careful not to do X, Y, or Z to Michael," you know. And so it can actually really help with the relationship. And it often explains like why...well, in some cases why certain people are doing something in the couple and some people aren't. Sometimes we've actually suggested, "Hey, you know, I know you're the one paying the bills, but it might be better if Bill paid the bills."
Michael: So I was going to ask like, do you get clients that push back on taking this kind of assessment and going through this process, but I guess from the flip side, like, you already gave them the Communication Preferences exercise and the Kinder three questions in the prospect meeting, so they're kind of just getting the gist that this is how things go when you work with Lisa. Like, there's lots of assessments. You're going to get to know each other and maybe yourself a whole lot better over the next couple of years you work together.
Lisa: Yeah. You know, the only people we've had pushback have generally been not technically savvy, technology savvy. You know, older... an older client.
Michael: So they just balk because, like, you send them an email to take this thing and they've got to do all these clicks on the computer and they're a little flustered because they're not computer-inclined.
Lisa: But we don't give up easy because we can print the hard copy, we've done it with two clients, and have them fill it out and then we put it into the system and we get the score anyway. And one of the clients who we ended up having to do that for, she was tickled pink once we had the report for her. She loved it. Yeah, so we haven't had a lot of pushback. And part of it is framing, right? It's, "This is going to help us do a better job for you. And in the process, you may learn something as a couple, you may learn something new about you. Certainly, if you're going through a career or a business transition, you need to have some, you know, deeper self-understanding." So I think when it's framed properly, there's lots of things you can get clients to do.
How She Uses Kinder’s EVOKE Process To Build Relationships With Clients [57:34]
Michael: Okay. So we talked about prospect meeting, we talked about initial onboarding where they're linking accounts in eMoney, you're doing FinaMetrica, soon to be Riskalyze, you're giving them Kolbe assessment, so what comes next in this planning process?
Lisa: Yeah. So basically, you know, and I don't know whether George Kinder talked about it on his podcast with you, but we're implementing at this point for a traditional client, a non-transition client, we're implementing the EVOKE process. So that is exploration, which was the prospect meeting, vision, which is where we give them more Kinder life planning exercises, several more besides three questions, obstacles, which I think is really a cool phase. I'll come back and explain in a minute why it's so important. K is for knowledge. So that's when we present the actual plan, a hardcopy plan. And then execution, that's when we start to talk about, "All right, how are we actually going to get all these action steps done?" And that's when we actually start to talk more deeply about the portfolio, how we would manage it in detail. In the initial plan we talk at a higher level to keep it more objective, but at the execution meeting, we're going to talk specifically about, "Hey, if we're going to manage the money, here's how we would manage it."
So the obstacles meeting is really important because, you know, there's a lot of life coaching out there. And a lot of people, I think, do a little bit of life planning light, where you're talking about people's dreams and hopes. And the reality is, Michael, that for a lot of people, they've had these same dreams and hopes for years. They have wanted to...these things are not just coming out of the air because they came into our office. And so, you know, you can get them really excited. We develop a vision statement, in the Kinder world it's called a Torch Statement, that is front and center at the beginning of the plan. There is one for each part of the couple or for each person. But if you don't spend some time dealing with the obstacles, I mean, the whole thing is that if they haven't achieved this dream yet, there's something getting in the way, right?
And so you have to spend some time unearthing and talking about the obstacles and how we might be able to work around them. And if you don't do that, you have this great beautiful plan that you deliver out to the client, you didn't deal with the obstacles, and guess what? They all come up again. Sometimes they're about money, sometimes they're about inner issues that the client has, sometimes they're about somebody else, sometimes it's about the job they're in isn't allowing them to get to where they want to. I mean, it's lots of different things. And so that obstacles phase is just really critical. And I would say that is really unique. I mean, we're doing...our visioning is certainly, you know, it's life planning and it's different than other people's discovery process, but it is a discovery process. And the knowledge piece is like a lot of people delivering a plan. And so is the execution phase. But that obstacle part, when we don't do that well, those obstacles come back up again later.
The Four-Meeting Planning Process Lisa Takes All Clients Through Before Anything Gets Signed [1:00:36]
Michael: So help me understand what this looks like from sort of a practical process perspective. Like, is this occurring over the span of like two meetings or three meetings or five meetings? Like, once I've gone through...you know, I did our prospect meeting, I said I want to work with Lisa, you sent me some bunch of onboarding stuff, so I, you know, linked my eMoney and I did my Riskalyze and did my Kolbe assessments, like, what does the actual meeting steps look like from there?
Lisa: Yeah. And part of that onboarding is we've also given them some more life planning exercises over the vision and the obstacles phases. They're getting more life planning exercises. So a lot of people who are familiar with Kinder do the three questions, but there's a lot more to the process than that if you're really going to do it well. But it's about a four-meeting process after the initial prospect meeting. Three meetings to get to the plan, four meetings to get to the detail and the execution on the investment management side, about a two to three-month period, depending on how busy the clients are and we are. So, you know, you're not getting a plan right away. It is a process. It's a journey as we talk about it.
