My guest on today's podcast is Melissa Joy. Melissa is the Founder of Pearl Planning, an independent RIA based in Dexter, Michigan, that oversees more than $175 million in assets under management for 251 client households.
What's unique about Melissa, though, is how she originally built her career following a path of becoming a partner in a large ensemble firm, but when she finally got the opportunity to make partner she still had an external lawyer review the partnership documents and the company’s operating agreement like a prenup – hoping for the best and that it would be a relationship for life, but ensuring there was clear documentation of what would happen if the relationship didn’t work out in the long run – which proved to be important as ultimately she and the business did grow apart in their vision for the future, and the legal work Melissa did upfront allowed her a pathway to be able to start over again when it became clear that she and the firm needed to part ways.
In this episode, we talk in-depth about how, while Melissa was being considered for partnership at her former firm, she decided to have outside counsel review the firm’s operating agreement (with its provisions and limitations about what happens if the partnership were to be dissolved) so she could be clear on what that would mean for her if she ever had to leave the practice, why even though Melissa began her career in operations and didn’t intend on changing roles, she was inspired to acquire her CFP marks because of advice that her mentor gave her that she could advance her career even further and bring value to the firm if she also brought in assets and had her own clients, and how despite having a 30% share of her former firm as a partner, Melissa decided to leave and launch her own business because she recognized that she enjoyed working on the development and growth of a business but her current firm was reaching a mature stage where major growth and rapid expansion was no longer the main focus.
We also talk about how Melissa set up her firm as a DBA under the firm of her close advisor friend so that she could have support and the time to focus on business development instead of working on achieving her Series 24 to operate as her own branch before launching, why Melissa is a big proponent of business operating systems and implements a combination of EOS and Small Giants in her own firm so that she can focus on company goals, create career opportunities for her employees, and streamline processes, and how Melissa grew her firm by developing hundreds of marketing touches through social media, networking meetings, sponsoring local events, webinars, and newsletters… and then rebuilding her firm’s website so that prospective clients could more easily schedule meetings when they were ultimately ready to reach out.
And be certain to listen to the end, where Melissa shares why she intentionally went through the ZingTrain management training so that she could become a better leader and boss, why Melissa feels her next natural step in her business is to take the role of CEO as she recognizes that she is a visionary and has become more confident in her leadership qualities which can help take the business to the next level, and how Melissa struggled early in her career with imposter syndrome but ultimately found that she had more success when she figured out how to speak up and started trying to get noticed instead.
So, whether you’re interested in learning about how Melissa handled transitioning into a role as a business owner, why Melissa purposefully chose to find a mentor outside of her former firm so that she could gain unbiased advice, or why Melissa engages in self-development training and continues to seek ways to improve in her career and personal life, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Melissa Joy.
Resources Featured In This Episode:
- Melissa Joy
- Pearl Planning
- #FASuccess Ep 112: Finding The Time To Get The Right People Into The Right Seat Of Your Advisory Firm, With Andrea Schlapia
- #FASuccess Ep 075: Walking Away From RIA Partnership To Scratch Your Own Entrepreneurial Itch with Kathy Longo
- Traction: Get a Grip on Your Business by Gino Wickman
- Small Giants: Companies That Choose to Be Great Instead of Big by Bo Burlingham
- Limitless Advisor
- David Meister Consulting
- Mark Tibergien
- Brian Portnoy (Shaping Wealth)
- Advent Axys
Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!
Are you a successful financial advisor, or do you know of one that would be a great fit for the Financial Advisor Success podcast? Fill out this form to be considered!
Michael: Welcome, Melissa Joy, to the "Financial Advisor Success" podcast.
Melissa: Michael, I'm so glad to be here. Thanks for having me.
Michael: I really appreciate you joining us and I'm looking forward today to getting the nerd out a little bit on businesses and business systems and how we actually learn to build and run effective advisory businesses as a business. If you look classically at any business in any industry, most businesses basically have 3 functional areas. There's something that is marketing and sales and brings in clients or customers or revenue. There's some kind of product function that makes the widget or delivers the service, does the thing you get paid for. And then there's a third area that's operations, finance, business systems, all the stuff that actually makes the business run as a business and actually make it function successfully as a business.
And in the advisor world, we tend to not do a lot with that third category of finance and operations. Either the business isn't quite big enough to need the infrastructure to put a lot of investments there or we just manage to grow enough that we stumble our way through it. But I know you have lived that journey because you actually started in the operations side of the business before coming to the advisory side and then launching your own firm. And as I discovered, we share a little bit of maybe an affinity for nerding out on some of the systems, the actually tradeable systems that are out there like EOS and Small Giants and some of the other platforms that are out there that help teach this.
And so, I'm looking forward to getting to talk about what it means when you're really actually trying to run the business as a business and work on the business as a business. And at least to me, the huge gaps we have in the industry and the fact that most of the systems that are now gaining traction in the advisor world about how to run a business don't come from the advisor world because we don't actually know how to do this and don't get trained. You have to look elsewhere to figure out how to actually run a business as a business in this world.
Melissa: It's so true. And 15 years ago...because my first 15 to 20 years in the business was primarily operations. I got to be a student of financial planning companies and I also was guided by a group of founders who were very interested in creating a business that they were proud of. And so, the study of professional services firms, using outside advisors to seek to become better and not just looking within your professional conferences of other financial advisors and/or broker dealer as a source was a huge part of that learning experience which I love and I'm excited to nerd out with you, Michael.
How Melissa Began Her Career In The Financial Services Industry [06:31]
Michael: So, help give us a little bit more context to just this...the career journey that you've had of just where...how did you start in the industry? How did you land in the financial advisor business world in the first place?
Melissa: Well, it was 25 years ago, and I just happened to answer a want ad. I had a liberal arts...
Michael: Like a want ad? Like a newspaper...you're dating...
Melissa: Physical newspaper. The "Ann Arbor News" to be specific. It's now only a website and rather defunct but back in the day, I was...I knew that I could do office jobs and I needed a job and so I reached out to law firms and financial planning firms and it's a coin toss. I could be an attorney today or working for a law firm just as easily. I have no idea.
Michael: That seems very specific. Why law firms or financial planning firms?
Melissa: They were the ones that were hiring that wasn't...I felt like would be looking for my skill type. I had worked summers in a mortgage company that my dad was the president of, a midsized mortgage company. And so, I had worked with numbers, actually had been interested in law earlier in my life. And so, I...and there happened to be want ads placed versus just go fill in these forms or something like that. So, I happened to...it was a financial planner that offered me the job. And so that's how I ended up there.
Michael: So, you liked numbers and the law, so it was law firms or financial planning firms and...
Melissa: I wouldn't even say liked. I just know I could get paid to do stuff and I would be...I probably would bring enough value for an entry level job.
Michael: Okay. And so, you answered just a want ad for...was it literally administrative assistant or some equivalent as you were getting started?
Melissa: As close to the mail room as you can get but it was a one-person firm, one financial planner. He was a Raymond James financial planner. One person office. So, anything he didn't want to do, I could do.
Michael: Was yours.
Melissa: Yeah, and the last person who had the role really was a secretary, scheduled appointments and filed and I'm not that good at filing but I was pretty good at talking to the clients and taking care of the things he didn't want to do. I drew the line at cleaning the bathroom because that was one of the things requested. But I got to listen. We were in the same room. And I won't say that I was immediately like, "Oh, I'm going to have a career here." It was just like, "Well, I can do this until I figure out what I want to do." And so, I worked with him for a year.
Michael: And so, this is essentially your straight out of college, first job out of college kind of thing?
Melissa: Yep, it was the first thing I... Dad was like, "I'm not paying your bills so you need to find a job."
Michael: And I'm not giving you one. You have to actually go find one. Okay.
Melissa: So, that was a start. And I worked there for a year. And then happened to meet through the son of a financial planner another group of financial planners. I met them briefly at a broker dealer conference and then I knew the son socially and I actually went out to Easter brunch with him and his girlfriend and he's like, "My mom really liked you. It's too bad you're working for so and so." And I was like, "Well, I could get you a resume next week if that would be a good time." I was interested in, frankly, making more money and also just having a little bit bigger office. And that was where I worked for the next 19 years.
