Welcome back to the 262nd episode of the Financial Advisor Success Podcast!
My guest on today's podcast is Melanie Milam. Melanie is an advisor with Gateway Financial Partners, a super-OSJ affiliated with LPL Financial located in Texas, where she oversees $150M of assets under management for her 110 client households
What's unique about Melanie, though, is her approach to connecting with clients, mostly in the oil and gas industry, through a tried-and-true list of 34 questions she’s built specifically geared toward maximizing the amount of time clients talk about themselves, to not only gain a better perspective on their goals, but to create deeper, longer-lasting relationships.
In this episode, we talk in-depth about how Melanie and her husband began her firm by leveraging her knowledge as a CPA and his managerial experience and personal connections in the oil and gas industry (which lead them to find her niche market), the way Melanie’s firm segments clients into tiers to align their services and provide specialized gifts and experiences for her top clients, and how Melanie’s faith drove her to obtain her Certified Kingdom Advisor (CKA) designation so that she can connect with her faith-based clients and give back to her community.
We also talk about how Melanie managed to begin her firm while homeschooling 6 children, why Melanie believes it’s so important to create stability in your own financial life before launching a business to help advise clients in theirs, and how it was the realization that Melanie does her best work when she’s in front of her clients that helped her build the courage to begin hiring a team that helps ensure she’s maximizing her time in front of her clients.
And be certain to listen to the end, where Melanie shares her “can have it all” (just not all at the same time) mindset about the women in the financial services industry, the way Melanie weaves her faith into her advice and her own life and business decisions, how Melanie’s passion for helping others inspired her sons to join the firm and further built client trust.
So whether you’re interested in learning about Melanie’s unique CKA designation and how she translates faith into financial advice, what inspires Melanie to create deeper relationships with her clients, or how she built her firm as a busy but attentive mother of 6, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Melanie Milam.
Resources Featured In This Episode:
- Melanie Milam
- Gateway Financial Partners
- Clark Capital
- Certified Kingdom Advisor (CKA) Designation
- Indiana Wesleyan University (Ron Blue Institute)
- Danish Kringles
- LPL Financial
- Melanie's List Of Questions (PDF)
Michael: Welcome, Melanie Milam, to the Financial Advisor Success podcast.
Melanie: Thank you. I'm so excited to be here today, Michael.
Michael: I'm really looking forward to the discussion today and just hearing more about how you've built your advisory firm over the years. There's a lot of discussion these days in the industry around getting more focused into niches and specializations. It's a theme that we often talk about here on the podcast and one of the challenges I know a lot of advisors have is sort of this, well I guess, really dual challenge of how do I figure out what niche to go after and even if I kind of have an inkling of one to go after, do I start there or do I just start broadly and get any clients I can when I'm getting started and then later get around to my niche once I'm ready to focus in where I've hit some critical mass.
And I know you have built a very focused niche advisory firm kind of deeply into the oil and gas industry in Texas where you are, and really can focus there from the start. And so I'm just excited to hear about what the journey looks like of building advisory firm, trying to build into a focus niche area and just building that way from the start and how it compounds over time.
Melanie: So basically, my background was a CPA. When I graduated from school, I worked at a CPA firm, regional firm here in Midland, Texas, for about five years. My husband's background, however, is in the oil industry. At the time we met, he was in Houston, Texas working for Getty. And then at the time we married, he was the only one at his office that ended up with a transfer here to Midland, Texas with Texaco, now Texaco during the Texaco Getty merger. And so then he was with Texaco until the Chevron-Texaco merger, and at that point, Chevron, they had different plans for him. He was the area manager over about 150 people at the time, and his people loved him. He was just an incredible manager. And so when this merger happened, one of the things that he wanted to do is he wanted to make sure his 150 people got what they wanted. So if they wanted to stay with the new company, he helped them to stay and if they wanted to leave, he helped them to leave.
And he realized in this process, so many of like the pumpers and stuff, they honestly didn't realize that they had both a pension and a 401k. They thought, oh my goodness, I have to pick. It shows here that I had this pension money and have this 401k money. Do I just pick the highest? So he had the opportunity to really educate them on what they had. And once he got everybody situated, then we decided the job that Chevron offered him wasn't something that we were interested in. So we had always wanted to be in business together. And with my CPA background and his managing people and really in that role managing budgets and stuff, he was able to take that and our financial advisor that we use said, "Hey, have y'all ever thought about being financial advisors?" And up until that point, we had never thought about that. But at that point, that sounded like a great idea to us.
And once John got all of his people situated, he went into Chevron and he said, okay, I want to take the package. I don't want to stay with the new company going forward. Which for him ended up being two years' worth of severance, which because I'm super frugal...We have six kids. So I've always been very, my kids will call me cheap, very cheap. And so I was like, yeah, we could take that two years and...
Michael: There's a lot to manage with six kids, like, wow.
Michael: I feel like I'm treading water with three.
Melanie: Well, and in the process of when our kids start going school, God called me to homeschool my kids. So we were homeschooling at the time. John was leaving his job. We were going to start this new business and our mentor that the advisor we were under said, "Okay, number one thing, you need to decide what your niche is going to be. You need to figure out a niche market." And for us, the oil and gas industry was a perfect fit. I mean, that's what we knew, and we knew those people and we enjoyed working with those people, down to earth, good salt of the earth kind of people. And so that's kind of how we started and we realized, by doing it that way, by not being a generalist that there very possibly it could be a while before we actually made any money in the business. So it is challenging to know your niche from the beginning and to really start focusing on that immediately, and be prepared to potentially not make money for a little while.
How Melanie Found Her Niche Market In The Oil & Gas Industry [7:13]
Michael: Although to be fair, I feel like it's not like most advisors I know who start out as generalists and cold call anybody they can find have a much better, faster path to income in the early years. It sort of just sucks for everyone no matter how you start. But I am curious as to hear more about that dynamic of a manager saying you should be picking a niche, you should be picking something to focus into from the start, but you're getting started from scratch. Did you have second thoughts about this? Were you just all in, "Okay, let's go. It sounds like the best strategy"? Was it sort of a hedging like, "Well, it seems like a good thing in the long run. And we've got some savings built up now because of the severance payments, so let's go for it because we feel like we have the onramp"? How were you thinking about focusing into oil and gas from the start?
Melanie: I honestly thought that was an incredible idea because of my husband's contacts. John had so many great contacts in the oil and gas industry that we were like, "Well that really is a perfect fit." And because I had already also gotten some contacts just by living in Midland, lots of the tax returns we did at the CPA firm that I worked for were oil and gas related. And so when he mentioned that, that made sense to us, and we were like, "Yeah, we don't want to just be advisors for anybody." I don't really want people just walking in, "Oh, I've got $10,000. Can you invest it for me?" because I knew we weren't going to get anywhere quickly by doing that.
And we've always had this idea of we wanted to provide that wow experience for our clients. Well, you can't do that if you have a million clients. That just doesn't work. And so we knew it had to be a smaller set, a smaller group in order to really effectively and consistently provide that experience. And so when he had that idea, that recommendation, we said we were on board. We said okay, well, we know ours will be people that are transitioning in the oil and gas business, either they're moving to a different oil company, or they're retiring all together. And so that's kind of how we started.
In our first assignment we had another advisor that was also mentoring under him who lived in Bartlesville, Oklahoma. And at that time, it was during the ConocoPhillips merger. And so our mentor said, "Hey, why don't y'all temporarily relocate you and your six kids up to Bartlesville, Oklahoma and help this other advisor who's a little ahead of you open his office there?"
Michael: I feel like the person who made this suggestion probably didn't have six children.
Melanie: No, they had two grown children. So we were like, "Okay, well, that sounds interesting." But we were homeschooling. And so we're like, "Okay, I can work in the business. I'll be up there from this hour. I'll start at 8 in the morning and I'll be there to like 3 in the afternoon and then I'll go home and I'll have already put the kids to work on their school stuff. We'll have a nanny in there just kind of monitoring them and then I'll go home and finish doing school stuff. And this is what this is what our day will look like as we build this business."