Michael: So how do you break up those three meetings? Because I just...like, that's a good number of meetings before getting to a plan in the fourth and then execution from there.
Lisa: Yeah. So, you know, the vision meeting is going to happen whenever they've decided they're willing to come on board and we can get them in. We like to do the obstacles meeting about, you know, maybe two to three weeks later because we want to keep the energy going. And also, in the obstacles meeting, not only are we brainstorming, "What are the obstacles and what are the solutions around them?" but we actually will often put some initial planning, like early financial independence numbers in front of them in case anyone thinks money is an issue. Sometimes money is an issue, sometimes money isn't an issue. So, you know, we're gathering data because we're trying to get it into MoneyGuidePro enough to be able to give them a sense of, "Hey, money is not an issue here, so these life plans you have, let's just go do them." Or, "Hey, you know, well, we're going to actually have to be creative here on the money side, so do you have any ideas?" You know, so this is a very collaborative process.
And then we meet normally about a month from the obstacles to the knowledge phase because then we're going to fine-tune the financial planning projections analysis and then we're going to write out the qualitative part of the plan. So, you know, we're looking at cash flow, tax planning, investment planning, insurance planning, estate planning, education funding, financial independence. So we're looking at all of those different areas. And that takes time to get that all written up and ready to be presented.
Michael: So very literally, like, you're not just following the EVOKE process per se with the acronym, like, literally, there are five meetings, including the prospect meeting. Like, the E, the V, the O, the K, and the second E.
Lisa: It says it right on our preparation sheets. Our meeting preparation sheets say it, our workflow say it, the whole thing.
Michael: Okay. So, like, that just...clients know that's what coming. And functionally for you, that last E, that final execution meeting, I guess fifth meeting but forth since the first was the prospect meeting, that final meeting is, "Okay, here's where we, in the traditional sense, present the plan and move on from there."
Lisa: Actually, no, the fourth meeting, the knowledge meeting is where we present the plan. The execution meeting is where we will review, "Hey, are there different scenarios you want to look at?" We create a spreadsheet with all of their actions, and then this is where it starts to morph into Sudden Money Institute type of work because we will grade them as either now, soon, or later, and then we'll keep track of when they actually complete them. So we're starting to dive into the, "How are we going to get this implemented at the execution meeting?" And the other half of it is that we're talking about now specifically managing money for you. So we do not put investment paperwork. We don't even put the investment management agreement in front of them until the execution meeting because we don't have to because we're getting paid for the work we're doing.
Michael: Right. Because you're getting paid the planning fee upfront, so at worse, like, they do all this planning stuff with you and they don't follow through on the rest and you got paid for the planning and...
Lisa: Well, we got paid for some of it. I mean, if they don't stay for at least six months, we probably didn't get paid all on the planning.
Michael: And out of curiously, how do you structure that $7,500 planning fee? Like, do they pay that upfront when they're coming on board? Is there like a deposit plus remainder?
Lisa: No, it's a quarterly fee.
Michael: So you've talked about now this meeting process, now, how does this map back to the specialties that you said you had?
Lisa: Yeah. So I just described sort of our traditional process. And, you know, that works for a lot of the folks that come in to work with us. It works often for business owners because we're getting at the life planning, but we have a completely different process for people in transition. Because you can't be asking...if somebody has just lost their spouse, you can't be asking, you know, if you only had 5 to 10 years to live or if you had 20, that just doesn't work, right?
Michael: Yeah, that would get really awkward really fast. Yes.
Lisa: Yeah. You know, and this is much more where we bring in the Financial Transitionist Institute, also part of the Sudden Money Institute work that we do. So we're still going to do Communication Preference, but this process is a lot more freeform because you have to meet the client where they are, but we do have different tools that we have available to pull out depending on what we think the client needs. So it isn't as structured. The meetings tend to be shorter. They tend to be more often. So we have to assess when a prospective client comes in, "Are they going to follow our transition process or are they going to follow our traditional financial life planning process?"
Michael: Okay. And that's kind of how you break out the two. So the specializations around entrepreneur is more of just the conversations you might have in the vision, obstacles, knowledge meeting but not necessarily the process they go through clients in transition, it's actually a more different process?
Lisa: We actually, with the entrepreneurs, we do have an offering that we've put together. We haven't implemented a whole lot yet but that includes our traditional financial life planning offering but then also includes a Kolbe consult and monthly coaching for the entrepreneur. And it has a different fee arrangement. So we actually do have a different offering. We've done some various versions of it with our entrepreneur clients. So we do have a different direction we can go with them. But most of the time, unless they've had some really terrible thing happen, we can take them through, you know, the regular financial life planning offering to at least get a baseline.
Michael: And are you pricing that kind of monthly coaching option differently?
Lisa: Yeah. So the Entrepreneurial Edge, as we call it, yeah, it's definitely priced different. It's a flat fee. Because a lot of times, again, the clients, the only assets they may have is the 401(k), that's their current 401(k), which we can't manage anyway.