Michael: Wow. So, what was the state of that business and the role as you went in?
Melissa: At the time, the company had...there had been quite a few founding partners and 3 of them stuck. And they were 14 years old. And they were looking to truly be an ensemble practice. So, they recognized that they had been siloed and they had put time, effort and hiring into trying to collectively build their business. I think they were in the broker dealer structure as well, but they were really intentional about building a practice that was a professional services firm. They had read David Meister, studied Mark Tibergien and what he had to say. And my first role was administrative assistant, so I got a chance to work for several partners, ultimately working for a woman named Estelle Wade who was a business mother to me. She retired 3 years after I started there. She's in her late 80s. I just got a chance to visit her in Arizona where she's retired.
But I had someone who...several...the founders who believed in me, saw something in me, thought I was doing a good job as an assistant but also started to find projects that they thought had been partner responsibilities and then it was like, "Hey, can you research this mutual fund or that?" And so, I just started to take on specific tasks that required a little more thought. And they liked what I did.
Michael: And so, how did that role evolve and grow over time?
Melissa: So, over...I got licensed in 2003. So, there's 5 years where I was starting to do investment research, but it wasn't trading...well, to be frank, way back in the day, you called the trading desk whether you were licensed or not. But eventually this was more formalized and operationalized at that firm. And so, in the intervening years, I had an investment research role, junior investment researcher. The partners set aside time each week to meet together, and they would bring me in when they said, "Go find some small cap funds to compare." In the beginning, it would be, "These are the funds we want you to look at. Give us some analysis." I had a debate background so I could see both sides of an argument and really enjoyed that research and deep dives into narrow paths.
And so, that evolved over time to being an investment assistant to the partner that had the largest assets, Dan Boyce. I would make phone calls to fill up the bonds on the bond ladder. So, we were not discretionary. I'd solicit trades for that and then eventually built a...in addition to the research responsibilities, built a system to send letters in bulk to make recommendations for rebalancing since we were not discretionary. So, how do you manage the prospectuses and send letters and then tell them to call back and approve the trades? It seems like when I tell the people that I work with today what we used to do, I'm sure they have no concept of what that was.
Michael: Yeah. It's hard to really reflect how revolutionary this combination of rebalancing model management software and discretionary...the ability of discretionary models are for how painful it was back then. Some firms choose to do that now and have built particularly… infrastructure around how to support that. But back then we did that because there was no other choice, and it was really manual and tedious. Clients got rebalanced when they were coming in for a client meeting because that was a good excuse to make now the point that we're actually going to get all the stuff done for them to trade because at least they can authorize it while they're here at the meeting.
Melissa: Yeah. And so, how do you get that done when you are trying to centralize operations, you're trying to have a shared investment model? I get to see...if you think about it, if you're somebody sitting in that role, you don't learn a lot of the psychology of these multiple advisors.
Melissa: At the time, we had a bullpen. So, you had your list of recommended funds and everybody had their favorite. So, you pick from the bullpen of what you wanted. The portfolios were similar but there was always some thematic spices that were based on the advisor or the week, things like that. But they were also building something out of nothing and I think doing at that point in time... a lot's changed over 15 or 20 years. They weren't the most sophisticated then. We weren't. I wasn't. But it was building pathways for clients to be better managed at scale.
Michael: Okay. And so, was that a thing that...this dynamic of trying to create a path so you can manage client portfolios more effectively at scale, is that something that was happening around you in the firm at that time or was that actually your thing of, "Y'all, this isn't scaling. We've got to start changing this and I want to push us this direction."
Melissa: At that point, it still is discussions and I was more in the room, not brought into the room for the, "Here's what we want you to do." But I had a seat at the table for the investment portion of partner discussions or, let's say, financial planner discussions. And so, I was coming in with ideas and I was also tracking performance. We used Advent Axys back in the day and I was looking at different portfolios, how they were doing. I was also doing the investment research. It was primarily active managed or almost all active managed open end mutual funds or blue-chip stocks which I did not have the stock research responsibility. So, I was responsible for the due diligence on the investment research for open end mutual funds at the time. I would attend due diligence meetings, do research, meaningful research. One could also call it overhead but deeper work on maintaining a centralized investment heartbeat to the firm.
Michael: Okay. So, then what came next on this career journey evolution for you? Because I know now it's...you started in the administrative end. You've now landed increasingly deep in the investment research, investment management side of things. So, what came next on the journey?
Melissa: So, then I was kind of a fixer or a creator for project management. I had a stint being a manager of the client service department after having been one of the people managed in the client service department not too long prior. Certainly, an intimidating job or can be when your peer becomes your boss and how are you welcomed, things like that.
Michael: Yeah, how did that work when you became the boss of the department you entered into?
Melissa: Well, and I was definitely the youngest or one of the youngest in that department as well. So, I had some skinned knees and bruises along the way but it worked out over time. That's the first time that I engaged with ZingTrain from the Zingerman's Community of Businesses, and I took a class called "Leading with Zing." A lot of food service companies would send their managers to the class but it was all about how to be a great boss. And so, I had that job. I still was doing the investment research.
Michael: For those who aren't familiar, what's ZingTrain?
Melissa: So, Zingerman's Community of Business is...I live in Dexter, Michigan and that's where Pearl Planning, my business is today. They're in Ann Arbor, Michigan. So, if you've visited somebody at University of Michigan, you may have heard about Zingerman's, this great delicatessen built to be an old-school Jewish delicatessen with some of the greatest locally sourced food or organically sourced. And they have a group of businesses. If you've read "Small Giants" which I know that you have, Michael, they're featured in "Small Giants" and they intentionally...even though they had a story and a brand that would be very well received with the franchising model or expansion, they chose to stay local and have singe locations. And then they started to foster a community of more businesses including a bakery, a coffee shop, several restaurants here in the area. And a leadership...a training program that trains those restaurants.
They have a tremendous process for visioning that's not about your typical like, "Here's my revenue and here's my AUM." But what does success look like in the future? What is your vision of success for either a project or a company or even personally? So, that's my version of who Zingerman's is. They're a really interesting group of businesses.
Michael: And so, I guess one of the things in their leadership training program was this how to be a great boss training, training module.
Melissa: Yeah, it's a class on how to be a manager and how to tell people when there's a problem in a way that they'll receive feedback and how to set expectations and how important it is that your culture fits with...you walk the walk and talk the talk. And so, just some of those lessons that when you're struggling to have something to hang onto because you've got to sit down and give the annual review and tell people what their bonus is going to be and you've never done that before. Giving you a little bit of extra confidence.
Michael: So yeah, I guess I'm just...was there a big takeaway for you at the time of like, "Oh, I didn't know that's part of what I needed to be doing if I'm going to be a boss for my old peers."
Melissa: It was more of a backbone, I would say. But it was also one of the first times where I went outside of looking… just looking around the office to see what the heck do I do. And I found a solution that I thought would help me that I think did that was not from a CE class or something like that. It was really, "Okay. How do other businesses do it? Because maybe they do it better than financial planners who don't always even give reviews for their people and things like that."
Michael: So, what came next then is you continued on this journey. So, you've gone investment management. You're managing client services.
Melissa: Yeah. Then we find ourselves at 2008 and that was a big disruptor. Just I had lived through one bear market when I had much less responsibility. But 2008 was huge, especially if you think about being a firm that does not have discretion. If you do any sort of tactical investment allocation, every single client wants to talk to you. I had responsibility not to be anybody's financial planner but I did...at the time, it wasn't webinars. It was phone conferences, communicating...I wrote for investment newsletter and then September 2008, our partners with the largest assets happened to be out of the office and out of the country. So, got a lot of firsthand experience talking to clients who feel very disrupted and very...all the emotions. I think those are...I would not choose to live it over again but it's invaluable experience. In the company too, and specifically regarding investments, we wanted...we'd always toyed with should we be discretion, should we use discretion.