And so John, my husband was like, "Okay, that sounds good. Well, let's find a place and let's temporarily move to Bartlesville, Oklahoma." And so we did. We found this duplex downtown, which was wonderful. We could literally walk anywhere but the duplex was built in like 1910, so it was older than the hills and a lot of stuff didn't work. But we just went up there. We didn't take any of our furniture or anything. We went to garage sales. We found furniture. The kids, you know, we had so many of them that we just had tents in the second bedroom because there were only two bedrooms. So in the second bedroom, we had tents and we had two in each tent so that they could pretend we were like camping.
Michael: Yeah, it's a family camping adventure.
Melanie: It was. It was such an adventure. So for 10 months we were in Bartlesville, Oklahoma helping this other advisor open his office but in the meantime, we also ended up with some amazing clients that I still have to this day that we got from that ConocoPhillips merger in Bartlesville, Oklahoma. And our kids too, we have great memories of the funny stuff, the hard stuff that happened during that time, that 10 months, when we were starting this business.
Michael: So there are a few things that struck me there just as you were talking about how you formulated who you're going after. That you had said that you wanted to have a more wow experience for the folks that you were serving. And so to you that just meant we have to have a more focused group of clients. We can't do the just lots of clients anything for everyone.
Michael: That was, I guess, part of the focus or theme for you in the first place.
Melanie: Yes. I'm a very forward-thinking person. So I'm not just thinking about today, but I'm thinking about 5, 10, 15 years down the road. What do I want this business to look like? And how do I want it to grow? And all along the way, we were incredibly deliberate about from the very beginning how we built it. Now, the other thing was is I knew that we were going to be the turtle. I'm the turtle. I'm not the hare. I'm not out there. I'm not wanting to buy a bunch of people's other business and then sort through it. I just wanted to be very deliberate and I wanted to build this incredible business that I felt like someday at least some of my children would want to be a part of, or that was what I was hoping. I was never going to force that on them. But that was always my prayer was that someday that they will carry out this legacy that their dad and I have started.
Why Melanie Frames The Focus Of Her Firm On Transitioning Employees [13:09]
Michael: Then help me understand a little bit more. You had framed kind of specifically like our niche is going to be people who are transitioning in the oil and gas business. So where did that come from? I get the oil and gas business part because John had the background and you had the connections from doing returns and you're in Midland where there's a lot of oil and gas business, but why people who are transitioning? I can imagine a lot of ways to carve up a focus around oil and gas. Where did that come from as a particular framing?
Melanie: Well, so where that came from is living amongst the booms and the busts, what we witnessed were there were very specific times when people changed careers in the oil business, as we you know, in the last 20 years, and that would typically be during a usually during a boom but it could be during a bust as well. That they've been with one oil company either now during a boom, they get a better offer from a different oil company or during the bust, they've gotten laid off and so they need to move because and find a new job. And most people continue to stay with oil companies and why did they do that? Because oil companies have incredible benefits. So you have like for Chevron who has ended up being the majority of my niche market, they have a pension and a 401k. So I know if I'm working with someone who not only has their 401k that they've put money in and the company has matched, but they also have this pension that they had nothing to do with, the company is just building up for them, that for me, I knew they were going to come to the table with a substantial amount of assets.
And so that is even to this day, if a pumper is retiring out in the field. This guy may have a high school degree, definitely don't have a college degree, may not even have a degree. Just a little pumper, that's all he's done. He's been with Chevron for 25, 30, 35 years. He's going to come to me with a million dollars typically or more. And so I knew I could look down the road and I could see if we could get people who are leaving one oil company and go into another oil company or they're retiring, they're going to have a substantial amount of investable assets for us to immediately be able to work with.
Michael: Interesting. So kind of this framing of the appeal of specifically those who are in transition in the oil and gas business is just it means dollars will be in motion, right? If you're going from business or coming, which means you're leaving some other business to be coming to the current one, like any of those transitions means an old 401k has to be moved, an old pension. Someone's got to make a decision pension versus lump sum which pension payment if they're going to take a pension payment. And so just the fact that decisions and motion comes when the transitions come, I guess is essentially why you went to the transitions?
Melanie: Absolutely. That's exactly why because you're exactly right. There's money that's on the table, because they're not typically... If they come to get advice, I'm not going to advise them to keep that that 401k just sitting there at an old company, right? So then you give them their options. These are the things that you can do. These are the four things that you can do with that money and what would you like to do with that going forward? And so, typically, they wanted to go, you know, they were ready to have...they were ready to have it out of the old company. They didn't necessarily want to move it to the new company because think about that. With the oil business, you have all these ups and downs and ups and downs and you could have your job and then you can lose your job and so let's not put it in a new company where you don't know how long you're going to be with, so for them and they obviously didn't want to take it out as cash and pay the taxes on it. So for them, it made sense. Okay. What would it take for you to be my advisor and let's move it with you and you invest it?
Michael: So how did this get started? When you said like, okay, we actually want to go off and do this, right? John's left the Texaco in the midst of the merger. You're ready to get started in the business. You're coming together to get started. You've made this decision that we're going to go after folks in the oil and gas business because you've got all these roots there. But how does that actually get going when you launch and get started? I'm imagining John doesn't literally like go back to all of his former employees and say like, "Hey, I used to manage your career. Now I can manage your retirement account." Let's just transition this relationship. What did you actually start doing to begin to get clients and position yourselves as advisors in this niche, as experts in this niche when you're just getting going in it?
Melanie: Well, so because we had those 10 months first up in Bartlesville with that advisor up there, and it was a perfect time because it was right in the midst of that ConocoPhillips merger, that one of the things we did was we did seminars. That was back in the day, the old day of seminars and we had a great restaurant there, and we would put on these seminars and that's kind of how we started getting clients in the business was by using seminars. And so then when we transitioned back to Midland, and we opened our office here, that was one of the ways that we started kind of reaching out to people was through those seminars. And then, John would figure out people in the industry that he had heard were thinking about retiring. So we would basically send a letter to them and said, you know, introduce ourselves as, "This is our new career path. And we'd love to sit down with you and just look over your picture. Even if you're thinking about using someone else, it's always great to get a second opinion." And that's what we did a lot at first was give people that idea of providing a second opinion.
Michael: Okay, so maybe, we're new. You knew us in a different context. You don't have to give us everything as the primary yet. Just let us be able to share some thoughts as a second opinion just I guess...it's a lower risk, lower stakes way, I guess, for getting in front of them while you're trying to reposition yourself from what they knew you as previously to what you're hoping they'll know you as going forward?
Melanie: Exactly. So very few, or at least back then, very few financial advisors were also CPAs. So I had that CPA knowledge that in our letter, in our introductory letter to people we could tell them that the money that you're thinking that you're moving potentially from your old company is all pretax money. And so one of the things that's going to be very important to you is to know the tax ramifications of every decision that you're making about what to do with this money so that you don't make huge mistakes with it. So that little bit of edge there really, truly helped in the beginning for people to go, "Oh yeah, yeah, I need to know that tax knowledge." And if they know the tax knowledge, and they have an idea of the transition process, because John has already been through that transition process because that was in the letter too that we had already walked through that and kind of knew all the steps, it was very enticing for them to at least come and sit down with us and talk to us.
Michael: And so this just went out to any folks that you knew that John knew previously to just introduce, I think you'd said like, reintroduce yourselves.
Melanie: Exactly. So basically anybody that he thought was within five years or less of retirement, that's kind of who we targeted, because we knew that those people when you're in that window of, "Hey, I think I might retire in five years," a lot of times you want to know okay, but where am I? Is that feasible? And one of the things that the Chevron guys did not know is the fact that from Chevron, you can retire in the year you're going to be 55. As long as you leave money there in your 401k, you can withdraw from that money until 59 and a half without that 10% penalty. So many of the guys, no clue about that. And so that was something else that we were able in our letter to articulate of, "Hey, come find out how you can do that, how can you retire early, and we can give you those helpful hints without that 10% penalty." So it was little things like that and mainly from his contacts and my tax knowledge that we kind of put those two together to encourage people to come and just sit down with us one time. That was my goal, is if I can get them in front of me, especially husband and wife one time, then I really feel like we've got a good in the doorstep to where we can help them see the value that John and I bring to the table.
Michael: And then talk to us a little bit more about the seminar side. What were you doing? What were you speaking on? What were the topics and how did you get the word out? What was the seminar marketing process for you?