Michael: Right. And a potentially very valuable completely illiquid business.
Lisa: Exactly. So we have a flat fee on that. And obviously, they can pay for that from their business. And, you know, that makes sense and all, based on what we talked about.
Michael: And is that a higher fee structure than the usual planning fee?
Lisa: Yeah. So, I mean, you know, we would start that probably closer to $10,000 or $15,000, depending on, you know, the scope of the work, the complexity of the work.
Michael: But then, you know, I guess from traditional planning fee perspective, that may feel higher than usual for a lot of advisors. From business owner end, yeah, like, spending $10,000, $15,000 a year on business coaching is, I don't know, normal or even low for some business owners and coaches. Like, you're right in with what people might spend on personal coaches or Strategic Coach or a world of other programs.
Lisa: Totally. Yeah. Totally. Yeah. Yeah, it's just a lot. You know, and then being brought in to, you know, like, do a team a Kolbe test and that kind of thing. Yeah, they're used to paying for that kind of stuff.
Why And How She Manages To Take Sabbaticals From Clients Who Have A Close Relationship With Her [1:08:45]
Michael: So now I have to ask, you've talked about this incredibly, like, deeply personal financial planning process where you're asking very weighty personal questions about life vision, and goals and Kinder three questions and all of these pieces and a deep relationship around communication preferences that are going to be set, and then you take vacations from this practice for extended period of time. So how does that work?
Lisa: Right. So let's talk about the why and then we can talk about the how. How's that?
Michael: Okay. Okay.
Lisa: So I think there's a couple of different reasons the why is important. Number one is literally, like the last...so I took a sabbatical in 2018 for six weeks, and I had taken a prior once for six weeks in 2012. Completely different teams. And I'll talk more about the how and how that went and everything. But the why was, you know, I think as business owners, if we're honest, I mean, and when we're really investing a lot of our time and energy, we need a break sometimes. And a week vacation, even two weeks' vacation is not the same as really unplugging for most of us. And so, I think that's one reason. I had worked very hard on building this last team that we have right now and had been working really hard on growing the business, and I just needed a break.
And the other piece of it is that I think in the work that we do, it's really important to have a lot of integrity and walk our talk. And so if I'm coaching my clients, our life planning clients, whether they're individuals or business owners, to take a sabbatical maybe between jobs, and we've had lots of clients do that successfully, or an entrepreneur to take a break from their business, I need to be walking the talk. I may only need to be a few steps ahead of them, but I need to be able to say, "Hey, I've been through this. Here's how we prepared. Yeah. You know, I know it's going to be hard." So for me, it's living by example, leading by example with this work.
And literally, I wanted to take a break this last one, I have twin sons who are...well, they're now 17, they were 16, and I have an older son in college. And my twins are going off to college in fall of 2020 and I wanted to make sure that I took a little time off to be more involved in some of their activities and just invest more time in some of the relationships that I wanted to work on. And I wanted to take a break. So that was the why. So the how is how the heck do you do this?
Michael: I mean, particularly with...you know, again, like, it would be one thing if you had a, and I don't mean this in a pejorative way, but just like a simple straightforward investment management business where the investment process mostly managed itself and you were mostly passive, and you could just kind of say, "Hey, I'm just going to bunch up all my client meetings in the first quarter and the third quarter and then I won't have many portfolio reviews in the second quarter, and I can go take a sabbatical." Like, that I understand how to wrap my head around. That's not what you do. Like, you are much more involved with clients and this deep relationship around the planning work that you're doing. So separating out from that is a whole other kind of phenomenon than just finding the time.
Lisa: Yeah. So, I mean, no doubt. So I think a couple things. Let me just set up. When I say I was away on a sabbatical, let's just be clear because that is a little overwhelming to people but it's important to talk about. So I literally was unplugged from the business for six weeks. When I walked out of here, actually right before Retreat, FPA Retreat in spring of 2018, like, literally a day or two before, I left...we have a two, well, really multi-factor verification system with our IT platform. I left my fob here. So I literally could not get into the system.
Michael: Like, you cut yourself off. You didn't just unplug, you...
Lisa: I deleted my office email from my phone, and so literally, I had no...I mean, you know, could I have gotten back into Outlook? All right, you know, for those of us who know what we're doing, yes, I could have, but I took the work email off my phone, I left the fob here, so literally, I could not have gotten in to the, you know, like the remote desktop system and the client files. And literally did not...there were only a couple of occasions where I talked to anybody from the office. The biggest issue, biggest learning was I had a lot of my personal, like, you'll appreciate this, frequent flyer information and stuff in Outlook and I couldn't get to it. So I literally had...
Michael: And you refused to, like, capitulate to your own promise and reinstall Outlook so you could get to it.
Lisa: No, I got on Gmail, I got on Gmail and I emailed my office manager and I got her to give me the information I needed. We had actually tried to do some of that before I left, but we had missed a couple of important things. And then there was one client, not a really significant client but a longtime client who left us while I was gone. And I sent an email out of Gmail and I CC'ed my office email so that, you know, it got into the system to say, "We're going to miss you. Thank you for the opportunity to work with you for so many years," etc., you know. So literally, that was the extent of my work communications. The rest of my colleagues I did not talk to for six weeks.