But there was always a reason not to or the cost of software etc. And that was...
Michael: What was the hesitation up to that point around managing with discretion?
Melissa: Well, you've got multiple actors who need to be comfortable with change and trust each other because it doesn't necessarily make sense, at least the way we were building it, to have everybody have their own...still have that choose your own adventure where you had your bullpen of recommended funds and you decided what was right for which people. And so, you need...a crisis often engenders the willingness to act when status quo just felt more comfortable and we'll get to it but not yet. And so, 2008 was that inflection point where it's...from a partner perspective, it's time to change. We need to invest in software that we can...and we looked at choices. That was my responsibility, to research software and we chose Envestnet or Tamarac at the time now by Envestnet for...we kept Advent Axys for performance reporting and we used Tamarac for rebalancing.
Michael: Okay. And I guess the...so the core driver was...the resistance to change was, "Well, if we have discretion, we have to really do it with standard models and then I can't pick my funds of the things that I like to use for my clients and make it different for each client."
Michael: Until the pain of, "Oh, my gosh." But needing to talk to every single client on a nondiscretionary basis who all want to talk to you and find out what you're doing to help their portfolio in a crisis creates a massive glut of phone calls and client service that made them say, "Oh, if we'd been discretionary, could've literally just sent 1 email and done 1 mass call that said here's what we're doing for all of your portfolios."
Melissa: Come hell or high water, I'm not doing this again. And keep in mind too...I didn't mention this, but we still were on the fence. There were...most new clients were fee based but there were still clients who were C-shares, A-shares. There was a lot of operationalizing that again requires shared commitment, and it seems like a good idea for everybody else. But even with people with strong adherence to collective operations change is difficult and it's costly and it takes time, and it feels painful when you anticipate it. And sometimes going through it is painful as well.
Michael: And just for context, how many advisors or people were on board? I'm gleaning part of this as just when the business gets to a certain size and there's a lot of people and stakeholders and advisors involved, any level of change gets difficult because there's just a little bit of a herding cats thing. Just to get any group to go in the same direction for anything is remarkably difficult sometimes.
Melissa: Right. There were 6 advisors and 4 of those were partners.
Melissa: So, there's a lot of just...and also, the 2 founders were closer and closer to retirement. I think just the last few years...how many bear markets would you like to go through? Well, maybe this is the last one I'd like to go through. So, it was close to retirement as well. And so, do you want to go through this conversion for your last couple of years of work? That's another question. Or, in this case, they worked for 7 more years but decreasing time in the office.
How Melissa Built Her Path To Firm Partnership [26:25]
Michael: Okay. So, what was next on your journey?
Melissa: Actually, a lot of fun things for...if you're a nerd. So, we got...we built models that were truly models that everybody agreed upon. We put them into software that was functional. And then because we had not made everyone wrap accounts, then there was a behavioral psychology test of how to convince each partner to make those conversions and pitch that to clients. So, if you're in operations and need people with the ability to make decisions themselves to do something...I used some healthy competition, reporting on stats of how much conversion had happened and things like that.
Michael: I was going to say so what did you do? So, you made a scoreboard of how much they had converted and then made all of the other partners feel bad because someone else...oh, they're at 87%? Well, I've got to get to 90.
Melissa: Exactly. Yes. That is exactly what we did. And that healthy competition works. We also noticed at that point in time that as a company, the company had grown over time and... gosh, it seems like new clients aren't just popping out of the woodwork. A really pivotal growth moment for the company had been between 2000 and 2002. And it just wasn't the same this time. And oops, maybe we need to think about how we're marketing. And so, I got the opportunity to do some legwork as that project person rebuilding the website, introducing a blog where various people within the firm had responsibility for contributing to the blog. And just thinking about what marketing might look like for a practice that has more than 500 million in assets at that point but how do you share a central message and brand but also encourage people to reach out to individual financial planners to engage and become clients.
Michael: Well, so I guess I have 2 questions, then. The first, literally how did you try to craft the central message and brand for a $500 million firm with lots of different advisors to get clients to reach out? And secondarily, where and how are you figuring out how to do this having come from an ops, administrative and ops background into investment management research analyzing mutual funds and now you're standing up the marketing strategy? So how did those dots connect?
Melissa: I don't know. I liked to talk in front of people. I was always interested in the...I was interested in new, different growth...and you know what? Ultimately, I think the brand helped but...and we looked different than your average navy bank like environment website. There were still some people walking on the beach, I think. But ultimately, again I think measuring and tracking individual net new assets and linking your compensation to your business origination is a big part of that. I thought about that. I continue to think about that in my company as I grow people who have their own accountability for business development that you… there’s both the brand can help but also in most cases, it's the responsibility of individuals and hopefully the central firm can help to show who's successful and how so that there's ideas that encourage and reward success.
Michael: So, you get to do a stint trying to centralize marketing.
Melissa: And then at that point we find ourselves...we'd also made our first hires for an investment department. So, they started part time. Very challenging hiring time period for firms that had found their revenue diminished by at least 20%. But we hired in 2009 2 part-time people. And then the next discussion was, "Oh, maybe..." Or I was invited to start to have discussions with the partners about potentially becoming a partner.
Michael: Which is I guess interesting for that path. Well, even now but especially then because you were not in a client capacity. You didn't have clients.
Melissa: That's right. I knew many of the firm's clients either because I'd been an assistant way back in the day or I did talk to...I would come in and talk about the investment side of our business to clients, especially important relationships in the business. But it was unique. I mean, it stood out. I had always done a great job of networking outside of our company just because I love talking about the business. I love sharing some of the things we were working on. And so, I always looked at the reverse mentor opportunity. And so, at that point when I... the discussions started about becoming a partner or having a partner, I asked my mentor within the firm, Dan Boyce who was a huge sponsor throughout...still is and has been throughout my career, "Hey, do you have someone you think I could use as a mentor who's not here in our firm?" And I had met Kathy Muldoon who was a good friend of his and is a financial planner in Dallas. And he read my mind and said, "What about Kathy?" And so, that's when I had someone outside of the firm who I could talk to and trust about the experiences of perhaps becoming a partner in a practice.
Michael: So, I was going to ask where did it come from, this request to the firm to have someone outside the firm to mentor you? That seemed like a very intentional ask. So where did that come from?
Melissa: I think it was instinct. It wasn't a conscious like, "Let me map out what can do best." But I really could see the conflicts that...and the dynamics changing potentially. Especially anticipating...this was all in coordination with planning for succession from the first generation of ownership. And so, I think it was good instinct but it was something I would highly recommend regardless of the size of the organization to people listening who have roles similar to the roles that I had at the time to find the voices outside. Because sometimes you're in a jam and you can't find them in a scramble. So, it's nice to build your rolodex and follow up with people. And people love to be helpful. Women in this business really want women to succeed in the business. And so, if you're a woman who's operations and looking for someone outside, there are people out there that will help. It was pivotal.
Michael: So, what kind of questions were you asking or perspectives were you looking for? What were you coming to Kathy about?
Melissa: How to approach...we had partner meetings...and I had been invited into the room for more and more decision-making times but there were these big quarterly partner meetings and asking...strategizing with her about how I could bring things to the table to show that I was serious about it and had...I didn't have a lot of wealth to bring to buy in so I was really bringing my human capital as my biggest resource there. So, she would help me strategize there. She gave me a piece of advice that is prophetic, that I just had plans to always be operational and she said, "Melissa, if you don't have assets, you'll never have control of your career." And I don't know that that's true for everyone but gosh, sitting here today, I still remember those words and...and I was also a new mom. So, I had my son in spring of 2009. Frankly, it was so exciting to have maternity leave. It's just a break from horrible markets.
Michael: I was going to say, right in the middle of the rest of it like, "I'm going to be out for a little while."
Melissa: Yeah, yeah. And so, she could help. She was the mom, had been a mom and had advice there. She's just somebody that had my back that I didn't need to navigate the concerns about what their interests were because everybody else had very valid reason to be protecting their own interests as we also were trying to figure out what the company would look like over time.