Melanie: So on this seminar marketing process, we basically...he still had his list from when he worked at Chevron or Texaco before it came Chevron, and so we would pick about 25, 30 people that we wanted to send an invite for this seminar and we would make it stuff that we felt like was relevant to them, you know, preparing to retire, or if we wanted to do a little bit older group, when to turn on Social Security, just those different topics that we knew would be interesting to them. And we would always provide a meal as well. So people a lot of times, especially back then, loved coming for a free meal. It's a free meal, we can hear, you know, hopefully, get one good idea. We know these people, they're not threatening, and so we had good success in the beginning kind of using that seminar idea and encouraging people just to come and hear the topic, eat a meal, and then we would talk to them after the seminar and just with those same kind of ideas of, "Hey, have you thought about retiring early?" Or, "Do you know what that would look like with Chevron? Did you realize you could retire before 59 and a half?" just some of those little enticing things to where we could get a meeting scheduled one on one with that couple.
Michael: So I'm struck though that the topics weren't necessarily super deep and specific to the niche space. It's not as though you were doing topics on 10 ways to maximize your Texaco options or whatever it was at the time. These were still more broad-based topics just your marketing targeted people in the energy industry?
Melanie: Yes, that's what it was. So it was our marketing is what targeted people in the oil and gas industry because that's the people we were looking for.
Michael: So was there something different in the marketing just to speak to them more? Why was it working for you in the energy industry in particular, as opposed to just anybody in the greater Midland area who wants to come and learn about Social Security?
Melanie: Well, so we didn't advertise in the paper. We sent invitations out to the people that we were wanting to target. So it wasn't...
Michael: Which was a contact list that you had built directly or that John had from his prior work as opposed to buying a mailing list for thousands of dollars.
Melanie: Right. And he wanted to send it to people who already knew him, who already trusted him from when they worked under him or one of their friends worked under him. So people that already knew that he was a man of integrity, that he was honest, that he had these great character qualities. And so we weren't going from a cold call type situation or a cold card type situation. It was people that he had already built that trust with who knew him personally and knew him as a boss, that we could say, "Hey, come listen to the seminar, have a meal, and then let's see if you might want to sit down with us."
Michael: And so the fact that he knew them and had them in the Rolodex, knew a little bit of their situation to at least potentially qualify that they're probably a good person having your seminar. More likely to have them attend because they already have the name recognition to John and so that just makes the marketing process more efficient and cheaper than whatever it is, you know, $7,000 on 20,000 mailers to everybody in the zip code of such and such.
Melanie: Exactly. No, it really it made it a lot more efficient. Plus, it meant that we had a higher probability of people actually coming because they, like I said, they knew John and they trusted John. And so they were like, well, let's just go see what this this seminar is about, and let's talk to him about how he envisions his career as a financial advisor. And let's find out what he knows now that he's transitioned out. What tips does he have for us if we're ready to leave Chevron?
How Melanie Orchestrated A Balance Of Work, Family, And Personal Finance [25:27]
Michael: And so how did it go as you just got started with this in the early years, I guess, after you came back from Bartlesville and back to actually building in your home territory? Did you start doing this and it just took off? Did you start doing this and like still a brutal grind for a long, long time? How did it go?
Melanie: It was challenging when we got back here when we found our office space and really started working and honestly, year one and year two back here went pretty well for it being a new business and everything. Year three was okay. Year four was awful. You want to talk about low point? Year four was low point. So I crack up. We were the other day...I had the son Joel that works here for me in office. He's my licensed admin assistant. We were going through some of our old tax files because I'm trying... My husband, so John is a packrat. That's one of the things and he keeps everything. And so we're at the point where in our storage because we have a storage building, I'm like, "Okay, we got to get rid of some of the storage stuff. So the garage stuff can go to the storage." So we one of the things we brought up to get rid of was old tax files. And so we pulled out the old tax file from the fourth year in business. And Joel was like, "Oh my gosh, mom. Y'all only made 30,000 that year. And you had six kids." And I'm like I started laughing. I said, "I know it was a terrible year."
Michael: Let's thank that Texaco severance payment once more.
Melanie: Right, let's thank it. The other thing that happened that year, because he remembered. He's like, but we had that amazing vacation. So one of our big things since I homeschool, one of our big things was seeing the United States. I wanted all my kids to see the United States or as much of it as possible before they graduated from my home school. So before they graduated, we had gone to like 45 of the states, 42 different state capitals. I mean, been all over the United States. So in that year that we made 30,000 our big trip that we had planned was we were doing kind of the Northwest. It was kind of a big loop. And we were going to be gone for four weeks. And I had gone on Priceline and done all the bookings, and we were we were trying to eat on a budget, obviously, because we weren't making a lot, but we wanted our kids to still have this incredible experience.
So we get back and we were laughing because it ended up that I think our daily eating was less than $25 a day and that includes, you know, we got free breakfast at the hotel, we had lunch out to eat somewhere, and not horrible places. We would go to Chili's or a place like that, Applebee's, and then we would have sandwiches for dinner. My friends were laughing. They're like who feeds their kids on vacation for $25 a day? You are the ultra-cheapest person we know. But we did not miss out on that vacation on that year that was so horrible that we only made $30,000.
So year five comes and I'm like John, you know what, there was several things. One is, so we were in the same office. Okay. And even though we initially thought that, "Oh my gosh, we want to work together. This is going to be amazing. We've always dreamed of this." Well, it's a little more challenging. And if you've ever worked with your spouse and especially over an extended period of time, it is a lot more challenging than what you're anticipating. So we are both, John and I are both type A. We want to be in charge. And since it was just the two of us, we both wanted to be in charge but we didn't have any little peons to tell what to do. That made it really difficult because he's trying to tell me, I'm trying to tell him. And in the office space we have my desk is on one side of the room and his was on the opposite side of the room so I could see his desk at all times. He is a messy. I am a neat. So he's got piles everywhere. Mine is completely neat.
I finally told him, I said, "Honey, I love you dearly. And I really think that it is time for you to go back in the oil business because I can't look at this mess every day anymore at the office because I'm looking at it at home, so I can't be at home looking and I said my office space needs to be clean. And you don't listen. I'm trying to tell you what to do and you don't listen." And so, of course, he's like, "Well, I'm trying to tell you what to do and you don't listen."
So at that point, we both felt like for the sake of...we don't believe in divorce, so one of us was going to die. So it was like okay. So he started, we start praying about him going back in the oil business. Well, he ended up getting multiple different calls to go back in and finally went back into the oil business. Basically at the end of our fifth year, he went back in, which was good for everyone. Although I was terrified and he didn't know this before he went back in, but I was like, "Oh my goodness God, how am I going to do this? How am I going to have this business and serve these clients in the way I want to and grow it and have these kids that I'm still homeschooling?
The kids are in the front office. So I bring them to work. They're out there doing their school. I'm working on work. I'm meeting with clients, but then in between clients, I'm going and answering questions on their schoolwork. So it was like one day, I was just like, "Okay, God, what are we going to do here? Because I don't know how I'm going to do this." And God was like, "Melanie, I got this. All you have to do is just be obedient. You just be obedient and I will equip you for all that I've called you to do. So you just chill. And I will bring you the clients. I will bring you those prospects. And I'm going to give you the wisdom if you just keep praying for wisdom, I'm going to give you the wisdom to really be able to understand how to make this business incredible. So just keep praying for my wisdom, keep doing what I'm telling you to do. And I will take care of you." And so that's kind of what we did.
Michael: So help me understand just the progression a little bit more of like just how the business and the income got going in those early years. You said years one and two went well and three was okay. Just what was the revenue at that point? What were you able to get going as you were first getting going?
Melanie: Well, so at that time, this is before I really knew anything about managed money or fee-based but what I did know for the people we were working with is if we rolled money out of a pension, we needed to have an option for it to provide lifetime income. And the problem with leaving pension money there at Chevron, which lots of companies are like this, so it's not just Chevron, but if you leave the pension money there and take it as an annuity, as just pension, if you're married, then you're picking joint survivor. Well, what happens is if both of you, let's say a year after you start your money, you're out there on the road driving and then you're killed in a car wreck and the two of you die, then Chevron keeps the rest of that pension money. And that's just how a lot of company plans are designed. So I knew that we needed to be able to have a better alternative.