Michael: Okay. So...
Lisa: Okay. So how did we get there?
How Long In Advance She Prepares Staff For Her Sabbaticals [1:14:17]
Lisa: Because you don't just, like, walk in one day and go, "Hey, I'm not coming in next week. Actually, I'm not coming in for the next six weeks." So, you know, the bottom line is it takes a bunch of planning and preparation. So I had announced to my team a year in advance. And this was a brand new team compared to the team I had been...I had a slightly smaller team in 2012, like one person less, and it was completely different people. So this whole new team in 2018 had never been through this. So they were a little anxious, to say the least, in 2017 when I said, "Hey, I want to do this. I've done it before. I know we can do it. I'm confident that you guys are going to be ready for this." They were definitely nervous about it.
So I had laid out a plan of, "Here are the things that have to happen. Here's the capabilities that have to be reached." At our weekly team meetings, we would talk about as an agenda item, "All right, what else do I need to get myself out of?" Like, I was the only one who could sign checks. Well, that wasn't going to work. I mean, not sign payroll because that was all automated, but, you know, occasionally you've got to write a bank check. So we had to go and get my office manager signed up to write checks while I was out, you know. And what else? Like, my bookkeeper normally runs all of the weekly bills by me, but during that time, she just paid the bills and everything went out and people got paid. And it all worked. But, you know, it was a process of, "What are the things that I'm involved in that I shouldn't be? How can I get myself out of them? What training do I need to provide you with so that you can feel confident?"
And then we began a process with our clients. Now, we didn't tell the clients until about two or three months in advance, but we began a process from 2017 to 2018 of giving my two associate financial advisors, Kathy and Jared, more responsibility in client meetings, and getting them to respond more directly. Like if, you know, they were CC'ed into an email, having them respond instead of me so that they were building a relationship with the client that they were leading so that they were showing capability and expertise so that when we did finally tell the clients, and many of them had been around for the first one, but for the ones that hadn't, that they would feel confident that things would be handled, you know, properly.
Michael: So having at least some associate advisor support staff, like, someone who can respond to at least...well, I was going to say at least basic questions and issues that come up from clients. Although I guess as you said, ultimately, it's not just basic questions like you weren't even taking meetings when clients were potentially leaving.
Lisa: Well, right. I mean, the instructions I gave the team were, unless the client died or left or, you know, there was, you know, something, you know, like just it was major and catastrophic, I wasn't going to get involved. And I said, "By the way, if the market goes down while I'm out, there's a whole bunch of emails I sent out during 2008 and 2009, you're welcome to go through those and pick a few out and redo them."
Michael: So don't even call me if the market is crashing.
Lisa: Well, you know, they know I'm going to keep an eye on things. Yeah. So we are implementers of the Entrepreneurial Operating System, EOS. It was made famous by the book "Traction." And so, in our quarterly sessions, you know, we were working for a year on, "Okay, what goals do we need to have? What rocks do we have for this quarter to be prepared for this sabbatical in spring of 2018?" So it was quite methodical, quite intentional around preparing.
And then, you know, in the very end Michael, I had to just trust my team. And that was...the hardest part is because they were like, "But what if..." You know, and I'm like, "You know what? The buck stops at me but I'm going to trust you that you're going to do the right thing. And if I didn't think that you could do the right thing and you didn't care about the clients, I wouldn't be doing this." So that's the piece that probably will be hardest for many entrepreneurs. But trust is built by training and investing in your people.
Michael: So is there some essential amount of just like team infrastructure that's necessary? I mean, I guess at the end of the day it sounds like just some operations person that makes sure operationsy things happen and at least some associate planner who can respond to core planning issues.
Lisa: Exactly. I mean, you know, I was only gone for six weeks. I mean, literally, if it was, you know, like client dying, client dead, you know, that kind of thing, I mean, or some catastrophic, I could have stepped back in. At least from Gmail, I could have stepped back in to provide some coaching. But yeah, I mean, you know, I think there are people who take in a year or take...you know, if you took several months then I think you have to start to have a bigger staff. But I think you're absolutely right that it doesn't take a big staff to support a four or a six-week sabbatical.
Michael: Right. Because, just to be fair, like, they're not launching new business initiatives and running major projects in four to six weeks, like, it's, just keep the wheels on the bus until I get back.
Lisa: Although we brought in two clients while I was out. I mean, these were pretty, you know, softball ones, you know, where, like, it was a really soft referral in. And then there was another client that came, parents of another client. But we actually signed two clients while I was out, which was awesome. And that was a real confidence booster. And it was after tax time, so we weren't having to worry about that. I mean, I purposely picked the time. That's the other thing is, you know, if you're really strategic, maybe it's summer, maybe it's post-tax time. You know, you don't want to take your sabbatical October, November, December probably, or February, March, April, right? If you want to be successful, you actually have to be a little strategic about this. But then again, we don't always get to plan these breaks from our business. So this is a test for the business to see how dependent it is on me. So, you know, if you're trying to look at succession planning, at some point you've got to try to do this.