Michael: So, I'm fascinated just by these tidbits...I feel like tidbits understates their significance but the perspectives that you were getting from Kathy. So, I love the, "If you don't have assets..." or I just envision at a high level, if you don't...if you're not attached to revenue and client relationships, it's harder to have control of your career.
Melissa: You're expendable is probably what she said. And also, I was just trying to emulate the values of the company. I got my CFP designation at that time. I'd only...I thought I was still just doing it to continue to be the investment person but emulate the values of the company. And Dan Boyce as a sponsor invited me to join a group of distinguished Raymond James advisors that had created their own conference called Advanced Planner Study Group that was...is run by an advisor named Carl Stuart. I just was trying to look...I very much recognized that I was a promising person that was still sitting at the kids' table. And I was...you know like that Thanksgiving dinner where...should we invite them to sit at the main table or do they need to just go manage those kids over there? And I really wanted to...I'm in my 30s at this point. I had more than a decade of experience and to be a partner, I didn't want to just be the promising ingenue I wanted to really belong at the table and bring value.
And that was a period of really powerful learning executive presence that...it's hard to think back and say exactly what I did but I really tried to transform my presence, what I brought to the room. I would even tell people, friends, when they were trying to do the same like, "You need to own the room. You need to bring in something you know nobody else can bring to the table." And things like that.
So, I was trying to be strategic. I thought it was best for the company and certainly for my career.
Michael: And did it work? Did you get to become the partner?
Melissa: I became a partner. And through a variety of circumstances, initially I was going to be a 5% owner and I... through serendipity, I ended up being a 30% owner. It helped to balance out the dynamics of partners in the room. And so over that 2010 to 2015 period was that acquisition of shares and at the same time, almost immediately the kicking off of the final transitions of the first generation.
Michael: So, it sounds like you were going to have a smaller initial partner stake but there were some founders that were looking already to get out and so suddenly, just a lot more shares were in play and suddenly you had a lot more opportunity at the table.
Why Melissa Views A Partnership Agreement As A Pre-nup [38:57]
Melissa: Yeah, and I think it was...I would be a ballast perhaps. You've got to be thinking about what happens if something happens to someone.
Melissa: Does someone have full control of the company in this situation where there's an ensemble? I can't...I wasn't necessarily making all the decisions. That's one of the things that is important to think about. You've got to navigate being business savvy. Anticipating your operation of understanding or membership agreement is in essence like a prenup. But you can't be so self-interested to blow up the deal although it's really important to know that you're making a business contract with someone or people that are...you're going to want to work with over time. So, there's a lot of stuff going on and it was lots of moving parts at the same time.
Michael: That's an interesting way to frame it. The business's operating agreement...your LLC operating agreement, articles of incorporation, whatever your structure is, is like a prenup because it explains the circumstances of what happens and who gets what if you break up. And then...
Melissa: Yeah, or death or disability, all of that. And who knows who you are, whether you're the one breaking up or being broken up with. And a lot...and how do you have...I had outside counsel review the documents that I signed. But how much negotiating power did I have at the time? Probably not much. But it's certainly a time where...when you're thinking about things like that, getting outside advice whether it's a mentor or also legal and accounting advice, all of those are well advised, I think.
Michael: So, you literally just hired a lawyer yourself to say, "Hey, I'm coming into a partnership. Will you please look at the operating agreement and tell me what should change?" Because I'm assuming their operating agreement's their operating agreement. They've got a bunch of partners. It's not necessarily a contract with terms you can negotiate because if they're going to change it, they all have to change...agree to change it which is a cat herding exercise unto itself in an ensemble context. So, was this the context of, "I want counsel to read it because we may have to negotiate on some of this." Or was this in the context of, "I want counsel to read it so at least I understand exactly what I'm getting into and how this is going to work if it ever doesn't work out."
Melissa: I wanted to understand but also because of this succession and because the economics of financial planning practices and investment management firms had radically changed from the '90s to...at this point, we're 2011 or '12. I think things were being redrafted at the time and I'm also discussing this in the context of drafting my current company's documents. I learned lessons along the way where I really...I know it's expensive and seems unnecessary to lawyer up but I really think there's value in understanding what you're signing and knowing in a variety of ways what could come next and having open, transparent discussions with the people that you're in the room with hopefully on most agreeable day when everybody is happy to sign on the dotted line and exchange capital. So, that's what I think.
Michael: And really, I just really like the framing of the...look at the operating agreement of the business that you're signing into coming as a partner as a prenup. In that context. You go into the relationship wishing for and hoping the best and that this is going to be your...a life partner in marriage. But if you've got certain financial circumstances coming to the marriage in the first place, we do need to put a document together that says how we untangle this should this relationship ever not work out.
Melissa: Exactly, and I use it...to this day I use that language in my employee hires when I have them sign employment contracts. I've drafted...I don't currently have partners at my firm today but I've drafted our operating agreement so that when we do have partners it's built that way knowing that hopefully everything works out but you never...no one has a crystal ball. And these agreements help everybody to stay reasonable and figure out how to divide things or add someone to all those things. They're very important.
Michael: So, out of curiosity, were there any provisions that came up or stuck out as problematic or concerning or that you actually did have to go back and say, "Hey, y'all, you've got to change this one. I can't be on board if we don't change this one." Was there stuff that came up or just it felt good to do diligence and at least know?
Melissa: Yeah, it felt good to do due diligence. I really hired a very amiable attorney to look it over. He was like, "You might want to change this or that." But all things considered, he knew where I was...the seat I was sitting in, that I was junior and... he knew how much power I had in that room which was less. And so no big things to look back on that were like, "You have to change this or that." But you sign a lot of documents. Another thing that you sign oftentimes if you're in the broker dealer world is something that says that the branch manager holds the control over your relationship with whoever is the broker dealer or likely custodian as well in RIA cases and nobody knows that that's in the 10 pages of the FAA agreement that you sign with the custodian because it's a throwaway document and who wants to read that legalese. But that's something else that you need a side agreement on if you're that junior partner that comes in if you've got a... it's important to maintain relationships and things like that.
Michael: So, this is essentially the document that says at the end of the day clients are not literally legally signing with you. They're signing with the firm. These relationships are assigned by a branch manager. If you actually really want your clients to be your clients beyond that agreement, you need something else that specifies it. At least in BD world.
Melissa: Right, or said a different way, the clients are the clients of the branch. The broker dealer has contract with the branch manager. And they will...they don't want to have ambiguous fights. They need to make it clear, their legal departments do. And so that will be the final person who says whether you can do business with that broker dealer or not. Even if you're a partner. If you don't have a separate side agreement saying you have a right to do business. I learned this over time and I also know executives at broker dealers who have had to mediate between a branch manager saying, "I don't want them to ever be able to do business anywhere." They often, I think, would also prefer that you get that side agreement so that it's clear that they're not between a rock and a hard place.
Michael: Because otherwise you run the risk that the branch manager refuses to assign you clients and revenue and technically, if that's what they do, you're stuck.
Melissa: You've got to go somewhere else.
Michael: You either leave and go somewhere else or you're escalating to the executive leadership of the broker dealer asking them to try to override the branch manager that's technically empowered for this.
Michael: So, I guess I'm also just curious as well. You had noted that part of the challenge in thinking about coming to the table with partnership was that you didn't necessarily come from a lot of dollars and family wealth to do a big buy-in. So, I guess I'm just wondering how did 30% owner work for you just on the economics. Was the firm willing to finance this? Was a portion of it treated as sweat equity for coming in? Just how did that work?
Melissa: Yeah, I don't think I can go into the specifics but it was more of the sweat equity route where it was a much lower buy-in than you'd be used to today.
Michael: So, you become partner in a unique, nonrevenue producing role from where we classically draw these lines in the advisory industry. So, did that change your role and your job duties within the firm? What happened after you become partner and you're continuing in the business?