We knew about annuities and so part of the money was going into annuities. And even though the temptation was let's take all of the commission upfront, we were never those people. So we were the ones that did a step down and we said, "Well, let's take a chunk of commission upfront. And then let's take the trails, let's always have trails." And so that was one of the early on, one of the really wise decisions we made is we never took all of the annuity income upfront and we always had a trail. So we knew we were building in trails. And then with the 401k money at that time, we were putting together mutual fund portfolios that we were using. Since then, in the last six years, we've moved on from that and it basically is fee-based. But that too, we knew wasn't just a one-time payment. So that early on was our strategy is we want to continue to put the investment products in place in a way that it would pay us trails, not just that whole upfront commission to help us get to the next paycheck.
Michael: So you, I guess, it sounds like early on you were sort of trying to do the balancing blend, right? If I do everything...well, there wasn't much fee-based back then. But if I do everything with levelized C shares or C share style annuities, I just may not get enough dollars out to pay the bills, especially with six kids. But if I take all of it upfront, then by year five, I'm still starting over from scratch. So you were trying to find the balancing point of I want enough trails that I'm building something over time, but I can't take it all levelized because it's too slow of a ramp-up? The two-year severance only can go so far.
Melanie: Exactly. And one of the cool things was that the December before John left, we had paid off our house which that was our last debt and so we were completely debt free. So all we were working with was just our normal, you know, regular bills. And like I said, I'm super frugal. And so we really, our monthly budget was very easy. We knew we could make our monthly budget in what we were earning as long as we were good with those months that we made more than our monthly budget, we needed to put back into our savings for those months that we might make less than our monthly budget. But because we had no debt, that was another huge blessing. When we started this business was, we started it completely debt free. And even in that year that we only made 30,000, we never had to borrow any money as we were building this business. So we built it without debt.
Michael: So just ratcheting down household and personal expenses to the extent possible so that you don't need as much upfront in the first place?
Melanie: Exactly. Which was huge.
Michael: I've always been struck for all the discussion out there of, well, the cost of starting businesses in general. Advisory firms, I mean, relative to like starting a restaurant where you got to take down a big lease and kitchen equipment and deck out the whole place, there's not a lot of actual upfront overhead costs for starting an advisory firm. What kills most people is their household expenses until the business kicks off enough money to make the math work.
Melanie: Exactly. And so if you can be really smart there and prepared and like I said, for us have zero debt before you start the business, it takes a lot of that strain off of you have how much money do I need a month to be able to pay my monthly bills. The other thing I have found over time is that when you don't need that next sale, it's a lot easier to be the best for the client. When you don't need that money, when you can truly sit back and it's not all about the money you then can really think okay, what is the best investment for this client at this time?
Michael: So what was it that was going on that things started out going okay and reasonably well and then year four was so awful? What happened? What derailed or like wasn't manifesting as hoped that that you got a couple of years in and then it got worse?
Melanie: Well, because basically what one of the things we figured out. So John, my husband, he is incredible when you get people in front of him. He is so good, very articulate. He does not love to be on the phone to make those calls to set those appointment to do those things. And at that point, he's the one that knows these people better than I do. Some of them I don't even know. He knows them. But I couldn't do enough to motivate him to get on the phone to make the call. And I really think it was just all part of God's perfect plan in that John needed to go back into oil business and I needed to take over this business myself. And I needed us to hit rock bottom for me to really understand that if I wanted this to be successful and I'm not a quitter, I had to turn to God and I had to go, "Okay, God, this is your business. I just want to do it amazing. And so I need you to help me know how to do that."
And really, once that happened in year five, we did really a whole lot better in year five. But by that point, we had already made the decision for John to go back into the oil business. And I was learning how to take this over myself while I was still doing all these other things and have that confidence that...and I think that in this male-dominated industry, I think that's where a lot of women struggle is they're afraid that they're going to fail because they're such a minority in this business. And then even like, I remember going to LPL conferences and there's just so few women there and I'm thinking, "Oh my gosh, all these guys, they're smarter than I am. They're better than I am. They know how to do it better. They're crushing it and here I am." Well, what I found out years later, now when I go to conferences, and I start talking about my business and my niche, like I have the male advisors going, "Oh my gosh, you have an amazing practice. Can you share some of your ideas with us?"
And so it's kind of rewarding for me when I have the opportunity to share because I know it's not me. I know it's not my knowledge. I know that all that I'm doing today is because God gave me that knowledge and that was the cool thing when I went through to get my CKA, my Certified Kingdom Advisor certificate, all of the information that they shared, 95% of it I was already doing in some form or fashion that God had already gave me that wisdom along the way. So it was really neat for me to see, "Oh my gosh, God, you really have been working all along here giving me the tools, giving me the ideas, giving me the focus on this business so that you can make your business successful."
Why Melanie Chose To Pursue A Certified Kingdom Advisor (CKA) Designation To Connect Her Faith To Her Financial Advice [39:39]
Michael: So for those who aren't familiar, can you share a little more just about what the CKA, what the Certified Kingdom Advisor designation program is?
Melanie: So one of the advisors at Gateway, he came to me and this now has been over two years ago, and he said, "Melanie, I have found the designation for you," because he and I were both struggling with, "Okay, do we need to go and get our CFP?" I knew I was a CPA and that brings a lot of credentials. It brings a lot of value to the table, but I was struggling, do I need also to get my CFP and so was he. And so then he found the CKA and it's called Certified Kingdom Advisor. And basically this certification is done through Indiana Wesleyan University. So you have to take a college class through them in order...that's step one in getting this certificate. But basically, what it is is all financial principles from a biblical worldview. So the writers of this CKA, the creators of it were Ron Blue, and Larry Burkett were the two of the main creators of this program. And so when this other advisor came to me, and he said, "Melanie, why don't you do this?" and I saw who was the creator of it, I was immediately on board.
Because John and I have taught, we taught Larry Burkett. We taught Dave Ramsey at our church. We taught Ron Blue at our church. We've taught all that in the past. So I was like, oh my goodness, if I can get a credential behind my name, that means that I have gone through and I have studied intensely what the word of God has to say about finances because there are over 2350 verses in the Bible about money or related to the topic of money. And because of that, then I know, I believe God has so much to say to us about money, and many of my clients are Christians. And so I thought that would bring so much value to them in that I'm also helping them use their money to glorify God, to really bring honor and glory to him and to be wise stewards of all that he's entrusted them.
So in this program, and right now, there are only approximately 1500 to 1600 Certified Kingdom Advisors nationwide. So there's not a lot that have actually gone through the program. It started in 2016. And you take this class and so for me, in any college class, I want to make a high A. In fact, I really want to make 100. That's my goal. And I realized that was kind of probably not a realistic goal, but I want to be as close to 100 as I can get. Well, what I didn't realize was on this online class, this was my first online class ever and technology is not my best friend. And so part of this class is you have this ginormous, lots of information about this one couple, their family, because throughout the entire course they have 19 modules. You're going to use that family's financial information and their history and everything about them as the case studies each week in doing each of your case studies for the course.
So I finished that course. And then you have to take a five-hour proctored exam. So you're sitting at your desk, or wherever you decide you're going to be and you have your webcam on and there is someone literally watching you for the entire five hours. And in the test, they give you 100 multiple choice and then they give you this huge case study that you have to do and they give you the questions that you have to address in that case study. And you have five hours to do it. I did not leave that desk for five hours. I didn't take a drink of water. I didn't eat anything. I didn't go pee. I literally sat there until the last 20 seconds of that test. We finished the test and I told my kids I think I failed. I failed. I failed this. I've worked so hard and I think I failed because tests kind of petrify me especially when I'm literally being watched the whole time and I'm trying to think and you have all these scriptures that you've memorized that they want that to be a part of it. And you have to wait six weeks to get your grade. So I wait the six weeks and I'm back and forth. Well, maybe I passed, maybe I didn't. Back and forth.
Well, come to find out, I did pass and I think I ended up making like a 97 on the test which I was so excited. Then after the test, then you have this whole application process that you have to do and so it is you have to get a recommendation from your pastor. You have to have recommendations from several of your clients. You have to fill out your testimony. You have to fill out 1000 words on what you believe about stewardship. And so there's all this different stuff that you have to do. And then you send that in and then it's another month to six weeks for them to decide, for Kingdom Advisors to decide if they will accept you as a Certified Kingdom Advisor. So it can only be people who are CPAs, attorneys, so JDs, and anyone that's been in a financial advisor for at least 10 years, or if you have your CFP, then there's some other stuff you can do to get it earlier than the 10 years if you've already gone through the CFP program. So they're trying to make it a lot more challenging to get a CKA. They're not going to just give it out to everyone.