Michael: Yeah, I am struck that just...I mean, essentially, what you laid out is, on the one end, like, I think for a lot of advisors, terrifying, a massive leap, you know, a huge investment in time and people to try to get them up to the point that they can do all this stuff without you so that you can be gone, and on the other hand is, like, absolutely normal prudent business process to reduce the risk of your business by making it less dependent on you, and completely essential if you're ever going to sell your business or have a succession plan, like, these are all the things you have to eventually figure out how to do anyways, you just did them not because you're leaving or, like, not because you're retiring or successoring out, you simply did them because you wanted to take a sabbatical. Just, like, frankly a much more aspirational reason to do it.
Lisa: Well, right. You know, and the way we operate here is that we took a little time when I got back to process, and there's a great tool that I use from Strategic Coach called the Experience Transformer, that really looks at, "Okay, so what went well? What could have gone better? You know, what strategies can we brainstorm that might have helped it go better and what are our action steps?" So we did a little processing on the back end to just say, you know, "Is there anything we'd do differently?" And that mostly it was that stupid...
So there's two things. One is this whole business about having my personal and professional intertwined in Outlook. So just a tip for anybody looking to, you know, take a sabbatical, you need to separate those things, just like if you're going to retire. And as you know, our ability, you and me communicating, my office manager did such a great job of training my email that all the Michael Kitces emails were going into one of two inbox folders I had. And I didn't see it for a while. So, you know, there was a lot of work we did on training on email and stuff. But sometimes on the backend, that didn't work as well.
What She Did During Her Six Weeks Off [1:22:17]
Michael: Yeah. You know, the unwind, which I want to come back to in a moment, is a whole other challenge. So what did you do with your six weeks?
Lisa: Yeah. So first thing I did was go to FPA Retreat and hang out with my planner friends and not have to look at email the whole time I was there. To me, that's pretty awesome. Got a massage while I was there. I didn't get to...there were a lot of things going on on the family front with my kids' activities that I wanted to get home for, so I couldn't really stay. The last one when I was...I did it after retreat, I actually went to a spa for a few days. So, you know, trying to get a little personal time there.
But this time, got home and was just there to hang out. My older son came home from college and... One of the things, I had a theme for this particular sabbatical, and that was relationship. I wanted to spend some time...more time with my twin sons. You know, being a crew mom because one of my kids rows crew. So I was able to go sit at the boathouse and supervise and go on a...you know, go volunteer with a crew regatta. Actually, had to drive to Canada the last weekend to pick up my son so I could get him back for an orchestra concert. That was all in like two days. Welcome back from the sabbatical. But, you know, it was to be around.
And then probably...I saw some friends that I don't normally get to see to have lunch. And then I think the two other things that were important was, I've been estranged from my brother for a long time, and I was trying to track him down. Luckily, I mean, thanks to the internet, I thought he was in one place, turned out I checked right before I was starting to make arrangements, and rather than being in Florida, he was in New York. And so my older son went up to New York with me. I connected with my brother but I did not get to actually see him because I tried to let him know I was coming but wrong address. The internet is not always perfect. Whitepages is not perfect. But at least I got a chance to try to reach out to him and reconnect. And that was probably one of the most important things that I did. And I needed the space and time to do that. I didn't know how long I was going to need to be there. I needed to not be worrying about work. And then I got a couple of days with my older son, which is really a gift because, like I said, he's in college.
And then there were two books that I read, one of which took me, like, the entire sabbatical and then one I got through a little quicker. The first one is "Being Mortal" by Atul Gawande. If you know "The Checklist Manifesto," he also wrote that. And he's also the guy who is heading up the JPMorgan, I think it's what, Amazon and Berkshire Hathaway health initiative. Amazing book about aging and dying in our country. I know it doesn't sound like the most upbeat thing to read on your sabbatical, but it was really thought-provoking for me, and I had the time to read it down, which I don't normally get to do. You know, I know some of my colleagues get to read a lot. I don't get to.
And the other thing, the other book I read is by a D.C.-based therapist named James Hollis called "A Life Examined: Wisdom for the Second Half of the Journey." An amazing, intense, looks very deceivingly, easy to read through. And it was recommended by my coach Courtney Pullen. It took me the entire six weeks because it was one of those kind of things where you could only read like a chapter and then you'd have to digest it and you read another chapter. But it was great. And so, you know, just getting to read more, do a little more yoga, get to cook a little more. You know, I know a lot of people think in terms of the sabbatical as you're traveling all over the place and stuff.
Michael: I was going to say, like, you didn't do the whole, "Let's, you know, travel the world and go to a remote destination" kind of sabbatical.
Lisa: No. I've got kids in school. You know, I think I've said to everybody my next sabbatical is going to look like that. Not these first two. You know, it'd be like you running off. What, are you going to leave your wife and those beautiful little girls at home? No.