Melissa: Well, another piece of serendipity. So, a couple of things happened. First, I was on maternity leave with my second child in 2013. Got a call from an acquaintance who said, "Someone I know has won the lottery." And I was being referred this client. I had no clients. And so, I, again, based on instinct thought, "This would be a good time for me to have assets versus refer this person to someone else in the company. I think there had been discussions in the past about someday maybe I'll be a financial planner or have clients. And so that felt like the right day to ask for it.
Michael: When you had a literal lottery winner coming in saying they want advice? Okay.
Melissa: A multimillion-dollar lottery winner.
Michael: Good timing.
Melissa: Yeah. And I took a little journey meeting Susan Bradley. Very interesting first client. And then there had been in the meantime a landgrab in a good way but assets have been distributed and assigned for the succession. And so, the existing financial planners in the company all were getting increasing responsibility for these clients from these 2 founders, Marilyn Gunther and Dan Boyce who had been the backbone of the growth of the company and had been there from the start. And I wasn't a part of 90% of that. But then this new client relationship opened the door primarily for Dan Boyce to say, "I have these 20 or 30 clients I've been holding back who are complicated, large. Melissa knows them quite well because she talks to them about investments." And so, I had a very unique responsibility for a very small segment of the clients that happen to be some of the most complicated and largest by asset clients in the company that I started to have responsibility for and either...in some cases, solo and in some cases, teamed up with other planners in the company, have responsibility for a handful of very large clients.
Michael: And so, then suddenly you are in a client facing revenue producing role with a limited number of clients by quantity but probably a pretty healthy revenue size because they're big clients.
Melissa: That's right. So, I still had operational responsibility. I diminished my day to day in the investment department but still had a role there as leader as we...there's terrific leadership successors in there. And then had built out a more centralized financial planning department concept whereas in the past we'd had someone who was the financial planning department that things got lost in interpretation when it's...run this plan or projection versus converting to associate planners that were in the room and heard the client's voice tone. So, I had continued to have other operational responsibilities and then I had this cohort of clients. And so, that was where I was at, let's say, 2015 or so.
Why Melissa Decided To End Her Partnership Role [51:08]
Michael: Okay. So, what comes next as you continue on this journey?
Melissa: So, next was a pathway where everything I'd ever dreamed of as a financial...I was late to the game on financial planning but everything I dreamed of of this awesome journey of being in roles in a financial planning company...we climbed the mountain for years. We talked about we wanted to be a billion dollars in assets. We're reaching that goal as well. And I'm someone who's very interested in growth. I'm very interested in change, building things, projects, what's next and I had checked off the things on the list and the what's next just became less and less clear. Even writing the company's vision...and again, we use ZingTrain. The clarity of where I fit was becoming less clear.
Michael: Because you're very growthy but the company is getting to a billion dollars of assets and successful transition of the business from the founders to the next generation. And so, now you've got a… I’m just envisioning, you've got a good economically scaled, probably very financially healthy business but that doesn't necessarily mean people want to fire up changing growth. Often when you've got a very healthy, financially profitable business, people are like, "Yes, and we would like to continue to have this exact financially healthy profitable business. And no, I don't really want to spend a whole bunch of money on a new growth initiative that may or may not work out because I'm happy with the sizeable company with very good financial health and profits.
Melissa: Yeah, there's probably some of those examples. And also, who knows? There's my version, other people's versions of the story and somewhere in between lies the truth. What had felt like so natural and always...here's where's next. To me, I was really enjoying working with clients. I really loved...at the same time I was doing work with Raymond James Women's Advisor Council, I really loved promoting careers of women in financial advice. And just my touchstone of what's next for the company felt like it should be so natural and it wasn't. And I think it's just me. I was a square peg in a round hole. And so less and less did I fit in with what the company was. Not an indictment of anyone or the company. And so, there was this just purgatory where I was hiring...I hired a business coach to try to help me help myself or figure out what was next and things like that. And she asked, "What are you going to do?" And I was like, "Oh, I think I'm going to just go find clients and work with clients. It's going to be fun." And she's like, "That sounds like...you are so interested in change and I don't know what you were thinking but that does not sound like you're going to be happy doing that."
So, it's just like this time of discontent. And some of it, I was not conscious. It was just under the surface.
Michael: It's just, you feel like you want to do things different or have some clarity for a new next direction and that just wasn't coming from the company at that point because they were pretty happy with where they were.
Melissa: Yeah. I don't know. It's not even about the company but I'll give an example. I had 2 really close friends who had chosen or been told to take a hike from their larger practices and started new companies. And I remember being so envious like, "Oh, my gosh. I will never start a company." But that is so interesting and if I were you...and you may be nervous now but in 10 years, you're going to know that was the best decision you ever made and such a cheerleader for them but also, I started to want that unconsciously. It was all under the surface.
So, it just wasn't...you don't always need to be at the same place forever and it just wasn't...it became time to find a new path.
Michael: Well, I can also just imagine at some point there just is a dynamic, I think, for a lot of folks I've known that just are very future and vision oriented that just almost any time you're in a large firm with a lot of partners, just it's hard for anyone to set any particular bold vision because usually you end out in some process where all the people need to have buy-in and everybody needs to get on board which means you have to make certain compromises along the way and just...it's hard for shared vision to not get committed in large firm environments which for some firms works great. That's how they get their buy-in from all the partners to move the business incrementally forward. But just even from what you're describing, you come across as a little bit more of a bold vision person and that's just...that's hard in any large multi-partner business. I don't think that's even specific to advisor world. That's hard in any large multi-partner business.
Melissa: So, true. And we were in the 5 to 7 range for partners which studies show is one of the most difficult times for buy-in and consensus and things like that.
Michael: Right. Too many people to have an efficient decision-making process but usually not enough for you to get to the next level. When you get to 10, 15 partners, firm's just like, "Oh, heck. This just isn't working. We're going to have to create a board and the board makes the decisions and then all the other partners just have to accept that." There's almost always at some point a governing separation when not every partner automatically has a say in everything but you don't have that in 2 or 3 partners. You have to have that by the time you get to 10 to 15. And somewhere in the middle, it gets messy.
Melissa: It was messy for me. And I do think that's as much of me and who I am and...so yeah, it was messy. And I just did not have the clarity to wake up and put myself...let's take a step back and see what's going on. And you can make changes in your life. I was driving an hour each way. I was raising young kids and putting a lot of the household burden on my husband who was also working, is also working and our nanny. And there was a long list of, "Melissa, why weren't you looking to change something up?" But that's where I found myself really enjoying working with clients and really feeling like I found the right career and maybe I wasn't bringing the value or service to the company that I once had. And there were really great people that were a great fit for the roles at the time.
And another thing the business coach asked me is, "Well, what if you just quit or got fired tomorrow and how bad would that be?" And I was like, "Aha. That's a horrible question." But then I was like, "Well, everything would be fine." So anyway, I was looking for answers and didn't know where to find them.
Michael: Yeah. I was going to say just how do you even get comfortable with the mental...you've been at this firm for nearly 20 years, your entire career and now trying to imagine could you possibly end up not being there. Because that's got to be hard.
Melissa: Well, again, I'll use the marriage example. There's a lot of familial dynamics in the practice or any practice or any company. It was like a marriage that I was in for life. There is no contemplation of any other alternative. And I sit here today as the founder of another financial planning company which I'm so grateful for. But there was a lot of just murky lack of vision in those last few years there.
Michael: I was going to ask how long did it take for you to navigate this. Sounds like it's literally a couple of years of feeling like square peg, round hole increasing challenge.
Melissa: Yeah. With the benefit of hindsight, it was probably 2 years from mid-2015 or '16 to mid... early to mid-2018. And ultimately, I left over the summer of 2018. Now whatever that date is, it's not that easy to break up either. So, it took some time. The day that I signed my exit agreement was the same day that I incorporated Pearl Planning within 5 minutes of each other. So, there was this lost in the wilderness phase for a couple of years that only, with the benefit of hindsight, can I see. And then there was this quick sprint of what are you going to do next. Very clearly, I love what I do. Even during that time, there were so many great things about the work of a financial planner that I made it more difficult to see the challenges. And so, there was this 4-month period where I was just basically trying to figure out what was next.