Michael: It's not an entry credential. It's an after you've got some other credentials and experience kind of program.
Melanie: Yes. Which has been incredible for me. I love the whole process of that and I love...I'm more proud of that designation than my CPA just because of what that truly means to me. And because faith is my why of why I do this business. And so that one is just very special to me.
Michael: So then help us understand as you made the transition, John goes back to the oil and gas business, you're now steering on your own, but the niche that kind of evolved around John and his personal networking connections to industry, so how does marketing work come year five when he's transitioning out? You're steering, you're ready to buckle down and focus on the business but a lot of the growth was coming through his network into the niche. So how does growth work now?
Melanie: Well, so by that point, we already now have some clients, okay. And so those clients are going back to their peers at Chevron and they're telling them, "Hey, if you're getting ready to leave Chevron, you need to go talk to Melanie because she knows the whole process." Plus by putting John back in the oil industry, then he's got a lot more opportunity in his day to day and as he's going out to lunch somewhere in hearing who's retiring, and then him being the spokesperson and say, "Hey, well, if you're retiring before you make your final decision, why don't you go see Melanie and just sit down with her because she also knows the tax side of everything." He was my little promoter out in the oil business to send people my way, which was a huge help. That really made a difference as well.
Michael: As we've always said in the industry, like one of the best ways to grow is having a strong center of influence, so it doesn't hurt when it also happens to be your spouse.
Melanie: Exactly. Exactly. So that helped a lot.
How Melanie Evolved Her Firm By Placing Faith In Others [47:38]
Michael: Interesting and so how did it grow and evolve from there? So I think you had said early on you were doing more annuity business. Now you're doing more fee-based business. So how did the business evolve in terms of what you're doing and how it structured from early days to where you are today 15 plus years later?
Melanie: So he went back in the business around 2006 is when he went back in the oil business. And at that point, then I kind of took the business on myself. I'm still homeschooling, got these kids. At 16, they're going to Midland College, I'm putting them in college, and starting them there. So the more kids I can get into college, then the more of my time is freed up to work on the business. But within a few years, I realized, "Oh my goodness, I need some help." I don't love technology. I don't want to do that side of it. The paperwork, that's not my favorite either. I just need to have time to focus to be in front of people and get people here.
So I'm at the time I banked with Wells Fargo and one of the young men that was my banker, I kind of gotten to know him a little bit. Now we're in the middle to end of 2009 and I gotten to know him. And one day I just sat down with him and I asked him his story, because he was, I could tell he was a super hard worker, but I didn't know what his backstory was or what his dreams in life were. And so when he's telling me his story, he came from a horrible background and basically from the age of 8 to 18, he was in 10 different foster homes and a group home, horrible. So at 18 when he goes out on his own, there's no mentor there. There's nobody to encourage him to go to college, and he tried to do a few classes and work full time and support himself and all this but he just needed to focus on making money to support himself.
But fast forward to this time, now he's the manager of the branch that I go to. And so I was like, "Well, hey, what are your dreams? Are you wanting to stay in the banking business? What have you thought about?" He was like, "Honestly," he said, "I know this can probably never happen, but I really would like to go to college." And I was like, "Okay, well, what if you come work for me part time, as many hours as you want. I will pay you hourly. And then you go to college, and I will give you the same deal that I gave my kids for college. If you make an A in a class, then I'll pay for the class and books. If you make a B, we're going to half it. You pay half, I pay half. If you make a C, you're going to pay for all of it, because that's not a good investment." So he was like, "Well, yeah, I'll take that deal because I like to make all As." "Okay, me too."
So he starts working for me. And then he gets his two years here at Midland College because he made a 4.0. He gets great scholarships. He moves on to UTPB. He's still working for me, going to school full time, then he gets his master's. And then he comes to me, he goes, "I really want to get my CPA." And I was like, "I think you should," and so he gets a CPA.
So now we're fast forwarding to 2015 which it was so amazing to me to be able to be a part of his life and help him to achieve something he really wanted. And he's helping me in my business. So in 2015, Obamacare has come in. I get my health insurance through John. And he said, he comes to me, he goes, "Look, I am so sorry. I love working for you. But if you aren't providing health insurance, I've got to go somewhere where is. This whole health insurance thing is now a nightmare."
So I said, "I fully understand." He said, "But can I still do all of your tax work, all the tax returns for the clients who you want to do tax work?" Absolutely. So he's kept doing that. So since 2015, he's my tax person. So he leaves. Well, obviously, I need help. So my son Joel, that works for me now, he graduates at the end of 2015, December of 2015 as a petroleum engineer. Well, there are no jobs. We are in the midst of a bust, and so he can't find any jobs. Of his graduating class, two females get a job and none of the guys get a job. So he's working three jobs at the time. It comes April, I'm in the midst of trying to do, give tax work to Jesse, see clients, I'm still homeschooling people. And so I'm like, "Well, hey, Joel, why don't you come to work for me while you're trying to find a job? We got to wait till the oil business turns around and that way you can work for me. I need help. You can see what you think."
So he starts working for me. Within six months, he was like, "You know what, Mom, I don't want to go in the oil business. I want to work here. I love what you do and how you get to help people. He said, so I want to be your licensed administrative assistant." Awesome. So he starts taking the exams and doing all of that to get completely licensed in everything. Now I would say by year eight in the business, I have a steady, a decent stream of referrals. I'm not advertising. I'm only taking referrals and part of it is because of the processes that we put in place to help clients have a wow experience when they come see us and that's something that I don't want us to not get in, because I really want people to hear that.
But anyway at this point, I'm having steady referrals come in, so I know I can't do this on my own. And even with a licensed admin, I still in the back of my mind, remember, I'm a forward thinker, so in the back of my mind, I'm like I need a succession plan. And Joel, my licensed admin, who I adore him being here, he's not someone that likes to be in front of people. He's not the person that's going to go, "I want to tell that person they're overspending. I don't want to give bad news." So sometimes we have to give bad news, and I knew that, and so I was like I know you don't love bad news. So we need someone else to give the bad news.
So I'm still I'm praying God, who's this succession person? I got all these other kids. Well, at that point, I also a year later 2016, I have a different son, who Joel's older brother who graduated from SMU Law School, who he wanted to do estate planning. So he goes and works for someone for a while and then he comes to me, and he goes, "Mom, I really want to have my own firm. You have your own business. I want my own business." Okay. So I said, "Do you think you can do it?" He was like, "Absolutely." I said, "Okay, well, I will use you to bring you in to do seminars for me for my clients, and then any of my clients who want to use you for their wills or wills and trusts, then you can do their wills and trusts and through your business, you charge them whatever you would charge anyone for wills and trusts and you can start your own law firm." So we did that. So my son, that's the attorney, Josh, he does all the wills and trusts for the majority of my clients that come in and they love that because they trust me, so they immediately trust him.
Then a year and a half ago, my youngest son who went to SMU Business School, he had been working for Oracle, worked for Oracle in Austin for three years, found the girl he was going to marry, she's a CPA, moves to Houston. Oracle had said, oh, yeah, you can work remote, and then he gets there and they're like, oh, yeah, but we forgot to tell you, you're working remote but you can no longer promote in the company because we don't really have a location in Houston. So, so sorry.
About that time, what happens, he's looking for other jobs. He has six offers on the table, COVID hits, all those offers go away. Still working for Oracle and I'm still praying about it. God, what do you want for Jacob? Well, he finds this other guy who has his own business that he does websites, starts working for him. The guy tells him after a month, he says Jacob has met all the quotas. He surpassed every other new person. The guy comes to him and he says, "I'm sorry, but I don't like the way you're selling." And Jacob said, "Well, what do you mean?" He said, "Well, you're losing me customers." And Jacob was like, Well, why? I far surpassed what you set your expectations for me." He said, "Well, because when you sell something, you're not overselling that person. And when that person says they don't need anything, you're not selling him something anyway, so you're losing me business." And Jacob was like, "I don't work that way. I'm not that person. I can't do that." And so the guy said, "Okay, well, you have a week. If you can't decide, that's the way that you're going to sell, then you need to find another job." So he and his wife start praying, and as he's praying, it just keeps coming to his mind, "Mom needs a succession plan. But I don't want to just go to her because I need a job. Is this the right thing?"