Michael: Yes. Yep. No. Not really. Yeah.
Lisa: Yeah. So, you know, and it was about relationship, but it was about the relationships at home and friends, and things like that. And I got to spend a lot of time in my garden. And because the Caps made, well, not only the playoffs but then won the Stanley Cup, I got, like, two or three Shutterfly picture books done while I was on my sabbatical.
The Hardest Part About Preparing For Lisa's Sabbatical [1:26:40]
Michael: So what was the hardest thing in trying to let go to get ready for this transition in the first place?
Lisa: You know, I think it was a couple things. One was I really had to invest in my team and...I mean, not that I have a problem letting go, but I really had to be intentional about getting their capabilities, you know, giving them opportunities. You know, it can be very easy for the senior advisor in the room to just lead everything. But having to sit back and let them grow and learn was really important. I mean, so it just took more energy perhaps. And, you know, I think we had to cram a lot more meetings our sort of first...we normally meet two to three times a year with our clients, and so those beginning of the year meetings were...we had a lot more of them. And that was pretty intense for the team. And then when I came back, we had to do a bunch more in June than normal. And so I would say that was a little hard on everybody just because of the intensity to get the meetings in because there was a six-week gap of not having meetings.
Michael: Right. So, I mean, that reminds me of just...I feel like the other pain or fear of trying to take a sabbatical like this, you know, it's one thing to say like, "We're going to try to get our team trained up, you know, to keep the wheels on the bus while I'm gone and make sure that the basic stuff gets done and the business doesn't fall apart," but, like, there's still just literally six weeks of stuff that would normally get done by you that's not getting done. And you can come back afterwards, but, like, there's still a whole bunch of stuff that wasn't getting done that at some point has to get made up, right? I feel like there is...
The Systems Lisa Put In Place For Dealing With Emails While She Was Away [1:28:32]
Lisa: Well, yeah. You know what the big part of that is, and this is the bane of my existence at least, is email. So we should talk about that a little bit. What do we do? Because that, I think a lot of people listening would probably be like, "I just couldn't leave because of the email."
Michael: Right. I mean, the whole like...you know, the worst part of vacation is when you come back the first morning and there is a bajillion emails that you have to try to get through, which takes days or a week, and then there's all the other tasks and projects and things you didn't do that you've got to do. Oh, and now all the clients want to meet because you're finally back again. And just, I know a lot of advisors who don't want to take vacation not because they're afraid of the vacation, but because the coming back after the vacation is actually worse than just not leaving, or feels worse than just not leaving.
Lisa: Right. So that takes planning and preparation as well. So we had spent...my office manager and I had spent a lot of time in the months prior to me leaving of really trying to unsubscribe. I use SaneBox as an email training tool. You know, so sending things to SaneBlackHole, it's called, SaneBlackHole so they never come back in your inbox again. So we did a lot of email training. I spent time with her saying, you know, "This is important, this isn't important." And so what happened when I came back in is I had a...you know, with exception to whatever email had come in over the weekend or, yeah, the weekend before I came back, my inbox was cleaned out. And either if it was an important email that needed my attention, it was in an inbox folder that said, you know, needs attention, or if it was FYI. So there was back-and-forth between my team and clients or whomever then I could get through that one at my leisure.
In addition, my team had been keeping day by day logs of talking to clients, you know, who they talked to, what happened, and then I sat, when I got back that first week we had already scheduled meetings so that when I came back I spend an hour with each of my team members to talk through, to have them walk me through the conversations they had had with clients while I was out so that I could be a little more up to speed. And I had these logs. And then I had the emails, you know, that I knew that I needed to get through in that first week. So, I mean, I was really blessed. But this didn't just happen...you know, this was not just magic, this was very intentional in getting ready to do this. And so honestly, my first week back was really good.
Michael: And it wasn't a challenge or a concern going to staff and saying like, "Hey, you're going to help me take a six-week vacation here?"
Lisa: You know, I think it's always...I think as a business owner, I always feel a little guilty, and we can actually talk about that in terms of like sort of where I am right now, of doing something like that, but they knew that I needed to do it, that I had been running pretty hard. They also knew that they were going to get some time away from the pace of meetings, which take, at least at our firm, preparing and following up and being in meetings takes a lot of time and energy. And there were other projects they could work on. And so, you know, for a...
Michael: So the benefit for them was that they would get a break from you.
Major Takeaways From Lisa’s Experience [1:31:54]
Michael: And any other big takeaways from...you said you kind of did this post-mortem as looking back like what went well and what could have gone better, any other big takeaways from the process?
Lisa: You know, I think as I...you know, I think separating the personal from the business, I mean, that's always just a good thing to do. I mean, luckily, I had a Gmail account already. I know a lot of...you know, there's plenty of business owners that run all of their personal email through the business, and, you know, there comes a point where that becomes really challenging if you either want to permanently leave or temporarily leave. But for me, I think we did pretty well with that. You know, there were definitely some areas where, you know, we're still...we will continue to train and develop on.