Michael: And so, as you have to go through this transition exit...I'm presuming this isn't sell the shares back and... you've become a partner and an owner at this point. Have to sell the shares back and then facilitate a transition out.
Melissa: Right. So, I learned a lot about negotiating. I again reinforced my appreciation for the very costly use of legal advice. And at the same time, I remember when it was clear that there was going to be a new chapter, I did not know...I had no idea what the company vision...I had not been preplanning this for my triumphant like, "I'm out of here." But I didn't really want to work for anybody else. Using that marriage analogy, if you're just getting divorced, at least for me, I'm not ready to walk down the aisle the next week. And a lot of people...I didn't publicly advertise this but I had a really great network professionally that just everybody was like, "How can I help?" And also, I think some people were interested and I have a succession challenge myself and it would be great if Melissa could come in and be that successor.
Michael: So, when they found out you were leaving and you were available and on the market again, the phone calls begin like, "Oh, you're a promising upwardly mobile young person with skills and experience and a long career. Come join my firm. Come be my succession plan." For which you're like, "Yeah. I'm just leaving one of those relationships. Too soon."
Melissa: Well, it was tempting and these are friends and...in most cases, I had several conversations. But it just...I still...then I could actually say, "Oh, I want to start a company. I can see our company's values." I knew those week one...that courageous authenticity was going to be a value and that if you're a client, you don't have to come to me with a good hair day or get dressed up in order to come to your financial planning meeting. You can tell me what's really going on. And I'll be really transparent and authentic with you about the good and the bad. And so, then there's all this positive vibes and energy and I didn't have a full business plan but I was like, "Oh, I can get behind this and I'm willing to take a lot of risk to see if this will work out." And also, it seems like I'm a decently marketable person for a job. So, if it doesn't work out, I think I'll be able to find a fallback plan.
Michael: That's an interesting framing. I'm going to go...I'm getting these calls for job opportunities and succession plans. I'm going to go start my own firm because hey, if it doesn't work out, I can always return their phone calls later. Someone's still going to hire me. There's a lot of demand for someone in my position and role.
Melissa: Exactly. And so, I spent...I actually...there's a video on our...the front page of our website today that I recorded 4 months before the company started. I knew the name, Pearl Planning. Pearl is my grandmother's middle name and my daughter's but a pearl is an irritation that turns into something beautiful. And I knew some of those values. And we actually filmed that video 3 months prior to finding the company when I was still talking to other options and trying to figure it out. My friend, Laura Garfield at Idea Decanter was like, "We're doing this because we happen to be together at a Raymond James National Conference. I don't care, Melissa, if you're throwing yourself a pity party. We're recording this video for Pearl Planning."
And so, it felt very comfortable and natural. And I had not had significant business development responsibility. So, the big question was, "Okay, great." I was, full disclosure, fortunate. We started with 50 million in assets from 50 client relationships that I had previously knew and worked with. But after that, there was no intention of fishing in the pond of my old client pool.
Michael: So, it was a $50 million client base that you were allowed to bring...I guess bring with you or have as part of the transition but then after that, it's a hard line. No fishing in the old pond of the prior firm. Clean break. Everything else has to be…
Melissa: Clean break. And very much for me too. I wanted to do it where I could say that I was...it was about my success. I actually listened at...just in June of 2018, I think, Kathy Longo's episode of your podcast was...
Michael: Who went through a similar transition.
Michael: She also left from a larger billion-dollar multi-partner firm to go and start her own firm from scratch and build her own path.
Melissa: It was so well timed, that episode, and it was...I remember being at one of my advisor friend's offices visiting her trying to figure things out and Kathy I'd emailed and that was like, "Would you please give me half an hour any time? I heard your episode and I would love to talk to you." I just felt...and actually one of my partners had even mentioned like, "Did you see that Kathy left Accredited?" And I was...I think it was a hint. Maybe you should think about that yourself.
Anyway, I reached out to her and she was so gracious. She was 4 years in, I think. Very successful and she still is. And we still talk and even saw each other on a retreat a couple of weeks back. But it was so meaningful to me to talk to somebody who had been in that ensemble practice where the firm's identity was your identity as a planner and to hear from someone, how it went and just give me the confidence of, "Hey, this is possible. I've got somebody I could mirror or mimic or know that they were successful to give me extra hope."
How Melissa Handled Launching Her Own Firm [1:07:31]
Michael: So, I guess I'm also just wondering just how you approach this from literally the...I need to start building and running a business. I'm struck on the one hand...you spent a lot of time in various operations' roles that gave you a lot of perspective on just building systems and infrastructure on the business. On the flipside, you were doing it in a lager firm that has certain resources that larger firms have which you don't get when you hang your own shingle and get started on your own. So, I guess I'm just wondering. So, where you turn just to figure out how to run this thing as a business and start building and get going?
Melissa: Yeah. So, I think it's a pick your battles. Pick what you think is going to bring you the furthest and figure it out as you go. And a lot of that first 6 to 12 months was looking bigger than you are. And I had, frankly, spent 20 years almost relying on we're big. That's why you should use us. And then I'm...I had my first new client meeting in my 1,000 square foot space that I just doubled but it's a very humble, open space with a card table as the only furniture because furniture doesn't arrive the day you order it with a business owner who'd never met me and had been on hold for a few months. And I was like, "If you look around this office, it doesn't say much but I've got a lot of experience and I've got a lot of great ideas." And he was like, "I'm a small business owner. I get it." So, it was...I may not be for everybody right now because there's a lot of heart and, I think, wisdom but it's a startup and very much a bootstrap startup mentality. And so, I just picked my battles. I was fortunate. I have to give so much gratitude and thanks to Sheri Stevens who was the branch manager of a Raymond James independent broker dealer office and she let me be a satellite because I didn't have my series 24 or compliance licenses to be a branch manager myself.
And it was like, "Oh, this...what am I going to get done this quarter? I can either open a business or study for the 24." So, she's still a sister company too...and Stevens Consulting is our RIA. And so, we shared some things, some infrastructure and technology and middle office resources and we still do.
Michael: So, help me understand how that environment fits. I'm presuming prior firm was Raymond James and had some broker dealer business. And so, some of your 50 million of clients that came with you had broker dealer business. You still needed to be in a broker dealer environment as opposed to just hanging an RIA shingle on your own.
Melissa: It was more a function...so everything was fee. There was maybe...I had to carry over 4 old annuities and get insurance licenses because I didn't want to tell clients they had to leave anything behind.
Melissa: But it was a very seamless process, paperwork wise if I didn't...and speed wise if I didn't found...I very much wanted...especially if you think about marketing BD world versus RIA world, I very much wanted to be in the RAA world. I thought that is where I was culturally a fit. But I very much wanted those clients that were the people that I was able to continue to work with to come with me and for expediency. I stayed…
Michael: Because now they don't have to repaper off of Raymond James custodial platform. Yeah, everything can switch on their centralized systems because all the firms are already Raymond James affiliated. So, you're just changing some internal numbers and I guess a brief client sign off.
Melissa: Not even a... well, there was a sign off but I don't even know if there was that paperwork. So, I very much knew that...I didn't know much but I knew I would be RIA at some point and we are today. But there were reasons in how quickly do you want to get started. Well, you spent 20 years knowing these systems inside and out and also there's extraordinary executives who have your back and a huge group of advisors who are friends and friendly.
Melissa: So that was where we were.
Michael: I see what you mean about picking your battles of like, "Okay. Maybe someday we want to be pure RIA but right now, let's do the switch and find another way to stay on the platform so that the repapering is faster. Oh, and if we're going to stay on the platform, let's just find someone to affiliate to that can solve my branch manager issue so that I don't have to spend a month studying for and passing the series 24 and I can focus on opening the business and getting my marketing going."