So they're praying. Well, at the end of that week, it's July the Fourth weekend, we're all meeting in Dallas. And he's like, "Okay, well, we're just going to present this to mom and see what she thinks because we really feel like this is the direction that I want to go to work for her." So sure enough, I've been praying that whole week. He's been praying. We don't know each other's praying. We come together. He starts telling me he wants to come work for me. I start crying. He's like, "Why are you crying?" He goes, "Did I ruin the weekend?" I said, "No." I said, "You are the answer to prayer that I have been praying that God... I really felt like I was ready for you to come on. But I was not going to be the one to bring it up because I don't ever want any of my children to feel they're obligated to work in this business." And so it was a wonderful confirmation that he was supposed to come in. So he's the one training to be me.
So our plan right now, what we do right now is when we have a new client, they have a pension, they have a 401k. That pension, we're going to do part or all into annuities and that 401k, we're going to roll into managed money and I use AssetMark is my money manager and the group I predominantly work with there is Clark Capital, because they have a phenomenal plan that my clients get. They have a bucket strategy that my clients totally understand. And the cool thing about that is, is when we had March of last year, March of 2020, I had three clients to call in because they were nervous their money had gone down. The rest of my clients remembered that in our bucket strategy, bucket one and two are very conservative. And so we can deliver money from there for up to, if we needed it, 10 years in their plan without hurting the other part of their money that's totally equity in the managed money. And so it's really neat that I don't have people questioning.
Part of what I've learned though over time, is that I have a group of seven charts that I use. So before I roll out a plan to people and that's going to be our third meeting. Our third meeting is when I roll out a plan and on that rolling out the plan, I have seven charts that I go over as of the why behind my recommendation. And once I get them to my recommendation, I have very few times that I have people question what my recommendation is because they understand the why behind the recommendation by the charts that I've gone over. But the bigger part of why I don't have pushback 99% of the time, is because of meeting one and meeting two. In meeting one, I tell people if it's a couple, both people have to be in attendance for me to meet with them. This is with my prospects. I tell them ahead of time meeting one, I need two hours of your time. I'm going to schedule two and a half. And I want you to know in that meeting, don't bring any of your financial stuff. I don't want to see it. We are going to get to know each other. Because just like you're interviewing me, I'm interviewing you. And I have an incredible client family, and I don't want any poopy clients. So I want to make sure that I'm the right fit for you. And you're the right fit for me. So we're just going to get to know each other.
So when they come for meeting one, I do a very brief little who I am and why, my why of why I'm in this business and why I want to help you be successful in retirement. And I kind of introduce but my family because three of my kids I basically work with. So that's done in a very short period of time because I have myself a note, only talk 25% of the time. I want them talking 75% of meeting one and my top priority by the end of meeting one, I want to connect with that wife because I know whether she has ever worked a day in her life, I know for a healthy marriage that wife has a lot of influence over that husband.
Michael: Guilty as charged if you get into a meeting with my wife and I together, I will probably do more of the talking. Don't mistake that as assuming that I'm the primary decision-maker.
Melanie: Well, and that's thing, so if I see that the husband is doing most of the talking, I will then start directing the questions to the wife. And one of the things, keep in mind, that I found over the years, it really helps in building trust. If you want to build trust quickly, start with questions they immediately know the answer to like, where did you grow up? How did you meet? Tell me about your first date. When did you get married? What is your wedding anniversary? How many kids do you have? Tell me about your pets? Have you ever traveled? What's your favorite trip? Ask them easy questions that they don't have to think a lot to answer. They know where they grew up. Ask them about what is your first recollection about money? What do you remember? And before the age of 10, tell me if you have a good idea about money or bad idea.
I mean, just questions that help them open up to you and get them talking and laughing. And I want to know about their hobbies and what do you do in your spare time and all of these things and so I have a list that I set in front of myself. It has 34 questions on it in case we get stumped that I can look back down in my list and I can go, "Oh, okay." And it reminds me of another avenue that we can take that really has nothing to do with their actual investments. So by the end of that meeting, I want to have connected with that wife and I have a great story on one of the couples that I met with here. Now it's been about three years ago.
So this couple, they at Chevron you have the opportunity to have a financial advisor provided for you when you get to a certain level. We're in Midland, Texas. This financial advisor is going to be flown in and you get one hour of his time once a quarter or once a year. I don't remember how often but very minimal time each time.
Well, this couple had been using him, their financial advisor through Chevron. They had been using him for two years. So they had already started down the path of they had this particular advisor only did the fee-based side. He didn't do anything with annuities. So he basically said, "Well, you should just take your pension as an annuity." And of course, no other, you know, not telling them the ramifications of doing that. So they had already filled out the paperwork, send it in. Well, you have a window of 30 days when you can change your mind on that. And then after that, it's locked in stone.
Well, several of the people that are my clients that he works with said you need to go see Melanie one time before you before your 30 days are up, because we think you've made the wrong decision. So on day 28, he and his wife come to see me. And I already know ahead of time we're on day 28. So I start asking my questions. Well, I focus my whole attention on her. She starts talking and talking and talking and I look over him and he...I could see the shock on his face. She's just telling me all kinds of stuff. And so at the end of that meeting, he was like my wife in the two years that we've gone to that other financial advisor, she has not even shared a tenth of what she has shared in this one meeting with you.
So they leave and I said, "Well, y'all just go home and think about if you think we're good fit, and I'll think about if we're a good fit." They go home. Their home is 10 minutes from here. Fifteen minutes from their meeting, he calls me up. He's like, "Melanie, my wife loves you." Now this wife, she didn’t work the whole time they were raising their kids and they are in their 60s. So she has not worked in 30 something years. But because of the fact she loved me so much, and he knew that I would take care of her if something happened to him, he was like, "You are our advisor. I am coming back and you need to tell us what we need to do."
And so it was the coolest thing for me to see because the statistics out there that 65% to 70% of women are going to leave the husband's financial advisor, it's out there for a reason. Because so many male advisors don't understand that wife's importance and how much you need to connect with her whether she has worked a day in her life because they are where they are because of her. She has helped them whether she's worked or not. This woman she's as frugal as I am. And because of her, they have the assets that they have today because she was so frugal at home.
So that's our meeting one. Meeting two is I've given them a list of these are the important pieces of information I need you to bring back for meeting two. Meeting two is also going to be two hours to two and a half. I scheduled two and a half. So they bring back the information. Once again on my card, talk only 25% Because as you can tell, I love to talk. So I'm collecting the information. But as I am I'm asking them questions and I'm getting them to talk more and I've got questions now since I met with them the first time. And so after meeting two, we have met for either four to five hours, and they have talked 75% of the time. But the time that I've talked I've been very transparent and I've shared stories. I love sharing God stories, and I've shared lots of God's stories with them in that five four to five hours that we've met, and they trust me by the end of meeting two. And so I understand, not...most advisors can't do that because they haven't built their book of business that they have that much time to invest in a prospect. But I know that when a prospect walks through my door, they're usually going to have at least a million dollars. So I know I have that time to invest in them and to make sure and make that connection. So if I decide they're not going to be a poopy client, and I want them, that basically I'm going to be able to have their trust and they're going to want me.
Melanie’s 34 Tried-And-True Questions To Become Acquainted With New Clients [1:05:42]
Michael: So out of curiosity, where did this guiding list of 34 questions come from?
Melanie: You remember when I said that I'm always praying for wisdom? Remember that? So I just I started a list one day of conversation questions. The one little point I heard someone say is in that first meeting, have them talk 75% of the time and I'm like, how is that going to happen when I know how much I love to talk, but what questions am I going to ask them. So I just started praying, "Okay, God, I need some questions." So I just started a list and at first, it was 10 questions and then 15 and then the other day when I did for Gateway, I did listen to your peers. And one of the guys on there said, "Hey, Melanie, can I get that list of questions?" And I was like, "You know what, I'm going to just sit down and type all these up in a nice, little list because it would be great instead of me every time a new couples come and creating a new, you know, my new list. I'm just going to have a master list. And so I did the other day. I sat down, created my master list, sent it to him, said, "Well, here's my master list and these are all great topics that will get people to talking and will help them feel comfortable." And I tell them before I ask, before I start asking them questions, I tell them, by the way, I am going to be writing when you're talking because I don't want to miss any of this information and I want to type it up after to put in your notebook because I want all of this recorded. I want to know you. And the best way for me not to forget anything is for me to take notes.