And then, you know, sort of the amazing thing that came out of it is the first week I came back, I got a call from a colleague who wanted to sell her business. So that was the beginning of June, and so we're just completing that transaction, like, this week. It's taken, you know, what, seven months. But that was sort of an amazing thing because we had all been talking about, "Well, how are we going to grow?" Well, this is certainly one way to grow. So, that just fell in my lap first week I was back at the end of the week. But, you know, no, I think it all went pretty smoothly, and I would do it again in a heartbeat but not right this second.
What’s Next For Her Advisory Business [1:33:13]
Michael: So what comes next for just the advisory business overall and what you're working and building on?
Lisa: Well, I think we've got some...we're continuing to grow. And, I mean, again, we don't want to be huge, but we definitely have some ambitious financial goals. And, you know, it may be that we look for some acquisition possibilities, especially in the financial life planning community because, you know, obviously the work we do is different. And I have other life planning colleagues out there who at some point may want to transition, and so there may be some opportunities and synergy there.
Michael: So you can merge your niche with other people with the same niche, which makes it a particularly uniquely good acquisition or merger opportunity.
Lisa: Yeah. I mean, and just judging by the one I went through, I mean, I think we come in at a very different way. So, you know, I think that's possibility. We're just always looking to grow as a firm from a technology standpoint, hence why, you know, we are adopting Riskalyze. Not only do we adopt the Entrepreneurial Operating System, but the other thing that we do here is something called the Engagement Multiplier. So every quarter my team is anonymously surveyed about how engaged they think I am, how engaged they are, how engaged they think our clients are and what I could do better and what they could do better to be engaged. So, you know, just always evolving as a firm around our engagement. How I can be a better leader and manager for them. And eventually, you know, a succession plan, I mean, but we're not in a hurry to do that. We've got time to do that.
Michael: So looking back then over the journey, you know, as you said, you're coming up on your 20 years of growing this path, what was the low point for you?
Lisa: I would say the financial crisis was probably really hard. I mean, our business model did really well during that period of time, so, I mean, we didn't take as big of a hit. But I can remember distinctly that, whatever it was, March 9, 2009, that Monday, where I was just sitting there thinking, "You know, maybe everything we've been telling clients about asset allocation is just wrong. It's just wrong. You know, stay invested and..." You know, that was the bottom, of course, and I knew we were pretty close to that. But, you know, that was hard because I started to wonder, "Am I really doing the right thing?" And I think, you know, trying to manage our own portfolios, that was just not our highest and best use. I mean, especially in this era now, there's so many better tools. You know, so that was really at least the beginning of rethinking how we handle the investment management piece.
Michael: So were you not using SEI then?
Lisa: We were using them for maybe, I don't know, at least half of our client accounts but not all of them. So we were still running portfolios through Schwab. And, you know, we had commodity funds in the portfolio. If you remember how that was in '08, '09, especially '08, it was ugly.
And, you know, I think the other low point was there was a period of time, you know, maybe five to seven years ago where I had a lot of turnover. And I finally had to...as a business owner, I had to step up as a leader and a manager. I had to become a student of business management, of leadership. I was tired of losing people. I mean, you know, sometimes you lose people and, you know, it's the right thing to part ways, but after a while, it's hard on the clients, it's hard on the people who stay, it's hard on the business owner. And, you know, I'd say besides the financial crisis, you know, in the last 10 years, in particular, that was the hardest thing. And I had to learn to make a lot more time, invest a lot more of my time each week, each month, each quarter, each year in my team than I had been willing to do before.
Michael: So how do you learn to do all of that? As you said, like, you became a student of business management and leadership. So what did you do?
Lisa: So, you know, some of it is reading books. Some of the, you know, "Good to Great" and all the Patrick Lencioni books and deciding to implement EOS, which I can talk about why that's such a big deal. So reading. Oh, "Harvard Business Review." You know, I'm getting subscriptions to that.
And then, most importantly is the time. So having, you know, quarterly sitting, taking one-on-one, taking each of my team members out to lunch or breakfast or whatever to talk about their goals, like annual goal-setting. We're right in that process right now. And that's separate, by the way, from performance reviews and compensation reviews, but literally setting goals, personal and professional, for the year, just like we do with our clients, and then each quarter, sitting with them to revisit those goals. How are they doing? And with my two associate financial advisors and my office manager, sitting weekly with them to check in and to prepare for the next week. And so, you know, that's...it takes a lot of time. That's more and more. The challenge is finding enough time to run the business, as opposed to be in all the client meetings. And how do I start to get myself out of some of the client meetings to run the business?
Michael: And is that in and of itself part of what's driven the team to be bigger now than it was before?
Lisa: Yeah. Absolutely, because at some point, I've got to not be the senior advisor on every relationship. And so we started that effort last year. That was challenging for me, somewhat more than the clients I think, which was a good lesson for me. I got better at it by about the fifth conversation. You know, but I have to keep investing in...I can't just autopilot like, "Oh, so-and-so's got that client." Because one of my advisors is a little younger, but both of them are still relatively new to the profession. And so, you know, I have to...I need to keep investing in them.