Melissa: And marketing was what I was most interested in because I... if you're...for those of you that know Michigan, Metro Detroit is very distinct from Ann Arbor where I live or the Ann Arbor metropolitan area. And so, I was changing markets at the same time. Even though I'm still 45 minutes from Detroit, I had intentionally decided to be 5 minutes from my house in this town that's a bedroom community of Ann Arbor and University of Michigan professors who...and this town used to be a farm town. And so, I had a whole new market that was pretty insular. Saying that you lived there but you had a business in Detroit was not doors open. So, I didn't have...I always had the networking skills but I did not have a natural professional network here where I was going to open the doors.
And so, TBD at the time whether people would welcome me. Turned out that people were fantastic and very excited to support a female owned financial planning business that didn't feel like it was stuffy and didn't have a bunch of suits either on the website or when you come into the office. But marketing, the website were critical. I pulled off a spreadsheet from 2019 and I did 280 marketing touches. Hundred and fifty of those were social media related but another 130 were networking meetings, webinars, videos, in person meetings, newsletters. I just was like, "We are going to bust our butt and see what sticks."
Michael: That's an interesting way to frame it. So, 280 marketing touches. So, every time you did a thing that just went out there, you measured and counted it as a touch. So, what did that mean just in social media context? Is that like, "I sent a tweet," or is this like, "I wrote an article or I did a video." Just what do you...
Melissa: Yeah. Tweets don't count. So, I think tweets are more for Fintwit than the rest of the world. But I started a Facebook and LinkedIn meme that was...every week was a small tidbit of financial advice. It had our company brand which nowadays is much more prevalent or not novel but 5 years ago it was interesting and new. We sponsored local events, did a webinar every single month, did, like I said, newsletters, went to networking events I never would've gone to that might've been a waste of time but just was like, "You know what? I need to be visible." And then the website too was really critical. I built a website and then the website was working. People were scheduling meetings off of it and I thought it was working so well that I rebuilt that website about a year and a half in just thinking, "Hey, if this is...if people are scheduling on weekends when they can't call you and they're...finally have time to sit down with their husband and say who we really need to take care of something and that's when they schedule," I want the website to look and feel better.
So that...the operational parts, I tried to be...I actually was thinking, "How do we make this simpler on everything else?" Because I knew that it was going to take a lot of time to be present and visible on the marketing side.
Michael: And so, you're logging, cataloging all these touches. Were you actually tracking and doing attribution of which things were working because you got clients...which marketing touches were actually generating business results?
Melissa: Yeah. It's harder to tell. I think LinkedIn worked really well because I would find that I was pretty...I would talk about financial planning topics on LinkedIn, make it clear I was open for business but not be cheesy or hit people over the head with, "You should come work with me or whatever." And I would find distant acquaintances were reaching out on LinkedIn. And then, like I said, the website I think is your business card in modern times. I wasn't able to track as much it was this or that but people would come up to me and be like, "I see you everywhere." And I did track...that year for example we had 34 introductory meetings, did 11 financial plans and had 12 million in new assets. So, we were making something out of what could've very easily have been nothing.
Where Pearl Planning Stands Today [1:17:31]
Michael: So, fast-forward us to today. What does the business look like today?
Melissa: Well, first of all, the business has grown a lot. I will tell you, Michael, because you know the numbers so well and you're probably like me. You calculate...you say the big picture numbers and you're like, "Either you're super profitable or there's no profit there." We have a bigger team. We almost doubled in size in the last 12 months, and I've chosen by intention to invest in the business when I see the opportunity and have that capacity based on my personal balance sheet. So, our assets are smaller than they will be. Everybody's on a growth trajectory. But there's 11 of us on the team. Our core operations are here in Dexter although we have a hybrid team but there's 4 financial planners including myself that are in our office in Ann Arbor area. One financial planner of that 4 works with my clients around the country and she's virtual. And the other works with my clients that are here local and then another woman joined our firm. Reached out to me and asked to join as an employee but as an advisor and brought assets with her this year.
Melissa: And then we have a divorce financial planning practice from someone who used to work with me at my old firm. And she just works with people during divorce. I don't love hourly billing but that's how we charge for that because there's not an easy way to do it otherwise. But then it's a really natural cultural fit for some of her clients and it doesn't need to be all because she's fairly compensated for the work that she does. But to become clients after their divorce for longer term purposes...and then we have an office in Grosse Pointe, Michigan which is outside of Detroit with a wife and husband team. Both former wholesalers who actually like to work with those divorce planners and they're converting more recently from the wholesaling path. So, earlier on their own trajectory but the firm's brand and resources support them and centralized investment management and financial planning provided by the company.
We're about 175 million in assets. We've had a lot of growth this year. So, we started the year at the same place we'd been the year before in terms of assets, around 130 million. And our revenues growing pretty quickly as well. It was 1.1 million last year and projects to be about one and a half million with a necessity of growth over the next few years to make the headcount work. But I feel confident that we're on the right track in the growth and the sustainability and endurance of the practice is there.
Michael: So, how do you just manage hiring and training of that many people that quickly? Because it sounds like a lot of the staff came on in just the past 12 to 18 months. And I just the reality is businesses get to the size...once you start crossing 8 to 10 plus people, departments start to form, businesses sometimes get a little bit more siloed as people get focused into their areas and you've gotta keep everybody aligned and rowing in the same direction. All the things you have to do to manage business as a business. So, I guess I'm really curious how you're managing that growth and the team additions, how you're navigating that.
Melissa: Michael, I think I've heard about your iceberg. It's messy. You're building process that seems so simple when there's a few of you that needs to be replicable. And what I'm trying really hard to do is to not build a necessary bureaucracy. I just don't love internal meetings to have meetings to schedule the next meeting to talk about it again. My calendar is the same amount of full as it used to be but it's external. It's clients and COIs and learning about new things. So that's tough but I really feel and call that current team is like a dream team. Even though we're not in person day to day...some of us are but not everybody. Our team communications are just...we know each other. We've got each other's backs. And the vast majority of the team were people that came to me that I knew, that I knew were rockstars, that were like, "Melissa, what do you...I've got a job offer but what do you think if I joined you and how could we make that work?"
So, there's 2 women, one of whom I mentored in a program from Women's Leadership Alliance which was created from a group of Raymond James Financial Advisors. And she just happened to be relocating from Denver to Michigan and her former colleague had already moved back home to Michigan. What a gift to me because they're these young 30s CFPs. One of them's a CPA who just have worked at a big firm, have all the skills and also personality that's a great fit for our company. And they're helping to take on some of that training and responsibility and leadership as I really work to work with the most complex client cases fewer over time and then be a true CEO which I used to say I would never be. And today I really embrace that it's going to be the right seat for me for the foreseeable future.
Michael: So, what changed? That wouldn't be the seat for you and now that is the seat for you.
Melissa: Well, I think other people assumed that that might be my career path. People outside of my company that knew me well in the past and perhaps was protective or just I never knew...I knew that seat would never be the right thing for me to go for. And also realizing today that knowing EOS that I'm a visionary and someday we're not going to expand...the intention is not to double our size year over year. I think we should...will be a small giant. But there will be a COO someday who will be that attention to detail operational person and rein me in. But I'm a natural fit for a CEO visionary. And now I'm comfortable saying that, I think.
Michael: So, because I know you're a student of these systems of EOS and Small Giants and ZingTrain and the rest, I guess I'm just super curious how do you literally run it today. Have you adopted one of those systems, none of those systems? Have you made an amalgamation of your own version of it? What are you actually using as the framework to run the business?
Melissa: I'd say today we are EOS light and I think part of my ideating...I like to think about things and then think about them for a long time and decide quickly when it's the right time. But I think we'll probably hire an integrator or an EOS coach in 2024. But you've got to...again, it's constant pick your battles when you're...especially if you're in growth phase. Our revenue grew 25% last year in spite of keeping assets at the same level. We've had 38% growth this year and onboarded a new employee advisor. You can't do everything all at once. And so, I've learned a lot from everybody and I'm also doing Limitless Coaching with Stephanie Bogan. But I pick what works for right now and some things we'll just have to get to later because it would...and at some point in time, we'll just say, "Let's take a pause on the growth focus and let's make sure that we take a breath and make sure we're building the right system." Because it's an ebb and flow over time when it comes to that.