And I had one lady told me, she said, "I have never had an advisor take notes about things that were not related to my finances." She said, "That impressed me so much that you cared enough about the other aspects of our life that you would take notes about them."
Michael: So would you be up for sharing the question list out for advisors who are listening to the episode here?
Melanie: Absolutely. I am all about helping other people just to be able to do better in their business. So absolutely. I would love to share my questions to encourage conversation list.
Michael: So just for folks who are listening, this is episode 262. So if you go to kitces.com/262 in the show notes section, we'll have a link out to Melanie's questions. Melanie, really appreciate you being willing to share.
Melanie: Absolutely. No, my pleasure.
Deepening Client Relationships Through Thoughtfulness And Charity [1:08:01]
Michael: So tell us just about the state of the business as it exists today. How many clients or revenue or AUM, however you measure? What's the size and scope of the business as it exists today?
Melanie: So I have about 150 million AUM, and that is 110 client families. And of that 110 client families, of those I have 20% of that is ministry clients so they don't fit in my ideal niche or they may be in the oil business, but they're not in my over a million dollar kind of category. But I believe as in everything that we need to give back. And so this is people that I am willing to help so that they can also be successful, even though they don't fall really in what I'm looking for.
Michael: So clients that you would either do for no fee or very small fee.
Michael: Just as a service back to the community.
Michael: Is that literally a target, like 20% of my clients will be ministry clients and you try to keep that balance, or just that's just how it's worked out in practice?
Melanie: It really is kind of how it has worked out because one of the things I'm all about is giving and basically, I want my clients to be about giving as well. One of the cool things we do is for Thanksgiving, so I have a favorites list. So when you become one of my clients, you get a favorites list, and I have like, I don't know, 15 things on here. I want your favorites of all these different things because when I do stuff for my clients, I want to know what's their favorite. Because if you do something for me, I'm going to be excited, but if you do something that's my favorite, like if you give me chocolate, yay, I'm probably going to share that with my kids, unless it's dark chocolate. Now if you give me dark chocolate, I don't know that I'm going to share with my kids because that's my favorite and I love it.
And so I want to bless my clients in things that are their favorites. So I sent out a list, they have to fill it, husband, one line, wife, the other column, and then when I get that back from them, basically, I take that one of the things on there is charities and I say I want you to do all your favorite charities and so they kind of do all of their favorite charities. And for Thanksgiving, we send out $100 to each of our clients' favorite charities in honor of them, and then we do a Thanksgiving letter to basically say here's all the places we've been able to bless because of our client family. This is a way that I'm giving back and I want you to give back at Thanksgiving as well.
So that's just one of the things that we do. But some of the other ideas and this is something for if you haven't segmented your business that is always something you really need to do. So we have platinum, gold, silver, bronze, ministry. Now my platinum and gold, they really are ones that we go above and beyond all the time to really impact them. Because I want them to understand that these are the people that I want to be super raving fans because I want to replicate that my platinum and gold. So once they become a client, they've done their favorites list, we make them up a bag and in that bag we have all kinds of fun things from their favorites list, their favorite snacks, their favorite wine, we have Gateway magnets, we have a little glass cutting board that says friends are the family we choose. And so and then there's a handwritten note. I do lots of handwritten notes to the platinum and gold clients. Handwritten note thanking them for joining Gateway. So now they're a part. I have a notebook for them, a Gateway notebook and in there, there's all of their paperwork and it has dividers where they can put literally everything in there. They put their tax return, their will, any other thing they want to put in there. We've got dividers in there for them to be able to do that.
And then we are always doing things where we can go out and give to them personally. So for Valentine's, we do these little bundtlets, they're their red velvet bundtlets, and they're less than $5 and we hand deliver them to anyone, for that, anyone within two hours of us. We go deliver these hand bundtlets. Then for Christmas for the platinum and gold, anyone that's within five hours, we deliver a kringle and none of my clients have ever heard of a kringle. And if you haven't, go look it up. It's this amazing Danish [pastry]. It's got stuff in the middle, and it's got an icing on top and we've already figured out what their favorite kringle is. So we deliver to them for Christmas for them to have with their family. So we're hand-delivering to these people at the end of the year. And then the ones that I can't hand deliver from platinum and gold, we send them in the mail with a note that basically says please share with your family. And you know, remember we're thinking of you at the Christmas season.
And then we do for Mother's Day and Father's Day, we send out little gift cards to them. And that way I can do it to all my clients. We send out $5 for either Starbucks or Sonic or Dairy Queen to go get a blizzard and so we shoot that out to everyone for Mother's Day and Father's Day and we put a poem or something cool related to Mother's Day and Father's Day, so that that we can impact everyone.
And then on the platinum and gold people, we also do their birthdays. We send out a gift card to their favorite restaurant because they've already told me what it is. So now I'm sending you a gift card on that favorite restaurant so that you basically can go and have a meal at your favorite place. And so we're just consistently trying to do...we have events. We have incredible events. Once a year, we have a Chevron retiree party event. So all of my retired Chevron people, all my current Chevron people, all my Chevron prospects, I want them to all come together. It's like a Chevron reunion one time a year. And I want these prospects to see all the other people that I already have as clients, so it's a great way to meet them.
Another great event is we do a if someone's retiring, I try to get to retirees at the same time and we do a Chevron retiree party for these two Chevron retirees. And I tell them each retiree, I want you to invite 10 couples each and I want them to be from your peers. But I also want you to invite your adult children and their spouses. And so we have this, it's at the country club, we have the dinner, I get up and I say a few words about each one, and then I ask if anyone has a funny story to share about the two people retiring. Well, the last one we had, it went on for two and a half hours of people sharing stories and it was funny stories and it was heartfelt stories. We were laughing. We were crying. And afterward those adult children came up to me and they're like, "Oh my goodness, that was incredible. No one has ever done anything like that for our parent and the company didn't do anything like that. This is amazing." And so that's a great way for us to reach out to that next generation too and impact them and show them that we care for their parents more than just the money. It is always more than just the money.
The Surprises Melanie Encountered In Her Journey [1:14:37]
Michael: So you look back over it all, what's surprised you the most about building an advisory business over the past 15, nearly 20 years?
Melanie: The thing that has surprised me the most is how much this is my passion. How much I would absolutely love every single day that I get to come to work and I get to serve people. That's what surprised me the most. I mean, I kind of thought at the beginning that this was my calling and my passion. But until my husband left and I had it all on my own, I did not realize how much I would love what I get to do and how I get to impact people's lives. Because one of the things that I try to help people think about is what do you want your next chapter to look like in retirement? You know, most of my guys, my Chevron guys, they've been working for 25, 30, 35, 40 years, and their work has been everything, but they don't necessarily love their job like I do. So what can you do in this next chapter where you can make a difference and you can have a purpose? What are you passionate about? Where can you go serve?
You know, there's so many volunteer opportunities. Think about how you want to make a difference and this next chapter, because this next chapter could be better than your last chapter if you are very purposeful about deciding how that is.
And I also get to help people think about their money. Okay, do you really need to leave $5 million to two kids? No, you don't. They don't need that. Let's think about right now working to impact those places, those other charitable organizations that you are passionate about. Let's also think about using that exclusion. If you have kids that are great with their money, they would be much better off if you would impact their lives now with that $15,000 a year or 30,000 per couple that you could do for them right now if they're good stewards with their money. Let's not just wait until you die. And you don't even get to see what impact you have, you know, that you had with the money that you were able to amass during your lifetime.
So that's what surprised me the most is how much I would love every day of what I get to do and how I truly get to make a difference in other people's lives.
How The Concept “You Can’t Have It All” Motivated Melanie To Success [1:16:49]
Michael: And so how do you balance all of this with six children? As you noted, for much of this time six children you were homeschooling...
Michael: ...while building this business. Like just how does that work?
Melanie: Well, I always struggled with that concept that that I heard for years and years and years. As a woman, you can't have it all. You can't have it all. You know if you want to be really involved in your kids' lives, you can't also have a career. Well, for me, and I'm not speaking for anyone else. I'm speaking for me. For me, I say as a woman, you can have it all, but not all at the same time. It's not all going to happen at the same time, in my opinion.