But what's really helped, I think, us be strong as a team and build accountability beyond just me doing everything has been EOS, the Entrepreneurial Operating System. We've been doing it for four years, and we have a two-day annual goal-setting session and quarterly sessions that we do. We have a facilitator that we pay for. And now many times I don't have all of the quarterly, as we call them, rocks or goals, the rest of my team has them. And that was really the turning point in the last year, where Lisa didn't have all the rocks, and Lisa wasn't on what we call the accountability chart for all the different functions in our business. Lisa's name is not in all the boxes anymore. So we're making progress.
The "Easy-To-Adopt" Strategic Planning System For Entrepreneurs [1:40:13]
Michael: For folks who aren't familiar, and, you know, we'll put a link in the show notes about this as well. Again, we're episode 108, so go to kitces.com/108. But can you just talk for a few minutes about what EOS is for people that aren't familiar? Because I know in small business world, EOS seems to be a fairly popular system and getting more popular. In advisor world, I find there's very little awareness of this, of what it is.
Lisa: Yeah. I mean, I think the best way to describe it is it's a really easy-to-adopt strategic planning system for entrepreneurs. It's focused on creating vision for the future, like, really concrete vision, which often is missing from small businesses, accountability by everybody on the team, not just the business owner. And it doesn't mean you can't get help with a particular goal or a particular function, but you are accountable. The buck stops at you. And it's about having better metrics for measuring how you're doing, measuring what's important, which ties back into the vision and forecasting.
And so having this structured system where every week on Monday at 10:30 we have a team meeting. And there's an agenda to that team meeting. And it isn't just Lisa talking all the time. And it's keeping everybody informed. And you have accountability. You were supposed to get things done this week, and if you didn't, you've got to tell everybody why. And then certainly, on the quarterly basis doing that, and on the annual basis. The team has a very clear sense of the vision of not just the numbers and metrics that we're shooting for, but who...in fact, we have...the demographics and the psychographics for our two target markets are in our Vision/Traction Organizer. It's a two-pager back...two-sided document that says what all our goals are, what our core values are, who our key...you know, who our areas of focus are client-wise, target clients. And so we have a really clear sense of where we're going.
And then for the entrepreneur, especially when you get a facilitator, it forces...first of all, it takes some of the pressure off of you of either hogging the meeting or driving things or not hearing what you need to hear. But early on, I had nowhere to hide around some of my leadership and management faux pas and weaknesses. And so my facilitator was like, "You need to read this book. You need to read that book." I mean, there were some really difficult one-on-ones before the rest of the team came in where I'd be in tears because, you know, I just I was struggling as a leader. And so having the support of that facilitator, having the support of the team, and just having a real clear path forward has made a great deal of difference. And being able, for the rest of the team, to be really involved in their future makes a big difference, right? Versus me in the old days where I'd create a business plan and say, "This is what we're going to do, like it or not."
Michael: Yeah. For those who are listening and are curious to delve in more, I highly recommend the book "Traction" by Gino Wickman. And we'll include it in the show notes as well. I think it's, like, the good kickoff, like, framing introduction to both EOS and kind of what it is as a system for managing the business, and also just to help you understand why maybe your business is not growing and going as well as you would like and you're having trouble figuring out why. Like, the book's name literally is like, "Why is your business not getting the traction that it should?" And it's pretty powerful.
Lisa: Yeah. The other one to read if you're built more like Lisa here, I mean, you're a Quick Start, you should read "Get A Grip," which basically is the story version of "Traction." So if you're not detail-oriented...if you're detail-oriented, read "Traction," and process-oriented, but if you're built more like me, very, you know, risk-taking kind of thing then you might want to read "Get A Grip." Same author, but it's just the story version of how a company implemented the book.
How Lisa Defines Success [1:44:23]
Michael: So as we wrap up here, this is a podcast about success, and, you know, one of the things we always observe is that success means different things to different people, sometimes different things to us in different stages of our own lives. And so, as you built this successful $100 million practice and doing this deep planning work with clients, I'm just wondering, like, how do you define success for yourself at this point?
Lisa: So my...like if you were to look at my Kinder third question answers over the years and then also even our company mission, in essence, it is about having a positive and significant impact on as many people as possible while I'm on the planet. So whether that is individually with our clients and their kids and, you know, their families, whether it is having a positive and significant impact on my team, whether it is writing articles for, you know, the "Journal of Financial Planning," speaking at conferences, training other advisors, coaching other advisors or business owners, it is...with my own kids, how can I have a positive and significant impact on as many people before I leave the planet? Whenever that is.
Michael: Well, very cool. I hope we get to expand your reach or your multiplier effect a little more with the...
Lisa: Thank you.
Michael: ...podcast here today as well and maybe get a few people to take a sabbatical and then do that same exercise to figure out their own success drivers.
Lisa: That would be awesome. Really have enjoyed spending time with you, Michael.
Michael: Absolutely. Thank you so much, Lisa, for joining us on the "Financial Advisor Success" podcast.