Michael: And so, I guess I'm just wondering what does EOS light mean in that context? What parts are you not doing or that you're not a fan of at this point?
Melissa: It's not not a fan but implementation is a lot. So, I have a VTO. I have a vision traction organizer. We run a level 10 Monday meeting but not every person in department is running a level 10 or has the EOS training. When I visited companies...Small Giants and EOS overlaps quite a bit, especially because Small Giants is based in Michigan. Their...not the author but the organization or their executive director is here in Michigan and EOS was started here in Michigan as well. And so, when you visit high, high implementers, oftentimes with Small Giants when I was in their cohorts, every person has their VTO at their desk visible. We're not there yet. When I do, I think I'll use Andrea Schlapia who is an EOS trainer who has worked...is a past guest of your podcast and has worked with the financial advisor community and I've worked with in the past. I mean, she's been doing this stuff for 20 years and she just is a stark raving fan of EOS and she understands advisory practices.
And so, I know the book, “Traction". Highly recommend implement...but not everybody has a rock for every quarter. And so, there's an intention that we'll be doing that over time. But I wouldn't have you come to learn EOS here today.
The Surprises And Low Points Melissa Encountered On Her Journey [1:27:38]
Michael: Very cool. So, as you made this transition particularly from being in the business, being in a larger platform internally to now running your own, what surprised you the most about the dynamic of building an advisory business when it's you on your own building an advisory business?
Melissa: I'm just having so much fun. It's not like there's not days that are difficult. But there hasn't been a moment where it didn't feel worth it. I have not one moment of regret. I love the people that I'm working with. And it sounds Pollyanna but it just shocks me that people, when they hear about it, would be like, "Weren't you so scared?" And there's 100 other things in other people's lives that would totally freak me out, but it just felt so natural over the years and fun and it's still super messy. You can always pick somebody to compare yourself to that makes you look so smart and so good, and you can always find the person or the company to say, "I know nothing. How am I even able to open the doors each day?" And yet, it's all so worth it.
Michael: What was the low point for you on this journey?
Melissa: I mean, that time of purgatory, the time of just knowing or even not knowing but having this sense of unease of what is next, especially with the benefit of hindsight. Looking back, I was not happy where I was at. And so that in particular...and I had a capitulation moment in negotiating where I felt like many people do working with clients in divorce where you're just like, "I give up. Take everything. I don't even care." Those times were very difficult and I've always felt that from difficulty...and I think I shared with you even the story of Pearl Planning is...not everything is roses and sometimes you learn your own strength through difficulty.
The Advice Melissa Would Give Her Former Self And Younger, Newer Advisors [1:29:54]
Michael: So, anything you know now that you wish you could go back and give yourself advice 5, 10 years ago as you were transitioning in a partnership and starting down this road? I know you're a fan of mentors. So, what would you go back and mentor yourself now?
Melissa: There's not a lot I would change because I would want to end up in the seat I'm in today. But I do think that advice that I mentioned from Kathy Muldoon that without the revenue being your responsibility, then you can't control your journey is prophetic. And so, would things be different if I spoke up about becoming a financial planner sooner? I don't want to do that but I think there's probably people who have the imposter syndrome who think they'll never be ready, who should probably raise their hand. So, I hope somebody's listening out there that can hear the stories of being quite strategic in their career and how that can pay off that might be inspired to speak up a little bit more quickly or ask for a little bit more.
Michael: What advice would you give to younger or newer advisors getting started in their career today looking to come into the industry?
Melissa: I think if you feel like you're different from most people in the room...especially speaking to women or people of color. Then if you can say something half intelligible, just speak up because people will remember you and notice you and you're going to say something great. But only if you use your voice. So, make the most of doors that are open for you, ask for doors to be open for you. Seek sponsors. Also, follow up. So, if you meet someone and they seem like someone who you'd like to know better, you only really need a couple times to talk to them after the first time to make them an advocate. I found I had so many people who had my back when I was making that career shift. My friend, Laura Web, calls it your peeps and your posse. So, there's your peeps that you know like the back of your hand, the people you text every day. And then there's your posse who...they may not know you as well, they're acquaintances but they want the best for you.
And so, I'd just be looking and intentional with networking and if you meet somebody, follow up and say, "Nice to meet you." Or if you know something they don't, say, "Hey, here's that resource I mentioned." If you become more proactive and active in managing your career, it's going to pay off.
Michael: And how did you go about the networking to find those people? I just feel a lot of us say, "Well, do more networking." Do what?
Melissa: So, if you go to...if you get the opportunity...whether it's a local FPA event that I'd say the doors are open for almost anyone or if you happen to get sent to a conference or...hey, how about asking to go to a conference? Then instead of just attending the meetings and if you went with someone from your company or someone you already knew, branch out and say, "Hey, we should divide the room and go see if we can sit at a table." I would even...I started researching open end mutual funds, actively managed funds. And when I got invited to a dinner because they were peddling a mutual fund and a portfolio manager was there. I'd wait to see where the portfolio manager was positioning themselves and I'd intentionally try to get as close to them as possible. I'd look for the person who had the most power in the room and say, "If I can meet..." And have a target of...these are people that either I would like to meet or it seems like would be interesting or interested. I inserted myself in a way that I would never do in my personal life and that helped me to gain confidence.
The first person that thinks that you have something to say gives you more confidence for the next person even if they don't have any resource or network for you in exchange.
Michael: It's powerful framing. If you're in a networking space, try to figure out whoever has the most power in the room and try to sit next to them and just get...
Melissa: If Michael Kitces is in the room, then be on that half of the room.
Michael: Oh gosh. I’ll just be wherever the...
Melissa: You already are mobbed.
Michael: The darkest corner is. The furthest away from the music and the bands.
Melissa: Oh, just kidding.
Michael: My introvert still kicks in.
Melissa: I hear you. But just don't...if you go to a conference and you come back and you're like, "I went to these sessions," and you didn't interact with anyone different, that's fine if you're happy with where you're sitting but every new person you connect with could have a pathway or an open door or you may need them in the future. So, it's not like you have to have a rolodex of a 1,000 but do be building.
What Success Means To Melissa [1:34:57]
Michael: So, as we wrap up...this is a podcast about success and just one of the themes that come up is word success. Means very different things to different people. And so, you're on this wonderful path of now building your own advisory firm as you're coming up on $200 million and have been on this journey for 20 years with the prior firm. So, the business stuff is going quite well. How do you define success for yourself at this point?
Melissa: I've always been so achievement oriented, and I used to think achievement was success. And I still really need achievement. I need that new mountain to climb. I need my 3- and 5-year pathway on the Vision Traction Organizer. But having that list of things you want to accomplish when you get to that moment rarely results in a feeling of greatness or success. To be frank, Michael, this podcast has been starred on the board for a long time and I'm so glad we're able to do it. But the day I got the email asking me to schedule was, "Okay, what's next?" And so...so excited but it wasn't...
Michael: Well, it's a curse of us achievement-oriented people. As soon as we check the darn box, you reset the goalpost for yourself. It's cruel.
Melissa: Yeah, already resetting. So, that is an...and it goes hand in hand with this concept of abundance and thinking about Brian Portnoy's conversations about contentment. And so, to me success is moments of satisfaction. It's moments of contentment and recognizing what is enough. It's celebrating other's success. I'm relentless on tracking growth in assets and this month my team has more new assets than I do. And that to me is like, "Ah, that feels good." So, it's those little moments of satisfaction and seeking them out on the personal side because it's so easy to find sometimes concepts of success, at least professionally, that feel easier to attain. So, it's very much high up on Maslow's hierarchy. It's not just a bullet point on a spreadsheet.
Michael: Very cool. I appreciate that so much, Melissa. Thank you for joining us on the "Financial Advisor Success" podcast.
Melissa: It's been so fun to geek out. Thank you, Michael.
Michael: Likewise. Thank you.