So now, for the last six years, we had two that were at SMU at the same time. One in business school, one in law school. We decided there, actually, it was the younger son Jacob, who had the idea, why don't y'all buy a house here in the Dallas area, so that we can have a place to live. We don't have to live on SMU's campus but then y'all can come visit. Well, at first I said, "Oh my gosh, why would I own a second home?" And then as I thought about it, I was like, "No, actually that's a good idea." And so we bought a house there. It is a big house, so it was four bedroom, has a study, has a media room. Big house, has worked out great. But when we did that my husband and I, we made a pact with each other. We're like, okay, one time a month, we are going to go to that Dallas house and we're going to have all the kids together. So we are going to encourage them, as many of as can, come together once a month for the weekend and we're going to do fun things together.
So now it's been six years, six years later, that is still one of our goals. One of the other things we do is we always have a family trip. So we travel together. We love to travel together. I get to work with, you know, three of my kids. So we are very much about work-life balance and we are very, very much about being super involved in our adult children's lives because they are our next generation. And that's who we are pouring into because I want them and I believe they do have the same kind of passion that I do for what I do. And my son who's the attorney, my clients will come back and they'll tell me, they'll go, "Oh my goodness, Melanie, your son has the same exact passion for his business as an attorney that you have as a financial advisor. We love working with him." And so it has been challenging along the way. And like I said, when I had them in the front room and I was homeschooling, and I was also doing this business, it was hard. It was really hard and it was very time-consuming and I had little time to sleep, but it was so worth it.
Michael: Help me understand how this worked. I get it a little bit more now as the kids are older, but take me back to the first 5 and 10 years when the kids are all young and homeschooling is like they're all home and you're trying to grow the business? Just how does that work? How do you manage to that or what are the tradeoffs that just come with that if you make it work?
Melanie: Well, so one of the things that my husband came up with... John is...he's brilliant. I already said, I'm not the smartest person in the room, but I will work my tail off. But John is really, really smart and so he came up with this idea early on that we would give our kids a list of everything that they had to do for that entire week on Monday. Every Monday they got their list of all the assignments. For me, I thought if one math is good, oh my gosh, two is better. And if one history is good, well, two must be better and we need to read at least 35 books during our school year up but maybe 40 or 50 would be better. So I was that overachiever as a homeschool mom. So they had their list and they typically paired off with either siblings and working together on trying to let's get our list accomplished. And I had different ones that worked at different speeds.
Jacob, my youngest, he was my one that struggled the most, but he's the most persistent, so he wanted to be done with his list by Wednesday at noon. So he would bug me to death for the stuff that I had to help him with so he could get that list checked off because it's not just turning in the work. Then I've got to check it, and if you've done anything wrong, I got to give it back. You've got to correct it. You've got to give it back. I've got to recheck it until it's all right. And then when it's all right, then we can check it off.
But what this taught my kids too, especially as I was building this business, was that they had to learn to self-teach as well. So I would give them assignments and they had to read all the stuff and learn what the material was saying. And yes, they could come and ask me questions or they could ask their dad questions in the evening. But basically, I wanted to know first, have you read all of this? And what part of that did you not understand when you read all that? Because I have really, I mean, I do have smart kids. I have some that work harder than others on schoolwork. But I have really smart kids and so it was like I knew that for the most part I could direct, I could be involved in some of their days' worth of school but I didn't have to be there. I didn't have to be like a normal teacher over them the whole time they were doing school.
And then when they were up to business, if they finished their schoolwork, I might have a project for them. You need to go shred, or I need this stuff filed, or you know, and so they were helping me up here doing some of the menial stuff that I needed help with as I'm trying to build a business when I don't have any clients here to meet with. So it was a balancing act and I worked every night usually till 9 or 10 before it was time to go to bed. I didn't watch a lot of TV back then.
The Advice Melanie Would Give Her Past Self Using Current Knowledge [1:22:23]
Michael: So what do you know now about building the advisory business that you wish you could go back and tell you from 15 years ago?
Melanie: Number one, I wish I could go back and tell me to be open and accepting of the fee-based side of it so much earlier. That's one of the big things. Another thing...
Michael: Why? Just what's so different from what you know now from what you understood then?
Melanie: Well, because I think part of it back then was I was scared of the fee-based side of it. And part of that was I didn't understand it. And once again, I've never claimed to be the smartest person in the room and you love having tons of credentials behind your name. If I can't get a credential that I have made a top A in, I don't want it because that's just my mentality. I was valedictorian in high school and salutatorian in college because the person that was valedictorian was...he had a photographic memory and he beat me by .03 and so I am one of those super, super hard workers. And so because I didn't understand the fee-based side early enough on, it took me a lot longer to accept it and go, "Oh, this is a good solution for that 401k rollover of my business."
The other thing I would say is as a woman, to my female advisors, is just don't give up. We are really good at what we do, because we understand the relationship side of the whole business. And because we are so good at connecting with the client or couple, so don't give up, just hone in on being really great at what you do and work at a level of excellence. And so I think those are two things that that I would have encouraged myself more back then that, hey, it doesn't matter you're a female. Just keep going. Because there were times that I would especially after conferences, I would say that was the hardest times for me, is if I went to a conference, especially LPL conference, if I went to LPL conference all by myself, I would come home and I would be very discouraged because at that point in time I didn't have the confidence I needed to go, "I'm building an incredible business." It would feel like to me these men knew more. They had no use for women. They didn't even want to listen to my ideas. And I wasn't bold enough to go, "Oh, but wait a minute. I've got a really good idea. And you need to listen," kind of thing.
Melanie’s Advice To Newer Advisors [1:24:48]
Michael: So is there other advice you would give younger and newer advisors coming into the business today and perhaps especially women coming in since as we know this is still a very male-dominated industry by numbers. We've struggled to increase the number of women who are becoming financial advisors.
Melanie: Especially for women, I would say it would be good to find a female mentor, someone who's been in the business a lot longer than you that can give you some really wonderful wisdom and encouragement. That's the other thing that I think that women are really a lot better at is as being encouragers. I know that's one of my gifts is I'm an encourager and I think that for a female advisor because it is, continues to be so male-dominated, that I think it would be helpful for her to get a step up to know and reach out to a successful female advisor and really get some wisdom from them before starting in.
But also as a female, I think that it's important to know what your own personal financial position is before you step into this business. And I would like I said I would highly recommend that you have your own house in order and be as close to debt-free as you can. So you're not feeling like you have to literally take anybody that walks in that door, that you can kind of start and have an idea of what am I looking for? Am I looking for divorced women? Am I looking for business owners? What is it that I want that niche market to be because I really believe that if you can build it right from the beginning, you're not building in a bunch of, like I call them, "poopy" clients that eventually one day you want to get rid of because those poopy clients, they take so much of your time and energy and effort and it's just not worth it. I don't care how much money they have. At the end of the day, it's not worth it.
What Success Means To Melanie [1:26:45]
Michael: So as we wrap up, this is a podcast about success and one of the themes always comes up is just that the word success means very different things to different people. And so you built this wonderfully successful practice with 150 million under management with 100 plus client families, so the business has done well. But how do you define success for yourself at this point?
Melanie: So for me success at this point is having the opportunity to truly impact others' lives for the kingdom. And what I mean by that is we had a guy in here doing a video for us that David had sent from his office and this guy upfront, we had a conversation and he had told us that he was agnostic, and by the end of our...we had a whole morning together. By the end of it, he told us...so it was Joel, Jacob, and I. He said, "I am so jealous of your faith. I have never seen someone so incredibly genuine, who just wants to love people, just wants to help people, just wants to encourage people, value people, listen to people to help make a difference in their lives."
So that's one thing but the other, the second part of it is I want to continue to be, as for success for me is continuing to be that role model for my kids that my children can look to and say, "I'm so proud of my mom. She loves helping people. That's her passion, but she also is an incredibly generous giver." My goal is to get to the point in my business where I'm giving away 50% of my income. That's my goal, because I want to do for others. I want to impact others around me that are less fortunate. And so for me, success is definitely not all about the money. It's about how I can impact others' lives for kingdom purposes.
Michael: Well, I love it. I love it. Thank you so much, Melanie, for joining us and sharing on the Financial Advisor Success podcast.
Melanie: Absolutely. It has truly been my pleasure.